MLAC is the largest single funder of civil legal aid in Massachusetts, with funding coming from two sources: the state budget and the Interest on Lawyers' Trust Accounts (IOLTA) program.

The majority of MLAC funds go toward General Support of civil legal aid programs. General Support funding provides legal aid programs with the flexibility they need to manage their day-to-day operations. The solid financial foundation of General Suport makes it possible for legal aid programs to leverage additional funds from other sources.

State Budget

On June 30, 2010, the Governor signed the FY11 state budget into law, including level funding - $9.5 million - for the MLAC line item (0321-1600).

IOLTA

MLAC's other source of funding is the Interest on Lawyers' Trust Accounts (IOLTA) program. Under Massachusetts Supreme Judicial Court rules, an attorney holding funds on behalf of a client must place the funds either in an account that pays interest to the client or in a pooled IOLTA account. An IOLTA account is used only if the funds are relatively modest, or will be held by the lawyer for a short time, so that the interest earned would be less than the cost of setting up and maintaining a separate account. Though the individual amounts of interest are small, the interest from the combined IOLTA accounts is significant.

The IOLTA Committee, appointed by the Supreme Judicial Court, distributes all IOLTA funds to three charitable entities: MLAC, the Massachusetts Bar Foundation and the Boston Bar Foundation. By order of the Court, MLAC receives 67 percent of IOLTA funds to support legal aid programs in the Commonwealth.

Massachusetts banking institutions continue to be important partners with lawyers and law firms in making IOLTA a success. Fair interest rates are the single most important factor in generating IOLTA revenue for legal aid programs.