In Re: Amendments to Rule Regulating the Florida Bar 5-1.1(g)
SC20-1543
| Fla. | Jun 18, 2021Background
- Florida established the nation’s first Interest on Trust Accounts (IOTA) program in 1978; IOTA proceeds are administered by The Florida Bar Foundation (Foundation) to support programs improving administration of justice and legal services for the poor.
- IOTA revenue has declined sharply due to economic factors and low interest rates while unmet civil legal needs among low-income Floridians have grown, prompting concern about distribution effectiveness.
- The Florida Supreme Court convened a Task Force in October 2019 to evaluate distribution models and prioritize funding for direct legal services to low-income persons; the Task Force unanimously proposed amendments to Rule 5-1.1(g).
- The Task Force’s proposal would restrict IOTA use to direct legal services and impose detailed reporting and distribution rules; public comments (including from the Foundation, past presidents, and legal aid organizations) raised concerns about caps, reserves, and operational burdens.
- The Court adopted the Task Force’s amendments with modifications: clarified definitions (including post-conviction services and pro se resources), required annual distributions within six months (with limited exceptions), set a 85%/15% spending expectation for grantees (with justification if exceeded), and imposed annual reporting/audit requirements and a two-year review.
- Amendments effective July 1, 2021; one Justice concurred in part and dissented in part, objecting chiefly to the administrative cap and distribution/timing constraints as unnecessary and potentially harmful to grantees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Restricting IOTA funds to direct legal services | Task Force: prioritize direct services to low-income Floridians | Foundation/others: maintain broader funding flexibility (capacity-building, strategic grants) | Court limited IOTA to "qualified legal services" but broadened definition to include post-conviction, navigation programs, and pro se resources; funds must facilitate or provide such services |
| Definitions and scope of eligible recipients/providers | Task Force: define grantees/providers narrowly to target services | Opponents: broader definitions needed to cover effective grantmaking (training, capacity, technical assistance) | Court adopted new definitions for qualified grantee/orgs, qualified legal services, qualified providers; clarified inclusion of training, technology, LRAP admin costs (not LRAP payouts) |
| Distribution timing and reserves (foundation must distribute funds within 6 months; cap on admin/reserves) | Task Force: annual distribution and limited reserves to maximize current service funding | Foundation: need reserves and flexibility for stable annual budgeting and disaster response | Court requires distribution no later than six months after fiscal year minus direct admin expenses, LRAP funding, and court-approved additional reserves; retained ability to seek court approval to exceed caps |
| Administrative expense cap and reporting burdens | Task Force: impose cap (proposed 10%) and robust reporting for transparency | Foundation/grantees: caps too restrictive (impede rent, training, tech), reporting burdens consume resources; oversight sufficient without strict caps | Court set 85% minimum for direct facilitation/service (i.e., 15% cap on general admin/reserves), allows written justification if exceeded, and adopted extensive annual reporting/audit and a two-year efficacy review |
Key Cases Cited
- In re Interest on Trust Accounts, 356 So. 2d 799 (Fla. 1978) (adoption of Florida’s original IOTA program)
- In re Interest on Trust Accounts, 402 So. 2d 389 (Fla. 1981) (IOTA program became fully operational)
- In re Interest on Trust Accounts, 538 So. 2d 448 (Fla. 1989) (IOTA proceeds fund the Foundation to expand legal services)
- Arnold, Matheny & Eagan, P.A. v. First American Holdings, Inc., 982 So. 2d 628 (Fla. 2008) (lawyer trust accounts may be garnished under certain circumstances)
- The Florida Bar v. Silver, 788 So. 2d 958 (Fla. 2001) (duty to protect assigned funds in trust accounts)
- The Florida Bar v. Krasnove, 697 So. 2d 1208 (Fla. 1997) (trust-account duties and protection of third-party interests)
- The Florida Bar v. Neely, 587 So. 2d 465 (Fla. 1991) (trust-account protections and ethical obligations)
- The Florida Bar v. Golden, 566 So. 2d 1286 (Fla. 1990) (fiduciary duties of lawyers acting as escrow agents)
- The Florida Bar v. Hines, 39 So. 3d 1196 (Fla. 2010) (trust-account related professional duties)
- The Florida Bar v. Marrero, 157 So. 3d 1020 (Fla. 2015) (discipline matters involving trust account obligations)