IOLTA Trust Violation
IOLTA violation: client funds commingled = bar discipline. Fines $500-$25K. Suspension 30 days - permanent. Disbarment for severe.
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IOLTA (Interest On Lawyer Trust Account) violations are among the most serious ethical breaches in legal practice. Violations range from minor recordkeeping issues (letter of admonition) to severe theft (permanent disbarment + criminal referral). Most states have mandatory training and audits.
IOLTA Rules
Client funds must be in separate IOLTA account (not commingled with operating). Each state has detailed recordkeeping requirements: contemporary records, monthly reconciliation, three-way reconciliation (book balance, bank statement, client ledgers). Annual statement of compliance required in most states.
Common Violations
Commingling: client money + operating money. Insufficient reconciliation: not balancing accounts monthly. Failure to deposit promptly. Failure to withdraw earned fees timely (creates 'cushion'). Withholding fees during dispute (must keep in trust until resolved). Theft (most severe).
Disciplinary Process
State Bar audit (random or complaint-driven). Notice of allegation. Response opportunity. Hearing with disciplinary board. Recommendations: private/public reprimand, suspension, disbarment. Appeal to state Supreme Court possible. Criminal referral for theft.
Last updated May 2026. Sources: ABA IOLTA Rules.