SB 31 would make participation in Montana’s Interest on Lawyer Trust Accounts (IOLTA) program voluntary rather than mandatory. Under the bill, a lawyer could place client funds into one of three types of accounts only with the client’s written consent: a non-interest-bearing trust account, an interest-bearing trust account where the interest belongs to the client and is remitted back to the client, or an IOLTA account in which the interest is paid to an organization chosen by the Montana Supreme Court.
The bill is framed as a response to the current court-ordered IOLTA system, which the bill’s findings describe as an unconstitutional tax-and-spend arrangement. It would add a new section to Title 37, chapter 61, part 4, and would preserve the existing statutory framework for lawyer trust accounts while creating an express client-consent option for how trust funds are handled and who receives any interest earned.
Impact
If enacted, SB 31 would change the rules governing attorney trust accounts by requiring written client consent before funds can be placed in an IOLTA account or other specified trust account arrangement. It would affect lawyers, clients, and the Montana Supreme Court’s IOLTA program by allowing clients to direct whether interest stays with them, is not earned, or is diverted to the court-selected recipient. The bill would also be codified into Title 37, chapter 61, part 4 of the Montana Code Annotated, modifying the state’s professional and trust-account rules for attorneys.
Sentiment
The bill appears to have had mixed but ultimately insufficient support. It passed the Senate Judiciary Committee 5-3, but then failed on second reading in the Senate 22-28 before a later motion to indefinitely postpone passed 30-19, indicating that a majority of senators supported ending further consideration. The caption and findings show the bill’s sponsors viewed it as a client-rights and constitutional issue, while the floor votes suggest broader legislative resistance to changing the existing IOLTA structure.
Contention
The main point of contention is whether the Montana Supreme Court can require mandatory IOLTA participation or whether clients must be allowed to opt out and receive interest on their own funds. Supporters of the bill argue the current program improperly taxes private client funds and appropriates the interest without legislative authorization, while opponents likely viewed the existing IOLTA system as a longstanding mechanism for funding legal aid or related public-interest work. A secondary issue is professional ethics: the bill asserts that mandatory IOLTA participation conflicts with client consent principles in the rules of professional conduct, whereas critics may have questioned whether the bill would disrupt the current trust-account system or the funding stream it supports.