PA   IOLTA BOARD

Helping to Secure Equal Access to Justice

IOLTA GRANT
PROVISIONS

 

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The Grant provisions of this part apply to Recipients (and/or their sub-recipients) of the Pennsylvania Interest on Lawyers Trust Account Board and are to be attached to the Grant Agreement. Questions on the applicability of the provisions should be directed to the Grantor.


Section


107.1 Definitions.

107.2 Payment Procedures and Reports.

107.3 Restrictions and Uses of IOLTA Funds.

107.4 Evaluation and Monitoring of Grantees.

107.5 Grantee Financial Standards.

107.6 Suspension/Termination of Grant Financial Assistance.


Appendix A  Report of IOLTA Funded Services.

Appendix B  Report of IOLTA Revenue and Expenses.

AppendixC  IOLTA Funded Law School Clinical Program
                                Program Client Satisfaction Survey

107.1 Definitions.



(a) Board.        Pennsylvania Interest on Lawyers Trust Account Board.

(b) Grantor.     The Pennsylvania Interest on Lawyers Trust Account Board.     

(c) IOLTA.     Interest on Lawyers' Trust Accounts.

(d) Recipient.  Any grantee or sub-grantee receiving IOLTA funds awarded by the Pennsylvania Interest on Lawyers Trust Account Board.

(e) Rule.         Pennsylvania Rules of Professional Conduct Rule 1.15, Safekeeping Property.

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107.2 Payment Procedures and Reports



Sub-Sections

(a) Payment Procedures

(b) Reports and Financial Statements




(a) Payment Procedures


1. Subject to the availability of funds and other terms and conditions of the Grant Agreement, the Grantor shall make payments to the Recipient according to the schedule identified in the Grant Agreement. Notwithstanding the foregoing, the Grantor reserves the right, in its sole discretion, to alter the disbursement schedule of the grant for any or all Recipients from time to time.

2. Prior to the release of any funds applicable to the grant, the Recipient shall have;

i. submitted a grant budget and service plan, and such budget and plan must be approved by the Grantor, and

ii. executed and returned the Grant Agreement to the Grantor.


3. The Recipient shall use IOLTA grant funds for the specific purposes and in the amounts set forth in the approved budget and service plan and shall not materially deviate from such budget and service plan.


4. Deviations from the budget amounts shall be deemed material when such deviations are:

i. in excess of 20% of the budgeted amount for all items with a budget of $1,000 or more, or

ii. in excess of $500 for items budgeted less than $1,000.


5. In the event of a material budget deviation, the Recipient shall request a revision of its approved budget. The request shall be in writing, fully delineating the request and reasons for the revision, to the Executive Director of the Grantor. The Executive Director may request such additional information he or she may deem necessary to approve the revision request.


(b) Reports and Financial Statements.

1. The Recipient shall report its IOLTA funded grant activities and financial activities according to the time schedule specified in the Grant Agreement. Delays in the submission of the report(s) to the Grantor will cause delays in the disbursement of funds to the Recipient.


2. The Recipient shall use the reporting format attached as Appendix A "Report of IOLTA Funded Services" and Appendix B "Report of IOLTA Revenue and Expenses", or their facsimile.


3. Between scheduled reporting dates, events may occur which have a significant impact on the grant. The Recipient shall inform the Grantor as soon as the following types of conditions become known:


i. problems, delays or adverse conditions which will materially impair the Recipient's ability to perform in accordance with the approved service plan and/or budget. The disclosure shall be accompanied by a statement of the action taken or contemplated and any assistance needed to resolve the situation;

ii. any facts or events which would render the Recipient ineligible for an IOLTA grant if the Recipient were making application for a grant at that time.


4. Within 105 days after the end of its fiscal year, the Recipient shall submit financial statements that have been subject to an audit or review by an independent certified public accountant. Any Recipient whose total gross expenditures exceed $500,000, regardless of the source(s) funding those expenditures, shall submit audited financial statements.




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107.3 Restrictions on the use of IOLTA Funds


Sub-Sections


(a) Fee Generating Cases

(b) Defense of Criminal Prosecutions

(c) Actions Attacking Criminal Convictions

(d) Prohibited Political Activities

(e) Capital Expenditures

(f) Lobbying

(g) Abortion Representation


(a) Fee-Generating Cases


1. Definition.


"Fee-generating case" means any case or matter which, if undertaken on behalf of a client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds, or from the opposing party.


2. Prohibition.

No Recipient shall use funds to provide legal assistance in a fee-generating case unless other adequate representation is unavailable. All Recipients shall establish procedures for the referral of fee-generating cases.


3. Authorized Representation in a Fee-Generating Case.


Other adequate representative is deemed to be unavailable when:


i. The Recipient has determined that free referral is not possible because:


(1) The case has been rejected by the local lawyer referral service, or by two private attorneys; or


(2) Neither the referral service nor any lawyer will consider the case without payment of a consultation fee; or


(3) Emergency circumstances compel immediate action before referral can be made, but the client is advised that if appropriate, and consistent with professional responsibility, referral will be attempted at a later time; or


ii. Recovery of damages is not the principal object of the case and a request for damages is merely ancillary to an action for equitable or other non-pecuniary relief, or inclusion of a counterclaim requesting damages is necessary for effective defense or because of applicable rules governing joinder of counterclaims; or

iii. A court appoints a Recipient or an employee of a Recipient pursuant to a statute or a court rule or practice of equal applicability to all attorneys in the jurisdiction; or

iv. An eligible client is seeking benefits under Subchapter II of the Social Security Act, 42 U.S.C. 401, et seq., as amended, Federal Old Age, Survivors, and Disability Insurance Benefits; or Subchapter XVI of the Social Security Act, 42 U.S.C. 1381, et seq., as amended, Supplemental Security Income for Aged, Blind, and Disabled.



4. Acceptance of Fees.
A Recipient may seek and accept a fee awarded or approved by a court or administrative body, or included in a settlement, if the requirements of sub-section 107.3 (a)(3) are met.


5. Acceptance of Reimbursement.

When a case or matter subject to this sub-section results in a recovery of damages, other than statutory benefits, a Recipient may accept reimbursement from the client for out-of-pocket costs and expenses incurred in connection with the case or matter, if

i. The requirements of sub-section 107.3 (a)(3) are met, and

ii. The client has agreed in writing to reimburse the Recipient for such costs and expenses.


6. Applicability.

Nothing in this part shall prevent a Recipient from:

i. Requiring a client to pay court fees when the client does not qualify to proceed informa pauperis under the rules of the jurisdiction; or

ii. Accepting a fee in a case that was initiated prior to adoption of this sub-section; or

iii. Acting as a co-counsel with a private attorney when the case meets the standards set forth in sub-section 107.3 (a)(3) and accepting part of any fees that may result from a shared case.


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(b) Defense of Criminal Prosecutions



1. Definition.

"Criminal proceeding" means the adversary judicial process prosecuted by a public officer and initiated by a formal complaint, information, or indictment charging a person with an offense denominated "criminal" by applicable law and punishable by death, imprisonment, a jail sentence, or a fine.

2. Prohibition.

IOLTA funds shall not be used to provide legal assistance with respect to a criminal proceeding, unless authorized by sub-section 107.3 (b)(3).


3. Authorized Representation.

Legal assistance may be provided with respect to a criminal proceeding;


i. Pursuant to a court appointment made under a statute or a court rule or practice of equal applicability to all attorneys in the jurisdiction, if authorized by the Recipient after a determination that it is consistent with the Recipient's primary responsibility to provide legal assistance to clients in civil matters; or

ii. When professional responsibility requires representation in a criminal proceeding arising out of a transaction with respect to which the client is being, or has been, represented by a Recipient.




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(c) Actions Attacking Criminal Convictions


No IOLTA funds shall be used to provide legal assistance in civil actions to persons who have been convicted of a criminal charge where the civil action arises out of alleged acts or failures to act and the action is brought against an official of the court or against a law enforcement official for the purpose of challenging the validity of the criminal conviction.

However, this sub-section does not prohibit legal assistance pursuant to a court appointment made under a statute or a court rule or practice of equal applicability to all attorneys in the jurisdiction, if authorized by the Recipient after a determination that it is consistent with the primary responsibility of the Recipient to provide legal assistance to eligible clients in civil matters.


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(d) Prohibited Political Activities


1. No IOLTA funds shall be used to contribute to or be made available to any political party or association, or the campaign of any candidate for public or party office or similar political activities or to support or oppose candidates for public or party office or to support or oppose any ballot questions.


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(e) Capital Expenditures


1. Definition.

"Acquisition Cost" means the net invoice unit price of an item of equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges, such as taxes, duty, protective in-transit insurance, freight, and installation shall be included in the acquisition cost.

"Capital Expenditures" means the acquisition cost of non-expendable tangible real or personal property or their improvements having a useful life of more than two years and an acquisition cost of $500 or more per unit. Capital expenditures include such items as land, buildings, equipment, furniture, furnishings and computer software.


2. Prohibition.

No IOLTA funds shall be used to provide for capital expenditures.


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(f) Lobbying


No IOLTA funds may be used, directly or indirectly, to support activities intended to influence the issuance, amendment or revocation of any executive or administrative order or regulation of a Federal, State or local agency, or to influence the introduction, amendment, passage or defeat of any legislation by the Congress of the United States or by any State or local legislative body, except that:
1. A Recipient of IOLTA funds may engage in such activities in response to a request from a governmental agency, legislative body, committee, member or staff thereof made to the Recipient, consistent with the Rules of Professional Conduct; and

2. A Recipient may engage in such activity in the provision of legal services to a client on a particular application, claim or case, which directly involves that client's legal rights and responsibilities. This shall not be construed to permit a qualified Recipient to solicit a client, in violation of the Code of Professional Conduct, for the purpose of making such representation possible.


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(g) Abortion Representation


1. No IOLTA funds may be used, directly or indirectly, to do any of the following:

i. Advocate the freedom to choose abortion or the prohibition of abortion.

ii. Provide legal assistance with respect to any proceeding or litigation which seeks to procure or prevent, or procure or prevent public funding for, any abortion.

iii. Provide legal assistance with respect to any proceeding or litigation which seeks to compel or prevent the performance or assistance in the performance of any abortion, or the provision of facilities for the performance of any abortion.

2. Nothing contained in this sub-section shall be construed to prevent the rendering of advice to a client with respect to that client's legal rights. Nothing contained in this sub-section shall preclude representation in any proceeding to procure or prevent public funding for abortion where the funding is allowed by law.



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107.4 Evaluation and Monitoring of Grantees

The Grantor relies on the submission of interim reports of grant activities and financial activities to evaluate and monitor grantee performance. Additionally, the Grantor relies on the submission of the Recipient's annual independently audited or reviewed financial statements and other program monitoring and evaluation reports and information to assess the Recipient's program operations, compliance with the Rule, grant provisions and Board guidelines.

However, to assure IOLTA funds are used for the delivery of quality legal services and to gain firsthand knowledge of the Recipient's operations other evaluation and monitoring activities may be required or performed.


Sub-Sections
(a) Internal Performance Evaluation

(b) Site Visits

(c) Interviews with Recipients


(a) Internal Performance Evaluation

Recipients that receive general support IOLTA grants, except law schools, are required to establish, maintain and demonstrate sufficient internal and/or peer review performance evaluation procedures as are necessary to assure the delivery of high quality legal services. Recipients are encouraged to consider the "Standards for Providers of Civil Legal Services to the Poor", adopted by the American Bar Association at its 1986 annual meeting, as guidance in their performance evaluations.


(b) Site Visits

Visits to one or more of a Recipient's places of operation or that of a subcontractor of a Recipient may be made as necessary as determined by the Grantor to inspect and review a Recipient's physical facilities, financial records, operational policies and procedures, including but not limited to firsthand observation of a Recipient's or sub-recipient's delivery of civil legal services, and such other aspects of a Recipient's program as may be reasonably necessary to ensure compliance with the Rule, these grant provisions of the Board, and the Grant Agreement.


(c) Interviews with Recipient

The Grantor may either by telephone, personal contact or otherwise interview appropriate staff of the Recipient as reasonably may be necessary to ensure compliance with the Rule, these grant provisions of the Board, and the Grant Agreement.


(d) Monitoring and Evaluation Reports

The Recipient shall timely furnish to Grantor, reports, results of investigations or such other information resulting from any monitoring and/or evaluation by any entity of its program and/or operations.


(e) Client Surveys

Law School Recipients shall survey their clients as to their satisfaction regarding the representation provided through clinical programs within sixty days after completion of the representation of the client. A sample survey format, which may be modified by the law school providing a copy of the modified survey is provided to the Board, is attached at Appendix C. Law Schools must report the results of their client surveys on the "Report of IOLTA Funded Services" attached at Appendix A.


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107.5 Grantee Financial Standards



Sub-Sections

(a) Purpose

(b) Burden of Proof

(c) Standards Governing Allowability of Costs Under IOLTA Grants or Contracts

(d) Recipient Fund Balances

(e) Record Retention

(a) Purpose.

This sub-section is intended to provide uniform standards for allowability of costs chargeable to IOLTA grants.


(b) Burden of Proof.
(1) The Recipient shall at all times have the burden of proof under this sub-section.

(2) If a Recipient defends a non-allowable cost on the basis that the funds used were not subject to IOLTA prohibitions and restrictions, the Recipient has the burden of proving that the funds actually expended were in fact not subject to the prohibitions and restrictions.

(c) Standards Governing Allowability of Costs under IOLTA Grants or Contracts.

(1) General Criteria.

Expenditures by a Recipient are allowable under the Recipient's grant or contract only if the Recipient can demonstrate that the cost was:

i. Actually incurred during the effective term of the grant or contract (or is allowed by this sub-section) and the Recipient was liable for payment;

ii. Reasonable and necessary for the provision of legal services for clients or for the accomplishment of another function specified in the grant or contract agreement as approved by the Grantor;

iii. Allocable to such function(s);

iv. In compliance with the Rule, these grant provisions of the Board, and the terms and conditions of the grant or contract;

v. Consistent with policies and procedures that apply uniformly to both IOLTA financed and other activities of the Recipient;

vi. Accorded consistent treatment;

vii. Determined in accordance with generally accepted accounting principles.


(2) Reasonable Costs.

A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. If a cost is determined as unallowable solely on the ground that it is excessive, only the amount that is larger than reasonable shall be unallowed.


(3) Allocable Costs.

i. A cost is allocable to a particular cost objective, such as a grant, project, service, or other activity, in accordance with the relative benefits received. A cost is allocable to an IOLTA grant or contract if it is treated consistently with other costs incurred for the same purpose in like circumstances and if it:

(1) Is incurred specifically for the grant or contract;

(2) Benefits both the grant or contract and other work and can be distributed in reasonable proportion to the benefits received; or

(3) Is necessary to the overall operation of the Recipient, although a direct relationship to any particular cost objective cannot be shown.

ii. Any cost allocable to a particular grant or contract or other cost objective under these principles may not be shifted to IOLTA grants or contracts unless specifically authorized by the Grantor's Executive Director.


(4) Applicable Credits.

i. A Recipient must deduct all applicable credits, as defined in paragraph (ii) below, from the costs it charges to a grant or contract from the Grantor;

ii. The term "applicable credits" refers to those receipts or reductions of expenditures which operate to offset or reduce expense items that are allocable to grants or contracts as direct or indirect costs. Typical examples of such transactions are purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds, and adjustments of overpayment or erroneous charges. To the extent that such credits accruing to or received by the Recipient relate to allowable costs they shall be credited to the grant or contract either as a cost reduction or cash refund as appropriate.


(5) Guidance.

The circulars of the Office of Management and Budget A-110 (Uniform Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other nonprofit Institutions) and A-122 (Cost Principles for Nonprofit Organizations) or A-21 (Cost Principles for Educational Institutions) shall provide guidance for all allowable cost questions arising under this sub-section when relevant policies or criteria therein are not inconsistent with the Rule, with these grant provisions of the Board, or the grant agreement.

 

(d) Recipient IOLTA Fund Balances (i.e. IOLTA Net Assets)

IOLTA grants are anticipated to be used by the Recipient during the term of the Grant Agreement. However, circumstances may occur such that all the grant funds may not be expended during the grant term.


Additionally, the grant term may differ from the Recipient's fiscal year end and some grants may be one-time or special purpose, or in the nature of ongoing support to a Recipient.

(1) One-time or Special Purpose Grants.


All one-time or special purpose grants awarded by the Grantor shall have an effective date and termination date. Generally, unless otherwise indicated in the Grant Agreement, Grants for law school clinical and or internship/externship programs are considered special purpose grants. Project grants likewise are considered special purpose grants. Such grants are not subject to this fund balance policy. No funds provided under a one-time or special purpose grant may be expended subsequent to the termination date of the grant without the prior written approval of the Grantor. All unexpended funds under such grants shall be returned to the Grantor.


(2) General Purposes Support.

IOLTA grants which are for general Recipient support and which can reasonably be expected to continue on an ongoing basis from the Grantor shall be subject to this fund balance policy. Unexpended IOLTA general purpose support grants must be accumulated in a separately identified "net asset" account.


(a) IOLTA "support" for the reporting period for purposes of this sub-section shall be defined as the sum of: (1) the annualized IOLTA grant award(s) (i.e., the annual sum of the monthly pro-rata portion of IOLTA grants applicable to the fiscal year); (2) any additional income derived from an IOLTA grant (interest, rents, etc.); and, (3) that proportion of any proceeds from the sale of assets, or other compensation or income attributable to any IOLTA grant.

(b) The IOLTA "fund balance amount" (i.e. IOLTA net asset account) shall be determined solely by reference to the Recipient's annual audit. (The fund balance reported in the Recipient's annual audit is subject to review and approval by the Grantor).

(c) The "fund balance percentage" shall be determined by expressing the fund balance amount as a percentage of the Recipient's IOLTA support for the reporting period.

(d) The Recipient may carryover a fund balance between the Recipient's fiscal years up to 10% of IOLTA support.

(e) Any fund balance in excess of 10% of IOLTA support shall be repaid to the Grantor in a lump sum or by pro-rata deductions from the Recipient's future grant checks. Such repayments or deductions shall be subject to the IOLTA Board Allocation Standards. However, the Grantor's Executive Director may issue a waiver of the 10% ceiling at his/her discretion, up to 25% of IOLTA support.

 

(e) Record Retention.


The Recipient shall maintain records sufficient to justify expenditures incurred and services performed and preserve such books, documents and records until four years after expiration of the grant or until all questioned items asserted by the Grantor are resolved or no longer required by law. The Recipient shall give full and free access to the Grantor or its authorized representatives to such records.


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107.6 Procedures Governing Suspension and Termination of Grants


Sub-Sections

(a) Purpose

(b) Definitions

(c) Default Conditions

(d) Remedies upon Default

(a) Purpose.

By providing procedures for prompt review that will insure informed deliberation by the Grantor when there is reason to believe that financial assistance to a Recipient should be suspended or terminated this clause seeks to avoid unnecessary disruption in the delivery of legal assistance to clients.

(b) Definitions.

(1) "Suspension" means any action temporarily suspending or curtailing financial assistance to a Recipient in whole or in part prior to the expiration of the Recipient's current grant from or contract with the Grantor.

(2) "Termination" means a decision that financial assistance to a Recipient will be permanently terminated in whole or in part prior to expiration of the Recipient's current grant or contract.

 

(c) Default Conditions.

(1) The Recipient shall be in default of its Grant Agreement when there has been substantial failure by a Recipient to comply with a provision of law, the Rule, or grant provisions of the Pennsylvania Interest on Lawyers Trust Account Board, or a term or condition of the Recipient's current grant agreement with the Grantor; or

(2) There has been substantial failure by a Recipient to provide high quality, economical, and effective legal assistance, as measured by generally accepted professional standards; or

(3) There has been an occurrence of any event which would make the Recipient ineligible to receive a grant if the Recipient were applying for one at that time, or

(4) There has been the submission of any materially false or intentionally misleading information to the Grantor or its Executive Director as a part of the Approved Budget, Budget Narrative, Financial Report, Financial Statements, or otherwise; or

(5) There has been the failure to return unused Grant funds at the end of a Grant Period unless a carryover has been approved by the Grantor or is permissible under the Board's grant provisions.

 

(d) Remedies upon Default.

In the absence of unusual circumstances, suspension or termination of a grant shall not take place unless the Grantor has given the Recipient notice of its failure and an opportunity to take effective corrective action.

In the event of a default by a Recipient, the Grantor shall have the right to do the following:


(1) Adopt a monthly grant disbursement schedule (including recoupment of grant funds already disbursed in excess of the pro-rata current month's installment) or suspend grant disbursements and condition payment of subsequent installments or grant disbursements on the Recipient's cure of the default.

(2) Terminate the Grant. Notwithstanding a termination of the grant, the Recipient shall be entitled to continue to receive grant funds on a monthly disbursement schedule pending final disposition of any appeal to the Grantor brought by the Recipient or sixty days after notice of termination whichever is sooner.

(3) Demand repayment and/or recoup by deduction grant funds improperly expended by a Recipient and/or institute legal action if necessary to recover such improperly expended funds.

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APPENDIX A

(Name of Recipient)

Report of IOLTA Funded Services

From to







I. Cases Handled. (County-level detail should be maintained; total number of IOLTA funded cases reported.)





Number of Cases Handled

Case Type                                                                            Projected                         Actual to Date

(list)















Totals:















II. Narrative of Activities.



(Law schools must list the names and addresses of the law students participating in the IOLTA funded clinic and/or internship. Additionally, the law schools must summarize the results of their client surveys applicable to their IOLTA-funded clinical program(s).














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APPENDIX B

(Name of Recipient)

Report of IOLTA Revenue and Expenses

From to





Expenses

Expenses This Report

Budget To Date Period

IOLTA Grant Revenue









Expenses (List by line items)



































Total Expenses





Excess (Deficit) Revenues

over Expenses










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APPENDIX C

IOLTA Funded Law

School Clinical Programs

Client Satisfaction Survey

1. Your name (optional)



2. What type of case did you have?



3. Were you treated courteously by the clinic personnel?



Yes No Sometimes



Any comments:





4. Were the legal personnel who assisted you helpful in trying to solve your problems?



Yes No Partly





5. Were you satisfied with the services you received?



Yes No Partly



Any comments:



6. Please provide any other comments or suggestions you have.




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