IOLTA Compliance: Simplified for Modern Legal Practices

Trust accounts are fundamental to legal ethics. Whether you're holding client retainers, court filing fees, or settlement funds, the rules are clear: those funds must be handled with care and kept separate from operating funds. Mistakes, even honest ones, can carry serious consequences.

Blawby is designed to make this easier. Our platform routes 100% of every client payment to your connected trust account. We never deduct fees from those funds. Instead, processing and platform fees are charged separately to a card tied to your firm's operating account. No complex setup. No risk of accidental non-compliance.

Understanding IOLTA Accounts

An IOLTA (Interest on Lawyer Trust Account) is a type of pooled client trust account required in most jurisdictions when lawyers handle nominal or short-term funds. The interest earned from these accounts is used to support public legal services.

What matters most from a compliance standpoint is that the lawyer cannot use or benefit from these funds until they are earned. And no operational or third-party fees can be deducted from the trust account—even indirectly.

The Challenge of Legal Payments

While it's easy to accept digital payments today, many systems are not built with trust accounting in mind. A few common issues:

Fee deductions: Most payment processors subtract fees before depositing funds. That's fine for e-commerce—not for legal trust compliance.
Account confusion: Mixing trust and operating funds can happen unintentionally if a platform doesn't enforce separation.
Record gaps: Incomplete audit trails or unclear fund movements make it difficult to reconcile client ledgers accurately.

These problems are more common than many firms realize.

How Blawby Helps

Blawby is structured to respect the boundaries required by IOLTA rules. Here's what happens when a client makes a payment:

The entire payment amount is deposited into your connected trust account.
Processing fees are not deducted from that payment.
Instead, those fees are billed to a credit or debit card linked to your firm's operating account.

This flow ensures that client funds remain whole, and compliance isn't left to manual tracking or trust in the wrong software configuration.

A Typical Payment Flow

Let's say your client pays a $2,500 retainer:

$2,500 goes directly into your trust account.
The card processor processes the transaction and calculates fees (e.g., $72.80). charges a 1.4% platform fee ($35.00).
Your saved card is charged $107.80 total.

The trust account receives the full $2,500. All fees are handled separately.

What You Need to Use Blawby

A trust account eligible for client fund deposits
A credit or debit card (ideally tied to your operating account) for fees

You don't need to connect two bank accounts. There are no intermediary transfers or manual adjustments. The setup is designed to match how lawyers already work, just with less risk.

Good Habits to Maintain Trust Compliance

Blawby supports your compliance goals, but consistent internal practices matter too:

Use clear account labeling to avoid confusion between trust and operating accounts.
Reconcile regularly, using Blawby's reporting features to align ledger records with bank statements.
Separate earned and unearned funds by keeping work status and invoicing up to date.
Don't skip documentation. Transfers from trust to operating should always be traceable to client approval and earned revenue.

PCI-Compliant Payment Infrastructure

Blawby leverages a secure payments infrastructure that ensures PCI compliance, providing a reliable and transparent flow of funds with detailed tracking.

Our system ensures:

Trust-compliant payment routing
Separate billing for fees
Clear audit trails for every transaction

Why Firms Use Blawby

Legal professionals choose Blawby because it aligns with how they practice:

No fees deducted from trust
No complex multi-account setup
Simple configuration for trust payouts and operating account billing
Transparent monthly billing structure

We're not reinventing legal payments—we're refining the flow so it aligns with compliance.

Try Blawby

Blawby is purpose-built for legal payments and designed with trust compliance in mind. If your firm accepts client funds and wants to reduce friction around trust accounting, we can help.