You provide pro bono services and contribute to your local legal
aid program. What more can you do?
If you are involved in class action litigation, you may have an
opportunity to support equal justice in a major way - by
designating class action residual funds for distribution to the
Massachusetts IOLTA Committee or directly to a legal aid program.
In the past two years, such designations have brought local legal
services for the poor such amounts as $473,256 and $483,279.
What are "residual funds?" At the conclusion of a class action,
funds designated for the members of the plaintiff class are
sometimes left over and not distributed. Perhaps members of the
class cannot be located or fail to submit claims. Or the amount due
is so small that the cost of notice, disbursement and
administration may exceed the value of the claim. These are
Both state and federal courts have broad discretion in determining
how residual funds should be distributed. Courts have found
interest on lawyers' trust accounts (IOLTA) programs and legal aid
societies to be appropriate recipients of these funds. Under Rule
23 in both federal and state procedure, the class action is
designed to afford otherwise powerless class members access to
equal justice. Legal services for the poor have a similar purpose,
affording access to justice to people who would otherwise have no
way to protect their rights.
In 2009, the Massachusetts Supreme Judicial Court amended Mass. R.
Civ. P. 23 to explicitly provide for the payment of residual funds
in class actions either to one or more nonprofit organizations
whose activities benefit the class (which could include legal
services programs) or to the Massachusetts IOLTA Committee, which
provides funds for legal services programs.
The IOLTA program, established by the SJC, requires lawyers and law
firms to use interest-bearing accounts for client deposits which
are nominal in amount or expected to be held for a short term. The
interest is remitted to the IOLTA program, which then distributes
it to three charitable entities - the Boston Bar Foundation, the
Massachusetts Bar Foundation and the Massachusetts Legal Assistance
Corporation. These entities distribute the funds to legal aid and
administration of justice projects.
If you find yourself involved in a class action in which residual
funds are showing up, contact the IOLTA Committee at (617) 723-9093
or www.maiolta.org for help in determining whether
a contribution to support equal justice is appropriate in your
Jayne Tyrrell is the director of the Massachusetts Interest
on Lawyers' Trust Accounts.