Florida Senate - 2025                        COMMITTEE AMENDMENT
       Bill No. SB 498
       
       
       
       
       
       
                                Ì651292)Î651292                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  03/12/2025           .                                
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       The Committee on Judiciary (Grall) recommended the following:
       
    1         Senate Substitute for Amendment (263874) (with title
    2  amendment)
    3  
    4         Delete everything after the enacting clause
    5  and insert:
    6         Section 1. Section 655.97, Florida Statutes, is created to
    7  read:
    8         655.97 Lawyer or law firm trust account interest rates.—
    9         (1)A financial institution may hold funds in an interest
   10  bearing trust account of a lawyer or law firm in which the
   11  institution remits interest or dividends on the balance of the
   12  deposited funds to an entity established by the Supreme Court
   13  for the purpose of providing or facilitating the provision of
   14  free legal services to low-income individuals or other purposes
   15  authorized by the Supreme Court. If the institution holds such
   16  an account, it must quarterly select one of the two interest
   17  rate alternatives to determine the interest it will pay to the
   18  entity established by the Supreme Court:
   19         (a)The first interest rate alternative must be set at the
   20  highest interest rate or dividend generally available from the
   21  institution to its comparable business or consumer accounts or
   22  nonmaturing deposit accounts, provided that the trust account
   23  meets or exceeds the same minimum balance or other account
   24  requirements.
   25         1. If a financial institution chooses to pay the rate
   26  alternative provided in this paragraph, it must submit a rate
   27  validation sheet and affidavit to the Chief Financial Officer by
   28  the tenth day of each quarter attesting that it will pay at
   29  least the same interest on the lawyer or law firm trust accounts
   30  that it is paying on its comparable business or consumer
   31  accounts or nonmaturing deposit accounts.
   32         2. The affidavit must attest that the rate information
   33  submitted on the rate validation sheet is true and factual.
   34         3.The Chief Financial Officer shall verify that the rate
   35  validation sheet and affidavit have been received by the
   36  Department of Financial Services.
   37         (b)The second interest rate alternative must be set at 25
   38  percent of the federal funds target rate determined by the
   39  Federal Open Market Committee of the Federal Reserve System or
   40  0.25 percent, whichever is higher, net of fees.
   41         1.Each December 1, March 1, June 1, and September 1, the
   42  Chief Financial Officer shall determine the interest rate of the
   43  second interest rate alternative. The rate alternative
   44  determined by the Chief Financial Officer is effective on the
   45  following January 1, April 1, July 1, and October 1,
   46  respectively.
   47         2. Within 3 days after determining the interest rate under
   48  this paragraph, the Chief Financial Officer shall inform the
   49  entity established by the Supreme Court of the determined
   50  interest rate for the upcoming quarter.
   51         (2)This section does not apply to interest rates
   52  established by written contract or obligations unrelated to the
   53  trust accounts described by this section.
   54         Section 2. This act shall take effect upon becoming a law.
   55  
   56  ================= T I T L E  A M E N D M E N T ================
   57  And the title is amended as follows:
   58         Delete everything before the enacting clause
   59  and insert:
   60                        A bill to be entitled                      
   61         An act relating to trust fund interest for purposes
   62         approved by the Supreme Court; creating s. 655.97,
   63         F.S.; establishing two quarterly interest rate
   64         alternatives for financial institutions to pay to an
   65         entity established by the Supreme Court for the
   66         purpose of providing free legal services to low-income
   67         individuals and other purposes approved by the Supreme
   68         Court; requiring financial institutions to attest that
   69         it will pay a certain interest rate; requiring the
   70         Chief Financial Officer to set an interest rate;
   71         providing applicability; providing an effective date.
   72  
   73         WHEREAS, in September 1981, the Florida Supreme Court
   74  implemented the nation’s first Interest on Trust Accounts (IOTA)
   75  Program, establishing a vital funding source for civil legal
   76  aid, justice system improvements, and public service programs
   77  for law students, and
   78         WHEREAS, Funding Florida Legal Aid (FFLA), formerly known
   79  as The Florida Bar Foundation, and the Florida Bankers
   80  Association cooperated for decades to sustain the program and
   81  encourage participation, and
   82         WHEREAS, in March 2023, the Florida Supreme Court adopted
   83  new rules requiring lawyers to secure interest rates based on
   84  the Wall Street Journal Prime Rate, compelling banks to pay
   85  higher rates for IOTA accounts than for similar accounts, and
   86         WHEREAS, 44 states, the District of Columbia, and Puerto
   87  Rico have mandatory IOTA programs modeled after Florida’s pre
   88  2023 system, while 5 states and the U.S. Virgin Islands operate
   89  voluntary or opt-out programs, and
   90         WHEREAS, the 2023 rule change made Florida an outlier
   91  compared to other jurisdictions where IOTA rates are typically
   92  benchmarked against interest-bearing checking account rates, and
   93         WHEREAS, the Wall Street Journal Prime Rate serves as a
   94  benchmark for lending and is not used to set deposit account
   95  rates, and
   96         WHEREAS, the 2023 rule change resulted in banks paying
   97  higher rates on funds in IOTA accounts, resulting in record
   98  revenues, exceeding $279 million, paid to FFLA during the 2023
   99  2024 fiscal year, nearly four times the prior peak rate, and far
  100  exceeding average annual interest revenues, and
  101         WHEREAS, in October 2024, the Florida Supreme Court
  102  authorized FFLA to hold nearly $143 million in reserve, and
  103         WHEREAS, it is in the best interests of this state for the
  104  Legislature to establish statutory benchmarks for IOTA rates to
  105  ensure regulatory safety, fairness, and sustainability, similar
  106  to the quarterly interest rate determinations made by the Chief
  107  Financial Officer for interest paid on court judgments, NOW,
  108  THEREFORE,