Background
The Florida Bar petitioned the Florida Supreme Court to amend Rule 5-1.1 of the Rules Regulating The Florida Bar, which governs attorney trust accounts and the Interest on Trust Accounts (IOTA) program. The IOTA program — mandatory for Florida Bar members since 1989 — requires lawyers to deposit certain client funds in interest-bearing accounts, with the interest remitted to the Florida Bar Foundation to fund civil legal aid. Since 1990, the rule has included provisions specifying the interest rates that participating financial institutions must pay on those deposited funds.
The specific target of the amendment was subdivision (g)(5), which sets the minimum interest rate eligible financial institutions must pay to participate in the IOTA program. The Bar’s Board of Governors approved the proposed changes in concept by voice vote on September 19, 2025, and the Board’s Executive Committee later unanimously approved the final text. The proposed changes were published for comment in the Florida Bar News and on the Bar’s website; no comments were received.
The amendment was designed to align the rule with Florida HB 893 (2026), recently enacted legislation addressing the same interest rate subject matter. Under the prior rule, the rate structure varied based on tiered thresholds of the Wall Street Journal Prime Rate; the proposed amendment replaced that tiered structure with a single, simplified formula.
The Court’s Holding
The Florida Supreme Court, per curiam with six justices concurring, granted the Bar’s petition and adopted the proposed amendment to Rule 5-1.1(g)(5). Under the amended rule, financial institutions participating in the IOTA program must pay, net of all fees and charges, a rate equal to the Wall Street Journal Prime Rate in effect on the first business day of each month, minus 300 basis points (3.00%), subject to a floor of 0.25% and a ceiling of 1.50%. The prior tiered interest rate provisions — including the separate calculations applicable when the Prime Rate was between 3.25%–4.99% and at or above 5.00% — were deleted and replaced by this single formula. The amendments take effect June 30, 2026, at 12:01 a.m., and a motion for rehearing will not alter that effective date.
Justice Tanenbaum dissented, arguing that both the new rule text and the provision it replaces exceed the Florida Supreme Court’s constitutional authority. In his view, the court’s rulemaking power is limited to lawyer admission and discipline and to court procedure and administration — neither of which extends to regulating the interest rates paid by banks and other financial institutions. Justice Tanenbaum acknowledged the court may regulate lawyers with respect to their trust accounts, but maintained that using lawyer-discipline authority as a hook to impose rate requirements on financial institutions that voluntarily participate in the IOTA program is constitutionally unsupportable and that such regulation belongs exclusively to the Legislature.
Key Takeaways
- The amended Rule 5-1.1(g)(5) replaces a tiered interest rate structure with a single formula: WSJ Prime Rate minus 300 basis points, floored at 0.25% and capped at 1.50%, calculated net of all fees and charges as of the first business day of each month.
- The change brings the IOTA rule into conformity with Florida HB 893 (2026), the legislative counterpart addressing the same subject.
- A lone dissenter, Justice Tanenbaum, contended the court lacks constitutional authority to dictate interest rates to financial institutions, even willing IOTA participants, and urged the court to cede that regulatory role to the Florida Legislature.
- The amendments take effect June 30, 2026; no motion for rehearing will delay that date.
Why It Matters
For Florida attorneys and the financial institutions that hold their IOTA accounts, the amendment provides a cleaner, more predictable rate formula that tracks a single market benchmark rather than the former multi-tier structure. The alignment with recent state legislation also reduces the risk of conflicting obligations between the court rule and the statutory scheme. Law firms and their banks should confirm compliance before the June 30, 2026 effective date.
Justice Tanenbaum’s dissent raises a constitutional question with potential long-term significance: whether the Florida Supreme Court’s authority over lawyer discipline can legitimately extend to imposing substantive rate obligations on third-party financial institutions. Though his view did not carry the day, the argument — that banking regulation belongs to the Legislature under Article III of the Florida Constitution — could resurface in future challenges to the IOTA program’s structure and may be of interest to practitioners who advise financial institutions operating in Florida.