A pair of Manchester, N.H., banks have found a way to boost funding for legal services to the poor, and picked up a few law firms as clients in the bargain.

Bank of New Hampshire and First NH Bank managed to give the New Hampshire Bar Foundation a better rate on the so-called IOLA, or interest on lawyer accounts, that are set aside to fund legal assistance and education programs.

So far, 18 of the state's 30 biggest law firms have signed up.

"It helps with CRA requirements because all this money goes to help low- income individuals," said Cheryl Cornish, vice president at $1 billion- asset Bank of New Hampshire. "And one other benefit is it gives us increased visibility with the legal community."

Officials at First NH, the $3.5 billion-asset subsidiary of the Bank of Ireland, could not be reached for comment.

In New Hampshire, as nearly all states, IOLA deposits are the interest generated by short-term accounts administered by lawyers, such as settlement or escrow money. The interest is pooled and given to community organizations that provide civil legal assistance to the poor. Nationwide, $94.4 million in IOLA deposits was generated in 1993, according to the American Bar Association.

New Hampshire averages $700,000 a year in IOLA money.

However, the Bar Foundation had been getting less than 2% interest on the funds it administers, since the transactional nature of IOLA money requires it be in low-paying NOW accounts.

But Bank of New Hampshire and First NH, working with the bar group and the state's supreme court, which had to approve the practice, now allows IOLA deposit rates to be keyed to the rate paid on overnight repurchase agreements on government securities.

First NH invests the money directly into the overnight repurchase agreements, which nets the IOLA funds about 4% interest. The bank charges a $225-a-month fee to the Bar Foundation and a $50-a-month fee to each law firm depositing IOLA money.

Bank of New Hampshire created a special no-fee deposit product, but ties its deposits to the bank's overnight repurchase rate minus 50 basis points.

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