Resources for Law Firms in Honolulu
Hawaii's legal market operates under some conditions that simply don't exist on the mainland. The most practically significant is the General Excise Tax: a gross receipts tax on legal services that has no equivalent in most other states and applies regardless of profitability.
The pool of approved IOLTA banks is also smaller than what attorneys are accustomed to in larger markets, which is worth knowing before opening trust accounts. The resources below cover the compliance basics for firms practicing in Honolulu.
Trust Accounting Resources: HSBA, the Hawaii Justice Foundation, and Rule 1.15
This information is maintained by the Hawaii State Bar Association, the Hawaii Justice Foundation, and the Office of Disciplinary Counsel, and is subject to change. Trust accounting in Hawaii is governed by Rule 1.15 of the Hawaii Rules of Professional Conduct and the Rules Governing Trust Accounting, both adopted by the Hawaii Supreme Court. The IOLTA program is jointly administered by the HSBA and the Hawaii Justice Foundation (HJF), which receives the interest from pooled accounts and distributes it to civil legal services statewide.
Trust accounts must be held in Hawaii, at financial institutions that are approved and listed by the HSBA. The list is short relative to what attorneys encounter in other states. When opening an account, attorneys provide their bank with Form 2 (the Notice to Financial Institution form) and send a copy of a voided check or deposit slip to the HSBA.
Annual IOLTA certification is completed as part of the HSBA license renewal process each December. Every attorney must file a certificate indicating either that they maintain an IOLTA account or that they do not handle client funds. There is no opt-out. Records must be retained for a minimum of six years, reconciliations are required monthly, and client ledger balances must be reviewed quarterly.
- HSBA - IOLTA: The HSBA's central page for IOLTA compliance, including the list of approved financial institutions, Form 2, and guidance on complying with Rule 11 of the Rules of the Supreme Court of Hawaii.
- Hawaii Justice Foundation - Information for Lawyers: The HJF's guidance on setting up and maintaining an IOLTA account, including what the bank does with interest remittances and how to report account changes.
- Hawaii Rules Governing Trust Accounting: The full text of the trust accounting rules adopted by the Hawaii Supreme Court, covering minimum recordkeeping requirements, reconciliation procedures, and the annual certification process.
- Hawaii Rules of Professional Conduct - Rule 1.15: The professional conduct rule governing safekeeping of client property, which operates alongside the separate Rules Governing Trust Accounting.
The General Excise Tax
Hawaii does not have a sales tax. Instead, the state imposes a General Excise Tax (GET) on gross receipts from business activity, including legal services. Unlike an income tax, the GET is assessed on revenue before any expenses are deducted, which means a firm can owe GET even in an unprofitable year.
The base rate for services is currently assessed through Hawaii Tax Online, and the City and County of Honolulu adds a county surcharge on top of the state rate. Current rates are available on the Department of Taxation's website and are subject to change. GET registration requires a one-time application and license fee. Periodic returns (Form G-45) are filed monthly, quarterly, or semi-annually depending on annual liability. An annual reconciliation return (Form G-49) is also required. There are no extensions for periodic GET filings.
Firms with out-of-state clients should be aware that the GET applies to services provided in Hawaii, and businesses sometimes pass the tax on to clients as a visible line item on invoices though consumer protection rules limit how this can be characterized. Firms new to Hawaii or new to private practice should confirm their GET registration status before commencing business.
First Circuit Court
Civil matters in Honolulu are heard in the First Circuit Court and the First Circuit District Court. Electronic filing is available through the Judiciary's JEFS (Judiciary Electronic Filing and Service System) for civil cases in the circuit and district courts, Land Court, and Tax Appeal Court. Filing fees are set by statute under HRS §607-5. Cases can be initiated online with filing fees paid by credit card.
The HSBA and Local Resources
Hawaii is a unified mandatory bar: every licensed Hawaii attorney is required to be an HSBA member. There is no separate voluntary city or county bar association for Honolulu, which makes the HSBA the single hub for CLE, ethics guidance, sections, and professional community in this market. The small size of the Honolulu legal market and Hawaii's geographic isolation from the mainland also shape how staffing and vendor relationships work.
Practice management software, payroll services, and banking relationships that firms take for granted elsewhere sometimes require more deliberate setup here, including confirming that vendors are actually registered and compliant with Hawaii tax obligations.
- Hawaii State Bar Association (HSBA): The mandatory unified bar for all Hawaii attorneys, with practice sections, CLE programming, the Lawyer Referral and Information Service, and ethics resources. License renewal is due annually by December 31.
- Hawaii Employers Council: A local employer resource with HR guidance and employment law updates relevant to the Hawaii market. Useful for firms managing staff under Hawaii-specific leave, wage, and classification rules.
