Georgia Online Justice Community

The latest news in legal aid is the same old story with a new twist. Funding crises are hardly a novelty for legal aid programs, which constantly struggle to serve their clients with skeletal budgets, but the recent free fall in revenue from Interest on Lawyers Trust Account programs is a particularly crushing blow-one that was largely unexpected.

Since the early 1980's, when the first IOLTA programs were established, funding from the programs has steadily grown to become the second single largest source of revenue for legal aid organizations nationwide. In the last few years, the future of the funding source was looking brighter and brighter, as efforts were made to mandate participation in the programs and to increase interest rates on the accounts. But then the nation's economy began to crumble, dragging IOLTA down with it. When the subprime mortgage crisis struck, people stopped buying houses, which meant lawyers stopped making real estate transactions-the largest contributors to IOLTA accounts. Then the Federal Reserve started slashing the federal fund rate, which is linked to the rates for IOLTA accounts, making the situation even grimmer.

The result is that legal aid programs across the country are laying off attorneys and closing offices, but this crisis is not about lawyers losing their jobs, it's about more poor Americans being unable to avail themselves of the crucial legal services they need to escape from domestic violence, prevent homelessness from eviction or foreclosure, and access life-saving public benefits to which they are legally entitled.

News outlets around the country are taking notice of the problem, and everyone from the New York Times to the Wisconsin Law Journal is highlighting the issue.

• In Connecticut, the New Haven Register reports that IOLTA funding in 2009 will be half of what it was last year, which has forced the local legal aid program to cut three paralegal positions and contemplate a six-month, 20 percent pay cut for all attorneys to avoid layoffs.
• For the Legal Aid Society of Columbus, Ohio, layoffs are already a reality. The Columbus Dispatch reports that the program has been forced to cut seven attorney positions and may lose more as a result of an $11.6 million loss in IOLTA funding from 2007 to 2008.
• The Milwaukee-based Legal Action of Wisconsin is also planning layoffs as a result of a 50 percent loss of IOLTA funding. The Wisconsin Law Journal reports that the program will probably have to cut as much as 13 staff positions.
• In Kentucky, the Lexington Herald-Leader reports that the state's four LSC-funded programs are suffering from decreasing IOLTA revenue, but may also see their funding from the state legislature cut by more than 80 percent.
• On the West Coast, IOLTA programs are expecting funds to decrease in Oregon by 66 percent in 2009, and by 33 percent in Washington, according to Oregon's Mail Tribune and the Associated Press.

The editorial boards of some major papers are urging state governments-many of which are going through tough financial times of their own-to step in and staunch the bleeding with an infusion of state funds.

• The New York Times said on Jan. 2 that Governor Patterson should restore funding for civil legal services that was eliminated in his recent budget proposal, arguing that "outlays for civil legal services are budgetary pennies that save many dollars....The Legislature and Mr. Paterson must take care to save money by spending a little more in the right places, like civil legal services."
• In Massachusetts, where IOLTA funding declined by nearly 40 percent during 2008, according to the group that administers the program, the Boston Globe points out, "Legal aid is the type of 'counter-cyclical' service that is most needed when state revenues are at their lowest. When the economy recovers, returns on the lawyers' trust accounts should improve. But right now, government needs to step in to ensure the poorest residents get justice in civil courts."

For more information on IOLTA programs, visit www.iolta.org, a joint project of the National Association of IOLTA Programs and the American Bar Association's Commission on IOLTA.