SE Texas Record

Monday, January 20, 2020

Legally Speaking: Brother, Can You Spare A Lawyer?

By John G. Browning | Apr 15, 2009

Times are tough all over during this recession.

When I'm in the mood for something truly terrifying, I skip the "Horror" section at Blockbuster and simply go home and open up my latest 401(k) statement.

But amidst all the stories crowding the airwaves lately to deliver either tales of woe or to share a few bright spots here and there, there's one news item that's been overlooked: how funding for non-profit legal services for the poor is in dire straits.

Let's begin with a little history. While accused criminals have a constitutional right to have a lawyer appointed to defend them if they can't afford one, there's no civil counterpart to this rule.

As a result, low-income families have to turn to non-profit legal services programs for help with many basic civil legal needs. This can include family law matters, help with access to public benefits like Social Security, consumer law issues, landlord-tenant disputes, health and employment law and an area that has sadly exploded in growth lately – foreclosure defense.

Back in 1984, the Texas Access to Justice Foundation (TAJF) was created to help address the challenge of providing civil legal help to low-income Texans. Over its 25 year history, TAJF has become the largest funding source of such legal aid in the state, awarding over $200 million in grants to legal aid organizations throughout Texas, who in turn have used that money to help an estimated 6 million Texans receive basic civil legal services.

The need for legal services has continued to grow, even as efforts to fund such efforts struggle to keep up. In 2001, the Texas Supreme Court formed the Texas Access to Justice Commission; at that time, approximately 3 million Texans hovering just above or at the poverty line qualified for legal help.

By the end of 2008, this number of low-income Texans had increased to over 5 million – nearly 20 percent of the state's population. Their ranks have been swelled by people devastated by Hurricane Ike, and the "newly poor" who had been living from paycheck to paycheck before the economic collapse, only to lose their jobs as companies cut back or folded.

But even before the recession hit, legal service programs were underfunded and only able to serve a fraction of those qualifying for their help. In Texas, all legal services providers statewide collectively were able to meet only about 25 percent of the need.

Nationwide, the figures are scary as well; a recent national study indicates that roughly half of all qualified legal aid applicants are turned away because of the lack of available resources. With the rapidly accelerating growth in the numbers of low-income Texans who can't afford basic civil legal help, legal aid lawyers are being asked to do more with less.

The "less" has to do with where funding for such programs comes from. TAJF administers funds from a program called IOLTA (Interest On Lawyers' Trust Accounts); simply put, the interest from bank accounts in which lawyers hold onto money from their clients goes to TAJF.

Back in 2006, the Supreme Court adopted the "comparability rule" requiring banks holding IOLTA to pay comparable rates for these accounts as they do for similar interest-bearing accounts. Among the ways banks could achieve that was by tying interest to the Federal Reserve Bank's rate for overnight loans among banks (the rate banks charge each other for loans). However, in December 2008, the Federal Reserve lowered that rate to a range of zero to .25 percent.

This decrease in the interest rate has had a devastating impact on IOLTA, and consequently on funding for legal aid in Texas. IOLTA funds accounted for $20 million in 2007, and were projected to generate about $28 million for 2008. With the decrease in the interest rate, conservative estimates for 2009 are less than $1.5 million – barely enough to cover overhead and administrative expenses.

At a hearing Dec. 20 in Austin, the Supreme Court heard testimony from the Texas legal aid community about this severe funding crisis, even as the demand for free civil legal services dramatically increases. Most poignant were the stories of men and women for whom legal aid services had meant the difference, as one put it, "between life and death."

So how, in the face of dwindling financial resources and mounting demand, can the Texas Access to Justice Foundation continue to support the 40 non-profit legal services programs that have made such a difference to so many throughout the state?

Some measures are already being implemented: technology grants to help legal aid providers improve their efficiency; internship and student loan repayment programs to motivate more law students to join legal aid programs; a corporate counsel initiative to get more help from the private sector; and working with "Prime Partner" banks (so designated for their voluntarily paying the higher of one percent or 75 percent of the federal funds target rate on lawyer trust accounts).

Ultimately, however, it comes down to the most important resource of all – people, particularly lawyers. These lawyers take pro bono cases, voluntarily staff legal aid clinics and telephone help lines, and they make financial contributions as well.

Facing the sheer numbers, as those affected most directly by the economic crisis threaten to overwhelm the system, it may seem like an impossible task.

But as James B. Sales, chairman of the Texas Access to Justice Commission, recently pointed out by quoting Scottish historian Thomas Carlyle, "Every noble work is at first impossible."

John Browning is a partner in the Dallas office of Gordon & Rees, LLP. He may be contacted at:

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