Legal Aid Staff Attorneys, Clients and Senior Managers Urge State Senate To Support IOLA Bailout and Provide More Funds for Civil Legal Services

A contingent of Legal Aid staff attorneys and their clients, led by ALAA/UAW President Deborah Wright, Civil Practice head Adriene Holder, and Attorney-in-Chief Steve Banks urged the State Senate yesterday to support the $15 million bailout of the IOLA Fund in the Judiciary's proposed budget and and called for increased funding for civil legal services throughout the State to meet the increasing need for civil legal help.

"At times like these, government must act to strengthen the safety nets that are in place to help protect those who are in greatest need," Legal Aid representatives testified.

Participating in the Senate hearings were staff attorneys Lester Helfman, Susan J. Horwitz, Amy M. Hong, Tashi Lhewa, Shannon McKinnon and Afua Atta-Mensah. Katie Kelleher coordinated and organized the client and staff testimony for the hearing. Clients told their stories of how The Legal Aid Society helped them with various civil legal problems including employment, immigration, homelessness and public benefit entitlements. One of the clients testified that: "Legal Aid has been there in my life to make sure that I am treated with respect and has enabled me to move forward in my life on many levels. Not only has Legal Aid addressed my legal issues, but its lawyers and staff have made me feel like I have worth, that I am a person who, despite my problems, can still succeed."

In recent months, we have seen unprecedented increases in requests for help in core areas of need:

  • a 29% increase in requests for help with unemployment benefits and employment problems;
  • a 40% increase in requests for health law assistance and help obtaining Medicaid, Medicare, and other health care coverage;
  • a 12% increase in requests for help to obtain food stamps, federal disability benefits, and public assistance;
  • a 16% increase in requests for domestic violence and family law help;
  • a 15% increase in requests for help from current or former low wage workers with earned income tax credit or other low income taxpayer problems;
  • a 21% increase in requests for eviction prevention representation; and
  • a stunning 800% increase in requests for foreclosure defense assistance.

Legal Aid representatives expressed their gratitude for the Senate’s strong support for a bailout of the IOLA Fund in the April 1, 2010 – March 31, 2011 fiscal year that, together with support from the Assembly, has now led to Chief Judge Jonathan Lippmann’s inclusion of $15 million in the Judiciary’s proposed budget in order to make the IOLA Fund whole for one year and thereby preserve current levels of civil legal services in New York State. This proposed funding will be reviewed by the Governor and the Legislature during the budget process and it will not become final until the 2010 – 2011 State budgets is adopted on April 1, 2010. Continued support for this $15 million IOLA bailout is therefore critical to ensure that this funding is included in the final 2010 – 2011 State budget. However, the proposed bailout for 2010 – 2011 simply preserves the current status quo in which there is a significant gap in available civil legal assistance and the increasing need for civil legal services and it does not address the need to stabilize the IOLA Fund after March 31, 2011.

The situation will become even more extreme in 2010 if the final 2010 – 2011 State budget does not include the $15 million in the Judiciary’s budget to bail out the IOLA Fund to address the dramatic drop in the Fund’s revenue for civil legal services because of the economic downturn. In these severe economic times, civil legal assistance is needed now more than ever.

Read the full Legal Aid testimony .


The New York Law Journal
Bar Leaders Support IOLA Rescue, Suggest New Sources of Funding
Daniel Wise

Lawmakers, bar leaders and legal services groups voiced strong support for passage of a $15 million rescue of the IOLA fund requested in the proposed judiciary budget for 2010-2011 at a hearing convened yesterday by two Senate committees.

The three senators who presided over the session at New York University School of Law in Manhattan also heard an array of proposals to place the funding of civil legal services for the indigent on sounder financial footing.

Interest rates in the sour economy have nose-dived and the pace of real-estate sales atrophied, leaving IOLA with less than $8 million to distribute to 71 legal services and other civil justice groups. That amount represents a decline of roughly 75 percent from the $32 million the fund had available in December 2008 to distribute to those groups.

Senators John L. Sampson, chairman of the Judiciary Committee, Ruth Hassell-Thompson, chairwoman of the Committee on Crime Victims, Crime and Corrections, and Liz Krueger, vice chair of the Finance Committee, presided over the hearing, which was sponsored by the judiciary and crime victims committees.

Ann B. Lesk, president of the New York County Lawyers' Association, said her 10,000-member group "strongly supports" the "emergency infusion of funds to IOLA" requested by Chief Judge Jonathan Lippman in the judiciary budget submitted last week to Governor David A. Paterson and the Legislature (NYLJ, Dec. 3).

Chief Administrative Judge Ann Pfau explained in her testimony that the court system had taken the "unprecedented step" of including a $15 million item in its proposed budget to offset the IOLA losses because we are "particularly concerned about those cases in which litigants do not have a statutory right to counsel, and are therefore totally reliant upon legal services organizations, including many funded by IOLA."

Judge Pfau and other judges said proceedings with unrepresented litigants tax court resources and eat up valuable judicial time.

She also said that when a pro se client appears, judges must strike a delicate balance to protect a litigant's rights without compromising the court's core function as a "neutral arbiter."

Since 1984, the IOLA (Interest on Lawyer Accounts) Fund has distributed $285 million to groups that provide legal services to the poor and other vulnerable groups, such as the elderly or victims of domestic violence. The funds are also used to support programs that enlist lawyers to provide pro bono representation.

By statute, IOLA is required to use 75 percent of its funds to support groups providing civil legal services directly to the poor.

IOLA receives the interest generated by 48,000 lawyer escrow accounts holding more than $3 billion.

Benito Romano, the chairman of the fund's 15-member board, explained that IOLA funds have dropped sharply because interest paid on escrow accounts by the 11 largest banks in the state have plunged to .31 percent from 2.25 percent two years ago.

Despite the precipitous 75 percent drop in the amount available to be distributed in 2010, the fund took measures to soften the anticipated blow a year ago, Christopher O'Malley, the fund's executive director, said in an interview.

IOLA distributed the $32 million it had available a year ago to cover a 15-month period, which means the 71 groups will receive $6.5 million from last year's funds to cover their expenses in the first three months of 2010.

That combined with the $8 million in funds on hand will leave the groups' average IOLA funding in 2010 on a level 40 percent less than in the current year. The cuts will range from 10 percent for large organizations to as much as 60 percent for some small ones, Mr. O'Malley said.

Those cuts have come at a time when because of economic woes the need for free legal services is peaking, court officials said.

Judge Pfau said that statewide mortgage filings in 2009 are up 84 percent in the past three years and Family Court filings have increased by 16 percent in the last four.

That situation has been mirrored in Nassau County Family Court, according to its supervising judge, Hope Schwartz Zimmerman.

"Family offense petitions have increased 20 percent in the same time period as the stress of job loss leads some to abuse drugs and alcohol and in turn to abuse family members," Judge Zimmerman told the panel.

Justice Alan D. Scheinkman, the administrative judge of the five county Ninth Judicial District, similarly explained that the legal group that services the district—Mid-Hudson Valley Legal Services—has experienced a 334 percent jump in the number of foreclosure cases it has handled this year over last. Overall, he said, the combined case load of the group and 600 volunteer attorneys will climb 20 percent to more than 10,000 by year's end.

Steven Banks, the attorney-in-chief of the Legal Aid Society in New York City, said economic woes have driven up the requests for assistance in foreclosure cases by 800 percent in recent months. As it is, he said, Legal Aid can help only one out of nine people seeking legal assistance.

Andrew Scherer, executive director of Legal Services NYC, reported that his organization has only been able to "fully serve" 12 percent of those who have sought its help this year.

Several of the witnesses yesterday put forward ideas for how funds could be increased.

Victor A. Kovner, chairman of the Fund for Modern Courts, suggested requiring a $25 increase in the fee for filing motions. Given the number of motions that were filed in 2008, the increased fee could generate $7.5 million a year to support legal services, he said.

In Supreme Court, the fee for filing a motion is $45. There is no fee for filing a motion in either New York City Civil Court or Family Court.

Stephen P. Younger, the president-elect of the New York State Bar Association, said that dedication of a fee on motions is "at the bottom" of his list because it would impose a financial burden on litigants with modest means in the Family and Civil courts.

Mr. Romano, the IOLA board chairman who is a partner at Freshfields Bruckhaus Deringer, suggested that the Legislature give IOLA authority to set aside money in a reserve fund in those years when interest rates are high, and it is flush.