As Interest Rates Drop so Goes IOLTA Support
IOLTA aka Interest on Lawyers’ Trusts Account has been a popular (or is it notorious?) discussion item on this blog, occurring in eight previous posts. And it’s become an issue with no less than the New York Times.
A quick read of the first three and last four paragraphs explains much of the current concern in legal services.
BOSTON — Scores of legal aid societies that help poor people with noncriminal cases — like disputes over foreclosures, evictions and eligibility for unemployment benefits — are being forced to cut their staffs and services, even as requests for help have soared.
In an odd twist, the societies have been hit hard by the Federal Reserve’s steep reduction of its benchmark interest rate, which finally plunged last month to near zero.
The rate decline, though generally welcomed as a blow against the recession, has had an unplanned and severe effect on legal aid societies, which depend heavily on revenues that are tied to the federal funds rate. As recently as 2007, the rate was more than 5 percent and legal aid agencies reaped more than $200 million for their operations.
. . .
Donna Hawkins, 42, a receptionist at a Boston hospital, said she was always on time with the $1,100 rent on the apartment she lives in with her husband, two grown daughters and three grandchildren. So Ms. Hawkins was stunned when two men showed up in May to tell her that the bank had foreclosed on the property and that she had to move out in 15 days.
Her story is ending happily. A legal aid lawyer who took up her case free helped her contest improper filings and expects to win a one-year lease.
But for the lawyer, Zoe K. Cronin, of Greater Boston Legal Services, the victory is bittersweet. Her agency expects to lay off 15 to 20 lawyers and paralegals this spring, and Ms. Cronin does not have seniority.
“I’m virtually certain that I’m going to be laid off,” she said.
Unfortunately this problem is not unique to New York or elsewhere. It’s right here, at home. Here in South Carolina Bar Foundation has grim forecasts for IOLTA grantees, because of the shortage produced by low interest rates. This affects not only the staff and attorneys of South Carolina Legal Services and other IOLTA grant recipients, but the impact is far-reaching especially to those most in need.
Whether you’re from South Carolina, New York or somewhere else, please consider donating to your Bar Foundation and/or Legal Services entity. The need for their services is greater than ever.
I encourage all to read the full NYT article here.