The VBA Journal is the official publication of The Virginia Bar Association.
Issue link: http://vba.epubxp.com/i/80228
IOLTA IOLTA Participation %R )EW] ;E] XS 7YTTSVX %GGIWW XS .YWXMGI By Dawn Chase T hese are dark times for legal aid and our clients. Many Virginia lawyers today have been working on the front lines of the Great Recession, helping clients regroup and recover. Legal aid lawyers are seeing the most desperate. Te entire legal aid system is on triage. Te line of people in need never ends. It includes formerly middle-class people who now have no resources to pay a lawyer. More foreclosures and unemployment claims have been added to legal aid's caseload. One million Virginians – one in eight – meet the eligibility guidelines for legal aid, with annual incomes no more than $13,963 for individuals and $28,813 for a family of four. But financial support for legal aid has plummeted. Since 2008, funding to Virginia's programs has been cut by almost $6 million. Of that, $1.2 million was federal funding. Local governments and nonprofits such as the United Way also have cut their contributions. And the Interest on Lawyers' Trust Accounts (IOLTA) program, which in 2007 contributed $4.6 million, dwindled to $680,000 in 2011 – a casualty of fallen interest rates and stalled home sales. IOLTA accounts now are earning 0.1 percent interest annually. To adapt, Legal Services Corporation of Virginia (LSCV), which manages IOLTA and oversees Virginia's statewide legal aid system, spent down its small reserve, then reduced its program funding by 18 percent in fiscal year 2011. Legal aid program staffs were reduced last year through attrition and layoffs. Health and retirement benefits were cut. Training and other administrative costs have been cut as well. An additional 20 attorneys and 10 support staff are scheduled to be let go in 2012. "Tat will be devastating to a system that only has about 125 case-handling attorneys," says LSCV Executive Director Mark D. Braley. Clients are feeling the impact: Too few are receiving direct representation. Too many receive advice only, and many more cannot get in the door at all. Te bar is seeing the effect, too: Courtrooms and clerks' offices are clogged with pro se litigants trying to find their way through the justice system. 20 t VBA JOURNAL Legal aid must find short-term and long-term funding support that will ensure services are in place when they are most needed. Lawyers can help immediately by fully participating in the IOLTA program. Trough IOLTA, interest earned on client funds kept in trust for short periods is used to support LSCV's 10 programs statewide. IOLTA is the backbone of legal services in every state. Sanctioned by the Internal Revenue Service for that special purpose, IOLTA is the easiest way to help legal aid without burdening the taxpayer, the lawyer or the bank. IOLTA participation is easy. No additional recordkeeping is required, and no special taxes or fees are charged. You merely fill out a simple form, downloadable at http://www.vsb.org/ docs/IOLTA-form.pdf. Whether you are opening a new account or converting an existing noninterest-bearing account to IOLTA, just bring the form to the bank and have a copy faxed or emailed to LSCV. Te bank or lawyer can contact Carolyn Lawrence at (804) 782-9438 or Carolyn.LSCV@mindspring.com with any questions. Lawrence can also quickly email the form to lawyers and banks. Currently, the Virginia IOLTA program has 5,200 accounts, each of which might hold client money for multiple lawyers. Almost 19,000 attorneys reported to the Virginia State Bar in 2011 that they are in private practice representing the general public. Te biggest IOLTA accounts house money from such transactions as real estate closings and insurance settlements, where large sums sit in trust for a few days pending disbursement. Because the number of participating lawyers is not known, Braley can only estimate that full participation in IOLTA could at least double the number of accounts. Other states that made IOLTA mandatory at least doubled their IOLTA revenue. As interest rates rise in the future, legal aid again will have a dependable source of nontax revenue. Te Virginia Bar Association has been a longtime supporter of legal aid. Tis year, the Association's lobbyists helped advocate for legislation that would allow the Supreme