Board approves 40 percent increase in legal services

Staff Writer

The legal services funding picture has been filled with doom and gloom of late, but a bright light appeared recently when the bar's Board of Governors approved a 40 percent increase in the distribution of grants from the Legal Services Trust Fund program.

Grants for the 1996-97 fiscal year increased to $9.3 million, up from this year's allocation of $6.6 million.

Interest revenue from attorney/client or IOLTA accounts is channeled into programs throughout the state which provide legal assistance to the elderly, children, victims of domestic violence and those with other severe legal problems.

Although the grant increase is a boost to legal services providers, the total is still under half of what it was in 1992, according to Judy Garlow, director of the bar's Legal Services Trust Fund.

"It's a welcome increase," said Garlow, "but we still have a long way to go before we meet the funding of a few years ago." She said the yield on IOLTA accounts declined from a high of $22.3 million in 1990 to $6.6 million in 1995.

Three factors contributed to recent increases in revenue, said Garlow: some large banks have agreed to pay a higher rate of interest than that of comparable accounts; some banks have decreased their service charges; and there have been modest increases in the balance on deposit in the accounts.

In late 1994, then-State Bar President Don Fischbach sent letters to banks throughout the state, asking them to narrow the gap between current interest rates on IOLTA accounts and those of other short-term funds.

Several banks responded by increasing the interest rates. The Office of Legal Services published a list in the California Bar Journal of banks and their interest rates and service charges in order for attorneys to do some comparison shopping.

That "outreach campaign" was partially responsible for the increase in funding, said Garlow, but a restructuring of the distribution system itself also accounted for some of the difference.

Not included in the increase was about $30,000 in contributions from attorneys, who sent in extra funds with their membership fee statements.

Those funds also will be used for free legal services for indigent clients, but the legal services commission has opted to temporarily set aside the $30,000 while it explores the most effective methods of distribution.

Garlow said that the recent increase will allow 114 legal services providers to receive grant funds. Those providers range from the Legal Aid Foundation of Los Angeles to the San Diego Volunteer Lawyers Program and the Legal Center for the Elderly and Disabled in Sacramento.

Future federal funding for legal services programs across the nation is still tenuous, said Garlow, noting that President Clinton only recently signed the 1996 omnibus appropriations bill which resulted in a 33 percent reduction nationally and 38 percent reduction in California's programs.

Hearings for 1997 appropriations are currently taking place, with Clinton's budget including $340 million requested by the Legal Services Corporation.