Thousands of People Will Lose Access to Legal Representation as IOLTA Revenue Drops, Forcing Lay-offs and Office Closings at LSC-Funded South Jersey Legal Services
Legal Services E-lert
Bibliographic Info:
Author: Matt Katz
Source: “Financial Crisis Crippling Legal Aid for Poor,” The Philadelphia Inquirer
Date: September 27, 2008
The Philadelphia Inquirer reports: "Programs that provide free legal representation to the indigent are partly funded through interest on accounts for real estate transactions, legal aid groups say. As the housing market collapsed this year and interest rates dropped, funds disappeared. The problem stretches nationwide, but this area has been hit particularly hard, say representatives of local and national legal aid organizations. Thousands of people across the region won't have the same access to legal protection for foreclosure, eviction, domestic violence, divorce, school-related conflicts and problems with disability benefits. [LSC-funded] South Jersey Legal Services, which covers seven counties, will lay off five attorneys and close two offices beginning in January. It expects to provide legal help to 9,000 people next year, down from 12,000 this year . . . . Due to the collapse in the housing market, the reduction of Federal Reserve interest rates and the overall bleak economic picture, [Interest On Lawyers Trust Accounts ("IOLTA")] funds have plummeted . . . . New Jersey was one of the first states to mandate that banks provide comparable interest rates on IOLTA accounts as other similarly sized accounts, so it has grown accustomed to a steady supply of these funds. In most states, primary funding for legal aid still comes from the federal government, according to [National Legal Aid & Defender Association civil director, Don] Saunders. But in New Jersey, last year IOLTA funds amounted to $40 million of the $70 million in total revenues. The umbrella group Legal Services of New Jersey only expects $25 million in IOLTA funds this year . . . . Other states are faring better. But they rely on federal funds, which have been stagnant for years. And this week's economic crisis could mean even that money is in question."