Financial Crisis Crippling Legal Aid For Poor

In Philadelphia, Pennsylvania, the Philadelphia Inquirer reports:

• The nation's financial crisis is claiming two more victims: Poor people who need legal help, and their attorneys. 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.

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• 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. "The cruel irony of that is we have a lot of people calling us, losing their homes, being evicted from their homes, and we're not going to have the same staff as before in order to help them, which is painful," said Douglas Gershuny, executive director of South Jersey Legal Services.

• Pennsylvania is in a slightly better position because of a state Supreme Court move, effective last week, that forces banks to make interest rates for legal aid program money comparable to other similarly sized accounts, said Alfred Azen, executive director of Pennsylvania IOLTA Board.(1) But Philadelphia-area offices are still instituting hiring freezes and not filling open positions for attorneys and other staff.

For more, see Financial crisis crippling legal aid for poor.

(1) According to the story, much of the legal aid money nationwide comes through something known as IOLTA, or Interest On Lawyers Trust Accounts, which is often managed and mandated by state supreme courts. Interest on accounts temporarily created by attorneys for clients' real estate transactions and other matters is pooled to fund these organizations. Due to the collapse in the housing market, the reduction of Federal Reserve interest rates and the overall bleak economic picture, IOLTA funds have plummeted.