The Legal Services Community Weathers the Storm

One of the major sources of strength and support for legal services during this period of turmoil was the private bar. Two new requirements that Congress and LSC had imposed on programs during the early 1980s significantly increased the involvement of individual private attorneys and the organized bar in the governance and delivery of legal services.

Congress had required that a majority of each local program’s board of directors be attorneys appointed by state or local bar associations. In addition, LSC had required each program to devote an amount of funds equal to 12.5 percent of its LSC grant award to PAI activities that involved private attorneys in the delivery of legal services to the poor on either a pro bono or a low-fee compensated basis. Despite the fact that the legal services community had resisted both of these requirements, fearing they would undermine the independence of the legal services program and divert scarce resources, in fact they had resulted in several positive outcomes. The new requirements helped those private attorneys who participated as board members or PAI attorneys to appreciate the difficulties of serving poor clients with severely limited resources, enabled them to view legal services attorneys as respected peers within the legal community, and strengthened the role of the organized bar as a champion of federally funded legal services.

In addition to the ABA, acting through SCLAID, and state and local bar associations, other bar-led entities emerged in support of the legal services program, including Bar Leaders for Preservation of Legal Services, founded by key bar leaders Jonathan Ross from New4Hampshire, Michael Greco from Massachusetts, and Bill Whitehurst from Texas. The organized bar and these bar-led legal services support groups, working with NLADA, PAG,and the Center for Law and Social Policy (CLASP), were able to effectively advocate before Congress to prevent implementation of many of the hostile policies that the LSC Board and staff had attempted to impose.

Another positive development in the 1980s was the growth of non-LSC funding for legal services. In most areas of the country, programs had always received some limited funds from private donations, foundations, or state or local governments. However, prior to the1980s, outside funding for most programs represented only an insignificant portion of their budgets. When faced with a major funding cut and the threat of losing all federal funding, legal services programs began aggressive efforts to obtain funding from other sources, including United Way agencies, foundations, bar associations, private donations,state and local government grants and contracts, as well as non-LSC federal funds, such as the Older Americans Act, Community Development Block Grants, and Revenue Sharing.

Also during the early 1980s, a completely new source of funding for civil legal assistance was created. Interest on Lawyer Trust Account (IOLTA) programs were first conceived in Florida,after changes were made in the federal banking laws permitting interest to be paid on certain kinds of bank accounts. IOLTA programs were instituted by state bars, courts, and legislatures,in cooperation with the banking industry, to capture pooled interest on small amounts or short-term deposits of client trust funds used for court fees, settlement proceeds, or similar client needs that had previously been held only in non-interest-bearing accounts.

Since these deposits were permitted to be pooled, interest could be earned in the aggregate,even though individually these nominal or short-term deposits would not earn interest for the client. Throughout the 1980s and 1990s, more and more states adopted IOLTA programs,and by 2000, every state, plus the District of Columbia and Puerto Rico, had an IOLTA program. While resources created by IOLTA are used to fund a variety of public service legal and law-related activities, most IOLTA funding has gone to civil legal services programs, and IOLTA quickly became the second largest source of funding for LSC grantees.

Despite this infusion of non-LSC funds, the cuts in LSC funding, inflation, and a growth in the number of those living in poverty all contributed to a devastating decline in the resources available for legal services. By 1990, the poor were served by many fewer legal services advocates than in 1981, when the modest level of “minimum access” was briefly achieved.