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Are Legal Aid Groups at Risk?

legal aid

There are currently (at least) two factors that could put legal aid groups in our State at risk for decreased funding. On the Federal side, President Donald J. Trump appears to have eliminated annual grants for the 11 legal aid non-profit recipients in California in his proposed draft budget for 2018. $43.6 million dollars went to California recipients last year, according to the website for the Federal Legal Services Corporation. These California legal aid groups claim to have handled almost 82,000 cases in California in 2015, paying 406 full time attorneys. The proposed cut would be devastating.

State Bar of California also contributes to the funding of legal services for the disadvantaged.

Attorneys often hold funds earmarked for clients or others in accounts entitled IOLTA trust accounts. These accounts generate interest from the banks at which they are held, but the legislature of the State of California has determined that, to fund legal services, in many cases the banks are required to pay all interest earned on the funds deposited in trust accounts to the State Bar to fund legal services. That means that interest earned on the money deposited on behalf of clients or others is not paid to clients or others, but rather has to go to the State Bar to fund legal services. Each year this generates a great deal of money to fund legal services.

Due to a variety of circumstances, the State Bar is likely to be divided over the next year or so, with one portion of the State Bar continuing its role of handling attorney admissions, licensing and discipline. Other functions that are currently under the State Bar umbrella would be dissolved and/or under some other umbrella. (There is a lot of controversy as to whether the State Bar should continue to oversee or facilitate these other services.) Legal services and other similar services are included in the controversy.

If the legislature, in restricting the State Bar to admissions, licensing, and discipline, does not provide for some entity taking over the collection and distribution of IOLTA (trust money) funds, those services could be lost. Of course, administrative costs and budgeting will certainly change (increase) with changes in the structure of the State Bar. Issues regarding housing, landlord-tenant, certain issues concerning family law and immigration, federal and government benefits and consumer protections may be affected. We all expect the trust accounts to remain the target for funding of these services, but nothing is guaranteed in this uncertain transition.

Something to watch.

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