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More Cuts Threaten Legal Services for the Poor

The most recent State budget slashed funding for legal services for the poor. Last week, the House passed a bill that would put even more aid at risk.

The legislation would change how something called IOLTA works.

IOLTA stands for ‘Interest on Lawyers Trust Accounts’.

When a client hands money over to a lawyer for a short period of time, say, while a real estate deal is being closed, the lawyer puts the money into a pooled account. That account earns interest.

For the past 30 years, the interest has been set aside to support legal representation for the poor. It’s done this way in all 50 states.

“It is an unbridled success,” says Jack Middleton. He’s Chair of the New Hampshire Bar Foundation, which distributes IOLTA funds.

“Over those 30 years, $28 million has been paid over to these endeavors, where, otherwise, there would be no funding available.”

Until December 2010, participation in IOLTA was voluntary for New Hampshire attorneys.

But when the recession hit, interest rates plummeted and the real estate market dried up. IOLTA funding fell off a cliff, dropping from nearly $2 million a year down to $800,000.

To help shore up the funds, the State Supreme Court decided to make IOLTA mandatory.

But that mandate hasn’t sat well with the small group of attorneys.

“I moved to New Hampshire because this was the one state left in the Northeast where a person could own his own soul,” says Representative Gregory Sorg.

“Even lawyers,” he adds with a smirk.

Sorg runs a small law practice in the North Country. He bristles at the idea of the Judicial Branch telling lawyers how to behave outside of the courtroom.

“The Court is just overreaching the bounds of authority of a judiciary,” says Sorg “And they are now legislating.”

Legislating, believes Sorg, should be left to the legislature.

The Republican is sponsoring the bill to revoke the mandate and return IOLTA to a voluntary program.

It’s not clear how many other attorneys share Sorg’s opposition.

Banks, the backbone of IOLTA, still support the program, though.

 “We do care about our community, and we participate in it because we believe it is the right thing to do,” says Paul Rizzi, CEO of the Merrimack County Savings Bank.

This bill has upset a lot of people in the legal aid world. They already lost over half of their funding in the last State budget.

What doesn’t make sense to John Tobin, Executive Director of NH Legal Assistance, is that if the bill becomes law, lawyers will still have to put the money into accounts. It just won’t be accounts that earn interest that can be used for legal services.

“Making IOLTA mandatory was a small positive step in the right direction that hurt no one,” says Tobin.

To him, Representative Sorg’s focus on the principle of the issue ignores the very real consequences.

“Even if we lose the funding that costs us one lawyer or one paralegal, that means that several hundred New Hampshire people will not have an advocate,” says Tobin. “And that means that some of them will lose their housing, some of them won’t get health care, some of them won’t be able to escape from domestic violence.”

These cuts really do impact people, he adds.

Already, Legal Assistance has had to close two offices and lay off 14 people.  

The bill’s fate in the Senate is uncertain.

Todd started as a news correspondent with NHPR in 2009. He spent nearly a decade in the non-profit world, working with international development agencies and anti-poverty groups. He holds a master’s degree in public administration from Columbia University. He can be reached at tbookman@nhpr.org.
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