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Access to Legal Services Virginia Legal Aid Is on Triage: Lawyers Can Help by Participating in IOLTA by Dawn Chase Today, Virginians with incomes in the poverty range—many of them newly poor—are standing in line for help with foreclosures, debt relief, public benefits, and other essential legal matters. More than one million Virginians—one in eight—meet the financial criteria for legal aid. Last year almost 40,000 cases were closed, benefitting 87,000 people. The system is on triage. Poverty lawyers and support staff are hard- pressed to meet the demand, not only because of the increased need, but also because legal aid's funding has been cut by almost $6 million since 2008. Intensified fundraising helped restore only a small portion of the lost funds. Legal Aid program staffs were reduced in 2011 through attrition and layoffs. Health and retirement benefits were cut. Training and other administra- tive costs have been cut as well. More layoffs are planned for 2012, and services will be further reduced. The lines will get longer and the number of people in need who are turned away without any assistance or just brief advice will grow. Mark D. Braley, executive director of the Legal Services Corporation of Virginia (LSCV), is hoping that an adjustment to the Interest on Lawyers' Trust Accounts (IOLTA) program will partially bridge the gap between more need and less funding. Delegate G.M. "Manoli" Loupassi is sponsoring legislation that could strengthen Virginia's IOLTA program by repealing a statute that prohibits the Supreme Court from adopting a rule that requires lawyers to participate in IOLTA, depending on the type of client trust accounts they maintain. With this change, Virginia would join forty-four other U.S. jurisdictions with mandatory IOLTA programs. At this time, Virginia lawyers can choose between IOLTA and 28 VIRGINIA LAWYER | February 2012 | Vol. 60 a non-interest-bearing client trust account that allows banks to use the deposited money for free. Pending the General Assembly's decision on the legislation, Braley is ask- ing lawyers who do not already partici- pate to exercise their IOLTA option and help legal aid meet the growing unmet need for legal assistance. Lawyers can do this by converting their non-interest- bearing trust account to interest-bearing IOLTA accounts. The interest earned on IOLTA is paid to LSCV for distribution to legal aid programs throughout the state. Converting to an IOLTA account is very easy. Lawyers fill out a one-page form (see page 29), check the appropri- ate box, and submit it to their banks. The conversion does not require closing existing non-interest bearing trust accounts, obtaining new checks, or other costs. In most cases, the same account number will be retained. Most banks should be able to convert the accounts quickly. Any questions by the bank or lawyer can be addressed by contacting Carolyn Lawrence at (804) 782-9438 or Lawrence can also quickly email the form to lawyers and banks. Currently, the Virginia IOLTA pro- gram has 5,200 participating accounts, which are drawing 0.1 percent interest in the current market, for a total payout to legal aid of about $680,000 last year. Virginia has more than 29,000 lawyers in active practice. Because the number of non-inter- est-bearing trust accounts is not known, Braley can only estimate that making the program mandatory would add up to 15,000 accounts to the program. The biggest IOLTA accounts house money from such transactions as real estate closings and insurance settlements, where large sums sit in trust for a few Mark D. Braley days pending disbursements. Other states that made IOLTA mandatory at least doubled their IOLTA revenue. Some quadrupled it. At current interest rates, the contri- bution to legal aid is helpful but only a portion of what is needed to sustain ser- vices. When interest rates increase, how- ever, IOLTA can re-take its historical place as the backbone of legal aid funding. In 2007, Virginia's small IOLTA fund earned $4.6 million. The recession hit, interest plunged, and housing sales dwindled, bringing IOLTA income to its current level of $680,000. In response, LSCV spent down its small reserve, then reduced its program funding by 18 per- cent in fiscal 2011. Programs began cut- ting staff and other budget items. Many cases that formerly would have qualified for fuller representation are now accepted as advice-only, where callers are given information on how to represent themselves. IOLTA continued on page 31

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