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A Backgrounder on Civil Legal Services Funding in Massachusetts

Massachusetts Legal Assistance Corporation (MLAC) 

MLAC was established in 1983 by the Legislature to provide funds for civil legal assistance to poor people throughout Massachusetts. It is governed by a board of directors approved by the SJC and distributes, in addition to IOLTA funds, state appropriated funds to legal service providers.  MLAC is the largest funder of civil legal aid programs in the Commonwealth.

MLAC’s revenue comes from the state budget, the IOLTA program and the Board of Bar Overseers dues add-on program.  The decline in Interest On Lawyers Trust Account (IOLTA) funds has resulted in a MLAC cutting grants to the legal aid programs it funds by 54%.

MLAC funds 16 legal aid programs that provide information, advice and representation to low-income people with critical, non-criminal problems.

Community Legal Aid Greater Boston Legal Services
Boston College Legal Assistance Bureau Community Legal Services and Counseling Center
MetroWest Legal Services Neighborhood Legal Services
Children’s Law Center of Massachusetts Merrimack Valley-North Shore Legal Services
South Coastal Counties Legal Services Center for Law and Education
Center for Public Representation Disability Law Center
Massachusetts Advocates for Children Massachusetts Law Reform Institute
National Consumer Law Center Prisoners’ Legal Services

MLAC funds three projects, which are run by the staff of legal services programs in local offices around the state:

  • Battered Women’s Legal Assistance Project
  • Disability Benefits Project
  • Medicare Advocacy Project

MLAC state funding: FY2013 $12 million; total grants for FY2013 are just over $16 million.

Interest On Lawyers Trust Accounts (IOLTA)

The Massachusetts IOLTA program was created in 1985 by the Supreme Judicial Court.  IOLTA is not unique to Massachusetts.  The first IOLTA program was established in Florida in 1981. Since then, all 50 states and the District of Columbia have adopted IOLTA programs.

In 1990, the SJC converted IOLTA from a voluntary program to a “comprehensive” program.  As a result, lawyers and law firms are required to establish interest-bearing accounts for client deposits.  These funds must be placed either in an account which pays interest to the client or in an IOLTA account. An IOLTA account is selected if the funds are relatively modest, or large amounts held by the lawyer for only a short period.

Each IOLTA deposit earns a very small amount of interest.  It is the money accumulated from pooled IOLTA accounts that allows the IOLTA committee to make its distributions to support law-related public service programs.  Over 200 banking institutions maintained an average of 14,000 IOLTA accounts across the state this year.

The Supreme Judicial Court limits the use of IOLTA to two purposes: 1) to provide civil legal services to low-income clients and 2) to improve the administration of justice.  The IOLTA committee distributes all IOLTA interest to three charitable entities that then use the IOLTA funds to make grants to local civil legal services programs:

  • Boston Bar Foundation (7%)
  • Massachusetts Bar Foundation (26%)
  • Massachusetts Legal Assistance Corporation (67%)

IOLTA operates on a calendar year.  The very low currently available interest rates and a period of declining real estate transactions have caused a notable reduction in the revenue on which the IOLTA program depends.

  • In 2007, interest on IOLTA accounts totaled $31.8 million
  • In 2011, interest on IOLTA accounts totaled $7.5 million
  • In 2012, interest on IOLTA accounts totaled $6.9 million

Legal Services Corporation (LSC)

LSC is a private, non-profit corporation created by the United States Congress during the Nixon administration and is funded through the congressional appropriations process.  Although LSC is the single largest funder of civil legal aid for low-income people in the United States it provides only about 15% of the funding for legal aid programs in Massachusetts.

LSC provides funding to independent local legal services programs through a competitive grant process and currently funds 134 independent legal aid organizations.

LSC distributes federal funding for civil legal aid and is governed by federal law.  LSC imposes restrictions on recipients of any LSC grant funds and not just on LSC money but on all of a particular program’s funds.  These restrictions prohibit LSC-funded organizations from engaging in lobbying, advocacy,, general impact work and from representing certain otherwise eligible low-income people.

In Massachusetts, the 4 LSC grantees are:

  • Massachusetts Justice Project, Inc.
  • Merrimack Valley Legal Services, Inc.
  • South Coastal Counties Legal Services
  • Volunteer Lawyers Project of the Boston Bar Association

LSC funding for FY13: $4,778,860

– Kathleen Joyce
Director of Government Relations
Boston Bar Association
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LSC Fighting Off Federal Cuts

Legal services providers face another yet another blow – following last week’s announcement that the new House Appropriations Committee has proposed a $70 million cut to the Legal Services Corporation (“LSC”) for Fiscal Year 2011.  This immediate cut would be catastrophic to the delivery of legal services in Massachusetts because it would mean an 18% reduction in LSC’s annual funding.  (Because we are already half way through the current fiscal year, legal services providers tell us this actually translates to a 36% cut.)

There have already been serious reductions in other funding sources upon which LSC-funded programs also depend – especially Interest on Lawyers’ Trust Accounts (“IOLTA”). As we noted in a previous post, record low interest rates and reductions in the number of real estate transactions have resulted in dwindling IOLTA revenues.

What the House Appropriations Committee proposed last week is in contrast to what President Obama’s unveiled his budget this week.  For Fiscal Year 2012, President Obama actually proposed an increase of $30 million for LSC.

LSC provides grants to independent local programs and currently funds 137 local programs, serving every county and Congressional district in the nation. LSC distributes 97% of the funds it receives to these programs.  Massachusetts has four LSC-funded programs: the Volunteer Lawyers Project of the Boston Bar Association, the Massachusetts Justice Project, Merrimack Valley North Shore Legal Services and the New Center for Legal Advocacy.

If this mid-year cut goes through, the entire legal aid delivery system in Massachusetts will suffer.  LSC has a big budget battle ahead of it. The BBA has already tried to do its part.

Today (February 17th), BBA President Don Frederico sent every member of the Massachusetts Congressional Delegation a letter urging no cuts in LSC funding. We will also join the American Bar Association in D.C. this April to lobby for funding for Fiscal Year 2012.  We urge Congress to adequately fund legal services to provide access to justice for poor people in the United States.

N.B. Some organizations in Massachusetts, such as Greater Boston Legal Services, do not receive LSC funding, and they still need our help.  That budget battle – to hold onto level funding – has just begun in the state Legislature.  Please be sure to join us next week at Walk to the Hill.  The event has been rescheduled for Tuesday, February 22nd at 11:00 AM in the Great Hall at the State House.

-Kathleen Joyce

Government Relations Director

Boston Bar Association

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