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What Does the Future Hold for IOLTA?

Point, counterpoint

Why go after funds that pay for civil legal services for the poor? "I look at it another way," responds Richard Samp, chief counsel for the Washington Legal Foundation. "Why go after private property without compensation?"

As Samp sees it, fighting IOLTA is about preserving property rights, not trying to eliminate funding for legal services for the poor. Such services, he points out, already are funded by federal and state governments. "Congress has provided about $285 million (per year) in recent years, and the states have provided another $100 million (total for all states, per year)," Samp points out. "Some would say there have been great cuts, but people who say that point to the high watermark years. In fact, funding has been relatively constant over the last 15 years."

To those who contend that government funding for legal services is inadequate, and that therefore the extra $100 million a year coming from all IOLTA programs is critical, Samp responds, "If you really need $100 million a year beyond what's being appropriated currently, then go to Congress and state legislatures to make your case."

If such appeals meet defeat "then the public, speaking through their elected representatives, doesn't think there's a need for more funds," Samp argues. "If it's in the public interest to have more funds for legal services groups, then make your case, and you will get it. Don't use this subterfuge to raise additional funds beyond those you've been able to convince legislators to give you."

John Ebbott, executive director of Milwaukee-based Legal Action of Wisconsin, says that if WisTAF funds vanish, his agency's staff would drop from 34 lawyers to 20. That would mean turning away about 5,000 more people a year who need legal services. Ebbott characterizes as "absurd" Samp's claim that legal services federal funding has been constant for some time. Not only did legal services groups take a 25 percent hit in the early 1980s, but in 1995 they suffered another 30 percent cut in federal funding, down to $283 million. "You also have to take inflation into account," he adds. "We've never maintained pace with inflation. If we had, we now should be receiving $15 per poor person, and we're at $7.70 per poor person."

"Current total funding, including IOLTA, for civil legal services provides one attorney for every 15,000 poor people in Wisconsin," Ebbott says. "Count in pro bono work, and the ratio might drop to about 1 in 14,000. That compares to a ratio of 1 lawyer per 450 people in the general population," he notes.

Ebbott also questions the true motives of IOLTA foes. "It's ironic," he says, "that when we were getting more money from the federal government, conservatives were saying we shouldn't be spending tax dollars for (legal services to the poor), and that there should be other sources of funding. Now the legal profession has found another funding source, and (IOLTA opponents) say we should use tax dollars. And that if the state and federal governments don't want to fund us, then that's the will of the people."

"But the end of that argument is to hell with justice for poor people - that in this country we only care about justice for the rich. I'm not sure that's the will of the people, especially when you look at who owns legislators with our current campaign financing system."

Further objections

Another ground for opposition to IOLTA, according to the Washington Legal Foundation, is that it violates the First Amendment by forcing people to give money to causes they don't support. For instance, clients who are landlords might disapprove of having interest on their deposits being used to help tenants fight eviction notices.

But there's a larger issue here, Samp points out. When people bemoan the possible loss of IOLTA, what they're concerned about is losing funds that "come with few strings attached," he says. Over the years, Congress and state legislatures have imposed more and more limits on how legal services agencies use their allocations. For instance, federal funds can't be used to represent illegal aliens fighting deportation or to challenge census results in cases attempting to block electoral redistricting. All told, Congress has imposed 15 to 20 restrictions on the use of legal services funds, according to Samp.

"By and large, the IOLTA funds have far fewer restrictions on them," he says. "That's why IOLTA is looked upon as such a particularly important program by many legal activists. It's money that can be used to do the most controversial projects, such as class actions challenging government policies."

Ebbott dismisses such statements as "the myth that's always been there," he says, "that we take this money, shop around for plaintiffs who agree with certain ideas, and then we bring lawsuits." Rather, he says, legal services agencies take on cases when an individual client is eligible and has a meritorious case. "This is funding the ability of poor people to have lawyers in court, whereas otherwise they'd have nothing," Ebbott says. "It's funding access to justice, not funding causes."

Because IOLTA funds do have fewer restrictions, they can be used to help people in need who have nowhere else to go, points out Jennelle Joset, attorney for the Center Against Sexual and Domestic Abuse in Superior. "Yes, there are services for indigent people," she says. "In our area that's Judicare. But before Judicare will accept a divorce case, it requires current, documented proof of physical abuse," which, she adds, excludes many people involved in seriously abusive relationships.

Joset says that even when a case is Judicare eligible, the client can't always find help. For example, a client who has a child custody matter may get referrals to private attorneys on Judicare's list, but fail to find any who are willing to take on what could become an extremely involved, time-consuming case. Lawyers often feel they can't afford to take on such cases at Judicare's pay rate.

Clients who fall through those sorts of cracks, who can't begin to pay for an attorney on their own, end up in court unrepresented, Joset says, often facing an abusive spouse who does have legal representation. "So the system these clients are coming to, saying, 'I need help out of this relationship; I can't live like this any more,' only victimizes them further," Joset says. "It's easy for people who are not in that situation to say, 'Well, services are available.'" She adds that anyone who contends that IOLTA funds finance political agendas, rather than helping people in real need, "needs to walk a day in our clients' shoes."

Bar responses

As the legal community awaits final word on Phillips, the State Bar of Wisconsin and the WisTAF board of directors are taking a proactive stance. A study committee has been formed - comprised of members from the Taxation Section; Real Property, Probate and Trust Law Section; Legal Assistance Committee; Professional Ethics Committee; and other State Bar sections, committees, and divisions.

Together, the State Bar and WisTAF "will look at what we might do if in fact there is a ruling that threatens to put IOLTA out of business," says Mary Lynne Donohue, a Sheboygan attorney and president of the WisTAF board. "We'll also be thinking about positive opportunities we can take from this, as opposed to just lamenting the fact that we think (Phillips) is a bad decision."

As one example, this is a prime time for education about IOLTA, Donohue says. "It's an opportunity to remind lawyers what IOLTA accounts are for: to hold nominal amounts of clients' money for short-term purposes. We all need to be reminded of that from time to time."

To preserve IOLTA as a source of legal services funding, "We will do what we need to do when we need to do it," says State Bar President Susan Steingass. But, for now, "We're in a study and assessment period," she adds, "and in the meantime, it's business as usual."

Dianne Molvig operates Access Information Service, a Madison research, writing, and editing service. She is a frequent contributor to area publications.