September 2000 

Legal Services Funding

by Kent A. Gernander

"The first duty of Society to the poor is not to give them charity but to secure them justice."

Lynn Abbott, 1901, Legal Aid Society of New York

It is a fundamental tenet of our democracy that all persons should be afforded access to justice. Meaningful access requires the availability of legal assistance. Providing that assistance is a shared responsibility of government and lawyers.

In Minnesota, over 640,000 people, or 14.5 percent of the population, are considered too poor to pay for legal services. Some are elderly, mentally impaired, physically disabled, immigrants, migrant workers, farm families, homeless, abused, minorities, or children. Their critical needs include shelter, food, health care, protection from abuse, and public services.

Legal services are provided to the disadvantaged by civil legal aid programs and volunteer lawyers. In 1999 the seven Minnesota Legal Services Coalition programs, using staff and private lawyers, closed 37,124 cases affecting over 100,000 families.

The total annual budget for Coalition programs is about $21 million. The cost of legal aid representation works out to about $55 per hour or $500 per case.

Funds for legal aid come from several sources. Almost one-third of the budget comes from the Legal Services Corporation and other federal programs. The state of Minnesota currently appropriates $6,484,000 for legal aid services. Attorney registration fee surcharges (currently $50 per year for most lawyers) produce almost $1 million per year for legal aid; and interest on lawyers' trust accounts (IOLTA) currently generates about $2 million more. The balance of funding comes from various private grants and contributions. Two other contributors to legal services are often overlooked in the financial equation. Legal aid lawyers are typically paid as little as 60 percent of the salaries paid to other public sector lawyers. This salary disparity contributes about $3 million annually to the provision of services. The contributions of services by volunteer lawyers are harder to measure. Volunteers working with Coalition programs in 1999 donated services with an estimated value in excess of $5 million.

Minnesota's programs for meeting the legal needs of the disadvantaged are a model for the nation. Coalition programs are staffed by experienced, skilled and dedicated lawyers; many smaller legal aid programs serve targeted populations. Participants in volunteer programs include many of the state's best lawyers and law firms. The various programs cooperate with one another to leverage available resources and deliver services effectively. Minnesota also enjoys unique participation in the funding of legal services by federal and state governments, lawyers, and private sources.

Despite all that, there remains a large unmet need for legal services to the disadvantaged. Coalition programs annually turn away 20,000 applicants -- people who meet eligibility criteria and have critical legal needs -- because of limited resources. Another estimated 58,000 people with qualifying legal needs fail to apply for services.

The funding situation is worsening. Federal funding was curtailed in 1995 by almost one third, and additional curtailments are threatened each year. State appropriations increased slightly in 1998, but the increase was not renewed in 1999. Curtailments in state funding are also a continuing threat. At the same time, program needs are increasing, inadequate staff salaries make it difficult to recruit and retain qualified and experienced lawyers. Costs of computers, technology, and health insurance are increasing, consuming more and more of the budget. Results have included staff reductions and closing or delaying the opening of rural offices, which means fewer needy clients are being served.

In 1995, the Minnesota Supreme Court, at the direction of the Minnesota Legislature, appointed a committee to recommend changes in legal aid funding. The Penn-Stageberg Committee recommended a partnership approach, involving the Legislature, the courts, and lawyers -- and a five-year plan for increasing funding. Many of the committee's recommendations have been implemented. One was the attorney registration fee increase, which was adopted by the Supreme Court at the request of the MSBA.

With respect to state funding, the Penn-Stageberg Committee recommended increasing the appropriation base in annual increments, so that it would reach $8,407,000 by the fiscal year that ended June 30, 2000. This level has not been achieved. The appropriation for the fiscal year beginning July 1, 2000, is $6,484,000, leaving a shortfall in funding of almost $2 million.

With respect to IOLTA funding, the committee recommended working with banks to increase interest income and reduce costs. Some success has been achieved; many banks have agreed to waive service charges on IOLTA accounts, and a few have agreed to raise interest rates. However, many are paying current rates between one and two percent, and the total interest paid on IOLTA accounts is 50 percent below its previous level.

The committee also recommended private fund-raising initiatives. Some of the programs have solicited and received grants and contributions to meet current needs. Endowment funds would provide continuing and stable funding.

During the coming year, the MSBA will be mounting a concerted effort to increase funding for legal services programs, including volunteer programs. It will address legislative appropriations, IOLTA income, and private fund-raising, as well as increased use of unclaimed class action proceeds. This is an important undertaking and a long-term commitment. It will require the participation of MSBA members, working with the courts, the Legislature and others.

Kent A. Gernander is president of the MSBA. A general practice and trial lawyer in the Winona firm of Streater & Murphy, P.A., he is a graduate of Harvard College and of the University of Minnesota Law School.