Correction to This Article
This article incorrectly said that funding for the federal Legal Services Corp. increased to $400 million for its current fiscal year, and that the fiscal year ends in July. The $400 million cited in the article is the amount approved by the Senate for the fiscal year, which ends next Sept. 30. The House has approved $440 million, and the final budget has not yet been negotiated.

Need is up, funding down for legal aid agencies

By Mary Pat Flaherty
Monday, December 7, 2009

For accountant Jose Burgos, who was laid off in October, the free legal advice he's received in Montgomery County could make the difference in whether his family keeps its Silver Spring condominium.

For the legal staff, Burgos, 41, is one more complicated bankruptcy consultation in a year of many -- and that is where the stress hits.

At the very time that more newly poor people need help with the likes of mortgages, rent disputes and battles over wages, clinics across the country that help with noncriminal cases are enduring sharp funding drops.

Locally, Maryland is hardest hit, although Virginia and the District are under increasing pressure.

In Oxon Hill, a legal aid office closed after staff layoffs. In Riverdale, the phone-line hours for screening have been reduced. In Baltimore, a clinic added 20 chairs in its waiting area, but although more people get a seat, fewer receive advice because the employees are swamped.

The program Burgos turned to decided that with attorney time limited, it could accept only 50 labor-intensive bankruptcy cases before summer. Burgos arrived at the 25-case mark.

The Maryland situation is so severe that the chief judge of Maryland's Court of Appeals has urged lawyers to donate time or money to preserve programs.

At the heart of the problem are historically low interest rates. Legal aid societies nationwide rely on income generated through an arcane process linked to the federal rate, and "what's been good news for everyone else was a blow to us," said Susan Erlichman, executive director of the Maryland Legal Services Corp.

Criminal suspects who cannot afford an attorney are guaranteed one under Supreme Court precedent. Not so parties in civil cases, which is where legal aid groups step in. A major money source for them is the interest on funds that law firms hold in escrow for clients, for example, during real estate transactions. The interest on pooled funds is donated to help with civil cases.

Over the past year, deposits shrank and interest rates plummeted to almost zero.

Legal aid groups reeled.

From $6.7 million in the fiscal year that ended in June 2008, the Maryland fund fell to $3.4 million a year later and is expected to be $2 million this year, Erlichman said.

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