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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, but funding plummets for legal aid
PROGRAMS RELY ON INTEREST RATE
Md. clinic has closed; D.C., Va. programs squeezed

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.

Every time the Federal Reserve "assures the nation that interest rates will be kept at these historic lows for quite some time, the light at the end of the tunnel seems farther and farther away," she said.

Nationally, interest on lawyers' trust accounts has fallen from $371 million in 2007 to a projected $93 million this year, "a precipitous and devastating drop," said Betty Torres, president of the national association of programs handling interest on lawyers' trust accounts. Torres runs the program in Texas, where legislators passed a one-time appropriation to help. But that is not typical, and as the year wears on, "the strains are worse," she said.

A growing gap

Virginia's groups are being advised not to fill vacancies as funds hover at about $700,000 for the year, down from $4.6 million last year, said Mark Braley, executive director of Virginia's Legal Services Corp.

The District program dipped into reserves when funds fell from about $2.5 million in fiscal 2008 to just more than $1 million the next year -- and a predicted $576,000 this fiscal year. But reserves could not patch the hole, and some District groups have lost funding, said Katia Garrett, executive director of the D.C. Bar Foundation, which awards grants. "We had to make painful decisions," she said.

With more people drifting into poverty, "a system that already was not meeting most of the need is teetering on the brink of disaster," said Melanca Clark, a lawyer with the Brennan Center for Justice at the New York University School of Law.

Annual income limits for free legal aid vary slightly by state and by program, but a family of four generally must have an income of less than $27,500 to qualify.

Downloads of self-help legal forms have doubled in Maryland and Virginia in the past year and substantially increased in the District, according to the federal Legal Services Corp., which offers the forms as part of its congressionally established work. Federal funding to the organization increased by $10 million to $400 million for the fiscal year that will end in July, but that increase "is not enough to cover the gap" at local levels, said Karen Sarjeant, the vice president for programs. As a result, she said, manageable problems -- such as an eviction -- spiral "into something much worse that takes more to remedy."

Burgos waited in a cold rain on a Wednesday night outside a program office run by the Montgomery County Bar Association at the Gilchrist Center for Cultural Diversity in Wheaton. Until he lost his job, he said, he was able to make some payments on a mortgage and a home-equity line on the two-bedroom condo where he, his wife and two young children live. He can cover one lien while he hunts for a job, he told a lawyer, but not both.

"I came because they see a lot of problems and know how to help people who can't help themselves in these circumstances," he said.

At another desk, Rosa Requena of White Oak clutched an envelope holding her most recent credit card bill. At 61, she was about to have eye surgery and had not worked for about three years since losing her job as a nanny. She had disability health insurance, she said, but the credit card debt weighed on her. "I try to talk to the card company, but I cannot get them to discuss it," she said.

Requena held out the monthly statement: a balance of just over $400 for purchases at Giant and an international food mart.

Doing more with less

The Maryland Legal Aid Bureau opened 17,600 cases in the past year -- up 1,100 over the previous 12 months -- and also referred more cases elsewhere. The bureau, the state's largest provider of free civil aid, is operating with $1 million less in interest proceeds, an 11 percent cut.

Several times each week, the Baltimore office has a day-long program to screen walk-in cases, and slots are taken within 90 minutes of the doors' opening, said Wilhelm Joseph Jr., executive director. "I'm seeing something I have not seen before: people showing up in ties and white shirts filling our seats."

That same demand surfaces in Prince George's County. "It's like gambling, in a sense, on whether people can get through on our lines," said Neal Conway, executive director of Community Legal Services in the county.

In a July letter to state bar members, Chief Judge Robert M. Bell predicted increased demand and said it had been decades since he had witnessed as severe a funding crisis. Lack of access to courts "is more than theoretical," he wrote, directly reminding lawyers that rules of professional conduct include a requirement to report how much free legal service they render.

The economic decline already had spurred some lawyers to volunteer out of altruism "or a desire to stay active as their own business tapered," said Julie Petersen of the Montgomery Bar Association.

Sharon E. Katula was moved by the judge's letter. Part of a two-person firm in Crofton, she works on estate planning for wealthy clients, "and I'm blessed to have that," she said. She said she saw the urgency for volunteers but thought her expertise did not mesh with the need.

Instead, Katula's firm sent $10,000 to Maryland Legal Services.

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