Pro Bono, Public Interest

The Ingenious New Plan To Fund Public Interest Efforts

Tough times for public interest funding has spurred new innovation.

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These can add up.

These can add up.

In the 1980s a little bit of compassionate magic was born. Known as the IOLTA (Interest On Lawyers’ Trust Accounts) program, the idea has brought hundreds of millions of dollars to civil legal organizations who provide free legal services to the elderly, indigent and disabled. Those public interest law firms then are able to help prevent homelessness, ensure medical care and provide safety and security, and so much more, for those who need it most. Now, an additionally magical gift, equally as compassionate, is poised to save as many lives as has the IOLTA dream.

The idea behind IOLTA was simple. Every lawyer in the country was, and remains today, required to have a trust account into which client monies are placed, generally to be held for very short periods. Settlement and judgment payments are deposited into these accounts until the checks clear and can be distributed to the appropriate parties at the appropriate times. Retainer amounts received from clients also go into these bank accounts and are drawn upon as agreed by lawyer and client. Because the individual amounts are small and short-term, the funds almost never generate net interest, bank fees often exceeding whatever miniscule amounts of interest might have been earned.

The genius of the IOLTA program comes from two directions. First, IOLTA permits the pooling of all these deposits, thereby creating a significant fund of principle that can, for the first time, generate substantial interest. Second, those interest dollars, which without the IOLTA changes in banking policy simply would not exist, are swept up by IOLTA funding organizations (either organized by state bar associations, state courts, or as separate non-profit foundations) and distributed to qualified legal aid organizations serving the poor. This creation of funding, seemingly out of nowhere, has resulted in the infusion of millions of dollars of life-saving legal assistance to the poor. Where nothing had existed before, there magically was created the nation’s second largest source of funding in support of free, high quality, compassionate legal representation for the poor.

The only downside to the IOLTA program is that its success is dependent on the nation’s interest rates. In California, for instance, when interest rates were high, more than $20 million annually was earned and distributed. When interest rates are low, as they have been for a number of years, less than $6 million has been generated. As a result, when rates first plummeted many legal aid organizations reduced the size of their staff and served fewer people at the very same critical moment there were more clients in need of legal representation. Even as revenue began to rebound, access to the justice system was correspondingly curtailed, and all of the democratic privileges that only the judicial branch of our democracy can ensure were endangered just when they were most needed.

Into this breach emerged a new program, equally as compassionate and as effective. In Massachusetts and Ohio, several banks have launched programs where law firms can choose to donate to IOLTA programs some or all of the “cash back” benefits generated by millions of dollars of credit card transactions. Genius.

Citizens Bank has taken the lead and is one of the first financial institutions to get involved. They have announced that law firms in both Massachusetts and Ohio have the opportunity to sign-on and direct their cash-back rewards to the local IOLTA distribution system. “The Citizens team has listened to the needs of their clients in the legal community and done a great job coming up with an innovative solution that helps law firms ensure the fairness of our legal system by contributing to civil legal aid for low-income and vulnerable Ohioans,” said Angela Lloyd, Executive Director of the Ohio Legal Assistance Foundation.

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Lawyers can do more to fight the tragedies of poverty than can anyone else. By representing low-income clients in court, attorneys ensure that the judicial branch of our government, the most responsive branch of our democracy, serves to protect the most basic of democratic rights. But without attorneys skilled in navigating the complex court processes and the ever-growing morass of laws and regulations impacting everyday lives, that safety and security is severely endangered. Attorney General Loretta Lynch recently explained the impact of the poor’s limited access to lawyers:

It hampers our ability… to prevent domestic violence and human trafficking; to combat homelessness…; to help those in need to secure health care…; to keep kids in school; and to help those with criminal records gain a second chance to succeed.

The IOLTA program has helped millions of people by ensuring their access to attorneys, and in turn their access to justice. Now the credit card cash-back program is on the precipice of being the next savior for many. So turn to your banks, explain an importance they may not recognize. Turn to your law firms, explain how it costs nothing to save lives. Turn to your lawyers, explain the power of participating in pro bono representation of the poor. And let everyone know that the legal aid system of delivery of services to the poor, needs us all. Innovative plans like the cash-back program are tomorrow’s window of opportunity for millions who may never know where that tomorrow comes from.

David LashDavid A. Lash serves as Managing Counsel for Pro Bono and Public Interest Services at O’Melveny & Myers LLP. He can be reached at dlash@omm.com. The opinions expressed are his alone.

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