Falling interest rates create crisis for civil legal services

Maryland Legal Aid executive director Wilhelm H. Joseph Jr.

An article in today’s Baltimore Business Journal outlines the financial crisis facing civil legal service providers in Maryland caused by the collapse of Interest on Lawyer Trust Accounts (IOLTA), which generates funding from money held on behalf of clients. Maryland’s IOLTA rate has plummeted 51 percent, from $6.7 million to $3.3 million. Thirty-eight nonprofits, including Maryland Legal Aid, rely on the funding to provide free legal services to low-income Marylanders and the elderly. Legal Aid, serving more than 50,000 people a year,  is the largest provider in Maryland.

“Right now, we’re holding on. But by the time we hit Jan. 1, 2010, the strings will tighten,” said Legal Aid executive director Wilhelm H. Joseph Jr. He’s banking on two uncertain factors to see Legal Aid through the difficult times: a pending cy pres award (left over funds from a class-action lawsuit to be awarded to charitable organizations) and the efforts of the Access to Justice Commission, created by Court of Appeals Chief Judge Robert M. Bell.