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Hard Times For Legal Aid Agencies

Layoffs are imminent as funding drops drastically

By CHRISTIAN NOLAN

The coming year is going to be a bad one for low-income people who need legal assistance. And maybe even worse for the agencies that serve them.

The amount of money coming from the major funding source for legal aid agencies is falling faster than the stock market on a bad day, from $20 million in 2007, to $8 million this year to a projected $4 million in 2009.

As a result, significant staff cutting is expected at Connecticut Legal Services, Greater Hartford Legal Aid and New Haven Legal Assistance.

“We knew there’d be a cut but nobody expected it to be like this,” said Patricia Kaplan, executive director of New Haven Legal Assistance.

Kaplan’s organization has 32 employees, including 20 lawyers and seven paralegals. She estimated that eight of the professional positions would be cut, along with one secretary’s job. Because New Haven, like CLS, are unionized, any cuts in jobs, benefits or working hours would have to be worked out through collective bargaining.

Kaplan acknowledged that some of her people are already looking for new jobs and she’s written them letters of reference.

CLS, the largest of the state’s legal services organizations, has 87 staff members, 56 of whom are lawyers. Executive Director Steven Eppler-Epstein said the organization may have to lay off between 20 and 30 people. To keep the number below that, Eppler-Epstein would have to cut hours and pay significantly. The end result is that the group may serve 30 percent fewer clients than the 6,000 it served in the past year.

Greater Hartford Legal Aid held a meeting on Thursday night to discuss job and service cuts, but reached no final decisions. Officials expect a 30 percent decrease in funding next year. “I’m in scramble mode,” admitted Elam Lantz, executive director of Greater Hartford Legal Aid. “It’s quite a shock.”

Lantz said his group has already reduced travel and has tried to scrimp on minor expenses, such as publication subscriptions. “It’s almost symbolic,” he said. “More than saving money, we have to tighten our belts.”

Housing Market Havoc

There would be no good time for such drastic cutbacks. But in a dismal economy, the legal aid agencies are even busier than usual. Poor people are struggling to keep their homes during a nationwide foreclosure epidemic. As unemployment rises, so do episodes of domestic violence. And impatient creditors step up efforts to collect overdue bills.

Of course, the drop in funding is also related to the economic crisis.

Since 1990, Connecticut legal services organizations have relied on funding from the IOLTA, Interest On Lawyer’ Trust Accounts. The accounts contain money that clients are temporarily holding for clients. But interest rates on the accounts have plummeted from 5 percent two years ago to 1 percent now. Also, the bulk of funds that go into accounts is money – such as deposits – that attorneys are holding for people buying homes. And everyone knows how bad the housing market is.

“Fewer and fewer closings are taking place in Connecticut and the bulk of the funds that go into client accounts are generated from real estate,” said Sandy Klebanoff, executive director of the Connecticut Bar Foundation, which distributes the money to the legal aid groups.

The CBF tries to save some of the IOLTA money for “a rainy day.” But, said Klebanoff, that fund is not big enough to get the agencies through a long-term recession. “If we don’t generate more funding by the end of next year, it’ll be a disaster because we’ll have nothing left,” she said. “It is a crisis.”

Klebanoff noted that other states are in the same dire straits. Thirty-seven states use IOLTA accounts, and many others use the interest to pay for legal aid services. In New Jersey, legal aid funding decreased from $40 million in 2007 to $15 million this year. Gov. Jon S. Corzine declared an emergency and the state has agreed to kick in $9 million towards next year’s funding to maintain legal service programs and keep staffing at a workable level.

Lobbying Lawmakers

Eppler-Epstein, the CLS executive director, said legal aid officials have already begun lobbying the Connecticut General Assembly to see if lawmakers can offer some help. But he understands that may be a long shot because the state is already facing the prospect of a massive budget deficit.

“The last downturn we had was in the mid-‘90s and it wasn’t as sudden as this,” said Eppler-Epstein. “Six months ago, IOLTA and the rest of the economy was looking at a soft recession. Now we’re looking for potentially the worst economic times since the Great Depression.”

Others aren’t quite so pessimistic. Some legal aid officials hope that the IOLTA funding will surge when the housing market starts bouncing back. “We do think this is a one or two year blip,” said Kaplan, of New Haven Legal Assistance.

But even if it does, there will likely be a long-term impact on legal aid agencies. When money is available again, they will be able to hire new lawyers. But there will be a learning curve as those lawyers learn about legal aid work. In the meantime, many of the experienced lawyers currently on staffs will have been laid off or will have fled for greener pastures.

“It’s terrible for our staff and terrible for our clients,” said Eppler-Epstein, who is hopeful that some temporary funding source can be found to halt massive cutbacks. “We’re looking for bridge money…[to get us from] where we are now to what we know will be a better situation in a couple years.”•