NEW STATE REGULATIONS TO INCREASE FUNDING FOR CIVIL LEGAL ASSISTANCE TO ELIGIBLE POOR NEW YORKERS

Governor Eliot Spitzer today announced that the Board of Trustees for the Interest on Lawyer Account Fund (IOLA) has formally proposed new regulations that will dramatically expand state revenue for civil legal services.

The proposed regulations establish new guidelines that require banks to pay significantly increased interest rates on IOLA accounts. Since 1983, the accumulated interest on such accounts has been used to help fund not-for-profit programs that provide civil legal assistance to approximately three million poor New Yorkers.

Currently, the top 80 banks handling IOLA funds pay an average interest rate of less than 1 percent, even on accounts of more than $100,000. Under the new regulations, each bank will now be required to pay interest rates on IOLA accounts comparable to those paid by that bank on accounts of similar size and characteristics. The new regulations provide options of acceptable account comparisons to guide banks in determining appropriate interest rates.

“The increased revenue from the amended IOLA regulations will provide poor New Yorkers with greater access to civil legal services,” said Governor Spitzer. “With IOLA, New York has attempted to make up for the lack of federal funds for necessary civil legal services, and yet programs have remained under-funded. This initiative, partnered with the new State funding, will go a long way toward supporting civil legal services programs that help prevent homelessness and assist victims of domestic abuse and discrimination, and ensure that families can access health care and other necessary services. When people are wrongly evicted from housing, rejected for Medicaid or abused by relatives and do not get the legal help they need, it costs the State money to provide housing, prevention assistance, counseling and medical care. For this reason, too, we are far wiser to try to prevent wrongful actions.”

Lorna Blake, Executive Director of the IOLA program said: “When the new regulations take effect, each participating bank’s payment toward the fund for civil legal assistance for poor New Yorkers can be expected to increase several fold. We commend the Governor for his leadership in encouraging the IOLA Board’s efforts to increase access to our civil justice system.”

In addition to pressing for this regulatory change, the Governor has worked with the Legislature to establish a regular funding stream in the State’s budget in order to boost state funding for civil legal services programs. Both initiatives will allow New York State to help close the “justice gap.” Similar efforts have been undertaken in New Jersey, Connecticut and Massachusetts.

Assemblywoman Helene Weinstein, chair of the Assembly Judiciary Committee said: “For more than a decade the Assembly has stood alone in the struggle to ensure access to critical legal services for low income New Yorkers. Year after year, we have faced an executive branch unwilling to fund civil legal services. It is a refreshing change to have a partner like Gov. Spitzer who believes that the words ‘liberty and justice for all’ should have meaning for all New Yorkers.”

During the development of these new regulations, IOLA staff members and the Governor’s staff met with several of the banks that service the greatest number of IOLA accounts. The largest participating bank, Chase, is leading the way by voluntarily implementing the new requirements even before the regulations take effect.

Kevin Watters, Chief Executive Officer of Business Banking at Chase said: “Chase is proud to have worked closely with Governor Spitzer’s administration and the IOLA Fund to ensure that we comply with the proposed regulation, even before the effective date. As a result of this new regulatory effort, more resources can be made available to provide legal assistance to poor families in New York.”

Kathryn Grant Madigan, Esq., President-Elect, New York State Bar Association said: “Access to justice for all, not just those who can afford it, has been and will continue to be a key Association priority. We hope that the steps that the IOLA Fund is taking to raise its income through new banking regulations will result in a significant increase in civil legal services for poor New Yorkers and we applaud Governor Spitzer for making civil legal services a priority in the current State budget.”

Anne Erickson, President and CEO of the Empire Justice Center said: “Governor Spitzer clearly recognizes the need to expand access to civil legal services for poor families. Unfortunately in New York, as elsewhere around the country, we have previously been able to meet, at best, a small part of the legal needs of the poor. By working with the banks and with IOLA, the Governor is paving the way for a significant increase in resources to help meet these pressing legal needs.”

Barry Kamins, President of the Association of the Bar of the City of New York said: “Revision of the IOLA regulations to increase interest rates paid on those accounts would significantly increase access to justice for needy New Yorkers. The additional funds will significantly assist legal services organizations which grapple each day with the challenge of unmet needs.”

In 1983, with the strong support of the New York State Bar Association, the Legislature created the New York State Interest on Lawyer Account Fund (IOLA) as a means to provide additional financial support to civil legal service organizations that had been decimated by federal budget cuts. The IOLA program requires attorneys to deposit funds received from clients either in interest bearing accounts for the benefit of the clients or in interest bearing IOLA accounts, in accordance with Judiciary Law §497. The interest on IOLA accounts is pooled and provides the money for grants made by the Board of Trustees of the IOLA Fund to non-profit civil legal service providers across the state.

To date, IOLA has provided more than $154 million in grants for providers of civil legal services to poor New Yorkers, furthering the goal of equal access to justice for all.

The new regulations have been approved for publication by the IOLA Board of Trustees. They are subject to a 45 day public comment period ending July 15.