Legal services program for poor is still alive -- as it should be

In the wake of a recent US Supreme Court decision in a Texas case, opponents of legal services funded from interest on lawyers' trust accounts (IOLTA) cheered the impending death of state programs for the poor. But their premature celebration reflects a weak understanding of the issues before the court, the history of the program, and most especially what is at stake for our system of justice.

The program in Massachusetts provides badly needed funding for legal services to the indigent. And, fortunately, nothing in the Supreme Court's decision changes that. Period.

One of the most serious problems in our system of justice is the persistent shortage of civil legal services to the poor. Defendants in criminal cases are guaranteed the right to a lawyer, but there is no such guarantee for civil law. The battered woman being challenged by her ex-spouse for custody of her children, for example, must turn to legal services if she cannot afford a lawyer of her own. She competes for these sparse services with the elderly man whose insurance company may be illegally denying him health care and with the family who may have been defrauded out of their home by a second mortgage scam.

As a former judge, I saw firsthand the effects of the legal services shortage. Litigants who come to court pro se, or unrepresented, are at a significant disadvantage in the courtroom, and it is extremely difficult for the judge in these cases to ensure that justice is served. But judges and court personnel do make efforts to help unrepresented clients understand the system -- efforts that take time, adding further delays to already severely backlogged courts.

Despite the efforts of the courts, the Massachusetts Legislature, and hundreds of lawyers who volunteer their services without fee, a severe shortage of civil legal services for the poor persists. In the past few years federal cuts in funding have exacerbated the shortage. The Massachusetts IOLTA program last year provided more than $6 million to legal services. This year the Massachusetts program will yield substantially more than that amount. The yield of all states that have IOLTA programs is more than $100 million annually. These figures give some idea of what the loss of funds would mean.

Massachusetts IOLTA was established by order of the state Supreme Judicial Court in the 1980s after a change in banking laws made it possible for individuals and nonprofit corporations to collect interest on checking accounts. Before that, no one benefited when lawyers held clients' funds for short periods of time (sometimes as short as a day or two) -- except, perhaps, the banks that kept the funds in interest free accounts. IOLTA made use of the lost interest, creating a mechanism to fund civil legal services for people who could not afford representation.

IOLTA supplements state and federal funding for legal services without adding to our tax burden and without harming lawyers' clients. If a client's funds are large enough or held long enough to earn net interest, the interest goes to the client.

In the Texas case, the US Supreme Court decided that the interest on client accounts is private property, but it did not find that the Texas IOLTA program constitutes a ``taking.'' That question goes back to a district court in Texas. Even if a taking is found, it is important to remember that the government can legally, in some circumstances, take property, as long as the owners receive just compensation. As Justice David Souter commented in his dissenting opinion, the Texas court might well recognize that just compensation, in this case, is zero, since the clients would not have earned any interest in the absence of IOLTA.

The Texas litigants should think twice about dancing on IOLTA's undug grave. No one, including clients with funds in lawyers' trust accounts, will benefit by destroying such worthwhile programs.

Edward F. Hennessey is a retired chief justice of the state Supreme Judicial Court.