by Nat Frothingham
In remarks to a September 15 meeting of the Montpelier Rotary Club, and in a subsequent interview with The Bridge, Robert Paolini, executive director of the Vermont Bar Association, hammered at a single theme: the serious gap evident in our legal system when, in civil cases, poor people can’t afford to hire an attorney but still need legal help.
Paolini emphasized the critical difference between civil and criminal cases as it affects the poor.
In criminal cases, the Sixth Amendment to the U.S. Constitution, as interpreted over time by the U.S. Supreme Court, guarantees a right to paid legal counsel to anyone whose conviction could lead to a loss of personal freedom—meaning jail time, for example. But this right to paid counsel does not extend to civil cases. Since the global mortgage and banking crisis of 2008, an estimated 4 million or more U.S. homes have been lost to foreclosure. And, Paolini pointed out in the interview, many of the individuals and families who have lost their homes were victims of fraudulent lending practices. He noted that billions of dollars of penalties and judgments have been levied on banks and other financial institutions in the aftermath of the financial crisis.
He went on to ask, “Wouldn’t the loss of a home be just as devastating, or even more devastating, than serving a jail term?” Yet, because a foreclosure is a civil case, the homeowner has no right to paid legal counsel.
In other civil cases a person could be facing the loss of custody of his or her children. Or a parent could be stiffed by a former spouse for needed child support. Or a tenant might be facing an unsafe housing condition. All these are serious predicaments. Not having legal advice—not having enough money to hire an attorney and get help—is wrong, a denial of fundamental justice, Paolini believes.
Over the years, the Vermont Bar Association has made a number of attempts to help poor people who need legal assistance. Paolini mentioned the “aspirational goal” that every member of the Vermont Bar provide 50 hours of voluntary, or pro bono, legal help each year. He also noted Vermont Legal Aid’s various state-funded programs. But the Legislature has pretty much level-funded Vermont Legal Aid in recent years, even as the demand for legal assistance has grown.
In 1982, based on their awareness of the need to help low-income Vermonters get legal assistance, the leaders of the Vermont Bar Association created a fundraising nonprofit called the Vermont Bar Foundation. To get the wherewithal it needed, the foundation turned to a source of money described as “interest on lawyer trust accounts” (IOLTA). The Vermont IOLTA program began voluntarily after it was approved by the Vermont Supreme Court in 1984; the program became mandatory on March 1, 1990.
And what exactly is a lawyer trust account?
In Vermont and other states, it’s a pretty standard practice for attorneys and law firms to hold a client’s money in a lawyer trust account. That client money could be a deposit that a client makes as part of a property transaction, or it could be client money set aside in advance of a divorce or a business settlement.
Lawyers are specifically prohibited from mixing client funds with their own funds or with a law firm’s funds. But these client funds, across the state, amount to millions of dollars, and they earn interest. What has developed—in all 50 states—is a mechanism for taking the interest from these funds and turning it over to programs that offer or finance legal help to people who can’t afford an attorney.
At the highest point, before the banking crisis, interest payments from lawyer trust accounts to the Vermont Bar Foundation amounted to about $1.3 million annually. But that IOLTA contribution has declined. In 2013, for example, the interest income to the foundation was just under $1 million, a loss of $300,000. And the income in 2014 could be even less, perhaps as little as $750,000, according to Paolini.
“That’s a crisis,” he told The Bridge. “A 40 percent loss over six years.”
The sum has declined for several reasons. Since the banking and mortgage collapse, housing purchases have declined. Relative to earlier years, there’s been a shortfall in business activity even during the recent economic recovery. And there have been fewer legal actions, too, meaning less money gets set aside in those lawyer trust accounts.
The decline of IOLTA money is compromising the Bar Foundation’s ability to sustain its various programs to help poor Vermonters get the legal help they need. At the same time, Paolini acknowledged, more and more poor Vermonters who can’t afford legal help need legal help.
In an email message following his interview, Paolini listed a number of examples of how the Bar Association and the Bar Foundation assist deserving Vermonters in need of legal help. The two organizations are helping Vermonters facing credit card debt that has gotten out of control. Both the association and the foundation have helped poor clients faced with losing their homes because they fell behind with mortgage payments. Both have provided help to people facing eviction.
When an early morning fire on August 21 completely destroyed the Rutland Plywood Corporation factory and 170 workers lost their jobs, the Bar Association’s legal access coordinator, May Ashcroft, swung into action. She recruited five Rutland-area attorneys to provide on-the-spot advice to the workers who had lost their jobs as well as counsel on child support modification, advice on how to work with creditors to avoid foreclosure, and help with employment matters.
Given such needs for legal counsel, Paolini is reaching out to generate the necessary resources. “I’m trying to help the Bar Foundation,” he told The Bridge. “I think we’re headed down a dangerous path. I think the crisis is only going to get worse. We’ve got lawyers doing pro bono [work], lawyers digging into their own pockets to help pay for a [Bar Association-supported] poverty law fellow.”
But the gap in the state’s justice system remains, and the need for help is increasing. “I see people at the lower [income] end getting dropped off the radar,” he said.
His fundraising goal this year is $200,000. He is convinced this effort will succeed if there’s a rising public awareness of what’s at stake.