3 Senate bills target the coffers of Legal Services

March 20, 1991|By C. Fraser Smith | C. Fraser Smith,Annapolis Bureau of The Sun

ANNAPOLIS -- An appearance of plenty in the coffers of poverty law programs is being used as a compelling argument for legislative opponents of Maryland Legal Services Corp. to raid those assets.

Three bills in the Senate would remove more than 20 percent from balances built up in the programs, which are designed to bring legal services to those who could not otherwise afford them.

The bills are backed by Sen. Walter M. Baker, D-Cecil, chairman of the Judicial Proceedings Committee, who admits that his pursuit of budget balancing is driven also by his distaste for the Legal Services program.

"If I was hungry, I'd buy myself a meal before I hired a lawyer -- and I'm a lawyer," he said yesterday. "I just hate to see an organization which is funded by the state turn around and sue the state. They bite the hand that feeds them."

But according to Robert J. Rhudy, executive director of Maryland Legal Services Corp., the organization hardly ever sues the state. Less than 1 percent of its work has to do with suits against Maryland, he said.

Mr. Rhudy and others say the Baker bills could derail a system that has just begun to make progress in extending services to Marylanders with unmet legal needs.

A commission chaired by U.S. Representative Benjamin L. Cardin, D-Md.-3rd, has reported numerous areas in which the absence of legal assistance in Maryland had a profound impact on a person's life. A survey of more than 230,000 cases in which government benefits were denied showed that only 10 percent appealed.

When appeals were taken with the assistance of lawyers, however, between 33 percent and 63 percent were successful. Failure to appeal, in other words, was a costly failure for the poor.

Mr. Baker is unmoved by these arguments.

"I'd like more. You'd like more. A drowning man reaches for straws. We'd like to have the Queen Elizabeth, but it's not always available," he said in an interview.

Under one bill he has sponsored, $750,000 would be diverted from the Maryland Legal Services Corp. to the public defender's office -- which does not have sufficient funds in this tight budget year to pay for so-called Children In Need of Assistance cases. The money would provide legal counsel for the parents of children under the protection of the state.

The money Mr. Baker wants to divert flows to Legal Services accounts from interest in the escrow accounts of lawyers who are keeping a client's money while property sales are pending -- deposits on contracts, for example. Known as IOLTA -- or Interest On Lawyers' Trust Accounts -- this source has proved to be a far more robust producer than its advocates had predicted.

Ironically, the fund's recent health has worked against the program, leading Senator Baker and others to suggest that Legal Services has had a windfall the state may rightfully use in these times.

Legal Services argues that its poor clients should not be harmed to finance programs that fall under the purview of the government.

On the Senate floor yesterday, Mr. Baker and John A. Cade, R-Anne Arundel, suggested that the corporation deliberately understated the amount of money that would be generated by the accounts.

But Mr. Rhudy says he estimated that the fund would triple when payment of the IOLTA money became mandatory last year. But he wanted to be conservative in his estimate. He said he previously had overestimated the rate of voluntary contributions from the legal community.

A second bill sponsored by Mr. Baker would take another $500,000 the Legal Services program gets from the state's abandoned-property fund and transfer that to the state's general fund. The theory again is that the program has more money than it knows what to do with. Here, too, Legal Services says the theory is untrue.

"Unless we see an increase in income from IOLTA over the next three months," Mr. Rhudy said yesterday, "our total grants will likely be lower next year.

A third bill originally would have produced as much as $3 million more for the Legal Services corporation. In Mr. Baker's committee, however, the measure was amended to provide that the money would go to Baltimore.

"The city needs money. Legal Aid has a $2 million surplus," Mr. Baker insisted.

This bill would generate money by creating what is known as IOTA -- Interest On Title Accounts -- meaning accounts established by title companies and their lawyers in much the same way the lawyer-interest account works.

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