ANNAPOLIS -- The Senate handed a major defeat to title companies yesterday by passing a bill that requires them to give up the interest they earn on their clients' trust accounts and send it directly into the coffers of Baltimore.
The bill originally would have sent the money, between $3 million and $7 million a year, to the Maryland Legal Services Corp., which funds legal programs for the poor and disadvantaged.
In a victory for advocates for the poor, however, the Senate voted 27-19 against a bill that would have stopped the sending of $500,000 to the Maryland Legal Services Corp. each year from the state's abandoned property fund.
The 29-17 vote on the title interest bill sends to the House the long-standing dispute between title companies and lawyers, who since 1989 have been required to give up their client trust account interest.
The attorneys, however, donate their interest on lawyer trust accounts to the Maryland Legal Services Corp. And the bill, as sponsored originally by Sen. Laurence Levitan, D-Montgomery, would have sent the title companies' interest on trust accounts to the legal services group. But an amendment offered by Sen. John A. Pica Jr., D-Baltimore, diverted the money to Baltimore.
Estimates on the amount of money the bill would raise depend, among other things, on the strength of the real estate market, which title companies serve.
Lawyers have argued that since they must give up the small amounts of interest earned on each real estate transaction, title companies should have to do the same.
But title companies countered that taking that money simply wouldmean higher closing costs in a state that already ranks among the most expensive for buying a house.
Still to be decided by the Senate is a bill that would take the first $750,000 of interest on lawyer trust account money that the Maryland Legal Services Corp. receives each year and send it to the state's public defender's office.
The bills are a reflection of the disdain some lawmakers have for the legal services group, which funds the Legal Aid Bureau, among other programs. "The Legal Aid service in my area goes out into the fields and solicits business against my farmers, and it cost one of my farmers $30,000," said Sen. Frederick C. Malkus Jr., D-Dorchester.
It hasn't helped the group that it has a surplus of about $2 million, although its advocates say the surplus is only a temporary reflection ofthe corporation's accounting procedures.
"Over $2 million is just laying there doing nothing. The state of Maryland needs this money -- it needs it very badly," said Sen. Walter M. Baker, D-Cecil, who reminded the Senate that another Maryland Legal Services Corp. recipient, the House of Ruth, an advocacy group for battered women, has been accused of misleading Gov. William Donald Schaefer about the records of ++ some of the women whose sentences for murder the governor commuted recently.
But Sen. Julian L. Lapides, D-Baltimore, argued that "there are people in Maryland who desperately need legal services."
"And the legal profession has been woefully negligent in handling work that should be done pro bono."