WisTAF faces funding crisis

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“In our state, there is a problem funding legal services to the poor and the problem is not going to go away by itself.” Edward A. Fallone, WisTAF Board member

Wisconsin Trust Account Foundation (WisTAF) board members are attempting to build support for a proposal they hope will help make up a decline in funds from the interest on lawyer trust accounts (IOLTA), which support civil legal service providers.

Moving beyond its mandate to manage IOLTA funds and distribute them to legal service providers, WisTAF has filed a petition with the state Supreme Court, asking the court to impose a fee of $50 on all dues-paying lawyers. Such a move is expected to raise more than $800,000. According to the petition, WisTAF would administer that money along with the IOLTA funds.

Two WisTAF board members, speaking during an open forum at the Milwau-kee Bar Association (MBA) offices last week, indicated that legal services are facing financial challenges due to inadequate federal funding, limited private donations and a significant drop in IOLTA funds.

"In our state, there is a problem funding legal services to the poor and the problem is not going to go away by itself," said WisTAF Board member Edward A. Fallone. "The question is, ‘How do we address that problem?’"

The Supreme Court created WisTAF in 1986 to help provide funding for legal services to the poor. The only source of funding for WisTAF has come from money collected under the trust account rules.

During the past five years, WisTAF has seen a significant drop in the amount of money available for grants. In 2000, WisTAF issued more than $1.9 million in grants.

By comparison, the recommended grants for 2005 are $411,000. The 2005 grants would eliminate funding for four agencies — AIDS Resource Center of Wisconsin, Legal Action of Wisconsin-Racine, Legal Aid-Door County and Portage County Legal Aid.

WisTAF Board members Milwaukee County Circuit Court Judge Patricia McMahon and Fallone, a Marquette Uni-versity Law School professor, told forum participants that steps need to be taken to help legal service providers, which are struggling financially. In recent years, IOLTA funds have diminished due to low interest rates and the reduced amount of money lawyers are putting into trust accounts. As a result, WisTAF has used the financial reserves established when IOLTA funds were strong.

"We had $1 million in reserve, but after tapping into those reserves for three straight years, essentially, we are talking end game," Fallone said.

Without coming up with additional funding, Fallone said, WisTAF will have to consider eliminating its staff and closing its Madison office. That would leave no one to handle calls from attorneys who have trust account questions. It also would mean the elimination of someone to supervise the compliance of financial institutions with trust account rules, to review grant applications and to monitor programs receiving those grants, he said.

Fallone said the proposed fee would provide an ongoing dependable revenue source to help WisTAF continue assisting legal service programs.

"We have come to a point as a board where we have said, ‘We don’t care if this is beyond what we are supposed to do,’" Fallone said. "We are going to do it and if someone wants to challenge us and say ‘You have no authority to go out and lobby, to seek additional funding,’ we’ll just shrug our shoulders and say, ‘What are you going to do, shut us down?’ it’s going to happen anyway."

Last week’s forum, sponsored by the MBA, Association of Women Lawyers and the Wisconsin Hispanic Lawyers Association, was designed as an opportunity for WisTAF to explain its proposal to lawyers and as an opportunity for the group to receive feedback from the legal community. Forum attendees expressed support for the proposal; however, they noted that e-mail messages circulating in legal circles show that people have concerns about the proposed fee.

MBA President Margaret Wrenn Hickey said, "I’m on a number of listserves that have been having a discussion about the petition and there is a lot of negative feeling against it."

Hickey and several other forum attendees indicated that it might help WisTAF’s position if it did a better job of explaining what programs will lose funding and what type of funding needs exist. They noted that if people understood the need for legal services, they might be more responsive to the proposal.

Hannah C. Dugan, a former MBA president and lawyer with Legal Aid Society of Milwaukee Inc., encouraged utilizing a needs assessment study, something which has been successfully used in other states.

"We need some indisputable documentation," Dugan said.

McMahon noted that federal funding for civil legal services has not increased significantly in the last two dozen years. In 1980, she said, federal funding through the Legal Services Corporation was at $321 million nationally. Today that funding stands at $335 million, only 4 percent more.

Several people asked whether WisTAF had considered other alternatives to help meet the need for legal services to the poor. McMahon and Fallone indicated that the WisTAF Board was open to other approaches; however, they believed the fee proposal was the best short-term plan for addressing the situation.

Fallone noted that suggestions such as approaching the state Legislature for funds would be challenging given recent state budget discussions. However, he acknowledged that could be a long-term project. As for the idea of directing court fees into a legal services fund, Fallone noted that the Legislature had already directed existing fees away from the courts and into the general
fund.

McMahon acknowledged that existing efforts to provide pro bono services and to gather private donations were helpful, but insufficient to address the need.

Asked about establishing a voluntary payment, McMahon noted that the State Bar had looked at that issue and determined the cost of administering such and effort would likely exceed the amount raised.

"We are mindful that this is not the only thing that can be done," Fallone told the group. "But this is probably the most immediate step that can be done to address the shortfall."

McMahon and Fallone acknowledged that the challenge of funding legal services to the poor is a societal issue, but they maintained that lawyers need to take the lead with that issue.

Three members of a State Bar committee established to study the WisTAF petition were on hand for the discussion. That group has posted all of the WisTAF reports that it has gathered on the State Bar Web site at www.wisbar.org/ bar/reports, where anyone can access them. The State Bar also has invited lawyers to share their thoughts via e-mail at [email protected].

State Bar President-elect D. Michael Guerin, who also attended the forum, indicated that the Board of Governors would decide whether or not to support the WisTAF petition at its Nov. 5 meeting.

During a discussion of the issue during the Board of Governors’ September meeting, several board members raised questions about WisTAF’s ability to bring the petition and administer funds beyond those generated by IOLTA. One board member expressed strong opposition to the proposal.

The state Supreme Court has scheduled a public hearing on the WisTAF petition for 9:30 a.m., Jan. 12, 2005 at the State Capitol.

Tony Anderson can be reached by email.