Legal-Aid Groups Face Money Woes
January 19, 2009 | Read Time: 1 minute
Legal-aid charities are starting to lay off workers and cut back services because of money woes, reports The New York Times.
The troubles come at a time when many such organizations say demands for help are surging.
Legal-aid groups get a significant part of their financing from short-term deposits that lawyers hold in trust for their clients. For instance, while a real-estate transaction is pending, the money is placed in an escrow account that earns interest, and the interest is then turned over to the legal-aid groups.
But now that federal interest rates have dropped, the money in the accounts is earning negligible sums, so legal-aid groups are losing out. In Connecticut, for example, 50 of 150 legal positions may be eliminated because of the decline in funds. In Massachusetts, one-fifth of legal-aid lawyers and paralegals may be laid off.
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