Economy Strains Legal Services for the Poor

Interview with Executive Director of Connecticut Legal Services Steve Eppler-Epstein

Joy Moses interviews the executive director of Connecticut Legal Services about how the economic crisis is affecting legal services and the need for greater government investment.

SOURCE: Steve Eppler-Epstein portrait

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The recession is putting the squeeze on organizations that provide free legal assistance to low-income families. They are experiencing an increased demand for their services at a time when they are also undergoing severe budgetary strains. I recently had a conversation with Steve Eppler-Epstein, the executive director of Connecticut Legal Services, who explained how the crisis is affecting Connecticut and discussed the need for greater government investments in free legal services.

Joy Moses: My name is Joy Moses. I am with the Poverty and Prosperity Program at the Center for American Progress. We’ve been doing a series of discussions with advocates throughout the country who work with low-income people and are helping them to manage the crisis that was brought about by the economic downturn. I am just going to jump in and begin with the first question. How has the demand for your services been impacted by the recession?

Steve Eppler-Epstein: We know from studies that have been done in past history that every time the economy struggles, there are more people out of work and more people who need help—and that happens in a variety of ways. A lot of the work we do is for victims of domestic violence, and when households are under economic stress there tends to be an increase in the amount of violence that happens. But there are also more direct results of a bad economy.

When more people are out of work, people’s incomes drop generally. Because there [are] many more people working part time, people’s incomes are lower. So for starters, there’s just a lot more people who are eligible for legal aid for the poor. And in addition to people who lost work, [there are] people who may have been marginally employed before and who may have in fact have disabilities that entitle them to help. People tend to prefer to work than to take public help, but when there aren’t enough jobs, there are more people that need to get on various forms of assistance, whether it’s food stamps, or disability assistance, or other kinds of help.

JM: And does your organization help people with obtaining those services?

SE: We do. Legal aid works with all the other social service agencies around. So we don’t help people who can do things for themselves and we don’t help people who could be helped by the other agencies. We get referrals of cases where problems have gotten to a point that folks really need a lawyer … because they need to go to court, either to defend themselves against an eviction, or to protect Section 8 housing subsidies, or to deal with a domestic violence situation in court. Or often people need a lawyer to analyze the laws that are being applied to them. So we often are helping people who aren’t in court, but are trying to figure out if they are in fact eligible for government benefits that could help them in a time of need, and they are being told that they are not eligible. And we can do the analysis and if necessary do the administrative process through the government bureaucracy to try to get people the help they need.

JM: One of the major issues arising out of this recession, of course, is the foreclosure crisis. Has your organization been playing a part in helping families or individuals manage foreclosures or evictions connected to foreclosures?

SE: We have. There has been a huge change in the nature of the work that we do to prevent homelessness among low-income people in that there are so many people who have been evicted after foreclosure—people who are tenants. The numbers nationally, I think, are that 40 people of the people who lose their homes as a result of foreclosure are actually tenants, not owners. And so we have certainly seen that in our work. A large part of the caseload of lawyers doing housing work for low-income people has become defending tenants who are being evicted as a result of foreclosure.

And what’s amazing about these cases is that these are generally people who are paying their rent. They are people who are doing everything right. But the practice for a long time in the banking industry has been that when they foreclose on a building, they just empty it out of all the tenants. They have the right to do that under the law and they take advantage of it. And they empty it out under the theory that it’s difficult or expensive for them, is the idea, to keep tenants in. And if they empty the building out, the idea is that it will be easier to sell. And of course, the fallacy of that in this environment is that nobody is buying anything. And so these buildings sit on the market. They are often vandalized and in fact, lose value sharply. So we’ve been fighting really hard not only for individuals, but also talking to policy makers, talking directly to banks, to try to get them to let tenants who are paying their rent to stay in the building and not add to the problem.

JM: And could you talk a little bit about the resources that you have available within your organization to provide this assistance. Are you facing any resource challenges?

SE: We are in fact facing a resource crisis. In Connecticut, as with many other legal aid programs around the country, there is a variety of funding sources. There’s some private money from foundations, donations from United Way, there’s some state funding—although Connecticut has provided less state funding than other comparable states to this point—and there’s some money from the federal government. But in Connecticut, two-thirds of the funding for legal aid, for the whole legal aid network—two-thirds of the funding has come from IOLTA, [or] Interest on Lawyers Trust Accounts. And that’s a program that was established about 20 years ago.

Lawyers hold money for clients for short periods of time in their trust accounts, in their escrow accounts. And the lawyer is not allowed to make money off of it. They can’t make money from their client’s money, but the money is held for too short of period of time—or it’s not enough money—to have it make sense for the lawyers to set up separate accounts client by client to earn interest on it, so they go into a pooled account for safe keeping. And about 20 years ago, across the country, policy makers realized that there could be interest on those accounts and that could be used to fund legal aid.

And for many years it worked better in Connecticut than probably any place else. It was a large part of our funding for many years. And it tended to be reasonably stable because, if interest rates went down, you would think you would get a little bit less money. But if interest rates went down, the number of homes being sold went up and there was more money being held, and it tended to balance out—until the current crisis.

And starting last fall, the Interest on Lawyers Trust Accounts funding sources has just collapsed because nobody is doing any real estate business—everything is just frozen up and interest rates are almost zero. And so the IOLTA revenues, Interest on Lawyers Trust Accounts revenues, in Connecticut have dropped by 80 percent. And it had been two-thirds of our funding. The money from IOLTA goes through a non-profit agency that administers it in Connecticut; it’s called the Connecticut Bar Foundation … They had some reserves, so we are not seeing the full impact of the 80 percent loss, but what we have seen is a loss of 50 percent of our IOTLA grants at this point. And in my organization, it has been a $4 million-loss in funding. We’ve lost one-third of our funding, and it has just created huge pressure on our organization.

JM: So, how will this affect your organization? How will it affect your staffing and operations in the future, but also I guess at this point in time?

SE: Pretty immediately. We are taking it in two stages. We first looked at what we could do immediately to try to impact our situation. And the immediate thing we could do was to cut back on our salaries and hours. We have a unionized program and a really great relationship between the management of our program and the staff union. And we agreed from the beginning that our mutual goal was to try to hold onto everybody in the organization that we could because we know that at some point the funding should improve. … And so the staff, incredibly, heroically, took a 20-percent cut in hours and pay from what weren’t terrific salaries to begin with. We also restructured our health care benefits so they are less expensive while still providing quality health care. The managers in our program took a 25-percent to 35-percent cut, and so that got us part way into the deficit that we were facing.

And then we went out and started trying to raise money like crazy, and we have been very active in sending out applications for money from various private sources and government sources, although, you know, the challenge is that many foundations lost 30 percent of their money in the downturn too, so there’s not as much private money out there as there would have been a year ago. So that is going to help close another little bit of our gap, but the final effort that we are making is to get funding from the state government, which had given us a little bit of money before, and in this environment we are asking them to make a much more significant grant to legal services to get us through this crisis without any further cut in services to clients.

JM: So have you made some cuts in services to clients? Has it impacted the people you serve?

SE: It absolutely has. We’re trying to minimize it as much as we can … You know, our offices are closed one day a week at this point, with the exception of our administrative office. We make sure that one of our offices is always open. We do it on a rolling basis so that we are always available. But, you know, you close a day a week, it just has an impact on how much you can do. That’s been really hard. Some of our staff work on the day when we are closed, just as some of our staff has always worked on weekends and 24/7. We have people that are really committed to the work, but it does have a serious impact on the number of clients we can help.

We still do really good work. We are still helping a lot of people, but it has been hard for the staff because their salaries have been cut so much and it has been hard on the client community … The thing that is a little bit scary is that if we don’t get the help from the legislature that we are asking for, we are going to be forced to have layoffs in addition to the cuts we have already made. And we could be forced to layoff as much as a quarter of the staff if we don’t get help from the legislature.

Fortunately, the state legislature in Connecticut understands that there’s a need, that the work we do is important. Our state, as many states around the country, is faced with multibillion dollar deficits right now, but we have identified some potential sources of funding through increases in court fees, that’s supported by the judicial branch in Connecticut, and an increase in the attorney occupational tax which is supported by the Bar Association in Connecticut. They actually volunteered to the legislature that they would be willing to increase their own taxes in order to support legal aid. And so we are hoping that the legislature will put those in place and let us avoid the worst results for our staff and our clients from this recession.

JM: Do you think there is anything that can be done at the federal level to provide some assistance?

SE: There’s a lot that can be done at the federal level. And I know people are very active in trying to make some of these things happen. For starters, the biggest line of money to support legal services is the Legal Services Corporation funding and that line has been too low for a very long time, and I know there are proposals around to try to get at least the authorized level doubled from where it has been in recent years. And that would be a really great step.

A second thing, also related to Legal Services Corporation funding, is that there’s a set of restrictions on what that money can be used for which has resulted in distributing the money in sort of awkward ways in some states, including Connecticut, where the money has to be segregated in different agencies and not necessarily supporting all of the work of legal aid. So lifting of what’s called the private money restriction [would help—it] says that if you take the federal dollars not only do the restrictions that come with it apply to the federal dollars, but they apply to your whole agency and everything else that you do. Even if another funder gives you money specifically for a project, you may not be able to do that project if you take the federal dollars. So folks are working hard to try to get the private money restriction lifted. So fixing the Legal Services Corporation structure, both in terms of the funding level and the private money restriction, would be very helpful.

But there have also been other lines of funding that a lot of legal programs work with that have been at low levels for a long time. One of those is Title III of the Older Americans Act, which funds a lot of work in communities around the country for the elderly. And in Connecticut, 6 percent of those funds go to fund legal services for the elderly. We worked very closely together using those funds in cooperation with all the other agencies to help the elderly in Connecticut, but that funding line has been stagnant for years and years. And of course, in fact, that means it’s declining in terms of real dollars when you adjust for inflation, and so a significant increase in the Older Americans Act would help the work we do for the elderly.

JM: And I just had one additional question. Recently, in February, the federal government did pass some additional recovery dollars that touched some of the programs that you mentioned earlier. One of them was LSC, another one was VAWA. I am not sure if you are aware of these funds and if you think that they will help in any way in the immediate future.

SE: The LSC funding was increased by around 10 percent for the current year, so in Connecticut that helps Statewide Legal Services, the call center I was describing; it helps it to be able to stay stable because they also had some loss in the IOLTA funding, although not as great as what we saw in the field program. We received a Violence Against Women Act grant … and we are finishing the second year of our cycle … When we are up for renewal, we are hoping that we can get an increase in support through that, particularly because the IOLTA money was supporting a lot of our work on behalf of victims of domestic violence, and if that funding is lacking, we are going to need an increase in Violence Against Women Act funding in order to keep up the level of services we’ve been trying to provide.

The place where more immediately we are hoping we get at least a little bit of help is from the Homelessness Prevention and Rapid Rehousing Program out of HUD [U.S. Department of Housing and Urban Development]. The HPRP funds are being distributed through the five largest cities in Connecticut and then another big chunk through the state of Connecticut … Legal services to low-income people has been identified in the federal guidelines as one of the appropriate services for people to help them avoid homelessness, and to help people who are homeless be rehoused more rapidly—both through defending evictions and through helping people hold on to housing subsidies that they have, but also through work on behalf of domestic violence victims who often become homeless as a result of domestic violence …

So we have active applications in the five cities and in the state of Connecticut that are currently working with the federal government to develop their process, and they will be making decisions over the next few months as to funding there. But, you know, just in terms of the scope of the problem we’re facing and the amount of dollars we are looking at, in Connecticut the Violence Against Women Act money right now is about $350,000, the Older American Act funding that legal services gets in Connecticut is around $500,000. The amount of money that we might see in Connecticut through the HPRP for legal services is perhaps $300,000 to $500,000 at most. And the funding gap that we are facing is a $9 million funding gap. So we are trying to use all of these sources of help and everything we can to piece things together, but there is no doubt that we need the Connecticut state legislature to support legal services at levels that are more like what New York and New Jersey and Massachusetts and our neighboring states do.

JM: Do you have any last comments that you would like to make before I close our conversation?

SE: I think it’s important for people who are thinking about legal aid to understand not only the funding structure, but also to understand how incredibly effective the legal aid network is. One of the things that has struck me as I talk to both folks in Congress and also in the state legislature is that they hear from so many constituents that legal aid should be supported, and the reason they hear that is because our folks are trained as advocates. Sometimes they do work that is really understood as lawyering, you know showing up in court and arguing before a judge. But lawyers are trained advocates that are trained to organize an effort that needs to be done and to get a result. And in all kinds of ways in communities, across the state and across the country, legal aid lawyers are incredibly effective at fixing problems for people, and that benefits everybody in our society. So it’s not just that we are here and we have a problem and we need support.

The reason that it is so important to increase the resources available to legal services is that we fix things that society wants fixed. We help people who are subject to violence, we help elderly who are sick or having trouble in nursing homes, we help kids who are having trouble in school, we are helping people who need support through temporary or long-term periods to be able to get through. And these are people who are our neighbors, and sometimes our relatives, and the legal aid programs are really good at solving their problems, that’s the reason we should be supportive.

JM: Well thank you for talking with me today, and I definitely wish you the best in your efforts to raise funds for your program, and definitely here at the federal we’ll continue to have these very valuable discussions, and hopefully they’ll result in greater funds being directed your way. Thank you.

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Joy Moses

Senior Policy Analyst