After $100M Ask, Legal Aid Funder Nets $50M For Relief Work

By RJ Vogt
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Law360 (March 27, 2020, 3:04 PM EDT) -- With the economy convulsing and unemployment claims skyrocketing, the U.S. Congress passed a $2 trillion relief package aimed at mitigating the impacts of the novel coronavirus wreaking havoc across the country and around the world.

In addition to promising billions of dollars in aid to airlines, hospitals, school districts and small businesses, the package allocates $50 million to the Legal Services Corporation, America's largest single funder of civil legal aid.

In a statement, newly appointed LSC President Ronald Flagg said the money would go a long way toward helping the organization's 132 legal aid grantees tackle myriad effects of the virus and its economic impact.

"We are grateful that Congress has recognized that COVID-19 is going to dramatically increase the life-altering civil legal needs faced by low-income Americans and that legal aid can make a meaningful difference in addressing those needs," Flagg said.

LSC, which received $440 million in funding for fiscal year 2020, had requested $100 million in emergency aid based on estimates that there would be a roughly 25% increase in demand for services due to the pandemic.

Although the $50 million Congress ultimately allocated — a .0025% sliver of the total package — was one-half the amount LSC requested, Flagg said the money will nevertheless be critical to help existing legal aid clients face challenging legal issues like evictions, unemployment benefits, domestic violence and more.

He added that the economic downturn will likely increase the population of people living at or below 125% of the poverty line, the cut-off for legal aid eligibility.

"As a result of losing their jobs, many more people will be eligible for our services in the coming months than was the case two or three months ago," he noted.

The emergency funding comes despite the fact that the White House's fiscal year 2021 budget called for eliminating spending on the LSC, marking the fourth straight year of efforts from the Trump administration to nix civil legal aid funding at the federal level.

Those calls have been generally ignored by Congress, however. Last year's $440 million allocation — a $25 million increase from the previous year — was the largest appropriation, in terms of actual dollars, in LSC's history.

For the upcoming budget, LSC had requested $652.6 million in congressional funding. Flagg told Law360 that, due to the impacts of the pandemic, it is unclear when the 2021 budget decisions will come down. In the meantime, he said LSC will focus on helping its grantees improve their abilities to operate remotely.

"Something like 83% of our grantees have needed additional technology tools," Flagg said. "So that's the first dollars that will go out the door."

He added that the emergency funding comes at a critical time for legal aid organizations. Many rely on state and local government funding, which is drying up as governors strive to bolster hospitals and other hard-hit industries.

Meanwhile, interest on lawyer trust accounts, or IOLTA, has been hammered by the Federal Reserve's decision to slash interest rates. On average, LSC-funded groups receive more than 5% of their funding from IOLTA.

And on top of that, foundations and endowments have suffered as the financial markets plummeted. Even with an uptick in pro bono efforts, Flagg said legal aid providers are in dire straits.

"This is really the perfect storm," Flagg said. "Our grantees will see a dramatic spike in need for services at a time when they're forced to provide those services remotely and with fewer resources."

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--Editing by Katherine Rautenberg.

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