Labor & Employment Law

Low interest rates are resulting in layoffs of legal aid lawyers

Some may rejoice at the fact that the Federal Reserve has lowered interest rates to record lows. (The current target: between zero and 1/2 of one percent for the federal funds rate.)

One of the sad results of low interest rates is a depletion in the funding for legal aid programs.

IOLTA (Interest on Lawyer Trust Accounts) is an important source of funding for legal aid programs. In many states, the interest that banks pay for funds that lawyers keep in a trust account is not paid to the lawyers and not paid to the clients. It goes to legal aid.

Lower interest rates mean less income for legal aid. As a result, we could be seeing something like a 20 percent cutback in legal aid lawyers in some areas.

For details: Interest Rate Drop Has Dire Results for Legal Aid

My view: We thought this was a "cheap" and easy way to fund legal aid. After all, who would miss the tiny amounts of interest in a trust account? Instead of funding legal aid programs with tax dollars, we took the easier way.

Full post as published by Ross' Employment Law Blog on January 18, 2009 (boomark / email).