Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 7, 1994 TAG: 9402070035
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: MIKE HUDSON STAFF WRITER
DATELINE: LENGTH: Medium
The Virginia Bankers Association says it is fighting to avoid an unfair "tax" on banks.
But Legal Aid lawyers call the legislative battle a clash of "greed vs. need."
This is what is behind the story:
Day after day, law clinics such as the Legal Aid Society of Roanoke Valley hear from low-income people who cannot afford a lawyer in a civil case.
They are in a dispute with their landlord. They are getting calls from collection agencies over medical bills they cannot pay. Or they are in a fight in divorce court for custody of their children.
Many get turned away. The Roanoke Valley agency has six lawyers for an eight-county area. It cannot keep up with the demand that has grown, even as its budget has shrunk.
"Most of our offices are turning away as many people as they serve," said Mark Braley, who directs the Legal Service Corp. of Virginia. "Some offices have waiting lines of well over a year for people who want to get a simple no-fault divorce."
A 1991 survey by Virginia Commonwealth University concluded that just 16 percent of the legal needs of Virginia's poor were being met.
Last year, the Virginia State Bar, which regulates lawyers, came up with a way to increase funding for legal aid.
At the bar's urging, the state Supreme Court ordered that interest from some trust accounts set up by private attorneys for their clients be used to fund legal aid and other nonprofit programs.
Banks usually pay no interest on these accounts, because they are too small or deposited for too short a term to earn interest. For example, a personal-injury settlement might stay in a bank only a day or two before it is disbursed to the client, doctors and others who are due a share.
But by pooling the money from many such accounts, the State Bar program earns interest to support Legal Aid offices, shelters for abused women or other similar efforts.
Until last fall, the trust-account program was voluntary and was earning about $1.7 million a year.
Now that the Supreme Court has required that all private attorneys participate, the program is expected to earn nearly $4 million a year for these nonprofit programs - along with perhaps $3 million for the private attorneys' own clients.
The Roanoke Valley's Legal Aid office expects another $100,000 from the program - a bonus that would allow it to serve as many as 600 more clients a year.
But Del. Glenn Croshaw, D-Virginia Beach, has introduced legislation, sponsored by the banking industry, that would throw out the Supreme Court's rule.
The Virginia Bankers Association says the new rule creates an unfair burden on banks.
Walter Ayers, the association's executive vice president, said the state bar and the Supreme Court have no right to "reach through the lawyer to regulate the bank" and force banks to give money to a specific charity.
It would be OK with the banks if the trust program remained voluntary, Ayers said, but "we simply don't feel that charitable endeavors, no matter how noble, should be mandatory."
Supporters of the trust-account rule - who include former Gov. Linwood Holton and former Attorney General Stephen Rosenthal - say it does not force banks to give to charity. They say it simply requires that banks pay modest interest - usually about 2.5 percent - on money on which banks usually pay nothing.
Otherwise, Legal Service Corp.'s Braley said, banks are free to invest the money and make profits themselves - without having to pay a cent in interest for the use of the money.
Braley said there is another reason why banks are against the trust-account setup: The money goes to support law clinics that often sue banks or represent people who are being sued by banks.
In a telephone interview last week, Ayers at first said, "That's a minor point in the scheme of things." Later, he said the group's opposition to the rule "has nothing to do with the fact that Legal Aid sometimes shows up in court."
But in a letter he wrote last fall urging bank executives to lobby for the bill, Ayers included this objection to the trust-account rule: It "forces banks to fund one of the agencies that frequently challenges them in court."
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GENERAL ASSEMBLY 1994
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