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FINAL REPORT OF THE PRO BONO & LEGAL AID COMMITTEE OF THE WASHINGTON STATE BAR ASSOCIATION TO THE BOARD OF GOVERNORS OF THE WASHINGTON STATE BAR ASSOCIATIONCIVIL EQUAL JUSTICE FUNDING OPTIONS May 1, 1998 "The vibrancy of our Democracy depends upon our willingness to ensure that the fullest range of voices and interests is represented and heard. This is what the fight for equal justice is all about." Hon. Robert F. Utter, Washington Supreme Court, Ret. CIVIL ACCESS TO JUSTICE FUNDING May 1, 1998 "The mission of the Washington State Bar Association is to promote justice ...." I. INTRODUCTION This report was developed by the Pro Bono and Legal Aid Committee (PBLAC) of the Washington State Bar Association. The report was prepared in response to a request by the Board of Governors (BOG) that the PBLAC evaluate a range of revenue generating resource development ideas and provide recommendations designed to help rebuild a system that provides truly meaningful access to the civil justice system and equal justice for Washington State's nearly 1.2 million poor and vulnerable people. PBLAC committee member Gail Smith chaired the subcommittee responsible for the report which is comprised of the following individuals: Denice Patrick (PBLAC), Eric Nordloff (PBLAC), Pam Daniels (Snohomish County Clerk), Marianne Walters (Jefferson County Clerk), Jean Holcomb (King County Law Librarian), Barbara Clark (Legal Foundation of Washington), Caitlin Davis Carlson (Legal Foundation of Washington), and Lauren Moore (LAW Fund). BOG member, Mary Alice Theiler, participated ex officio in her capacity as chair of the special BOG Committee on Civil Legal Services Funding. Staffing was provided by Joan Fairbanks (WSBA and the ATJ Board) and Jim Bamberger (Columbia Legal Services). Additional research assistance was provided by Jay Carlson. The Committee's work is premised on the following:
The Committee reviewed state based civil equal justice planning activities that have occurred since 1995. We strongly believe in and affirm the vision of equal justice articulated in the Access to Justice Board's Hallmarks and State Plan, and further believe that this vision should continue to guide the development and implementation of civil equal justice initiatives in our state. Meeting the civil equal justice needs of vulnerable and low income people is a joint responsibility of both the public and private sectors. The Committee applauds the WSBA Board of Governor's long-standing support of civil equal justice initiatives. The Board of Governors' request for this report is further evidence of its recognition of the unique professional and constitutional responsibility of the Bar to meet the civil equal justice needs of the poor. One of professionalism's hallmarks is service to the public good. The PBLAC believes that our profession's leaders -- and indeed every lawyer -- should actively participate in meeting the civil equal justice needs of poor and vulnerable people through direct pro bono assistance, financial contributions, or other equal justice service. Because equal justice is a cornerstone principle of our democratic form of government, our federal, state and local governments have a fundamental and continuing obligation to help meet the equal justice needs of low income people. The Committee welcomes the Board of Governors' strong and passionate leadership in championing necessary and appropriate public funding for equal justice. II. THE CURRENT STATE OF WASHINGTON STATE'S CIVIL EQUAL JUSTICE DELIVERY SYSTEM Washington State's Access to Justice Network (ATJ Network) is a highly coordinated model public-private partnership designed to make the most effective and economical use of very limited resources to provide a continuum of legal services of varying intensities to meet the civil equal justice needs of nearly 1.2 million poor and vulnerable people. Operating under the umbrella of the Supreme Court's Access to Justice Board, and with the active support of the Washington State Bar Association, the Network consists of staffed legal services programs, specialty legal services providers, law school clinical programs, local bar volunteer attorney programs, courthouse facilitators, county law libraries, county clerk offices, court administrators, and a host of other individuals, community, educational and professional volunteers and organizations who work in partnership to serve the equal justice needs of poor and vulnerable Washingtonians. Gauged by any measure, Washington State's civil equal justice delivery system is strained to the breaking point. The raw numbers tell part of the story. There are nearly 400,000 low income households in Washington State. According to the 1994 ABA Legal Needs Study, 47% of low income households experience at least one civil legal problem per year. ABA Legal Needs Study at Table 4-1, page 19. Low income households that experienced civil legal needs had an average of 2.3 legal situations each. Id. at Table 4-2, page 10. According to the ABA study, between 61 and 75 percent of low income people's legal needs go unmet. Translating these numbers to Washington State, we start with 400,000 low income households. Assuming that 47% of these households experience a civil legal need each year, we find that about 188,000 households can be expected to have one or more civil legal needs each year. Carrying over the ABA Legal Needs Study's incidence rate of 2.3 legal needs per household, we conclude that Washington State's low income population experiences about 432,400 independent occurances of civil legal need each year. Between 264,000 and 324,000 of these are unmet, depending upon the definition of unmet legal needs. Juxtaposed against the need is the current capacity of the civil equal justice delivery system. There are two primary gateways into the system, the Northwest Justice Project's Coordinated Legal Education, Advice and Referral program (CLEAR) and, courthouse-based clerks, facilitators and law libraries. CLEAR is a statewide toll-free intake system that provides low income people with "one-stop shopping" for legal screening, case assessment, advice, information and, where appropriate, referral to a Network provider for direct representation in court or before an administrative agency. Courthouse-based clerks, facilitators and county law libraries are the walk-in point for many thousands of low income people who have self-identified a need for assistance in a broad range of legal matters, but most significantly in the area of family law. In addition to these two primary gateway systems, other community based organizations and direct service providers work to help low income people identify the need for civil legal assistance and provide referral to an appropriate provider entity. In addition to these gateways, the ATJ Network includes two statewide civil legal services providers (Columbia Legal Services and the Northwest Justice Project), 23 private bar volunteer attorney programs, specialty legal services providers (e.g., Northwest Immigrants Rights, Legal Action Center, Tenants Union, Unemployment Law Project, etc.), clinical law programs at each of the state's three law schools and human and social service entities. While working closely with CLEAR, some of these programs must maintain supplemental client intake and case acceptance procedures that enable them to serve their targeted client population (in the case of specialty legal services providers) as well as clients facing emergent legal needs and those who may be unable to meaningfully navigate a telephonic intake system. Still reeling from devastating federal cuts and exploding demand for client services, the staffed legal services programs presently maintain offices in 10 communities throughout the state, and have a cumulative staffed capacity of 78 full time equivalent attorneys (excluding the 18 attorneys and paralegals who are dedicated to staffing CLEAR). The largest regional presence is in Seattle, where 12 attorneys (the total number of attorneys employed by CLS and NJP) are employed to meet the equal justice needs of about 200,000 low income people in King County -- a ratio of 1 staff attorney for every 16,667 poor people; or 1 attorney for every 7,833 legal problems. Statewide, the ratio is 1 attorney for every 6,923 civil legal problems. Numbers only go so far in demonstrating the inadequacy of our civil equal justice delivery system. Every day urgent requests for help are turned away by every kind of legal services provider. CLEAR staff help hundreds of people every day, but still cannot handle all of the requests. Staffed legal services programs are more severely curtailed as to the types of cases they can handle, leaving many thousands of clients nowhere to turn for help with important legal problems. In the past, the ATJ Network counted on the staffed legal services programs to provide the largest proportion of direct legal representation. Now there is a huge "capacity gap" in the area of direct representation which falls disproportionately upon local private bar volunteer attorney programs. Pro bono coordinators find themselves unable to keep up with the demand for help from clients. Moreover, with the advent of CLEAR there is a need for VALS programs to refer more cases requiring direct representation to the private bar, and this is proving difficult. To help meet some of the demand, these programs have turned to new service delivery approaches (substantive law clinics, discrete task representation, etc.) to leverage the limited capacity of their local private bars. As if these dynamics were not enough, courthouse facilitators are under siege as a result of the explosion in pro se litigation in both routine and complex contested matters. The same is true for county law libraries. Already taxed beyond their capabilities, libraries are unable to dedicate the time or resources necessary to maximize their capability to help meet the civil equal justice needs of their low income consumers. III. REBUILDING EQUAL JUSTICE IN WASHINGTON STATE: REVENUE AND SERVICE DELIVERY CAPACITY OBJECTIVES There was a time when minimum access for low income people could be determined by a congressionally accepted Legal Services Corporation "equation" -- two attorneys for every 10,000 eligible clients. This was a long time ago (1974-1980), when staffed civil legal services programs were almost the exclusive way to meet the civil equal justice needs of low income people. Times have changed. Federal funding cuts, a burgeoning poverty population, increasing costs, the advent of new technologies, radical changes in the laws affecting poor people, the emergence of new state-based funding sources (IOLTA, DC-TED), a decade of experience with organized local bar volunteer pro bono programs, and an explosion in the number of pro se litigants (particularly in the areas of family law and landlord-tenant), have all worked to force a change in the way we quantify and develop the justice system's ability to meet the civil legal needs of low income people. While continuing to serve a critical -- even central -- role, the staffed legal services programs are no longer the exclusive vehicle for delivering legal services to low income people. Instead, they are an integral component of Washington State's new statewide Access to Justice Network. The vision articulated in the Hallmarks and State Plan, and the practical connectivity of NJP's CLEAR system serve as the glue that holds the ATJ Network together and ensures that its members operate in an integrated and efficient manner. The design and implementation of the State Plan to create an integrated delivery Network will guide all present and future planning to meet the civil equal justice needs of poor people. These needs will be met by an ever increasing mix of individuals, institutions and organizations working together to provide clients with effective and timely diagnostic services, identification of appropriate resource(s) to address legal needs, and the practical ability to secure meaningful legal assistance from an appropriate service provider. Depending on the nature and intensity of the legal needs, clients will be able to secure help from a staffed legal services program, a pro bono lawyer, a courthouse facilitator, or CLEAR, or they may simply need to sit down at a county law library, public library or other place to obtain necessary legal information from the Internet. We must always remember that no single component of the system can be counted on to comprehensively address the full continuity of client needs. The precise mix and match of local and state resources and capacities will necessarily differ by location. The Access to Justice Board's Hallmarks and State Plan inform the planning of an effective delivery system. But they leave important questions unanswered. Foremost among these is the size, location, and geographical deployment of civil equal justice capacities. The PBLAC believes that the full continuum of civil equal justice capacities (client outreach, community legal education, brief service, self-help assistance and direct representation) must be meaningfully available regardless of where low income people reside in Washington State. Low income people in Walla Walla, Longview, and Republic should have similar abilities to secure appropriate civil legal assistance as their counterparts in Spokane, Seattle, and Olympia. At the same time, the PBLAC believes that there is a minimum level of capacity below which civil access to justice is no longer meaningfully available to those in need of help. It speaks the obvious to say that we are far below this minimum level of capacity. It is less easy to determine the optimal level of capacity to meet the civil equal justice needs of low income Washingtonians. A separate equal justice working group has engaged John Arango, a national equal justice delivery systems consultant, to help us define a system that in practice delivers on the promise of equal justice for low income people in our state. For the purposes of this report, however, the PBLAC is in agreement that an incremental first step in any effort to build such a statewide system will require a substantial increase in the resources available to the equal justice community, both at the statewide level (to help restore staffed civil legal services capacity) and at the local level (to support private bar, courthouse facilitator, and other important local civil equal justice efforts). The PBLAC believes that, at the statewide level, not less than five million dollars per year in additional funding will be necessary during the 1999-2001 biennium to make this initial step toward a revitalized equal justice delivery system meaningful. IV. REVIEW OF POTENTIAL REVENUE SOURCES At the request of the Board of Governors (BOG), the PBLAC has undertaken a review of a wide range of revenue generating ideas. Some were initially postulated and discarded because they were unlikely to generate a meaningful level of incremental equal justice resources. The balance are discussed in this report. At the outset, the Committee recognizes that there is no simple answer to meeting our state's equal justice system revenue needs. Money is tight everywhere; and every suggested approach will have its detractors. The purpose of this document is to provide the BOG with a menu of options and some general recommendations, recognizing that the selection of any specific approach (or any combination of approaches) will be a function of myriad considerations. The Committee is well aware of the controversial nature of a number of these proposals. We realize that the Board of Governors may find some to be less palatable than others. We leave these choices to the BOG. At the same time, however, the Committee thinks it important to note that, like the efforts to establish IOLTA, the filing fee, the LPO rule, the creation of the Access to Justice Board, and any number of other civil equal justice initiatives undertaken over the past decade, the effort to rebuild our state's equal justice system will require a long and intensive commitment of leadership and energy. We appreciate that the Board of Governors and the WSBA are in it for the long haul. A. Federal Funding The Legal Services Corporation (LSC), under the presidency of Washington State attorney John McKay, has requested an increase in federal funding for LSC, from the current level of $283 million to $340 million. The Administration backs this request. LSC's budget request includes, in addition to a general 5.5% increase for basic field activities, a request for special funding to meet the legal needs of domestic violence victims and children, and for enhanced technological capabilities. Given the continuing importance of federal support for equal justice efforts in our state, the PBLAC urges the Board of Governors to work in support of the Administration's and LSC's congressional request. B. State Funding There are three principal avenues for securing new funding from the state of Washington -- additional general fund appropriations, changes in the filing fee schedule coupled with additional appropriations, and the imposition of a special B & O tax surcharge on the legal profession. Each requires legislative action. Two will require changes in substantive statutes in addition to additional amounts included in state appropriations legislation. 1. Direct Appropriation of New State Funding This option would require that the Legislature increase the annual general fund appropriation for legal services by $10 million in the next biennium. Initiative 601 placed limits on the Legislature's authority to increase spending and raise taxes. RCW 43.135.010 et seq. While current budgets fall within I-601 limitations, both the Governor and the Legislature have been cautious about making new -- or expanded -- general fund commitments without some guarantee that there will be incremental revenue to support them. Precedent exists for underwriting equal justice efforts with general fund appropriations. Despite a very difficult legislative environment, the Bar, in 1996, successfully led a strategy that enabled the civil equal justice community to break out of the "dedicated funding" world of the PSEA, by securing $2 million in new funding from the general fund. While all needed funding for equal justice is unlikely to come from an increased general fund appropriation, the PBLAC believes that a general fund appropriation should be an important part of any strategy adopted by the BOG. 2. Increase in Civil Filing Fees (District and Superior Court) Current state funding was initiated in 1992 with the passage of ESHB 1378. This legislation:
In addition to passing ESHB 1378, the Legislature, for the first time, appropriated funding for basic civil legal services. A biennial funding level of $4.8 million (appropriated from the PSEA) was established and made available to the three then-existing LSC-funded programs. Following the merger of the three programs in 1996, the funding was continued into their successor, Columbia Legal Services. In 1997, an additional $2 million general fund appropriation was included on top of the $4.8 million PSEA appropriation. The initial adoption of what was then referred to as a "filing fee surcharge" and the corresponding appropriation of funding from the PSEA helped stabilize a civil equal justice delivery system then facing challenges caused by huge increases in the eligible client population, a decade of flat federal funding and a substantial decline in interest rates which, in turn, resulted in a substantial reduction in IOLTA funding. It allowed for continued funding for new and emerging components of the civil equal justice system, provided increased staff capacity in most offices, and enabled Evergreen Legal Services to reopen a field office in the Tri-Cities, an area that had not seen a staffed legal services presence since federal cuts forced nine office closures statewide in 1981-82. An immediate temptation would be to seek a further increase in civil filing fees. Cognizant of the BOG's concerns about continued reliance on the filing fee as an exclusive mechanism for funding, and recognizing that, in the absence of a dedicated account through which the fees would pass on their way into the equal justice community, the PBLAC evaluated this concept with substantial caution. In looking to the filing fee as a potential source of new revenues, the PBLAC reflected on past experience, evaluated the practical access problems that might result from a further increase in fees or the establishment of response fees, explored the feasibility of looking beyond superior court fees, and, in conjunction with all of these, considered the experience of other states in their effort to increase funding for civil equal justice activities. In the end, the Committee adopted a set of guidelines that it believes necessary and appropriate to guide the discussion of any strategy relating to civil filing fees. According to these guidelines, any legislative proposal to raise funding for civil equal justice efforts in Washington State through the use of civil filing fees should:
The Committee secured information about filing fees in various courts throughout the country. In addition, the Committee surveyed each of the county clerks on a range of issues relating to the administration and collection of filing fees. Washington State's current superior court civil filing fee of $110 falls near the middle of the national range of fees for courts of general jurisdiction. In addition, we found that Washington State's filing fee for district court was within the general range of fees for courts of limited jurisdiction in other states. Finally, we found that a number of states require the payment of an "answer fee," and that this fee generally ranges between 30% and 50% of the corresponding basic filing fee. The PBLAC was impressed with the concerns expressed by the county clerks, especially the near-unanimous objection to any strategy that diverts funding from the counties, as would happen in the case of dedicated filing surcharges. The clerks also expressed some concern about the amount of the current superior court filing fee, and the practical consequences resulting from further increases (i.e., larger numbers of fee waivers, and a greater financial obstacle to access for low and moderate income litigants). Taking all information into consideration, the PBLAC determined the basic superior court filing fee is approaching the point where additional increases could serve as a substantial obstacle to access. The PBLAC felt that, for the foreseeable future, the fee should not exceed $150 per filing, including the special local option surcharge for courthouse facilitators ($140 in counties where such surcharges have not been established). The Committee believes it appropriate to propose a nominal increase in district court filing fees as well. Courts of limited jurisdiction are increasingly called upon to handle a wider range of civil litigation. The PBLAC has been unable to identify a rational reason why a portion of civil filing fees in the district court should not be used to support civil access to justice activities in the same manner as the state portion of superior court fees has been used since 1992. A moderate increase in civil filing fees at the district court level will result in substantial additional revenue for local counties and for civil equal justice efforts. Given the amount of the district court fee, these benefits will outweigh the minimal adverse impact on the affordability of that forum to the vast majority of civil litigants. 3. Establishing Civil Response Fees. The Committee believes that the current fee system does not proportionately or equitably allocate the burdens of court fees among those who use the court system. Specifically, the Committee believes that it is appropriate, equitable, and legitimate to require the payment of an answer fee by those who appear and contest civil legal proceedings. As a "user-fee, " the civil filing fee is designed to allocate a portion of the cost of operating and maintaining the civil court system to those who use and benefit from it. While plaintiffs/petitioners initiate court proceedings, they are certainly not exclusively responsible for the use of court resources. Very often, controversies exist that result in a race to the courthouse door. The inability to resolve a dispute prior to filing is in most circumstances a joint responsibility. More importantly, the civil court system works to the benefit of all those who avail themselves of its machinery, plaintiffs and defendants alike. Consequently, the Committee believes that both parties to a contested civil judicial proceeding should bear some portion of the cost of using the civil court system. The PBLAC believes that the practice in a number of our sister western states (Oregon, Idaho, Montana, California, Utah, North Dakota, Arizona, Colorado) is the more correct, and that some fiscal responsibility must be assigned to those who appear and contest claims -- especially those who file counterclaims. The PBLAC believes that such a fee should be set at or close to one-third of the basic civil filing fee. Finally, consistent with the guidelines set forth above, the Committee believes that the revenues from a civil response fee should be allocated in accordance with the existing statutory split between local counties and the PSEA. The PBLAC's recommendation extends to district court fees as well. A civil response fee should be established at a level between 30% and 50% of the fee for initiation of a proceeding, and should be allocated in accordance with the existing statutory spit. Finally, the Committee believes it important to increase the revenue available to county law libraries from filing fees, and has included recommendations along these lines. The following, then, represent the specific recommendations of the Committee with respect to civil filing fees: i. Increase Superior Court Filing Fees by $30 (making the total $150 in counties where there is a surcharge for courthouse facilitators.) With an average of 135,000 civil filings annually, such an increase would generate an additional $1,863,000 in additional revenue to the PSEA. Simultaneously, the minimum authorization for county law libraries would be increased from the current level of $12 to $17, and the maximum would be increased from $15 to $20. In addition, a county that operates a multiple-site library would have the option to add a local surcharge (on top of the fee) not to exceed one-half of the library's share of the basic fee ($10 under the proposal). In those counties where the full increased authority for law libraries is exercised, a $30 increase in civil filing fees will generate $11.20 in additional revenues per filing for the court clerk. The total amount of increased funding available to court clerks and county law libraries as a result of this proposal would be about $2,187,000. The exact split between the two would depend on the degree to which counties exercised the authority to increase funding for law libraries. Consistent with the principles adopted by the PBLAC, the new funds made available to county clerks would be governed by non-supplantation language and designated exclusively for use by the clerks to support a broad range of local civil access to justice efforts. ii. Establish a Superior Court Response Fee of $45 (making the total $55 in counties where there is the $10 courthouse facilitator surcharge) and make it subject to the existing statutory split between the PSEA and local counties. Five dollars of the local county's share of each response filing fee will be available to support the county law library upon the exercise of the statutory procedure set forth in RCW 27.24.070, leaving $19.30 for county clerks. Assuming that 60% of all civil filings are contested (a very conservative assumption), this civil response fee would generate an additional $1,676,700 in funding for the PSEA, an additional $1,563,300 in funding for court clerks civil equal justice activities, and up to $405,000 in increased funding for county law libraries. iii. Increase the District Court Filing Fee by $19 (making the fee $60 in counties where there is a $10 dispute resolution center fee). This fee would continue to be subject to the $68% county/32% PSEA statutory split. Of the county's share of this increase, three dollars would be dedicated for support of the county law library upon the exercise of the statutory procedure in RCW 27.24.070. iv. Establish a District Court Response Fee of $20 (making the fee $30 in counties where there is a $10 dispute resolution center fee) and allocate the proceeds in accordance with the statutory split. Of the county's share, up to three dollars of each filing would be dedicated for support of the county law library upon the exercise of the statutory procedure in RCW 27.24.070. v. Establish a Mechanism to Ensure That All New Revenues Generated to the PSEA From the Civil Filing Fee Increase Are Appropriated for Civil Equal Justice Activities. When the Legislature increased civil filing fees in 1992, it was calculated that the increased revenue to the state from the $22 intended for civil legal services would be about $2.4 million per year. As a result, the corresponding appropriation was made at that level. Since then, however, the amount generated by the filing fee increase has jumped by 33%, but until 1997, the amount appropriated for civil legal services remained at $2.4 million per year. The PBLAC encourages the BOG to ensure that the fruits of any increase in civil equal justice funding resulting from an increase in filing fees, establishment of civil response fees, or any combination thereof, are realized and that these funds are appropriated for civil equal justice efforts. While we cannot tie the hands of future legislatures, it is surely possible to include in any legislative package sufficient intent language to maximize the likelihood that the funds are appropriated at a level consistent with the increased revenues resulting from the fee increases. 4. Establishing a Uniform System for Determining Indigency and Reclaiming Waived Fees The PBLAC recognizes that any fee increase in any court has the potential to further limit access to the system for those of limited means -- both low and moderate income litigants. The Committee's deliberations and research also led it to conclude that the practical application of the constitutional right of indigent litigants to a waiver of filing fees was wanting in regularity of criteria and process. Establishing uniform standards and procedures can help mitigate the obstacles to effective utilization of the right to a fee waiver by those for whom it is necessary, and thereby mitigate the potential negative impacts of the fee waiver itself. Further, there are many cases in which an authorization to proceed In Forma Pauperis may be appropriate on the front end of a case, but where the fee should ultimately be recovered either at the conclusion of the litigation (especially in domestic relations cases), as part of a payment-over-time plan, by entry of a judgment for the fee at the conclusion of the case, or some combination of these. The Committee therefore recommends that the Supreme Court adopt a rule which establishes uniform standards for indigency, defines procedures for conditional waiver of fees for those who meet the indigency standards, expressly authorizes litigants who fall close to the indigency standard to pay the fee over time (subject to penalty of having the case/defense stricken), and ensures regular reevaluation of the propriety of the waiver and authorizes entry of judgment for recovery of the fee upon the conclusion of any case in which the fee was conditionally waived. 5. Establishing a Special B&O Tax Surcharge on the Legal Profession The legal profession has a special responsibility to ensure equal access to justice. One way of generating additional funding is to establish a special surcharge on the B&O tax rate for lawyers. Such a surcharge, if coupled with legislation dedicating the increased revenues for civil legal services for the indigent, could help raise substantial new revenues. According to the Department of Revenue, lawyers and law firms paid an average of $38,198,605 in B&O taxes during the 1995-1997 period on average revenues of $1,909,930,283. Increasing the B&O rate by one tenth of a cent on the dollar of gross revenues (from 2 cents to 2.1 cents), would yield an average of $1,910,000 in additional revenue per year in funding for statewide equal justice activities. The practical effect of such an increase is as follows: A law firm with gross revenues of $10,000,000 would have its state B&O tax liability increase from $200,000 to $210,000. A law firm with $500,000 in gross revenues would see its annual tax liability increase from $10,000 to $11,000 -- or $250 per quarter. There are a number of arguments that can be made in support of a tax surcharge strategy, probably the most compelling of which is that it demonstrates the willingness of the profession to carry its share of the burden of meeting the civil equal justice needs of poor people. But, if this approach is to be embraced, the PBLAC cautions that it must clearly be characterized as part of a larger, integrated strategy pursuant to which substantial additional state funding (beyond that which would be generated by any surcharge) would be appropriated for civil equal justice activities. This might be the quid pro quo for the Legislature's agreement to appropriate a large sum from the general fund or to increase civil filing fees, or both. Two principal arguments will be made against this approach. First, many would argue that it is inappropriate for the legal profession to bear a disproportionate burden for financing a civil justice system that is the constitutional responsibility of all the taxpayers of the state to operate. As to this argument, the following remarks are relevant: The legal community has created a monopoly in which it alone controls access to justice -- to the protection of individual liberties and rights. We have established a system in which we reject the right of anyone other than the courts and lawyers to pass on our qualifications to practice law, or to regulate us in the practice of law. We permit no realistic alternatives to the use of our legal system. ... Given our unique role, individual lawyers and the legal community as a whole have a special obligation to take a leadership role in assuring that there is access to justice for all. The second objection flows from the fact that the B&O is calculated on the basis of gross revenues, not profitability. There some struggling lawyers in our state, especially some of the younger lawyers who operate under the burden of large student loan debts. Increasing the B&O tax rate might have a negative impact on some of these practitioners, many of whom also provide substantial pro bono assistance. 6. Dedicating Income From Abandoned Lawyers' Trust Accounts Some years ago Chief Justice Durham suggested the possibility of targeting unclaimed and abandoned property in lawyers trust accounts as a potential source of revenue for civil equal justice activities. While some initial research was conducted, no action was taken to determine the feasibility of this idea. As part of its comprehensive review of potential funding sources, the Committee decided to explore the possibilities of dedicating unclaimed trust account property to support equal justice. Unclaimed property, such as unclaimed client funds held by an attorney, is presumed abandoned after five years and must be turned over to the Department of Revenue. RCW 63.29 et seq. The Department holds the funds, puts out notices and makes other periodic efforts to notify the owners of these funds that they are available to be claimed. All funds collected by the state since 1955 remain eligible to be claimed. Additionally, up to ten years' of interest may be paid to the funds' owner(s), if the property was reported as interest bearing at the time it was turned over to the Department of Revenue. Under the statute, the Department of Revenue must hold out $250,000 in a separate account in readiness to pay for any claims against the fund. The remainder, which is now approximately $200,000,000 is invested by the state. In the past year, this fund earned about $11 million in interest, which benefits the state's general fund. The question of unclaimed lawyers' trust account property raises several conceptual and practical issues. First, there is the question of jurisdiction. While the Legislature has directed the disposition of such property by statute, strong arguments exist that the disposition of such property falls within the exclusive jurisdiction of the Supreme Court. It is the Court that, by rule, regulates the handling of client funds. RPC 1.14; APR 12.1 Having created the system for the handling of client funds, the Court presumably has jurisdiction to control their disposition upon abandonment. The Court could exercise its authority and amend RPC 1.14 and APR 12.1 to establish procedures for the determination, disposition and dedication of abandoned client trust account funds to support civil equal justice activities after a suitable period of time. The Committee recommends that this potential funding source be pursued after the U.S. Supreme Court issues its ruling in Phillips v. Texas Equal Access To Justice Foundation (a ruling is expected by June 1998) and perhaps the final decision is reached in Washington Legal Foundation v. Legal Foundation of Washington (a Ninth Circuit decision is expected in later 1999). A positive decision in Phillips would underscore the propriety of dedicating interest earned on the client's abandoned property for civil equal justice activities. C. Increased Private Fundraising Support of equal justice is a public-private responsibility. Federal and state funding increases are needed. So, too, is a substantial increase in private support for civil equal justice, especially from the legal profession itself. Three principal ideas have been explored -- an increase in attorney registration fees; establishment of aspirational pro bono support goals with a financial contribution alternative; and a tax credit in favor of those who provide direct financial support for civil equal justice organizations that serve poor and vulnerable people. 1. Increased Attorney Licensing Fees Recognizing the unique obligation of attorneys to support access to justice and the importance of equal justice to the integrity and continuing legitimacy of lawyers' exclusive monopoly on the practice of law, the Supreme Courts of Minnesota and Ohio have dedicated attorney licensing fees to help support civil equal justice efforts in their respective states. The PBLAC strongly believes that every attorney has a professional obligation to contribute to help ensure civil access to justice. The duty to ensure that this obligation is met falls squarely upon the Supreme Court and the Washington State Bar Association as the regulatory arm of the Court. GR 12. [The] Court, as the administrative head of the judicial branch, has the responsibility to ensure that access to the courts is provided for all segments of our society. ... Justice is not truly justice if only the rich can afford counsel and gain access to the court. There are more than 20,000 attorneys licensed to practice of law in Washington State. An increase in the annual attorney license fee of $50 would generate in excess of $1,000,000 in additional revenue for civil equal justice activities per year. As the number of attorneys in the state increases, the amount of funding raised by such a surcharge would increase over time as well. The PBLAC recognizes that many arguments can and will be raised against such an approach. Most of these are chronicled in the deliberations of the Minnesota State Bar Association and the proceedings before the Minnesota State Supreme Court which resulted in that court's ordering an increase in the attorney license fee to support civil legal services for the poor. The PBLAC believes that these arguments can be effectively answered, as they were in the Minnesota proceedings. The authority to establish such a surcharge falls squarely within the Supreme Court's constitutional authority to regulate the practice of law. Washington State Bar Association v. State of Washington, 125 Wn.2d 901, 890 P.2d 1047 (1995). "One of the basic functions of the judicial branch of government is the regulation of the practice of law." The practice of law is so intimately connected with the exercise of judicial power in the administration of justice that the right to define and regulate the practice naturally and logically belongs to the judicial department of the state government. Under the doctrine of separation of powers the courts have inherent power to regulate admission to the practice of law, to oversee the conduct of attorneys as officers of the court, and to control and supervise the practice of law generally whether in or out of court. ... See also Schwarz v. Kogan, No. 96-3276 (11th Cir. 1998), Slip opinion at 8-9 (finding that the authority to establish rules governing pro bono service, including the alternative obligation to contribute $350 per year to legal aid organizations, falls squarely within the constitutional prerogative of the Florida Supreme Court's authority to regulate the practice of law). The Washington Supreme Court most recently exercised its authority to establish surcharges to fund activities determined central to its responsibility to regulate the practice of law when it authorized the Client Security Fund assessment. APR 15. A surcharge to support equal justice and the fair operation of the civil justice system falls squarely within the Court's constitutional authority. The PBLAC does not believe that an attorney license surcharge would substantially interfere with pro bono recruitment and related equal justice fundraising efforts. A surcharge to support full access to a civil justice system that licensed attorneys have a private monopoly to practice within and make a living from is not mandatory pro bono; nor does it constitute a taking of property. Questions of equity and disproportionality are policy matters, and on these the PBLAC takes no specific position, except to reiterate its dual beliefs that (1) lawyers have a special obligation to support equal justice distinct from those of the general public, and (2) the Supreme Court working directly as well as through the WSBA, has a constitutional responsibility to ensure that the civil equal justice system is open and meaningfully available to all who need it. 2. Establishment of Aspirational Pro Bono Support Goals With a Financial Contribution Alternative. In 1997, the PBLAC asked the Board of Governors to embrace revisions to RPC 6.1 designed to bring our rule into substantial conformity with the ABA's Model Code. The rule would have created an expectation that attorneys provide at least thirty (30) hours of pro bono service, the majority of which would involve provision of representation to persons of limited means or to charitable organizations in matters designed to address the needs of persons of limited means. The rule also encouraged attorneys to voluntarily contribute financial support to organizations that provide civil legal services to person of limited means. Finally, while not part of the rule itself, the PBLAC recommended that the Bar Association establish a procedure for attorneys to voluntarily report their pro bono activities and for the Association to recognize the special contributions of attorneys who provide more than 50 hours of pro bono service. The PBLAC's proposal was tabled after substantial debate. The Florida Supreme Court has taken the lead in initiatives designed to increase pro bono services and private support for civil equal justice efforts. By rule, the Court established the expectation that attorneys provide 20 hours of pro bono legal service to the poor or, in lieu of such assistance, make an annual contribution of at least $350 to a legal aid organization. To enable it to track the effectiveness of the private bar's voluntary compliance with these aspirational expectations, the Court established a mandatory reporting requirement, and made failure to submit the compliance report a disciplinary offense. In defending the propriety of the mandatory reporting requirement, the Florida Supreme Court explained: [T]here is no more effective way to gauge the success of lawyers in meeting their obligation to represent the poor--an obligation that every member of the Bar swears to undertake. Lawyers have been granted a special boon by the State of Florida--they in effect have a monopoly on the public justice system. In return, lawyers are ethically bound to help the State's poor gain access to that system. The mandatory reporting requirement is essential to guaranteeing that lawyers do their part to provide equal justice. In an extensive commentary to the rule, the Florida Supreme Court explains that the Court has a central responsibility to find a solution to the problem of providing the poor greater access to the legal system; that lawyers play a unique role in the adversarial system; that as officers of the court, members of the bar have a professional responsibility to provide pro bono legal services to the poor; that certain lawyers may not be able to discharge that responsibility by providing direct services, and that such attorneys should be provided alternative ways in which to meet this obligation; that it is fair and reasonable to establish a minimum contribution level of $350 for those attorneys who cannot otherwise meet the pro bono obligation established by the rule; and that a reporting system will provide a sound basis for evaluating the extent to which pro bono expectations are being met. The expectations of the Florida rule have been met in practical application. Despite ongoing legal challenges and a judicially imposed moratorium on the mandatory reporting requirement, both pro bono activities and private financial support for civil legal services has increased substantially since the rule's initial adoption. There can be no doubt the reporting requirement has been effective. Accurate statistics are now available as to the number of pro bono legal hours being provided in Florida each year. ... Further, a positive side effect of our pro bono rule is that both pro bono legal services and contributions to legal services have increased. A study conducted by the Florida Bar Foundation confirms the effectiveness of the rule, noting that, in addition to substantially increasing the amount of pro bono representation provided by Florida's attorneys, the buy-out provisions of the rule have resulted in a near-doubling of private bar contributions to Florida civil legal services programs -- from about $875,000 1n 1995 to more than $1.4 million in 1997. Recognizing the effectiveness of the Florida Rule, efforts are underway in Utah and Massachusetts to adopt rules of similar effect. The Florida rule, including the reporting procedure, provides a model worthy of consideration. The PBLAC will continue to work with the Board of Governors to effect appropriate changes in RPC 6.1 consistent with the goal of increasing both volunteer attorney involvement and private financial support for civil equal justice efforts in our state. 3. B & O Tax Credits for Contributions to Civil Equal Justice Organizations One way to stimulate increased private contributions to civil equal justice organizations is to provide some level of tax relief in return. The federal government does this through its charitable contributions deduction. There is no similar procedure in state law. Substantial increases in private contributions to equal justice organizations (LAW Fund, local volunteer attorney programs, specialty legal services programs, etc.) could be generated by providing a targeted tax credit against state B & O tax obligations of lawyers, law firms and for-profit arbitration/mediation service providers. Such a program might be designed as follows:
While there are a number of feasibility and practical implementation considerations, these do not appear to be insurmountable. The PBLAC believes that a program of targeted tax credits could be aggressively marketed in a way that would result in a substantial increase in private bar financial support for civil equal justice organizations. 4. Authorize the Award of Punitive or Enhanced Damages in Certain Types of Cases and Direct That All or a Substantial Majority of Any Such Damages Be Paid to the Legal Foundation of Washington. Washington State is one of four states in the nation that generally does not allow the award of punitive damages in civil legal actions where the conduct of the culpable party demonstrates a willful or wanton disregard of its likely consequences. A significant (although by no means the only) reason for the historical resistance to punitive damages is the concern that attorneys and injured parties will realize a windfall from the award of damages in excess of those found to be appropriate to compensate for the injuries caused by the culpable party's conduct. Sound public policy considerations suggest that those whose conduct demonstrates a level of recklessness or a callous disregard for its likely consequences should suffer financial consequences in addition to compensatory awards that are now internalized into normal business planning decisions. To address legitimate concerns regarding windfall benefits to those who have been compensated through the award of damages and their attorneys, the Legislature might be encouraged to establish a limited authorization for the award of punitive or enhanced damages (e.g., double or treble damages up to a specified amount such as those available under Washington's Consumer Protection Act) in certain types of cases, provided that all or a substantial majority of the damages be paid to the Legal Foundation of Washington and used for civil equal justice activities. V. WHAT OTHER STATES ARE DOING Every state is facing its own equal justice delivery crisis in the wake of the fundamental changes wrought by the 1995 LSC cuts and corresponding restrictions. Spawned in part by the LSC's request that each state develop a plan to meet the civil equal justice needs of low income people in the wake of these changes, civil legal services planning has been ongoing in nearly every state since late 1995. In an effort to help facilitate and coordinate the work of state legal services planning entities, the American Bar Association initiated two new support programs. The State Planning Assistance Network (SPAN) is a joint project of the ABA and the National Legal Aid and Defender Association. This project is designed to collect and share information regarding state civil equal justice delivery system changes, and provide technical assistance information and guidance to state civil equal justice planners. SPAN regularly publishes its national UPDATE, a state-by-state analysis of equal justice planning efforts, key contacts, and initiatives undertaken or underway. In addition to SPAN, the ABA's Standing Committee on Legal Aid and Indigent Defendants operates a Project to Expand Resources for Legal Services (PERLS). This project tracks civil equal justice funding initiatives (as opposed to service delivery design changes that are the primary focus of SPAN) on a state-by-state basis. Staff at PERLS compiles and is in the process of establishing clearinghouse capabilities for state based equal justice funding statutes, court rules, and other relevant documents. A draft state-by-state funding report was shared with the PBLAC. A final copy will be provided to the BOG upon its publication. A third source of information regarding state based initiatives to address the civil equal justice funding crisis is the national Center for State Courts in Williamsburg Virginia. In July 1997, the Center's Institute for Court Management published a memorandum chronicling the responses of states to cuts in legal services funding. The memorandum addresses funding and pro bono related efforts. In the area of funding, the memorandum outlines four "promising new sources." These are:
From the SPAN and PERLS information, key themes have emerged. Every state has recognized the need to secure state funding. Not surprisingly, the majority of states that have increased funding for legal services since the 1995 federal cuts (14 out of 24) have done so through increases in civil filing fees. Others have sought direct appropriations in lieu of civil filing fees. Some have been successful in seeking both. In addition, Supreme Courts of Minnesota and Ohio have dedicated attorney registration fees to support civil legal services. Nearly every state has undertaken some new initiative to raise funding from the private bar and other private funders. VI. RECOMMENDATIONS On the basis of the foregoing, the PBLAC respectfully submits the following recommendations to the BOG: 1. Declare that a civil equal justice crisis exists in our state. 2. Establish $10,000,000 as the target amount of additional new state funding to be secured during the next biennium as an initial necessary step toward rebuilding an effective statewide civil equal justice system.
3. Consider the propriety of asking the Supreme Court to establish a civil equal justice surcharge on bar licensing fees. 4. Reconsider the PBLAC's proposed changes to RPC 6.1 and the propriety of establishing reporting and buy-out procedures like those adopted and upheld in Florida. 5. Support efforts to increase federal funding for the Legal Services Corporation. See Also
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