Everyone agrees that the work Elam Lantz Jr. does is very much needed in Greater Hartford.
Lantz directs Greater Hartford Legal Aid, a team of attorneys that fights for fair treatment for Section 8 tenants, the mentally retarded, Medicaid recipients and many others who cannot afford their own lawyers. Their service plays a key role in ensuring that there really is justice for all.
But it’s also expensive, which is why Lantz feels so relieved recently. He is expanding GHLA’s operation and will have 29 attorneys by the fall, eight more than when he joined in 2001, thanks to a court ruling that boosted the amount of bank interest earned on certain lawyer accounts that has benefited his operation.
More money began pouring in last June when the Superior Court changed the rules for IOLTA, the Interest on Lawyers Trust Accounts, a mandatory program that compiles interest earned from the bank accounts lawyers use to set-aside clients’ money during legal transactions.
IOLTA has contributed more than $115 million to civil legal representation for the poor since 1987, and that number is likely to increase at an accelerated pace as more banks agree to interest rates that comply with the new directive was imposed last summer.
The judges unanimously ruled that lawyers were required to deposit client money with financial institutions that agree to pay the same interest rate on IOLTA accounts that are paid on comparable accounts with similarly sized deposits.
Too Much Regulation
That ruling had bankers fuming. Many of them, including Rockville Bank President William J. McGurk, paid more than the minimum percentages for IOLTA accounts and were baffled at being required to offer the same interest rate on IOLTA accounts as provided to long-time customers who did large volumes of business with their banks. Though the judges viewed the new rule as matter of attorney practices, bankers viewed it essentially as regulation of their industry.
Co-chair of the General Assembly’s Banks Committee, Rep. Ryan Barry (D-Manchester) –- an attorney who uses IOLTA accounts himself — agreed. “I think it’s de facto regulation of the banks. There’s no doubt about that,” Barry said.
Rather than haggling over a legislative bill, Barry asked that the banks and the Connecticut Bar Foundation, which administers IOLTA, come to an understanding on their own. Both sides acknowledged that they were close to reaching a compromise last week.
An advisory board will be created that would include not only foundation members but also bankers as a way to give the financial institutions a voice on administering the program.
Any agreement would require approval of the Bar Foundation’s board, which will meet March 27.
Promising Compromise
Sandra F. Klebanoff, executive director of the Connecticut Bar Foundation, said she thought that a concession made sense, giving the voluntary nature of banks’ participation.
“I have always looked upon IOLTA as a partnership … and so I’m always open to meet and I’m glad we’re finding a way we can agree,” Klebanoff said.
There also seems to be agreement on the matter of how participating banks and the Bar Foundation will settle disputes. Rep. Barry said the banks had pushed for a binding, private arbitration process that would remove judges from making final decisions, but said the banks had agreed on using court appeals, a scenario Klebanoff said would be reserved for final resort.
“The last thing we ever want to do is declare a bank ineligible,” she said.
The only piece of the agreement that requires legislative action is a measure requiring that the Bar Foundation report to the General Assembly, including the Banks Committee specifically.
“They both seem to be very happy with the resolution,” Barry said.
Klebanoff called the agreement “a very positive step.” It also seemed to answer a number of the questions raised by Rockville Bank’s McGurk, though he originally wanted a complete financial report from the Bar Foundation.
“I’d just like to see some outside representation and a little bit of openness,” McGurk said.
No doubt the arrangement works for Lantz as well. He hopes to expand certain practice areas down the road, to help immigrant women who suffer from domestic violence, expand housing subsidies and seek provisional pardons for non-violent felons, which could help them land jobs.
“We’ve experienced some nice solid growth, and with the increased funding we’ll be able to continue that and hopefully build on it,” Lantz said.
