Up Against It

By Jeanette Borzo

Law firms across the state are laying off attorneys as work and revenue dries up. But California's legal nonprofits have been hit by a double whammy: At the same time they are straining to keep up with a booming demand for their services, they are feeling the pinch of the recession themselves.

"The nonprofits aren't getting paid on their contracts," says Stephanie Choy, managing director of the Legal Services Trust Fund Program at the State Bar of California. "City and county [government] funding is down. We don't want to say that the sky is falling?but sometimes it feels like the sky is falling."

Since last year, hundreds of legal nonprofits in California have shared that feeling. These are the organizations the state's needy turn to for help with a host of matters such as civil rights, elder abuse, discrimination of all types, family violence, and even tax preparation. Some are litigation-based, while others focus more on providing legal counsel. Most help individuals with their specific legal problems, but some address broader social issues by pushing for policy changes intended to benefit whole segments of the population. Some are referral organizations that pass most cases off to outside lawyers, while others do the legal work themselves?sometimes in partnership with outside attorneys.

Many of the organizations are funded by the Interest on Lawyers Trust Accounts (IOLTA) program. Others get more-restricted money from the Legal Services Corp., which doesn't let its grantees file class actions or collect attorneys fees (although the Obama administration may soon eliminate those restrictions). Most legal nonprofits also get some sort of grant money from special-interest foundations, and often those that litigate supplement their budgets with court-awarded attorneys fees.

However these groups are funded, just about all of them are feeling squeezed now. IOLTA funds, for example, dropped 10 percent for the fiscal year that ends next June. And for the year beginning July 2010, funds are expected to drop by another 30 to 50 percent, according to Julia R. Wilson, director of the Legal Aid Association of California in San Francisco.

Foundations that provide funding to legal nonprofits are also hurting. According to the Arlington, Virginia?based Council on Foundations, the overall value of U.S. endowments?many of which fund legal nonprofits?plunged by $200 billion in 2008, dropping more than 30 percent from the year before. For the nonprofits that rely heavily on such grants, many expect that the worst is yet to come and so have already cut staff.

In January, for example, the American Civil Liberties Union of Southern California laid off two non-lawyer staff members. Since August 2008 the Western Center on Law & Poverty in Los Angeles has lost 5 of its 24 lawyer positions through layoffs and attrition, says Co-Interim Executive Director Pegine Grayson. And at the Inland Empire Latino Lawyers Association in Riverside, Executive Director Enrique R. Acuña took a 5 percent pay cut and last year laid off one paralegal. By mid-2010 he expects to be forced to make more cuts.

"Our biggest shortfall is with [services to address] mortgage fraud," says Acuña, who estimates that he has turned away a couple requests for foreclosure help every day for the past year.

Indeed, of all of the state's legal nonprofits, none may be stretched more thinly than those that focus on housing and health. As Californians lose their jobs in record numbers, many people are rushing to nonprofits for help in keeping their homes and finding alternatives to replace their work-related health insurance. For example, by mid-March this year the Legal Aid Foundation of Los Angeles had answered nearly as many calls concerning foreclosure, homeownership fraud, and predatory lending as it did in all of 2008.

Another nonprofit that's feeling the heat is Legal Services of Northern California (LSNC). It defends rights to education, housing, the courts, racial equality, and health care for residents of 23 California counties. But LSNC faced a spate of recent challenges even before the current recession.

About a dozen years ago, when Congress changed the rules on how the federally funded Legal Services Corp. distributes money to legal nonprofits, LSNC had to cut one lawyer position from each of its nine offices. Then when interest rates climbed in 2007, it looked like IOLTA money might help close the gap.

"IOLTA [funds] in some of the other states ... had doubled in some cases and tripled in others," says Gary Smith, who has been at LSNC for more than 20 years and has been its executive director for the past 10. "We were planning what we were going to do with all that money." But last year the recession hit, and "that extra money never happened."

When the 2008?09 state budget was signed, LSNC?which handles about 30,000 cases annually?lost an additional $265,000 in state and local funds for its ombudsman programs, requiring elimination of the equivalent of 13 full-time advocate positions. Meanwhile, individual private donations began to drop after homeless locals pitched a tent city not far from LSNC's headquarters in Sacramento. Finally in March, just as everything that could go wrong seemed to have done so, LSNC's Ukiah office burned nearly to the ground, rendering it uninhabitable.

Somehow, though, Smith was able to keep a sense of perspective. "As difficult as some of the economic things are making it for legal nonprofits," he says, "it is making it even worse for the low-income populations we serve. That's the most painful part for our staff."

Other coping mechanisms for Smith and his 50 staff attorneys include using both technology and outside help. For example, to cut travel costs over its vast territory stretching from Del Norte to Amador counties, LSNC has turned to technology. "We have started using webinars to do our training, which cuts down on the cost of bringing everyone to our office," says Colin Bailey, a tech-savvy LSNC staff attorney in Sacramento. LSNC is also leaning heavily on pro bono attorneys, which may be the one resource available in abundance to legal nonprofits today.

Another challenge now facing many legal nonprofits is to effectively match cases to outside pro bono attorneys. The Inner City Law Center (ICLC) in Los Angeles, for example, doesn't even begin to have the staff it needs to help with the endless requests it gets for eviction assistance. And though ICLC frequently teams up with pro bono counsel on the big-case litigation it undertakes on issues regarding housing and homelessness, its biggest need for help is with the types of individual cases that often bypass court, such as illegal rent increases, leases, and evictions.

"We don't have the capacity to do all those unlawful-detainer cases," says Betsy Handler, director of legal services.

To address this problem, ICLC this fall was in the process of hiring a dedicated pro bono manager.

Reevaluating its donor base is another strategy that has worked for ICLC, which helps some 2,000 people annually. In a fund-raising drive in December, ICLC raised $10,000 more than it did in the previous year. Its trick? It took 800 people off its existing solicitation list?the ones who hadn't been donating?and replaced them with 900 new names.

ICLC has also gone after new funding sources by requesting cy pres funds in several class actions. (If funds remain after a class action settlement has been distributed, the law allows the remainder to be given to related?or "as close as possible"?parties.)

And ICLC has boosted its profile by increasing the number of people on its board, assigning more board members to committees with specific tasks, and giving tours of its offices and of the skid row it serves. "When people learn about Inner City Law Center, they want to help," says Murray, adding that already a third of the center's 31-member board has taken the tour.

Unlike most other California legal non- profits, Oakland's four-year-old Housing and Economic Rights Advocates (HERA) has had good luck lately in landing new funding sources: For instance, in the past year the organization has received enough new grant money to add four staff attorneys.

Nevertheless, now the group's five lawyers work pretty much around the clock. Says founder and Executive Director Maeve Elise Brown, "We turn away pretty decent cases on a weekly basis because we don't have the capacity to work on everything. Even with our staffing up, it's as if we are staring down a tidal wave."

While ICLC mostly helps renters with their housing issues, HERA focuses on problems homeowners have with predatory mortgage lenders, foreclosure, and housing discrimination. It represents clients primarily in Northern California, but it also provides technical assistance and training to constituents statewide.

"Our call volume jumped in January by about 20 percent," says Brown. "We are operating at maximum capacity. We are trying to keep up ... but it's a mess out there."

One telling detail about the depth of that mess: A new type of client has lately begun to knock on HERA's door?middle-class Californians. "We've had calls from psychiatrists and university professors who say, 'I didn't realize that my [mortgage] payments were going to adjust by X. Is that legal?' " says Brown.

Similarly, the Learning Rights Law Center (LRLC) in Los Angeles has also seen a huge jump in demand for its legal services in securing education for special-needs children. This is due not only to the recession's impact on school funding, but also to a rise in diagnoses of certain health conditions, such as autism. For example, in 2000 14,039 California students were receiving special education because of autism, says Executive Director Janeen Steel. But by 2008 that figure had more than tripled, rising to 46,196.

LRLC is part of the National Center for Medical-Legal Partnership, a network of groups that integrate legal assistance into medical settings. As such, it helps Los Angelenos with education-access difficulties, which are often linked to health problems such as autism, cancer, or deafness.

"We have a small staff and always have a [client] waiting list," says Steel, adding that LRLC's five lawyers began the spring with a backlog of about 150 intakes. "And now we're seeing a doubling in requests."

But Steel has met that challenge with a slew of ideas. To save money she has brought grant writing in-house, sending staff to free training seminars. In addition, she turned to email to send out updates about LRLC's latest activities?such as Steel's March testimony to Congress about education for at-risk youth?saving the $1,000 it previously spent to print and mail newsletters.

LRLC has also used inexpensive, so-called Web 2.0 technologies to raise its profile. "We're trying to use social networks to get the information out," says Steel. "And there is no cost to Facebook." Plus, last year Steel hired five law-student clerks after she started teaching at UCLA School of Law.

But staff training is one thing Steel won't scrimp on. "We are investing the same amount in professional development this year," she says. "Everyone has been touched by the economy. But it is so important that our staff [be] supported. We need really good attorneys."

Jeanette Borzo is a senior editor for California Lawyer.

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