The continued drop in interest rates and investment stocks means legal service organizations in Wisconsin will receive smaller grants in 2009 from the Wisconsin Trust Account Foundation (WisTAF).

As a result, legal service providers, such as Legal Action and Legal Aid Society, expect to cut staff positions in response to the anticipated loss of funding.

While the WisTAF board of directors have yet to formally approve 2009 grant totals, Executive Director DeEtte Tomlinson said the final number will be far less than the $1.7 million allocated though the Interest on Lawyers Trust Accounts (IOLTA) fund this year.

“I don’t know the exact amount yet, but it’s not going to be anywhere near what the IOLTA fund generated for legal service groups in 2008,” said Tomlinson, who noted that the average interest rate earned on IOLTA accounts is approximately 0.2 percent, compared to 1.1 percent one year ago.

Deep Cuts

Legal Action of Wisconsin Inc. received $748,000 in IOLTA grant money this year, but initial estimates put the 2009 total at approximately $371,000.

John F. Ebbott, executive director of Legal Action, has already begun to compensate for the expected loss in grant money from WisTAF, along with two other federal grants.

He said about a dozen staff positions have been or will be eliminated as a result of the lost money, which could strap the organization with a $1.1 million deficit.

“Since we cannot run at a deficit we have to cut expenses,” Ebbott said. “We’ve already started on that and probably about 12 or 13 staff positions all told will have to be essentially laid off.”

Cuts are also possible at Legal Aid Society of Milwaukee which could have its IOLTA grant reduced by more than half. This year the organization received $244,000 and in 2009 it could get $105,000 or less, based on the preliminary estimate.

Executive Director Thomas R. Cannon said the average salary for a staff attorney at Legal Aid is $75,000 and the aforementioned reduction in grant money could mean the loss of at least two positions.

“The problem is that bad economic times increase the number of people who badly need our services,” Cannon said. “So our services will likely be reduced just when demand is rising dramatically.”

Tomlinson said that 19 legal service organizations applied for 2009 grant money, the same total as this year. The WisTAF board approved 16 grants for 2008, and Tomlinson said she hopes that number will remain the same next year.

But that will mean less money shared among the same number of providers.

“I think [board] members would prefer to fund everyone who we’ve gone through the preliminary grant process with,” Tomlinson said.

Board members plan to vote on final approval of 2009 grant disbursements in late November.

$50 Assessment

While IOLTA income is expected to fall, Tomlinson said the impact is eased somewhat by the consistent revenue generated by the Public Interested Legal Services Fund (PILSF).

The annual $50 assessment on Wisconsin attorneys provided more than $800,000 in grant money this year. More than $500,000 went to Legal Action and the same amount is expected in 2009.

Ebbott called the attorney assessment a “lifesaver” and also took solace in the $350,000 allotted to Legal Action as part of the $1 million state budget amendment for legal services.

“Regardless of where the [interest] rates are, those amounts remain the same,” Ebbott said.

But the $1 million may not be included in the next state budget and some organizations like Legal Aid did not receive any direct grant money from PILSF.

“I know organizations like us depend on foundations whose grants are derived from investment income and those have bleak prospects for 2009,” said Cannon, who added that Legal Aid received $155,000 from the budget provision.

Tomlinson suggested that WisTAF would not significantly shift grant money generated by PILSF to compensate for shortages created by lower IOLTA returns.

“I don’t think I could promise that would happen,” Tomlinson said. “That money comes directly from attorneys throughout the state and they trust us to make sure we disperse it fairly.”