Funding Cuts, Legislation Threaten Legal Services Programs for Poor

When William Henry was victimized by a loan company and faced the loss of his southeast Los Angeles home, he received crucial free legal help from lawyers provided by Public Counsel, a Los Angeles public interest law project.

When Myla Levee of Hollywood was wrongly denied federal disability benefits, a volunteer from Bet Tzedek Legal Services convinced a judge that she should get the money.

And when Myrtle Faye Rumph wanted to set up an after-school education program in South-Central Los Angeles, the Legal Aid Foundation incorporated her center and prepared its bylaws free of charge when private lawyers had asked for $1,200.

Henry, Levee and Rumph are among thousands of people who have benefited from free legal services programs in Los Angeles in recent years. But now there is the looming prospect that funding cutbacks will reduce the availability of such services.

In the fiscal year ending June 30, about a quarter of the budgets of 125 legal services programs in the state--$22.7 million--came from interest earned on lawyers’ trust fund accounts, a source of funding for poverty law services in California since 1981.

But those funds will be reduced by $7 million to $8 million in the new fiscal year because of lower interest rates and a recession in the legal business statewide.

Perhaps more important, Ray Haynes, a newly elected Republican assemblyman from Temecula, has introduced legislation that would take away all the trust fund money from legal services and give it to programs for crime victims and probation departments, which have been hit hard by budget cuts.

The possible funding slashes come at a time when demands for free legal services for the poor are steadily increasing statewide. They also come on the heels of a 1991 study showing that only 15% of the legal needs of the poor was being met in California.

The study, “Unequal Justice,” documented that between 1980 and 1990 the number of poor people in California went up 41%, while the number of legal services lawyers was reduced 20%.

“And things have gotten worse since then,” said Tomas Olmos, executive director of the Legal Aid Foundation of Los Angeles, which assisted 34,000 people last year, up 8% from the previous year.

Advocates for the poor recently asked Congress to increase the yearly budget of the national Legal Services Corp. from $350 million to $525 million. The corporation is the parent organization of federally funded legal services projects in the state.

George Wittgraf, corporation chairman, said an increase of that magnitude is needed just to bring legal services funding back to where it was in 1981, factoring in inflation. Such an increase is considered unlikely.

So people such as Henry, Levee and Rumph may have to go without help.

Olmos said the special lawyer trust fund provided $2.1 million of the foundation’s $10-million budget for this fiscal year. He said if the Haynes bill passes it would have a severe impact: “We’d have to cut back staff, perhaps close certain offices, not handle certain types of cases.

“I think his proposal is very irresponsible,” Olmos said. “It’s not that the money isn’t needed for other services, but this would take it away from those most in need. Legal Services (Corp.) is, in large part, the last resort, the last safety net for those who have no place else to go and are in desperate need of help.”

Assemblyman Haynes, a lawyer, sees it differently. He said poor people, many of whom are crime victims, would rather have the money used for victim restitution programs than for funding legal services.

“This will be of more value to the poor than giving them some sort of civil representation,” Haynes said. “Civil representation of poor folks is not the highest priority,” he said in a telephone interview from Sacramento.

The assemblyman said he also wants to provide additional revenue for probation programs in an era where “state resources are so tight.” Haynes said that if the measure passes, the money diverted from legal services would be split between victim compensation and probation programs.

“This is a cynical attempt to cannibalize one vital program in order to help another,” said Assemblyman Terry B. Friedman (D-Los Angeles), who has been lobbying to generate alternate sources of funding for 18 Los Angeles County probation camps at risk of closing because of a state budget shortfall.

Friedman contended that the Haynes measure is the latest in “a quarter-century pattern of attempts, beginning with (then-Gov.) Ronald Reagan, to keep low-income people from having access to the justice system and the courts.”

The cuts would have an impact throughout California, said Mary C. Viviano, the State Bar’s director of legal services. The trust fund money is allocated to each county based on the number of people in poverty. Three poverty law programs in Riverside County, where Haynes is from, would lose more than $900,000 if his bill passes.

Haynes’ legislation is scheduled to have its first hearing in the Assembly Judiciary Committee on April 14. The California State Bar Assn. and the Los Angeles County Bar Assn. have sent letters against the bill to the committee. Several Democratic legislators have said they will oppose the legislation.

Thus far, neither Gov. Pete Wilson nor Atty. Gen. Dan Lungren has taken a position on the measure.

Haynes said he expects the bill to gain momentum as time passes. He said the state’s crime victims compensation program “always has a (funding) shortfall.” But other officials said that was not the case.

Last year, California paid $82 million in victim compensation, the most ever and the highest in the nation, said Jody Patel, spokeswoman for the State Board of Control. She said virtually all valid claims received by the board were honored.

About $47 million of that money came from state penalty assessments and the rest came from criminal fines collected by the federal government.

Patel said she expects that the board will pay $75.4 million this year. Part of the reason less money will be available is that many people are paying traffic fines more slowly--or not at all--because they have less money, she said.

Still, California has the oldest compensation program for crime victims in the country, said Dan Eddy, executive director of the National Assn. of Crime Victim Compensation Boards. He called California’s program generous and said it has been “well run in recent years.”

Compensating crime victims is “a worthwhile community concern, but surely there are better places to look for (funding) than taking it out of the mouths of abused children or defrauded senior citizens,” said Steve Nissen, executive director of Public Counsel, a public interest law project sponsored by the Los Angeles and Beverly Hills Bar associations, which provided free legal services to about 10,000 people last year.

Among them were Henry and his wife, Cleo. In 1986, concerned about rising crime, they purchased a security door and security bars for all the windows on their one-story stucco home. Unbeknown to the Henrys, according to a lawsuit filed in Los Angeles County Superior Court on their behalf, the contract included a trust deed on their home--which meant that if they failed to make payments, they could lose the house they purchased in 1953.

At the time, the Henrys’ sole income was his $610-a-month disability pension. Henry, a World War II veteran and former warehouseman, had suffered a series of brain aneurysms in 1976 and underwent two brain surgeries. According to the suit, Henry, now 68, “has suffered and continues to suffer serious mental impairment.”

The Henrys fell behind on payments for the security bars and door. Thereafter, they were induced into taking out several loans they were told would help them pay for the security equipment. But, in fact, they received hardly any money and fell further into debt. Ultimately, their house was sold at a foreclosure sale, and they were about to be evicted when their granddaughter, Tonya, became aware of their plight.

She took them to legal aid lawyer Steven Zrucky, who filed suit and forestalled the eviction. Then, the Henrys were referred to Public Counsel, which has worked on hundreds of home improvement fraud cases. In turn, Public Counsel recruited three volunteer lawyers from Morrison & Foerster to attempt to unwind a labyrinth of transactions.

The volunteer lawyers achieved a settlement in which the Henrys got back the title to their home. Also, thousands of dollars of unwarranted debt was canceled, according to court documents.

“To this day, Mr. Henry still does not completely understand what happened to him,” said attorney L’Tanya Butler. His granddaughter has been appointed as the Henrys’ conservator because they are considered vulnerable to other scam artists, Butler said.

For his part, Henry said one thing was clear to him--that he and his wife would have become homeless if not for the help of Legal Aid, Public Counsel and the volunteer lawyers.

“I would have gone down to the state (welfare office) with tears in my eyes to see if they’d put us up until I got this straightened out.”