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Earlier this summer, I wrote about the significant cuts to the budget of the , which provides funding to around with over nine hundred offices nationwide. These organizations provide crucial services to low-income communities, ranging from foreclosure prevention to domestic violence services to increasing access to public benefits.  LSC-funded programs employ approximately of the attorneys working in the legal aid field. Legal aid programs support asset building by helping clients access basic necessities and maintain their existing assets—including most families’ greatest asset, the home. Unfortunately, insufficient funding has left legal aid organizations struggling, and most families facing foreclosure unrepresented. However, banks have an opportunity to make small changes that could have a big impact with respect to one of legal aid’s major funding streams – the Interest on Lawyers’ Trust Accounts program.

The need for legal services has increased significantly due to the Recession—particularly with respect to debt and foreclosure. In 2008, LSC organizationsbankruptcy and debt relief cases; this number rose to 39,346 cases in 2010. Foreclosures reflect a similar trend; in New York, foreclosure cases between 2007 and 2011, and the cases “sit in the system” for an average of two and a half years. Just this week, AARP released finding that 1.5 million Americans over fifty have lost their homes since 2007; the racial disparities among this group mimic those of younger Americans, with black and Latino homeowners at almost double the risk of foreclosure. Legal aid lawyers assist clients in foreclosure through loan modifications, mediation, and providing representation in foreclosure proceedings. These attorneys also were among the first to identify the scandal in 2010.

Still, a from the Brennan Center for Justice revealed that the vast majority of families facing foreclosure in most states are not represented by counsel. In New Jersey, for example, 92.9% of the defendants in foreclosure cases in 2010 had no attorneys on record, while 74.1% of defendants in Connecticut’s foreclosure mediation program were unrepresented. This lack of representation has practical and potentially life-long consequences for litigants; as Martin Mack, the Executive Deputy Attorney General of New York, has testified: “[T]he lack of individual representation in foreclosure actions is one reason we have seen systemic abuses of the legal system by lenders and debt collectors.”

Inadequate representation, of course, is largely due to inadequate funding, as legal aid organizations across the country are cutting staff. A recent LSC survey LSC-funded organizations anticipated laying off 13.3% of their attorneys between 2010 and 2012, along with 15.4% of their paralegals and 12.7% of their support staff. It’s estimated that for every attorney who is let go, between two and three hundred fewer clients will be served. And with the proportion of eligible legal aid clients receiving services already , homelessness, bankruptcies and foreclosures are bound to increase as these layoffs take effect.

However, though LSC is the largest source of funding for legal aid programs, it’s not the only source. Coming in second is the (IOLTA) program. When attorneys receive client funds, like a settlement, they are required by law to deposit these funds in a separate trust account; the small amount of interest on all of these accounts is pooled to fund legal aid programs. As one lawyer in Washington , “It’s like scooping up pennies from the floor. But from all the lawyers in all the accounts in the state it ends up being millions.”

Yet because the amount of funding IOLTA programs can generate is contingent on the interest rates of the trust accounts, balances have dropped dramatically since 2008, as interest rates have plummeted. IOLTA programs contributedfor legal aid groups in 2008, including $111.8 million to organizations also funded by LSC. A mere two years later, IOLTA’s total contribution dropped to $122.9 million, with $67.9 million going to LSC-funded organizations.  The consequences of diminished IOLTA accounts, in conjunction with insufficient LSC funding, have been vast and devastating. In New Jersey, for example, where there are six LSC-funded legal service providers, IOLTA funding for these organizations in 2007 to a mere $8 million in 2010. Florida, Washington, Virginia, Iowa and Missouri have all reported similar drops.

So where do the banks come in? The National Association of IOLTA Programs and the American Bar Association Commission on IOLTA have offered . Banks can either raise interest rates for their IOLTA accounts or eliminate service charges, either of which would have a direct effect on the level of funding IOLTA is able to contribute to legal services programs. California launched a campaign to get its banks to raise their rates on IOLTA accounts , following cuts to LSC funding, which was marginally successful. Since then, many states have established “comparability” requirements, which require banks providing IOLTA accounts to offer the same interest rates as their other accounts with the same minimum balance and account qualifications. In , for example, the Bar Association found that if interest rates for IOLTA accounts were raised to match those of general business accounts, legal aid programs could net an additional $2.4 million a year.

While comparability is a big step, banks could go even further by providing slightly higher interest rates for IOLTA accounts or by waiving fees. Preserving adequate funding for legal services is essential to keeping families on their feet and in their homes, now more than ever.