CR 23 - Class Actions

• Proposed Changes to CR 23 - Class Actions (in Word Format)
• Comments Received for CR 23 - Class Actions

GR 9 COVER SHEET

CR 23

(A) Name of the Proponent:

The Legal Foundation of Washington (LFW)

(B) Spokesperson:

Legal Foundation of Washington

M. Laurie Flinn Connelly, Chair

Staff Contact: Caitlin W. Davis, Executive Director

(C) Purpose and Effect of the Suggested Technical Change to Rule:

Recognizing that access to the civil justice system was a chronic problem, in 2006 the Washington Supreme Court amended CR 23 to allow not less than 25% of residual funds in class action cases (Class Action Residual Funds) be disbursed to LFW to support legal aid programs. While the Class Action Residual Funds have been a valuable source of support for civil legal aid, they have not been sufficient to fully address the civil legal needs of the most vulnerable Washington residents.

The challenge to funding civil legal needs was exacerbated by the recession in 2008. Between 2008 and 2009, the Federal Reserve Board cut key interest rates to near zero, which caused the revenue stream from the interest on lawyers trust accounts to drop by 80%.¹ Since that time, LFW and its partner organizations LAW Fund (now incorporated into LFW) and the Endowment for Equal Justice have received over $40 million dollars for the benefit of civil legal aid, both directly and indirectly, as a result of the initial Class Action Residual Funds amendment to CR 23. While LFW has done its best to find additional funding sources, it is the Class Action Residual funding from CR 23 that has allowed LFW to stabilize Washington’s Alliance for Equal Justice, to prevent the deep funding cuts to individual legal aid programs that would have been necessary after IOLTA revenue dropped, as well as to provide significant funding in targeted areas of need, including prisoners, their families, and those individuals recently released from prison.

• spite of these efforts, the need for civil legal aid has been compounded by the rapid growth in the number of Washingtonians living in poverty. Since 2000, the total number of Washingtonians living at or below 125% of the Federal Poverty Level has increased by nearly 40% – from 815,000 individuals in 2000 to 1,250,000 in 2013. This number represents approximately 18% of our state’s total population.
• conjunction with the growing number of Washingtonians who are eligible for civil legal aid, recent research shows that the actual need for civil legal aid is immense. In 2015, the Washington Supreme Court reexamined the civil legal needs of low income people in our state. The 2015 Washington State Civil Legal Needs Study Update documents the immense scope of this need:
• Over 70% of low-income households in Washington experience at least one civil legal problem per year.
• Of those households, the average number of civil legal problems per year is 9.3, which is up dramatically from 3.3 per year as found in the 2003 Civil Legal Needs Study.
• Only 24% of those individuals who have a civil legal problem will receive some level of assistance, meaning that 76% will be forced to face their problems alone.
• When a person or household receives legal aid, 61% report that the help they received made a positive difference.
• Approximately 66% of survey respondents reported that they have no or limited confidence in the ability of the state’s civil justice system to provide protection and ensure their rights.
• current level of services provided to those with documented need fails to meet the national standard for the “minimum access to services” threshold of at least one civil legal aid attorney for every 5,000 eligible people, which was established in 1976 by the Legal Services Corporation – the grantor and administrator of the federal legal aid appropriations. In fact, Washington’s current ratio of legal aid attorneys to eligible low-income people is approximately 1: 11,000. With help from our state’s legal aid and pro bono programs, the Office of Civil Legal Aid estimates that Washington needs to more than double its yearly funding for civil legal aid in order to reach minimum access to services. The suggested amendment would help meet the objective of providing a more meaningful level of access for low-income Washingtonians in need of legal services.

Moreover, there is precedent for the proposed increase in the percentage of residual funds allocable to the LFW to not less than 50%, as that level of funding has been adopted by court rule in at least 8 other states: Colorado, Illinois, Montana, Oregon, Pennsylvania and South Carolina, as a means of increasing funding for civil legal aid. In addition, in August 2016, the ABA House of Delegates issued a resolution and report, encouraging states to use class action residual funds to “improve access to civil justice for persons living in poverty.” A copy of that resolution and report is attached and incorporated herein.

In sum, the LFW believes that the proposed amendment would serve to address the ongoing void in civil legal aid funding caused by the drop in IOLTA interest rates triggered by the 2008 recession, as well as to address the growing need for civil legal services that the 2015 Study has documented.

¹ Unfortunately, while the economy has improved, that improvement has not been seen in the interest rates on these accounts, which remain at historically low levels.