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Commenters criticize proposed IOTA rule amendments

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Scales of JusticeRecommendations to change how The Florida Bar Foundation collects and distributes IOTA funds should be rejected or replaced by an alternative proposal, according to comments filed with the Florida Supreme Court.

February 10 was the deadline to comment on proposed changes to Florida Bar Rule 5-1.1(g), which governs the IOTA program. The amendments were submitted last September by the court’s Task Force on the Distribution of IOTA Funds.

A group of 26 past Foundation presidents submitted a “consensus” alternative rule that they said was endorsed by all of the other rule commenters. A group of 34 past Bar presidents specifically endorsed that alternative as well as comments from the Business Law Section, the Bar’s Pro Bono Legal Services Committee, and others.

The past Foundation presidents endorsed the task force’s enhanced reporting requirements on how IOTA funds are dispensed, but said other changes were counterproductive.

“[T]he Task Force’s recommendations on distributing IOTA funds — though well intentioned — lack any supporting evidence and, in our collective judgment, gravely endanger Florida’s system for delivering legal services to the poor and administering justice,” the brief said. “Thus, we — twenty-six past presidents of The Florida Bar Foundation — with one united voice, object to the Task Force’s proposed rule and urge the Court to adopt our proposal — the Consensus Rule endorsed by all the commenting stakeholders — if it deems a change is needed.”

The task force has until March 3 to respond to the comments.

The task force proposed rule changes that would limit the use of IOTA funds to providing direct civil legal services, either through directly paying lawyers or by supporting pro bono programs, for low-income Floridians. The Foundation would have to distribute IOTA funds within six months of receipt and could use no more than 15% for overhead and reserves.

Recipient legal aid offices could use no more than 10% for overhead, including rent, training, and technology expenses.

Task force members, in reaching their recommendations, noted the court’s instruction to determine whether performing direct civil legal services should be the priority for IOTA funds.

The proposed task force rule would overturn the Foundation’s current policy of not spending IOTA receipts from one fiscal year until the following fiscal year. It would also end a recent Foundation policy of using a budgeting formula of averaging the past three years’ IOTA receipts and determining reserves in such a way that the Foundation never runs out of money.

The Foundation’s Board of Directors last August voted 12-8 to indicate “its willingness to serve under the restrictions placed on the use of the IOTA funds in the Hybrid rule if the task force names the Foundation as the entity to receive, administer, and disburse IOTA funds.”

The past Foundation presidents noted when the Supreme Court approved the first IOTA program more than 40 years ago, it set the priorities of providing legal services to the poor, improving the administration of justice, and “promoting public service as part of the law school experience.” The task force proposal would restrict or eliminate the last two of those goals, it said.

After talking with legal aid agencies and other parties, the past Foundation presidents said they came up with their consensus rule.

“Our proposed rule: (i) adopts, with modifications, the Task Force’s reporting requirements; (ii) discards the Task Force’s arbitrary caps on overhead and the six-month expenditure requirement; (iii) gives the IOTA grantor and grantees the discretion to exercise sound business judgment to meet the tripartite mission and to keep access to justice open; and (iv) removes problematic language and adds clarity,” their brief said.

The brief gave the history of the IOTA program, from when the Bar and Foundation began studying it in 1971, to making a recommendation to the Supreme Court in 1976, and the court’s approval in 1978, and setting up the program in 1981.

Over the years, the Foundation developed expertise in supporting legal aid and related operations and its business expertise helped cushion the programs when the Great Recession’s collapse of interest rates slashed IOTA income, the brief said. IOTA income has been only a fraction of pre-recession levels and the Foundation began a “strategic reset” in 2017 to deal with that continued reality.

The task force’s proposal lacks the careful consideration of those earlier efforts, the past Foundation presidents said.

“[U]nlike the 1978 Court that founded the IOTA program based on well-developed data, evidence, studies, and analyses … today’s Court lacks any meaningful data, evidence, studies, or analyses to assess the wisdom of the Task Force’s proposal,” the brief said. “The Task Force’s proposal not only lacks supporting evidence, but it also contradicts good business sense.”

The 34 past Bar presidents, in their brief, endorsed the past Foundation presidents’ conclusions, but specifically addressed the elimination of administration of justice programs under the proposed task force rule.

“Over the years, the Foundation’s AOJ grants have funded a range of diverse programs, such as: pro-se divorce clinics, streetlaw programs, family mediation support, education on the use of the legal system, an Older Floridians Handbook, a video on the Effects of Divorce on Children, a Racial and Ethnic Bias Study Commission, a Poverty Law Call-A-Law Program, a program on Alternative Dispute Resolution in Farmworker Cases, an Evaluation of Foster Care Project, human trafficking, a foreclosure defense project, and support for the Florida Innocence Commission established by Chief Justice [Charles] Canady,” the brief said.

It added that while most IOTA money from the Foundation goes to direct providers of legal services, “it also maintains its AOJ grants to fund innovation and to address unexpected demands that individual legal services providers cannot.”

In its brief to the court, the Foundation said it remained committed to the IOTA program regardless of the court’s action. But it still listed several reservations over the task force’s amendments, including the requirement to disburse IOTA receipts within six months.

“That requirement, among other things, creates uncertainty and extra burdens on legal aid providers and eliminates the Foundation’s reserves and investment programs that have allowed the Foundation to put more than $38 million … into the overall program, and coupled with fundraising efforts, to effectively remain net neutral with respect to receipt and distribution of IOTA revenues,” the Foundation said.

It also endorsed the consensus rule from the past Foundation presidents, saying it “provides additional regulation of the Foundation’s administration of IOTA funds, while avoiding the risks of adverse consequences to the legal aid providers and their clients” mentioned in other briefs submitted to the court.

The Business Law Section endorsed the positions of other commenters, but added specifics of its own for three areas.

The section argued the amendments do not allow for reserves outside of overhead at the Foundation or at local agencies, which would limit their flexibility in difficult times.

The section also contended the recommended overhead caps of 15% on the Foundation and 10% for local agencies lacked any objective supporting evidence. It noted the Florida Civil Legal Aid Association found “that the 15% Foundation limit will likely lead to the termination of many beneficial statewide programs which benefit the Grantees and thus contribute to the efficiency of delivering legal services to the poor – technological support programs, Florida Pro Bono Matters, the Loan Repayment Assistance Program, and other beneficial programs.”

In addition, the section said the 10% overhead on local programs would particularly hurt smaller legal aid agencies and the requirement for the Foundation to dispense IOTA funds within six months would lead to fluctuations in funding.

While praising the task force’s efforts, the section said its proposed rule “will choke the efficiency of the Foundation and the Grantees in their efforts to maximize legal services to the poor using the precious dollars available to the task.”

Bay Area Legal Services in its brief specifically advocated for the Loan Repayment Assistance Program, which for the past 19 years has helped legal aid attorneys pay their student loans. The BALS brief said 20 of its 70 lawyers use LRAP, and it included statements from several that without the program they would be unable to work in legal aid.

“This long-standing program has helped Bay Area attract and retain qualified, experienced lawyers who otherwise would not have been able to work at Bay Area,” the brief said. It added, “A significant number of Bay Area lawyers in the LRAP have been members of minority groups” including 10 of the current 20 recipients.

The FCLAA also criticized the loss of LRAP, the overhead limits and loss of reserves, and the loss of a “meaningful annual allocation process” with the six-month disbursement requirement. “Candidly, the adoption of the proposed rule would be a disaster for Floridians in need,” its brief said.

The FCLAA also criticized the process, saying while task force members were well intentioned, their process was flawed because it failed to specify any problems in the current rules; there was no business analysis of how the amendments would affect legal aid agencies; and concerns by legal aid agencies and others “were never expressly addressed, and ultimately the recommendations suggest a failure to have meaningfully considered these concerns.”

Other filing comments were the Bar’s Public Interest Law Section, the Florida Civil Legal Aid Association, Southern Legal Counsel, Florida Children’s First, the Innocence Project of Florida, the Florida Pro Bono Coordinators Association, the Bar’s Standing Committee on Pro Bono Legal Services, The National Legal Aid & Defender Association, and the Texas Access to Justice Foundation. Most of those filing also requested oral argument before the court.

Among the arguments in those briefs:

• Florida Children’s First said the proposed rule took discretion out of the Foundation’s hands on awarding grants and the proposed reporting requirements on grantees were “onerous and unnecessary.”

• The Innocence Project of Florida noted it has successfully helped secure the release of 25 wrongfully convicted individuals but would lose its Foundation funding under the proposed rule because IOTA funds would be limited to civil cases.

• Southern Legal Counsel said access to courts for low-income Floridians could be impeded by the proposed rule because counting technology and training as overhead could limit the quality of representation, the loss of the student loan repayment program could hurt recruiting and retention by legal aid agencies, and the rule has an ambiguous standard for distributing funds according to otherwise unspecified “demographic data provided by an appropriate governmental agency.”

The comments were filed in In re: Amendments to Rule Regulating The Florida Bar 5-1.1(g), Case No. 20-1543. The docket page with links to all the briefs is at More comments may be filed as the court extended the filing deadline to February 10

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