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Supreme Court weighs IOTA rule restructuring arguments

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Florida Supreme CourtThe fate of a proposed Bar rule amendment restructuring how The Florida Bar Foundation and legal aid agencies may expend IOTA funds now rests with the Florida Supreme Court after May 5 oral arguments.

Debate has been contentious over the recommendations to amend Bar Rule 5-1.1(g) from the Task Force on the Distribution of IOTA Funds, created by the court in late 2019 to look at the IOTA program. The rule governs how the Foundation collects and distributes IOTA funds.

Some of that discord came out in oral arguments.

“The tone of a lot of response to this, you’d think you guys had recommended outlawing sunshine. Some of the [written] responses were borderline uncivil,” Justice Carlos Muñiz commented to former Bar President Mayanne Downs, who chaired the task force and represented it at the oral argument. “…. What’s your big picture take to help us understand why this debate in front of us is playing out the way it is?”

“This is a substantial change, there’s no question, it’s a significant restriction on what the Foundation has been able to do,” Downs replied. “Under our [proposed] rule there are reporting requirements, caps on overhead, mandatory distribution [of IOTA funds received by the Foundation] within a relatively short time period — six months — [and] there’s still information about objective data that can be used to measure the efficiency of this program. All of that represents a substantial change.”

Another major change — and point of contention — is the task force’s recommendation that would eliminate the Foundation’s administration of justice grants and focus all its expenditures for direct services to low-income Floridians with civil legal problems.

“The improvement of the administration of justice can be measured no more effectively than one can measure the sky. It’s a subjective determination,” Downs said. “You’d be lucky if two of us would agree on the best way to improve the administration of justice.”

Not agreeing with the task force recommendations were attorneys representing 26 former Foundation presidents, 34 former Bar presidents, and the Florida Civil Legal Aid Association, a consortium of local legal aid organizations.

“These are the most significant changes made to this [IOTA] rule since its inception and the legal aid organizations believe, truly believe, that it’s going to be really truly devastating for them in the way they do business and how they are funded and their ability to provide legal services to the poor,” said Tom Hall, representing the FCLAA.

He pointed to the rule proposal limiting legal aid organizations from using more than 10% of their IOTA grants on overhead [15% for the Foundation to administer the grants], except for training and technical overhead that supports the direct provision of legal services.

Defining the difference between training and technical support for direct services versus general overhead could be difficult, Hall said. He also defended the use of administration of justice grants, which he said make up only a small percentage of the Foundation’s overall grants.

It was an AOJ grant that paid for a pro se guide on appellate proceedings that has helped numerous clients, but might not count as direct services, he said. Likewise, several legal aid offices host a DIY online service for tenants that allows them — without direct help — to fill and file a response to an eviction notice. That, Hall said, appears to not be an allowed IOTA expenditure under the proposed rule even though it has helped more than 4,000 people.

“There’s been no criticism of the legal aid organizations and what they’re doing in this state to provide services to the poor. That wasn’t part of the [task force] report,” Hall said. “There should have been a business analysis on how’s this going to actually affect them. Is it really going to hurt the ability to provide services to the poor?”

Bryan Gowdy, representing the former Foundation presidents, said the overhead limits and requirement that the Foundation disburse all IOTA funds within six months of receipt could be devastating.

The Foundation currently does not spend the IOTA receipts from one fiscal year until the following fiscal year, which it has said allows it to accommodate fluctuations in interest rates without affecting grants to local agencies.

“The six-month expenditure [requirement] makes it very difficult…on any type of planning by these organizations,” Gowdy said.

Justice Alan Lawson, as part of the discussion with Gowdy on overhead, said many non-legal charities have been forced to seek more outside resources and grants to pay overhead.

“In the lean times, as a policy matter, I think I want the money that is going to them [legal aid offices] to continue to provide legal services to the poor and if that means that organizations that aren’t willing to get out and work and raise the money to support the level of overhead they had in abundant times, that they go away and the money then goes to organizations that are willing to go out and work during the lean times to get their overhead,” Lawson said. “…. That seems like a responsible model to me.”

“What we’re saying is arbitrary [overhead] numbers aren’t the way to measure accountability. The way to measure accountability is to see how the funds are being used to improve the lives of low-income Floridians,” Gowdy replied. “…. If they go to 20% or 25% or 30% overhead but they help 500,000 low-income Floridians, that’s a better result than using 10% in overhead and only helping a tenth of those people.”

Gowdy concluded: “We spent a tremendous amount of time trying to do what the court directed in its administrative order [creating the task force] to better ensure the most effective use of IOTA funds. We just fundamentally disagree with the task force’s approach.”

Raoul Cantero, representing the former Bar presidents, noted the administration of justice has been an IOTA goal since its inception 40 years ago, along with expanding legal services for the poor.

Muñiz, referring to a Foundation plan known as “strategic reset” to deal with the drastic reduction of IOTA income in the Great Recession, said that included vague language about using administration of justice grants to address changes.

“That to me is sort of the best reason to eliminate something as amorphous and potentially contestable as improving the administration of justice and just focus on actually representing clients who have civil legal needs or helping people help themselves,” he said.

“I don’t think there’s anything wrong with defining the administration of justice,” Cantero replied. “…. Let me emphasize the task force has not identified any wanton use of the funds under the rubric of administration of justice. In fact, [a] task force subcommittee…conceded there was no indication whatsoever that IOTA funds had been improperly used by the Foundation.”

Chief Justice Charles Canady observed that the court, based on discussion at the oral argument, was likely to address concerns about using IOTA funds for pro se education and assistance and pro bono efforts.

“Beyond that, I think that’s where we get into questionable and potentially troublesome areas that are of concern. Address those other areas,” he asked Cantero.

“It’s hard to shoot at a target when you don’t know what the target is because the task force’s report does not identify any use of funds that they would object to and say, ‘You know we don’t think this is appropriate in the future,’” Cantero replied.

Canady then asked specifically what Cantero thought should be allowed. He replied assistance to educate pro se parties, innovative programs the court might want to try to improve legal access, and efforts to assist pro se parties, many of which legal aid agencies lack resources to directly help, in their legal needs.

The task force was created by a Supreme Court administrative order late in 2019 and charged with reviewing the IOTA program including determining whether providing direct civil legal services to low-income Floridians should be the priority.

The task force filed its report last September, including the proposed rule amendment, and the court then turned it into a rules case and invited comment.

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. In response to comments over its proposed rule, the task force said training and technology expenses that support direct representations should not be included in the overhead limit. It also said that IOTA funds should continue to be used for the Loan Repayment Assistant Program.

The proposed task force rule would amend 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.

A total of 12 entities filed responses on the task force’s proposals, including FCLAA, Bar sections, the former Foundation presidents, the former Bar presidents, and individual legal aid offices. All opposed the task force proposal and said the court should reject it or approve an alternative “consensus” rule submitted by the former Foundation presidents. That consensus increases reporting requirements, but drops the task force proposed overhead limits, six-month expenditure requirement, and limitation to using IOTA funds to support direct legal services.

The docket page for In re: Amendments to Rule Regulating The Florida Bar 5-1.1(g), Case No. SC20-1543, may be found here: []. The courts webpage also has links to the recorded oral arguments.

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