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As evictions, foreclosures, and the bad economy are increasing demand for free legal help, legal aid budgets in Connecticut are taking a massive hit. But the economic downturn has decimated their major source of funding.

Last spring, Alice Banks got an eviction notice. Her landlord said she was six months behind on rent, and she and her 3 year-old daughter had to get out.
 
"I wanted to cry, because I didn't know what was going on, why I had received one, what to do..."

She called a city hotline for help. They referred her to Greater Hartford Legal Aid.

That's where she met Nancy Boone.

"All right. Any new information for me?"

Boone is Banks' Legal Aid attorney. The two are huddled around a stack of papers at Hartford's housing court. They dispute the timing of an increase in Banks' subsidized rent.

They end up settling with the landlord. Banks and her daughter get to stay put, and she doesn't think that would've happened without her free lawyer.

"I don't think just me standing alone would've been able to go forth with them"

Legal Aid lawyers represent low-income people for free. They handle eviction and unemployment hearings, food stamps and disability benefits, domestic violence and divorce cases.

Nancy Boone spends almost all her time on housing issues, mostly helping clients navigate through the rules and policies of HUD, the federal Department of Housing and Urban Development.

"Well, I was wondering if they're hiring now. I was thinking I could go work for HUD."

She's joking about working for HUD, because she's getting laid off in March, along with 5 other lawyers. That's a fifth of Hartford's Legal Aid attorneys. They’re also losing a bilingual receptionist, and their only paralegal. It's part of an effort to shrink the office's budget by 30 percent.

And it's not something Boone saw coming.

"Not at all. I figured that my job was safe, because there would be more people who needed our services."
 
Their budget woes have roots in the same economic downturn that is making things tougher for their clients.

"IOLTA is an acronym for Interest on Lawyers' Trust Accounts."

Sandy Klebanoff is the director of the Connecticut Bar Foundation, which manages Connecticut's IOLTA program.

It is a private funding stream that gained popularity after major cuts to federal legal aid in the 80s and 90s. Every state has one. Here's how it works: Lawyers deposit clients' money in IOLTA accounts - like from a real estate deal or a legal settlement. It's usually only there until checks clear. But while it is, it collects interest.  

"That interest, believe it or not, in Connecticut in 2007, amounted to 20 million dollars."

That was good news for Legal Aid, because that money funds public interest legal programs. Then, housing sales slowed and prices fell, which meant less money going through lawyer's accounts. Interest rate cuts compounded the problem. The decline was gradual at first...

"But then it just bottomed so quickly. It's a crisis."

Next year, Klebanoff is expecting the interest to be down 80 percent from its high.

The three legal aid offices in Connecticut will see their primary funding source decrease by half.

“I don’t know of another nonprofit sector that has been hit as hard by the economy as legal services for poor people.”    

The crunch is not just in Hartford. In New Haven, the 20 attorneys are taking a 20 percent pay cut. And at Connecticut Legal Services, the Legal Aid agency that covers rest of the state, they’re considering cuts to salary and benefits, and may still have to lay off 20 people.  

All three are reaching out to the state legislature and private law firms for help, though they realize everyone is getting hit by the lean times. And Hartford's Deputy Director Jill Davies points out, that also goes for other social services.
 
"Our colleagues and partners in the community can't pick up the slack. The domestic violence shelters, the food shelters, all the nonprofits now are really being squeezed and are going to be doing less, and the economy as a whole is doing worse, so this is going to be something that we haven't seen before."

Meanwhile, the National Legal Aid and Defenders Association is focusing on Washington. The organization's Don Saunders says IOLTA budget shocks have been the worst in northeastern states and Texas, but low interest rates are hurting programs nationwide.

"And I think it is a responsibility of government. Equal justice under the law - it's a guarantee of our Constitution."

And his group's already reaching out to one constitutional scholar in particular - Barack Obama - about shoring up legal aid budgets long-term with more federal support.