A bill extending the $1 additional civil filing fee to support pro bono programs sailed through a Senate committee Wednesday despite a discussion about the possibility of allowing Marion County small claims courts to keep the filing fees they collect for themselves.
Senate Bill 42, introduced by Sen. Ron Grooms, R-Jeffersonville, would continue the extra filing charge until July 1, 2022. The money from the $1 fee, which has totaled more than $300,000 each year, has been funneled through the Indiana Bar Foundation to the state’s 12 pro bono districts.
In 2012, Grooms authored the bill that created the $1 fee and included language that sunset the charge July 1, 2017. Traditionally, the pro bono districts have been supported with revenue from the Interest on Lawyers Trust Accounts. When the housing market crashed, interest rates flat-lined and IOLTA revenue slowed to a trickle. The economy is rebounding, but interest rates are still very low and pro bono funding is still dependent on the filing fee.
Grooms pointed out the filing fee is essentially a user fee and not money drawn directly from the general fund. Also, as he and the bar foundation both told the Senate committee, the funds are used for the operational costs, such as screening the applicants and providing malpractice insurance to cover the volunteer attorneys. The money does not go to pay attorneys’ salaries.
The Senate Judiciary Committee voted 10-0 to pass SB 42. Grooms, who announced in September his intention to introduce this legislation, is optimistic about the measure’s future.
“Today I don’t see any issues that will prevent the bill from moving forward,” he said.
However, during the testimony, some of the members of the committee questioned whether small claims courts should be included in the filing fee.
Sen. Aaron Freeman, solo practitioner, raised the idea of having nine Marion County Township Courts keep the $1 filing fee in their own coffers. Venue rule changes have decreased the number of filings and left those courts struggling with a loss of revenue, he said.
The Indianapolis Republican, who emphasized he supports the pro bono program, asked Grooms if the small claims courts could keep the money rather than sending it to the pro bono effort.
Grooms responded he would prefer the entire appropriation continue to go to the districts.
Republican Sen. R. Michael Young, also an attorney, picked up on Freeman’s inquiry, saying small claims courts would not directly benefit from the pro bono program. Typically the litigants represent themselves in these venues. He proposed that the circuit and superior courts where pro bono attorneys usually work should turn over the $1 filing fee but small claims be allowed to keep the extra money.
For Grooms, the conversation was deja vu. He remembered Young raising the same issue in 2012 and this time his reply mirrored what he said them – the pro bono programs benefit more than just those who use the services.
“Even though (the small claims courts) may never really get to see the value of the dollar they contribute, the help is out there and they’re probably already receiving some benefits from that,” Grooms said after the hearing. “They’re actually paying for the system to be available.”
Sen. Tim Lanane, D-Anderson, said the township courts in his district handle a lot of landlord-tenant disputes. Many of those litigants have pro bono representation.
Charles Dunlap, executive director of the bar foundation, concurred. During his testimony in support of the bill, he said pro bono attorneys are not only helping parties in small claims courts but also providing assistance that in some situations resolves the dispute without having to go before a judge.
Following the hearing, Freeman said he was satisfied with the answer he received to his question about small claims and was happy to support the bill. He does not anticipate the issue will come up again as this bill progresses through the Statehouse.
“I think the dollar is going to remain going where it’s going for a very worthy cause of pro bono services,” he said.
In 2007, the monthly remittance from IOLTA topped $300,000 which translated into roughly $1.5 million spread across all the pro bono districts. The revenue fell dramatically during the Great Recession, and since 2011, the monthly remittance has stayed below $30,000.
The bar foundation drew upon its reserves to support the pro bono efforts, but when those were depleted, it needed additional revenue streams. Dunlap called the filing fee “critical,” explaining that money along with a portion of the attorney registration fee and revenue from IOLTA gave the organization enough money to stop the freefall and give nearly $800,000 to pro bono programs.
Annual proceeds from the filing fee have ranged from a low of $336,178.33 to a high of $409,118.59.
Although funding has dropped, the need for free legal assistance continues. According to the bar foundation, the 12 pro bono districts closed 2,698 cases in 2015 which represented just over $2.6 million in donated legal services. The districts worked with 1,098 volunteer attorneys but still had to turn away 1,986 cases for lack of resources.
Recently, the Federal Reserve has been raising interest rates, but Dunlap said those rates will have to hit 1 percent or above before IOLTA gets a bump.
Young noted the bar foundation would likely return for another extension in 2022 if interest rates have not recovered. He asked Dunlap about making the $1 filing fee permanent if Marion County small claims were exempt.
Dunlap said he welcomed the idea of erasing the sunset date but did not support exempting small claims. The revenue from small claims is too substantial to delete, he said. According to the Office of Judicial Administration, new filings of small claims cases in Marion County totaled 54,600 in 2015.
Paje Felts, legislative council for the Indiana State Bar Association, and Ray Ontko, president of doxpop, both spoke in favor of SB 42.
“This is the least I think that we can do,” Ontko told the committee. “So both from a position of compassion on the part of the state for the needs of pro bono recipients and from the standpoint of supporting the efficient work of the courts by having competent representation on important matters, doxpop supports this.”