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House to consider extension of civil legal filing fee

March 21, 2017

A bill which would extend the pro bono legal services fee on court filings has cleared a committee in the Indiana House of Representatives and is headed for a second reading Tuesday on the floor of the lower chamber.

Senate Bill 42, authored by Jeffersonville Republican Ronald Grooms, would postpone the sunset provision for the $1 additional filing fee on all civil cases brought in Indiana state courts. The bill would extend the surcharge, which was set to expire July 1, to July 1, 2022.

Since being introduced, SB 42 has picked up bipartisan support and a contingent of southern Indiana legislators - Reps. Edward Clere, R-New Albany; Steven Stemler, D-Jeffersonville; and Karen Engleman, R-Georgetown – has signed on as House sponsors of the bill.

The House Committee on Courts and Criminal Code passed the bill on a 10-0 vote at the March 15 hearing. The full House adopted the committee report yesterday and will consider the bill during Tuesday’s, session which was scheduled to begin at 1:30 p.m.
 
Grooms and retired Sen. Brent Steele authored the original measure, which instituted the pro bono fee in 2012. The goal of the legislation was to help shore up pro bono legal services’ funding, which plummeted during the Great Recession. From fiscal 2013 through fiscal year 2016, the extra charge has added $1.45 million to the pro bono coffers managed by the Indiana Bar Foundation, according to the Legislative Services Agency.

The money from the fee is being used to cover the loss in funding from the Interest on Lawyer Trust Accounts. Prior to the economic downturn, the interest was scraped off and, in Indiana, was used to support the Pro Bono Districts across the state.

However, when interest rates flatlined as the financial markets stumbled, Indiana’s IOLTA monthly remittance fell 90 percent to $30,000 per month. It has been hovering there since the end of 2011.

Recently, the Federal Reserve has been nudging interest rates up. Two times in the past three months, it has raised interest rates, bringing the rates between 0.75 percent and 1 percent.

“I am always thrilled from an IOLTA perspective to see interest rate bumps,” said Charles Dunlap, executive director of the bar foundation.

Yet, he noted, the civil legal filing fee is still very much needed because it will take time before the IOLTA funds sees any return from the rate hikes.

When Indiana was realizing $3 million annually from IOLTA revenue, the interest rate was well over 1 percent. Dunlap said if the Federal Reserve follows through on its plan to boost rates two more times this year then IOLTA will start to see some real return.   
 

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