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TUESDAY, NOVEMBER 24, 2009
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Falling Interest Rates Whack Legal Aid Groups

Funds tied to Fed's benchmark rate

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(Newser) – There’s been some collateral damage from the Federal Reserve’s slashing of interest rates: legal aid societies. These groups, which aim to help the poor in civil cases, such as unemployment or foreclosure disputes, have long relied on little-known programs to draw interest from short-term deposits from clients. With the Fed rate near zero, they’re scaling back, even as demand for their services soars.

“We are watching the interest rates with a sense of horror,” said the director of a Connecticut group. Even in good times, many agencies had to turn away qualified applicants. Now, according to one New York attorney, it’s like “a MASH unit in a war zone.” Federal money is available, but it comes with strings attached. Groups taking it can't work on class-action cases, or anything related to immigration, abortion, and other contentious issues.

David Hall, executive director of Texas Rio Grande Legal Aid, is shown outside the Texas Capitol before a news conference Thursday, May 29, 2008, in Austin, Texas.
David Hall, executive director of Texas Rio Grande Legal Aid, is shown outside the Texas Capitol before a news conference Thursday, May 29, 2008, in Austin, Texas.   (AP Photo/Harry Cabluck)
Legal help doesn't come free in civil cases, even though the results can be dire.
Legal help doesn't come free in civil cases, even though the results can be dire.   (Shutterstock)
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The justice gap has precipitously widened. - Helaine M. Barnett, president of the Legal Services Corporation.

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