A filing fee surcharge has passed the 2010 Maryland General Assembly, increasing fees to file civil cases in all Maryland circuit courts and district courts to boost revenue funding civil legal services for the poor. Effective July 1, 2010, filing fees in all civil circuit court cases in the state will jump to $55 and, in district court, summary ejectment case filing fees will climb to $8 and all other district court cases will rise to $18. This surcharge is expected to generate $6.1 million in additional funding to help alleviate the current crisis in civil legal services for the indigent.
MSBA supported this legislation as the best means of increasing civil legal services funding for the poor. The surcharge is needed to supplement IOLTA (Interest on Lawyer Trust Accounts) revenue, which has been hit hard by a shortfall because of the recession. This legislation also adds fiscal reporting requirements and increases oversight of the Maryland Legal Services Corporation (MLSC), the non-profit group that manages and disseminates IOLTA revenue to support civil legal services funding through its network of 35 legal services providers across the state.
This new law, which will take effect on July 1, 2010, calls for a circuit court filing fee hike from $25 to $55 per case and a district court rise from $5 to $8 per summary ejectment case, and for all other cases a jump from $10 to $18. The revenue raised will help fund MLSC’s 35 legal services provider groups offering direct service to their needy clients at a time when that need is overwhelming. However, the measure does carry a three-year sunset clause virtually eliminating the hike in fees on June 30, 2013.
Legislation seeking a filing fee surcharge to fuel civil legal services funding for the poor usually surfaces when the need of the indigent is dire and there is a dearth of legal services funding. In 1998, when such a need occurred, MSBA backed a $2 surcharge for all district court cases and a $10 surcharge for all circuit court cases, which passed the Maryland General Assembly and generated $2.3 million for civil legal services.
This need arose once again in 2004, prompting MSBA to support a $25 filing fee surcharge on all circuit court cases to enhance revenue for IOLTA, when the state’s principal funding mechanism for civil legal services hit a rocky road. This time, it engendered a $4.9 million to fund legal services funding.
Historically, a filing fee surcharge is one of the most feasible mechanisms for boosting legal services funding in volatile times, when government funding – the best vehicle – is not realistic. Up until 2008, IOLTA revenue generated over $6+ million to fund civil legal services in Maryland, but when the recession devastated the economy in 2009, IOLTA revenue dropped 45 percent, down to $3.9 million.
This loss, compounded by severe cuts in state government funding for civil legal services, resulted in major cutbacks in services at a time when the need was soaring, along with unemployment and foreclosures in the state. MLSC has seen a 70 percent drop in revenue this year and it would have fallen below $2 million without the surcharge, which has saved civil legal services funding to the state’s indigent. With an estimated $6 million in additional revenue to address the shortfall in IOLTA revenue, funding will be increased to help the state’s poor.
“The revenue from the filing fee surcharge is critical to so many Marylanders who desperately need legal services,” stresses Susan Erlichman, Executive Director of the Maryland Legal Services Corporation. “Projections indicate that this bill, which contains a three-year sunset provision, will generate approximately $6.1 million annually to address the shortfall in IOLTA revenue. With the passage of this legislation, MLSC will be able to restore funding for FY 2011 to pre-‘great recession’ levels.”
“We were so fortunate to have the support of Maryland’s entire justice community in our push for this legislation,” she adds. “It was a tough session, a very hard-fought victory and a terrific achievement.”