PMWJ C.S.S.B. 1534 75(R) BILL ANALYSIS JUDICIAL AFFAIRS S.B. 1534 By: Barrientos et al. (Berlanga) C.S.S.B. 1534 By: Thompson 5-5-97 Committee Report (Substituted) BACKGROUND The need of low-income Texas families for legal representation to handle their critical civil legal problems (e.g., protection against domestic violence, unlawful evictions, and wrongful denial of Medicare and Social Security benefits) far exceeds presently available resources. A 1991 State Bar of Texas study found that poor Texans go without legal help to assist them in almost 70% of the legal problems they face. If unaddressed, a poor family's legal problems often become a community's problem: families who are unlawfully evicted become homeless; Texans unable to obtain protective orders and legal counseling remain in violent homes; Texans wrongfully denied Medicare or Medicaid forgo health care; families wrongfully denied food stamps often go hungry. If low-income people are denied access to legal assistance, courts will become even more burdened with more unrepresented parties unable to advance their cases properly; the already overburdened social services agencies will experience sharp increases in persons in need of legal assistance; and, local government officials will be visited by persons looking for solutions to problems more properly handled by attorneys. Since 1974, the year President Nixon signed the Legal Services Act, Congress has funded non-profit corporations that provide legal services to the poor. The 11 Texas legal services programs rely on the federal Legal Services Corporation for over 75% of their funding. In 1996, Congress cut LSC funding for Texas Legal Services programs by $9 million, almost one-third of the previous budget. Further cuts are threatened for 1998. Another primary source of funding for Texas Legal Services programs, the IOLTA (Interest on Lawyers Trust Accounts) program, is tied to interest rates and, as a result, has seen its revenues in Texas fall from a high of $9.7 million in 1991 to approximately $5 million in 1996. The IOLTA program is also facing a serious challenge in federal court, where a Fifth Circuit panel has held it unconstitutional. All of these cuts are occurring just as the number of poor Texans eligible for legal assistance is increasing. At least 17 state legislatures, including Virginia, Tennessee, and Kentucky, have passed some form of filing fee add-on legislation to help replace cuts in funding to programs that provide legal services to the indigent. PURPOSE The purpose of this bill is to increase the funds available for basic legal services to indigents. C.S.S.B. 1534 provides for modest increases in existing civil lawsuit filing fees to be dedicated to funding non-profit charitable organizations that provide legal services to low-income Texans. RULEMAKING AUTHORITY This bill expressly grants rulemaking authority to the supreme court for the distribution of funds created by this act, for establishing income eligibility requirements, and for imposing sanctions requiring the reduction or cancellation of funding in new Government Code Sec. 51.902 in Section 1 of the bill. New Section 51.903(b) in Section 1 of the bill gives the supreme court the authority to approve vouchers before the comptroller may issue payment to programs providing basic legal services to the indigent. SECTION BY SECTION ANALYSIS SECTION 1 amends Chapter 51 of the Government Code by adding a new Subchapter J, entitled "Additional Filing Fee for Basic Civil Legal Services for Indigents," to read as follows: Section 51.901, Additional Filing Fee for Basic Civil Legal Services for Indigents. Subsec. (a) requires the clerk of each court to collect, in addition to other fees authorized or required by law, the following fees on the filing of any civil action or proceeding requiring a filing fee, including an appeal, counterclaim, cross-action, intervention, interpleader, or third-party action requiring a filing fee: Supreme Court and Courts of Appeals: $25; District Court (other than divorce and other family law matters): $10; District Court (for divorce and other family law matters): $5; Statutory and constitutional county courts: $5; and, Justice of the peace courts: $ 2. Subsec. (b) requires that fees collected under this subchapter be collected in the same manner as other fees, fines, and costs in the case. Subsec. (c) requires the clerk to send the fees collected to the comptroller at least as frequently as quarterly, and requires the comptroller to deposit the fees to the credit of the basic civil legal services account of the judicial fund for use in programs approved by the supreme court that provide basic civil legal services to the indigent. Subsec. (d) defines "family law matters" and "indigent." Section 51.902, Rules, grants rulemaking authority regarding the distribution of the funds to the supreme court and for imposing sanctions requiring the reduction or cancellation of funds, and provides that funds may only be distributed to nonprofit organizations that provide basic legal services to persons meeting the income eligibility requirements established by the supreme court. Section 51.903, Basic Civil Legal Services Account. Subsec. (a) provides that the basic civil legal services account is an account in the judicial fund administered by the supreme court. Subsec. (b) provides that funds in this account may only be used to support programs that provide basic civil legal services to the indigent. Funds from the account may only be paid by the comptroller on vouchers approved by the supreme court. Subsec. (c) provides that with certain exceptions listed in this subsection, the funds from this account may not be used to directly or indirectly support a class action lawsuit, abortion-related litigation, or lawsuits against a governmental entity, political party, candidate or officeholder, or for lobbying for against a candidate or issue. Funds from the account may not be used to provide legal services in matters of asylum unless necessary to protect the physical safety of the individual. Funds from this account may not be used to represent individuals confined in a local, state or federal jail or prison. Funds from this account may be used to support a lawsuit brought by an individual against a governmental entity to obtain benefits provided by a government, including social security benefits, aid to families with dependent children, food stamps, special education for the handicapped, Medicare, Medicaid, subsidized or public housing, and other economic, shelter, or medical benefits provided by a government directly to an indigent individual, but not including a claim for actual or punitive damages. Subsec. (d) provides that, with certain exceptions listed in this subsection, funds from the account may not be used for actions that, if undertaken by an attorney in private practice, might reasonably be expected to result in payment of a fee for legal services from an award to the client from public funds or an opposing party unless the indigent seeking legal assistance made a reasonable effort to obtain private counsel and has been unable to obtain legal services. Subsec. (e) requires the supreme court to file an annual report with the Legislative Budget Board showing disbursements from the account and the purpose for each disbursement and provides that all funds expended are subject to audit by the supreme court, the comptroller and the state auditor. Subsec. (f) states that the purpose of this subchapter is to increase the funds available for basic civil legal services to the indigent and provides that these funds may be supplemented by local or federal funds and private and public grants. SECTION 2. Effective date. Application of act. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The submission of fees collected under this subchapter are to be submitted by the clerk to the comptroller at least as frequently as quarterly under Section 59.901(c) in Section 1 of the substitute. In Section 51.901(c) in the original bill, fees collected under this subchapter were to be submitted by the clerk to the comptroller at least as frequently as monthly. The definition of "indigent" was added to new Gov't Code ' 51.901(d) in Section 1 of the substitute; this was not in the original bill. The supreme court was given authority to adopt rules for imposing sanctions that define circumstances requiring the reduction or cancellation of funding in Government Code Sec. 51.902(a) in the Section 1 of the substitute; this was not in the original bill. Abortion-related litigation and lawsuits against a political party, candidate, or officeholder for an action taken in the individual's official capacity was added to the list of cases that a basic civil legal services program for the indigent is prohibited from undertaking in Section 51.903(c) in Section 1 of the substitute; this was not in the original bill. "Funds from the basic legal services account may not be used to provide legal services to an individual who is not legally in this country in matters of asylum unless necessary to protect the physicial safety of the individual" was also added to Section 51.903(c) in Section 1 of the substitute; this was not in the original bill. Another prohibition on the use of funds from the basic legal services account was added to Section 51.903(c) in Section 1 of the substitute to prohibit representation of individuals confined in a local, state or federal jail or prison; this provision was not in the original bill. Section 51.903(c) in Section 1 of the original bill contained the statement, "Funds from the basic civil legal services account may be used to support a lawsuit against a governmental entity on behalf of an individual to secure benefits provided by a government directly to an individual, including social security benefits, aid to families with dependent children, food stamps, special education for the handicapped, Medicare, Medicaid, subsidized or public housing housing, and other economic, shelter, or medical benefits provided by a government directly to an indigent individual." In the substitute, this was changed to "Funds from the basic civil legal services account may be used to support a lawsuit brought by an individual against a governmental entity [on behalf of an individual] to obtain [secure] benefits that the individual or the individual's dependent or ward is eligible to receive from [provided by] a governmental entity as expressly granted under a statute or regulation [government directly to an individual], including social security benefits, aid to families with dependent children, financial assistance under Chapter 31, Human Resources Code, food stamps, special education for the handicapped, Medicare, Medicaid, subsidized or public housing housing, and other economic, shelter, or medical benefits provided by a government directly to an indigent individual but not including a claim for actual or punitive damages." The substitute added a new Subsec. (d) to Section 51.903 in Section 1 of the bill. New Subsec. (d) provides that, with certain exceptions listed in this subsection, funds from the account may not be used for actions that, if undertaken by an attorney in private practice, might reasonably be expected to result in payment of a fee for legal services from an award to the client from public funds or an opposing party unless the indigent seeking legal assistance made a reasonable effort to obtain private counsel and has been unable to obtain legal services. This provision was not in the original bill. Section 51.903(d) in Section 1 of the original bill becomes Section 51.903(e) in Section 1 of the substitute and adds the supreme court as an agency which may demand an audit; this authority was not in the original bill. Section 51.903(e) in Section 1 of the original bill becomes Section 51.903(f) in Section 1 of the substitute.