The Legal Foundation of Washington (LFW) is a foundation that is near to my heart, and therefore, one of the places where I give back to help make a difference in people’s lives.

The LFW oversees millions of dollars that funds legal aid programs throughout Washington State. I dedicate my time to this foundation because the LFW helps thousands of people annually. Last year, I served as the LFW treasurer. I was appointed to be vice president this year by the Washington State Bar Association Board of Governors.

LFW Background

I’d like to share some background and insight about how the foundation is funded, what we do and how the money goes into your community. The foundation’s mission is to serve low-income Washington residents who are involved in civil cases. We distribute millions of dollars in grants to local programs such as county legal services. Many counties have a volunteer lawyers program that may help you if you are getting evicted or have been denied unemployment, for examples of civil legal issues. The amount of money we can appropriate to programs varies on the funds we receive through two main sources. Last year, we funded almost six million dollars in grants and this year we should fund even more.

Sources of Funding

So where does the money come from? You may find this quite interesting. This money comes primarily from two revenue streams. The first is from interest on funds that sit in a lawyers trust account. When you hire a lawyer on an hourly rate, you typically pay a retainer. That money sits in a trust account for the duration of your case. When you settle an injury case the lawyer receives the settlement funds. That money may sit in your lawyers trust account for several weeks until it is ready to be disbursed. Before 1984, this money didn’t have to be kept in a trust account. Then the State Supreme Court required that it be held in trust. Banks kept the interest from these trust accounts for almost a decade, citing that the interest amounts were too small to worry about.

In December 1995, the Washington Supreme Court also required Limited Practice Officers (LPOs), who prepare legal documents for real estate closings, to use interest bearing trust accounts just as lawyers must.

Interest Becomes Revenue for Non-Profits

As our website explains, IOLTA is an acronym that stands for “Interest on Lawyer Trust Accounts.” IOLTA exists in all 50 states to help fund non-profit organizations that provide civil legal aid services for low-income people. The Washington Supreme Court created the LFW in 1985 to administer IOLTA funds and other available revenue.

The IOLTA program in our state allows interest to be earned on nominal or short term deposits held in pooled client trust accounts, with the interest remitted directly to LFW for distribution to civil legal aid programs.

Class Action Suits and Cy Pres

Our other main source of funding comes from something you might get in your mail occasionally and ignore as thousands of others do – class action lawsuits. When class action suits are settled, it’s usually difficult to locate all of the members of the suit and award them their money. (The lawsuits can take years to be settled.) The undistributed money must be given to non-profit charitable organizations, according to the “Cy Pres Doctrine.”

Two class action suits have resulted in millions of dollars for legal relief in our state recently and I’ll explain more about those in following posts.