New Rules to Direct Unused Funds to Indigent Pennsylvanians
New rules announced by the Supreme Court of Pennsylvania clear the way for money left over from class-action lawsuits to help provide legal services for low-income Pennsylvanians.
The new civil procedure rules take effect July 1, directing how money left over from lawsuits after the plaintiffs, attorney fees and expenses have been paid is to be distributed. The residual funds include money for plaintiffs who cannot be located or who don’t file claims.
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The Interest on Lawyers Trust Account (IOLTA) Board, which is working to increase access to the civil courts for low- and moderate-income Pennsylvanians, is designated to receive the newly court-ordered allocation of funding. Prior to today’s court order, the disposition of residual funds was left to the discretion of the trial judge.
“The legal needs of many Pennsylvanians have risen with the level of uncertainty in the nation’s economy,” Chief Justice of Pennsylvania Ronald D. Castille said. “But many legal aid organizations can only do so much. These new rules will provide underlying support for a new revenue stream while also standardizing the practice of disposing of leftover funds rather than the current discretionary practice.”
The rules require that 50 percent of the funds be designated to the IOLTA Board. The remaining 50 percent may also be designated to the IOLTA Board or to another organization that has a relationship with, or promotes the interests of, the class-action lawsuit’s objectives.
Class-action lawsuits provide a way for large numbers of claimants to have their cases settled in a single proceeding. One of the most common ways to resolve a class-action case is to create a fund to satisfy individual claims. Unclaimed or leftover funds are common because many times affected parties cannot be located or identified. Also, sometimes parties may be unable or unwilling to claim their shares of a settlement.
Several states — including Illinois, Massachusetts, North Carolina, Tennessee and Washington — have approved similar provisions that require or allow residual funds from class-action settlements to go to charities, legal aid providers or other nonprofit organizations.