I take this opportunity to address a topic that I know weighs heavily on the minds of many in the IOLTA community. There is no denying hopeful anticipation regarding interest rate prospects that pervaded the Summer 2015 IOLTA Workshops in Chicago. Indeed, one of the most popular workshop sessions, according to attendee evaluations, was the aptly-titled “Preparing for Abundance: Strategic Approaches to Using Income.” Therefore, it came as no small disappointment to hear the Federal Reserve announce in September that it would keep unchanged its current 0 – 0.25% target range for the federal funds rate.
Nevertheless, IOLTA programs need not despair. As recently reported by The New York Times, Fed chairwoman Janet Yellen’s speech, given at the University of Massachusetts one week after the Fed’s September announcement, indicated that— barring any unforeseen and unpleasant economic surprises—an increase in the federal funds rate is likely later this year. [i]
What does this mean for the IOLTA community? How can programs best prepare for the future in the face of such persistent, yet maddeningly cautious, optimism? Thanks to the resources and expertise shared during this summer’s “Preparing for Abundance” workshop, we have learned that this type of waiting period actually presents a much-needed opportunity for programs to engage in the strategic planning necessary to ensure the optimal use of any future income increase.
Specifically, according to consultant Gerry Singsen (whose 2013 article in this very publication inspired the title for the workshop), now may be the perfect time for IOLTA programs to take any or all of the following steps:
- Address important deficiencies in a program or state delivery system (e.g., reexamine state planning issues, identify low-cost steps to improve practices, engage in research and priority-setting to guide the use of new resources once obtained);
- Resolve future policy issues relating to topics such as IOLTA reserves, employee salaries, the role of legal services agencies with regard to evolving court practices for dealing with self-represented litigants, or any research data needed to best support grantees; and
- Pursue alternate revenue sources to maintain current operational levels while awaiting income resulting from any future interest rate increases (such alternate sources may include legislative appropriations, national mortgage settlements, new revenue from filing fees or cy-pres awards, license fee add-ons, or private fundraising campaigns among the legal and broader philanthropic communities). [ii]
Through this type of careful planning and prioritizing, IOLTA trustees and staff can put the “waiting” to good use—positioning their programs to take full advantage when the imminent federal funds rate increase does indeed occur.
I also want to welcome three new members who are beginning their terms of service on the Commission this fall: Justice Thomas Kilbride of Illinois, Erek Barron of Maryland, and John Carreras of Colorado (see the IOLTA News and Notes section to read more about them). I look forward to working with them and know they will contribute significantly to the Commission’s endeavors.
Finally, I remind everyone to mark your calendars for the Winter 2016 IOLTA Workshops, which will take place in San Diego on February 4-5, 2016. Please do not miss this unique chance to network with your colleagues and gain invaluable insights into the current issues facing the IOLTA community. Visit http://www.americanbar.org/calendar/midyear.html to register today.
[i] Appelbaum, B. (2015, September 24). Janet Yellen Says Fed is Likely to Raise Interest Rates This Year. The New York Times. Retrieved from http://www.nytimes.com.
[ii] Singsen, G. (2013, Winter). Don’t Forget Your Umbrella. Dialogue, Vol. 16 (No. 3). Retrieved from http://www.americanbar.org/content/newsletter/publications/dialogue_home/dialogue_archive/ls_dial_wi13_iolta1.html.