Navigation Legislation challenges new Florida funding mechanism for legal aid services
Funding of legal aid to low-income Florida residents through interest earned on law firms’ client trust accounts would be significantly reduced under measures now being considered by state lawmakers.
The legislation – Senate Bill 498 and House Bill 173 – was proposed after talks between the Florida Banking Association (FBA) and the nonprofit Funding Florida Legal Aid (FFLA) failed to produce an agreement over how to determine the interest rates paid by banks on the law firm accounts, according to the Legislature’s analysis of SB 498.
Prior to 2023, interest rates on the accounts were based on interest derived from a bank’s “comparable business or consumer accounts,” the analysis states. These rates reflected interest rates banks charge for funds they lend to each other. But in 2023, the Florida Bar and state Supreme Court approved a new formula to maximize interest generated from these funds, one that expanded the definition of an interest- or dividend-bearing account and was based on the Wall Street Journal Prime Rate.
