New Zealand Law Society - Lawyers’ special fund falls by $4m due to pandemic

Lawyers’ special fund falls by $4m due to pandemic

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The amount of money that helps fund Community Law Centres (CLCs) has dropped by $4 million in one year due to falling interest rates associated with the Covid-19 pandemic.

The loss in income through the Lawyers’ and Conveyancers’ Special Fund does not affect the amount the CLCs receive, and Justice Minister Andrew Little has this week announced an additional $3.5 million over three years for the centres.

Ministry of Justice figures show that in the 2019-20 financial year the Special Fund paid out $6.59 million, compared to $10.65 million for the previous year, and $9.75 million in the 2017-18 year.

The Special Fund is made up of 60% of the interest earned on lawyers’ and conveyancers’ trust accounts. The New Zealand Law Society | Te Kāhui Ture o Aotearoa sends this money to the Ministry of Justice in monthly instalments, which fluctuate as interest rates change.

“The Special Fund has definitely started to drop due to reduced interest rates and the impact of Covid-19 on economic activity and the property market,” says Sue Moroney, Chief Executive Officer of Community Law Centres o Aotearoa.

“It is too early to tell what the impact will be for the rest of the financial year.  While this doesn’t impact on CLCs’ core MoJ funding, it does impact on the donation we receive from the major banks which we also rely on to provide our services.

“In anticipation of this, we have requested banks increase the proportion they donate to CLCs and three have agreed to do so. However, that will not mitigate the drop in income from this source for CLCs.”

Funding boost

Meanwhile, CLCS are to receive an extra $3.5m for the next three financial years. This is in addition to the almost $8 million for Community Law Centres announced in Budget 2020.

Ministry of Justice forecasts show demand is expected to spike in the next few years and the funding will support the delivery of about 15,000 extra cases.

“Community Law Centres must be equipped to meet this increase,” says Andrew Little.

“Ensuring access to legal help for those who can’t afford it helps with early resolution of legal problems, meaning issues do not escalate unnecessarily and put further burden on the justice system, or avoidable mental and emotional strain on parties involved.”

The extra funding will allow for current part-time staff to move into full-time roles, and for the CLCs to attract and retain quality staff, allowing for higher volumes of casework to be completed.

“Increased funding will help Community Law Centres to help the increasing number of people affected by the impact of the pandemic response,” says Sue Moroney.

“It will help us to support people to protect the most important building blocks in their lives – their families, their jobs, their homes.

“We have already seen increased need for legal support as people grapple with job losses, changing conditions of work, family law matters and tenancy issues. We expect further waves of demand to hit for our services for months and years to come with demand also growing for legal support on debt and finance issues.”

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