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In the worst-case scenario, the impact of Fleet Bank being taken over by Bank of America would be a potential $2.8 million annual drop in income to Connecticut’s legal aid services. Fleet has been a model corporate citizen in its policies regarding Interest on Lawyers Trust Accounts, paying 1.55 percent interest on client funds held in short-term accounts — more than six times what Bank of America paid for Idaho’s IOLTA program. Of the 22 states where Bank of America pays IOLTA rates, the highest rate is 1.36 percent in Washington state. Even that would cause an annual shortfall of $557,834, based on a snapshot comparison made at the end of October 2003 by the Connecticut Bar Foundation, which administers the state’s IOLTA program. Its executive director, Sandra Klebanoff, is worried, to say the least. “If we take their rates at their worst state, we could lose $2,818,000 per year. It’s astounding,” she said last week. “Our revenue was just over $9 million last year. Can you imagine what one bank could do to us? It’s really scary.” URGENT PLEA The $47 billion merger of the two financial services giants took effect April 1, creating the nation’s third-largest bank. Calls last week to Fleet in Hartford were referred to a Bank of America spokeswoman, Eloise Hale, in its Charlotte, N.C., headquarters. Hale did not return telephone messages by press time. IOLTA funds provide 72 percent of the revenues for Connecticut’s legal aid groups statewide. Fleet carried 1,520 lawyer trust accounts with an average balance of $216 million. That was 24 percent of Connecticut’s 6,463 IOLTA accounts, but it generated 42 percent of the total IOLTA revenue, officials say. Fleet also had no monthly service charge for IOLTA accounts, while Bank of America charges $16 per month in Florida and $8 per month in Washington state. Nationally, Bank of America service charges for IOLTA accounts average $10 per month. “That alone could really cripple us,” Klebanoff proclaimed. John H. Lawrence Jr., a partner at Hartford-based Shipman & Goodwin, is president of Greater Hartford Legal Aid. He said that prominent Connecticut lawyers and officials, including state Treasurer Denise L. Nappier and Attorney General Richard Blumenthal, have strongly urged Bank of America to maintain Fleet’s level of IOLTA support. Cummings & Lockwood partner Robert Dolian, who is the chairman of the board of directors of Middletown-based Connecticut Legal Services, also testified at a Jan. 29 hearing on the Fleet merger in favor of maintaining the bank’s high level of IOLTA performance. Lawrence and other key members of the legal community planned to meet with Bank of America representative Maria Barry on April 2. When interest rates were higher, Fleet also established sweep accounts for large law firms’ IOLTA funds, which significantly improved the funds’ productivity. In a typical sweep program, the bank, at the end of each business day, electronically transfers the balance in an IOLTA account into an overnight money market fund account or similar repurchase agreement investment. There the funds earn a higher rate of interest than they do in the “daytime” checking account. The following business day, funds are swept back into the firm’s IOLTA account to cover outstanding checks and charges. “We made a lot of money on that,” said Klebanoff, “It’s temporarily suspended, because the interest rates are terrible right now.” In a Feb. 20 letter to Bank of America CEO Kenneth D. Lewis, Connecticut Bar Association President John W. Hogan Jr. emphasized the importance of maintaining IOLTA funding levels. Currently, Hogan noted, “poverty level households in Connecticut face more than 289,000 civil law problems per year and 90 percent of the civil law problems identified by respondents do not receive any attention from lawyers.” If Bank of America were to use one of the IOLTA rates of its other 22 states, it would have an impact equivalent to removing salaries and benefits for between seven and 34 legal aid lawyers, officials say. The problem isn’t confined to megabanks. Klebanoff said that the takeover of the Savings Bank of Manchester and Tolland Bank by New Haven Savings Bank already portends a downward trend. New Haven Savings paid the lowest rates in the state, she noted. “We did the math, and if they reduce their rate to what they’re currently paying in New Haven, we’re going to lose over $100,000 a year.” Dollar losses are only one measure of what’s at stake, added Lawrence. “Legal aid representation represents a lifeline for civil clients,” but its value goes beyond individual cases, he said. “High quality representation for the poor affects the entire court system — it raises the bar” by spreading justice and dignity throughout society. Hogan, of Berchem, Moses & Devlin in Milford, said that Bank of America’s regional president, Jeffrey Klaus, contacted him in response to his letter. Hogan was optimistic. “I think we’ll be able to work this out,” he said. He noted that the most recent U.S. Supreme Court challenge to the legitimacy of the IOLTA system resulted in its vindication. “All legal obstacles have been removed,” he noted. Lawrence said lawyers need to realize the importance of picking the right bank, and that banks need to be aware of the leverage they gain by attracting legal business. “Lawyers are one of the banks’ major sources of referrals for commercial loans and credit transactions,” he noted.

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