Pa. high court: leftover funds from class actions now go to legal aid for low-income Pennsylvanians

The state’s high court has instituted a new set of civil procedure rules that will make it possible for funds left over from class action lawsuits to be used toward legal services for low-income Pennsylvanians.

In a May 11 announcement, the Pennsylvania Supreme Court stated that the new rules, which are set to take effect on July 1, direct how money left over from lawsuits after the plaintiffs, attorneys fees and expenses have been paid is to be distributed.

These “residual” funds, the high court announced, would include any money for plaintiffs who cannot be located or who don’t file claims.

In the past, the disposition of residual funds was left to the discretion of the trial judge.

Now, the Interest on Lawyers Trust Account Board, whose nine members work to increase access to civil courts for low-and-moderate-income commonwealth residents, has been designated to receive the newly court-ordered allocation of funding, the Supreme Court announced in its statement.

“The legal needs of many Pennsylvanians have risen with the level of uncertainty in the nation’s economy,” Supreme Court Chief Justice Ronald D. Castille said in a statement. “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 new civil procedure rules mandate that half of the entire leftover funds from lawsuits be given to the IOLTA Board with the remaining 50 percent either also given to the board, or designated to another organization that has a relationship with, or promotes the interest of, the class action lawsuit’s objectives, according to a news release from the Administrative Office of Pennsylvania Courts, which announced the rule changes.

According to the AOPC, several other states, such as Illinois, Massachusetts, North Carolina and Tennessee, have adopted similar provisions allowing for or mandating that residual funds from class action settlements go to charities, legal aid providers or other nonprofit organizations.

The AOPC stated that class action lawsuits, which provide a way for large numbers of plaintiffs to have their cases settled in a single proceeding, often result in unclaimed or leftover funds since affected parties are often unable to be located or identified.