the legal aid society 2006 annual report - Legal
Transcription
the legal aid society 2006 annual report - Legal
THE SO D AI GAL LE 1876 CIET Y the legal aid society 2006 annual report Leslie A Abbey, Katherine A Adler, Samantha E Adomaitis, David B Affler, Michelle S Agdomar, Shailly P Agnihotri, Amy S Albert, Natalie Albert, Todd Albert, Elisa A Albo, George W Albro, Esperanza Alcarese, Michael Alcarese, Myra Alcarese, Melissa Alejandro, Rita S Alejandro, Gary A Alexion, Ronald Alfano, Marianne T Allegro, Zoe G Allen, Juan C Alonzo, Harriett Altholz, Yakub Aminov, Ayisha A Amjad, Carlos M Anazagasty, Mary E Anderson, Sharon A Anderson, Tareek A Anderson, Melinda L. Andra, Alison Andruszkewicz, Megan E Annitto, Jojo Annobil, Carmine Annunziato, Bahar Ansari, Kenneth Ansley, Sonia Antonetti, Jose Aponte, Solmerina Aponte, Ruth S Appadoo-Johnson, Rigodis T Appling, Noha M Arafa, Jennifer G Arons, William C Artus, Ann R Ascher, Daniel S Ashworth, Afua A Atta-Mensah, John Audain, Edward J Auffant, Lynda Augente, Germaine A Auguste, Garrett L Austin, Elenor Wendy Austrie, Amy K Avila, Alan S Axelrod, Jose Ayala, Maria F Ayora, Carly L Baetz-Stangel, Susan C Bahn, Sharon D Bailey, Tejinder S Bains, Allison M Baker, Japheth T Baker, Buffy Maria Baldridge, Michael T Baldwin, Vanda E Ballard, Steven R Banks, William S Banks, Erin M Bannister, Priscilla Barbot, Shyleur Barrack, Eric Barreto, Elizabeth Barroso, Peter A Barta, Richard W Barton, Jessica E Bash, Patricia A Bath, Howard J Baum, Jennifer Baum, Lizzie-Anne Beal, Sakeena Beaulieu, Marka S Belinfanti, Jerilyn L Bell, Valerie P Bell-Bey, Christine L Bella, Franklin D Belle, Jessica Bellinder, Bernard Bellinger, Ruthlyn C Belnavis, Joshua A Benjamin, Fredric Bennett, Stephen M Bennett, Timothy J Bennett, Michelle M Benoit, Marisa Benton, Harry Berberian, Juan C Beritan, Steven R Berko, Jeffrey Berman, Jerrold Berman, Matthew J Berman, Simone Berman-Rossi, James A Bernal, Jamie N Bernstein, Lillian Berrios, Joyce Betances, Abby I Biberman, Charles B Billups, Tracey A Bing-Hampson, Nicole P Bingham, Barbara C Blake, Charles H Blakeley, Faith Bland, Jennifer R Blasser, Rosetta C Blount, Evanjeline Blue, Richard E Blum, Joshua M Blumenfeld, Jane Sujen Bock, Sarah Fleisch Bodack, Marlen S Bodden, Silvana Boggia, William D Boggs, Anna V Boksenbaum, Thomas F Bomba, Sharon Bomzer, Bonnie A Bonica, David E Boone, Robert J Bornstein, John Boston, Heidi Bota, Jessica M Botticelli, Evelyn J Bovell, Norah E Bowler, Laura D Boyd, Precious S Boyd, Cormac S Boyle, Katherine L Bradley, Adrienne Branch, Carol S Braund, Edward Braunstein, Bonnie C Brennan, Kathleen M Brennan, Suroujlal Bridgelal, Melissa J Briggs, Kamber L Brisbane, Mitchell J Briskey, Christine A Brito, Dolores Britt, Kissa Broadie, J Lorch Brooks, Darren C Brown, James W Brown, Kenya D Brown, Violet L Brown, Gretchen Brownscheidle, Ilissa R Brownstein, Kristin A Bruan, Courtney A Bryan, Sharon D Bryant, Marjorie R Bryson, Rosemary Buckmon, Robert J Budner, Desiree J Buenzle, Roulston Bumbury, Vanessa M Burdick, Regina M Burgio, Carmen G Burgos, Thomas J Burrows, Katherine A Burton, Susan G Butani, Jane H Byrialsen, Barbara Byrne, Edmund J Byrnes, Luis A Caballero, Pedro Caban, Harry Cadet, Kristen Calabrese, Elisabeth R Calcaterra, Yolande Calder, Reinaldo Calderon, Anne K Callagy, Glenda Callender, Irma M Camacho, Sonia Cancel-Ortiz, Alan M Canner, Eneida S Carbonell, Camille K Carey, Helena Carmona, William B Carney, Bruce A Carpenter, Carol A Carter, Connie Carter, Bernette Carway-Spruiell, Olivia L Cassin, Iris D Castellanos, Victor S Castelli, Nancy E Cavaluzzi, Keith J Cavet, Ana Cecilio, Ferdinand Cesarano, Cara A Chambers, Lorna Chan, Peter Chapman, Juan Charbonier, Richard M Charney, Jonathan S Chasan, Susan H Chase, Abida S Chaudhry, Steven M Chavez, Jonathan B Chazen, Catherine Chen, Charlie Cheng, Phyllis S Cherebin, Vanessa D Cherena, Toe-Fun Chia, Maria J Chiu, James Chubinsky, Javier Chuck, Erica G Cioffero, Paul A Clark, David C Clarke, James O Clayton, Thomas J Cleary, William Cleary, Susan J Clement, Vilma Roxanne Clerge, Bryan J Coakley, Peter v Z Cobb, Antonia Codling, Dana J Cohen, Emily J Cohen, Matthew B Cohen, Steven J Cohen, Jennifer I Cohn, Patricia S Colella, Alexis C Collentine, Charles D Collier, Tara A Collins, Esperanza Colon, George C Colon, Jiovani Colon, Maria C Colon, Joann Colon-Cimino, Cynthia Colt, Johari L Commodore, Elaine V Conklin, Gary R Conroy, Megan E Conroy, Claudia C Conway, Emma D Cooper-Serber, Jordan C Copeland, Virginia Cora-Gabriel, Mark L Coron, Antoinette Costanzo, William Cotto, Joyce Couvares, Stephen Coyne, Daniela E Crespo, David A Crow, Victor G Cruz, Juanita Cruz-Cataquet, Alexandria R Cubbage, Meghan Cuomo, Seth T Curkin, Thomas V Curtis, Selene D’Alessio, Nicole M D’Orazio, Olayinka Dan-Salami, Dawn Dapelo, Jacques L David, Ellen B Davidson, Terence S Davidson, Edgar Davila, Nora M Davila, Patricia I Davis, Stephanie B Davis, Genitha Davis-Wint, Lauren J De Bellis, Teresa K De Fonso, Francesca De Graff, Francisco De Jesus, Jason H De Jesus, Nelson I De Jesus, Barbara Deadwyler, Jacqueline Deane, Warren L Deans, Deborah H Dearth, Natalie B Deduke, Gerard M Deenihan, Carmen Del Valle, Christine M Dell’isloa-Ruggiero, Jeffrey I Dellheim, Lonette B Dennard, Robert R Desir, Sidney Desjardin, Emily Di Biase, Angela M Di Corleto, Joseph Di Flumeri, Richard J Di Marco, Ada DiCarlo, Hilda Diaz, Laurel R Dick, Joannah Dickinson, Mary T Dieterich, Ellen Dille, Ellen A Dinerstein, Vernon S Dixon, Gerard P Dobbyn, Lucretia Deloris Dobson, Rachel Dole, Natalya Dolub, Michelle L Domena, Madeline Domenech, Consuelo Dominguez, Denise M Dominguez, Lisa Donchak, Ann M Donnelly, Lauren Donnelly, Amy I Donner-Schwartz, Francis J Donovan, Melodie A Donovan, Caron G Dorvil, Cassandra T Dorvil, Alyse S Dosik, Kisha Douglas, Felicia Drewery, Shavonn I DuBois, Karen A Dubin-Knight, Dionne Dublin, Jacqueline Duboulay, John R Duffy, Monica D Dula, Laura M Duran, Bernard C Durham, Lyndsey N Dussling, Suvra Dutta, Jacek Dziembaj, Le Shawn Earl, Cecilio V Eastman, Victoria L Eby, Susan B Edelstein, Tomiko Edmonds, Alanda I Edwards, Lisa R Edwards, Marcia Susan Egger, Felicia Ehrlich, Andrew H Eibel, Nancy R Eibel, Julius J Eingoren, Kerry M Elgarten, Anthony J Elitcher, Andrew J Elmore, Claudia A Emanuel, Theresa Emeterio, Jeanne M Emhoff, Elizabeth B Emmons, James I Ende, Kathleen Engst, Susan Epstein, Jodi R Erickson, Lindsay Ernst, Jana G Ertrachter, Lourdes E Escobar, Nidia I Espaillat, Jacqueline E Esposito, Theresa A Esposito, Belinda H Etienne, Jonathan S Ettinger, Denise M Fabiano, Stephen H Falla-Riff, Allen L Fallek, Karen A Faraguna, Allen L Farbman, Anthony J Farley, Lisa C Farray, Trelinda Farrer, Robert Febles, Briana S Fedele, Carol A Fegan, Martin R Feinman, Louise Feld, Ian F Feldman, Danielle Feman, Harold Ferguson, Beatriz Fernandez, Sheilah Fernandez, Ana Maria Ferrin, Victoria L Fetterman, Craig E Fielding, Leanne M Fields, Edna E Figueroa, Lillian F Figueroa, Japel M Filiaci, Andrew C Fine, Oscar H Finkel, Kenneth L Finkelman, Cheryl E Fisher, David N Fisher, Katherine B Fitzer, Golda M Fleischman, Vera Mae Fletcher, Monique Fleury-Brown, Elisa Flight, Husein M Flight, Diana Flores, Gladys Flores, Josephine Flores, Richard Flores, Yvonne Floyd-Mayers, Megan W Foley, Danielle W Follett, Edna Fonfrias, Jacqueline M Ford, Hamilton L Forde, Janet Forrester, Kimberly Forte, Allan J Fox, Michelle M Fox, Kimberly N Frankel, Robin Frankel, Melinda M Fraser, Angel G Frau, Demetra D Frazier, Dale I Frederick, Lisa B Freedman, Julie B Freeman, Lisa A Freeman, Mary L Frey, Helen M Frieder, Oda C Friedheim, Alan Friedman, Bruce Friedman, David L Friedman, David M Fritz, Julie N Fry, Mark I Futral, George Gabriel, Nicholas E Gagliardo, Frances A Gallagher, Caitlin M Galliker, Erin K Galvin, Alyssa L Gamliel, Adrienne M Gantt, Margaret S Garber-Steinberg, Harinda Garcia, Jose L Garcia, Laureen Garcia, Maria A Garcia, Omar Garcia, Jonathan R Garelick, Lisa Rae Garland, Elizabeth R Garrett, Giana F Gaudelli, Sekeena L Gavagan, Cedric Gayle, Nada A Geha, Emily Geiger, Michelle A Gelernt, Gail H Geltman, Ulex A B George, Diego Gerardi, Samuel A Getz, Francis Gibbons, William D Gibney, Susan Gibson-O’Gara, Patricia O Gil, Sarah T Gillman, Betsy Ginsberg, Nancy L Ginsburg, Ernest Giordani, Laura B Gitelson, Monica Givens, Andrea S Glenn, Charles A Glover, Melissa R Gluck, Steven Godeski, Clara F Goetz, Bonnie B Goldburg, Steven Golden, Joshua E Goldfein, Judith A Goldiner, Ira A Goldner, Matthew H Goldsmith, Cathy N Goldstein, Jessica W Goldthwaite, Chandra Gomes, Aurea Gonzalez, Eva Gonzalez, Kara Gonzalez, Maria C Gonzalez, Rolando Gonzalez, Alan R Gordon, Andrea Gordon, Carlie M Gordon, Ramona Gordon, Martin Gorfinkel, Theresa V Gorski, Maxwell Gould, Vincent J Graci, Holly B Graham, Herbert Grant, Edward S Graves, James G Graves, Donald R Gray, Burt Grayman, Marshall Green, Michelle Florence Green, Daniel J Greenbaum, Gary Greenberg, Katharine F Griffing, Pamela J Griffith, Nicholas L Grimaldi, Seth D Gross, Gerald L Grossman, Marla A Grossman, Adam Z Grumbach, Carolina Guacci, Nidia Guadalupe, Jamie L Guggenheim, Laurence Gurwitch, Karen F Gutheil, Laura W Guthrie, Donna Marie Haase, Joshua Hadas, Jason M Hadley, Adam P Haenel, Michael A Hahn, Justin L Haines, William Hair, Adrienne Hale, Reginald W Haley, Coleen C Hall, Marlene Halpern, Karen K Hamberlin, Karen A Hambrick, Junior T Hamilton, Monique A Harding, Robert W Harold, Elon D Harpaz, Juanita B Harris, Judith L Harris, Peter L Hart, JoAnn Hassan, Adam Hassuk, Michele J Hauser, Amy C Hausknecht, Lawrence T Hausman, Matthew W Hawkins, Wanjuri Hawkins, Elizabeth Ann Hay, Jameelah J Hayes, Lauren K Headley, Mattie L Heath, John T Hecht, Robert Heilbrun, Lester Helfman, Michelle C Henckler, Donna M Henken, Alba L Hernandez, Ariel Hernandez, Luis R Hernandez, Luz Hernandez, Manuela Hernandez, Lucy C Herschel, Adam S Heyman, Elizabeth E Hibbard, Sarah L Hibbert, Peggy O Hickman, Michael S Higgins, Eric W Hildebrand, Deborah J Hill, Joanna N Hinkley, John W Hirsch, Karen A Hirsch, Yvonne R Hobbs, Carol J Hochberg, Adriene L Holder, Bridgett J Holloman, Jacqueline Holmes, Linda A Holmes, Amy M Hong, Evalina Hooks, Arthur H Hopkirk, Richard I Horowitz, Rita P Horvath, Susan J Horwitz, Samuel A Howell, Suzanne J Hoyes, Daniel K Hsiung, Yvonne Huaringa, Dorothy Hubbard, Kate R Huber, Lakeshia L Hudson, Clinton Hughes, Michael H Hughes, Adira J Hulkower, Ronald V Hurrey, Michael P Hurson, Soraya E Hurtado, Brian P Hutchinson, Carolyn Y Im, Andrew Inella, Natasha Y Ingram, Charles Ippolito, Blondell J Irick, Yolanda Irizarry, Celia H Irvine, Svetlana O Isakov, Sigmund Israel, Kenneth B Ives, Rebecca A Ivry, Richard J Jack, Lois J Jackson, Rosemarie O Jackson, Shirley Jackson, Sophie M Jacobi, Michelle L Jacobs, Lynda W Jahn, Neela Jain, Seymour W James, Angela Maria Jatombliansky, Patricia Jeffery, Johanna B Jensen, Kam Ling Jim, Sunny Jo, Alexandra J Johnson, Antoinette Johnson, Carolyn A Johnson, Clyde E Johnson, Duane W Johnson, Jamal L Johnson, Kathleen Johnson, Kendea A Johnson, Nadine A Johnson, Thomas Johnson, Travis M Johnson, Gregory J Johnston, Jessica F Jones, Lasalle Jones, Peter H Jones, Willie E Jones, Allison P Jordan, Richard Joselson, Gina M Joseph, Seema Joshi, Maria Joza, Janette L Jurado, Steven Jurash, Alan S Kahn, Karen Marsha Kalikow, Anna Kalliagas, Carolyn Kalos, James Kampil, Melissa J Kanas, Rosy M Kandathil, Sandeep S Kandhari, Emily S Kane, Benjamin Kanstroom, Brian Kanzaki, Emily Kaplan, Melissa Kaplan, Stephanie Kaplan, David M Kapner, Robin Karasyk, Thalia Karny, Sheryl R Karp, Judith O Karpatkin, Andrew L Katz, Martin Katz, Mitchell L Katz, Rebecca J Kavanagh, Maura A Keating, Kathleen M Kelleher, Brian E Kelly, Tina L Kemp-Bland, Melvin E Kenny, Andrea L Kenoff, Carl J Kent, Sarah Kerr, Roma S Kessaram, Eve Kessler, Cynthia R Keyser-Posner, Saleem S Khan, Kathleen M Kheel, Afsane Khot, Han N Kim, Mary Hye Kyung Kim, Mihea Kim, Emily D Kimball, Evadne Kinear, Steffie Kinglake, Karen L Kipnes, Doreen A Kirwan, Emily Kitay, Thomas M Klein, Steven E Kliman, Helen J Kloogman, Robert J Knightly, Lisa C Koinig, Bridget K Kong, Coreen H Kopper, Joyce B Korn, Svetlana M Kornfeind, Daniella Korotzer, Estajo Koslow, Jill R Kotner, Susan E Kriete, Nanette Kripke, David G Kulick, Rebecca Lynn Kurti, Candace Kurtz, Cynthia M La Caprucia, Diane E La Gamma, Jack Lachman, Priya N Lakhi, Stacy M Lam, Brian T Lamb, Christopher D Lamb, Lori S Landowne, Kelli M Lane, Peter T Lane, Josette Lang, Patrick J Langhenry, Kevin D Lapp, Julie S Last, Leigh E Latimer, Julia Lau, Chani The Legal Aid Society T he Legal Aid Society is the nation’s oldest and largest not-for-profit organization providing legal services for clients who cannot afford to pay for counsel. The Society handles nearly 275,000 legal matters for clients with civil, criminal or juvenile rights legal problems with a staff of more than 1,400 — including nearly 840 lawyers and 600 social workers, investigators, paralegals, and support and administrative staff. The Society provides legal services through a network of borough, neighborhood and courthouses offices in 25 locations in all five counties of New York City. Founded in 1876 in New York City, the Society is a full service provider of legal services and a recognized leader in three major practice areas: civil legal work, criminal defense and juvenile rights, as well as impact litigation on behalf of thousands of clients, including immigrants, survivors of domestic violence, children in foster care, homeless children and adults, disabled New Yorkers and people who are incarcerated. The Civil practice, the oldest and largest civil program in the nation, provides direct legal assistance to low-income families and individuals in more than 30,000 client cases annually. Service in the civil area is provided through a network of 10 neighborhood and court-based offices and 15 specialized project and citywide programs operating out of that network. Clients include the most vulnerable New Yorkers, including senior citizens, survivors of domestic violence, disabled children and adults, homeless and imminently homeless children and adults, low wage workers, immigrants and persons living with HIV/AIDS. The Society handles approximately 220,000 indigent criminal cases every year and serves as the primary public defender in New York City through the Criminal practice. The Juvenile Rights practice represents 90 percent of the children who appear before the Family Court in New York City and serves as law guardian for approximately 27,000 children in proceedings in Family Court. Legal Aid also has strong relationships with New York City’s private bar. Many of the leading law firms in the country are represented on its Board of Directors, and co-counsel with the organization on important class actions and law reform cases. Legal Aid has one of the largest pro bono programs in the country, enlisting the talents of 1,000 volunteer lawyers annually, and maintaining relationships with them throughout their careers. The Society’s pro bono program supports the three practice areas. Legal Aid’s fiscal year budget is more than $140 million; 90 percent from public funding, principally for criminal defense work and representation of juveniles in child protective and delinquency matters. The remaining funding comes from targeted government funding and the fund-raising activities of the organization which include private donations from law firms, associates, corporations, foundations, individuals and special events. The largest source of current support is the New York legal community. As one of the largest non-profits in New York City, the Society is a tax exempt, 501 ( c ) (3) organization, and has been classified as a publicly supported charitable organization under Section 501 (a) (1) of the Internal Revenue Code. REPORT OF THE CHAIR I will complete my term as chairperson of the Board of Directors of The Legal Aid Society at the 130th Annual Meeting on November 15. It has been my great privilege and honor to serve as Patricia M. Hynes Chairperson of this venerable institution and one of my most rewarding professional experiences. I am extremely pleased to report that the Society is in a stable financial position with a strong administration and a dedicated, supportive Board of Directors to continue its mission of ensuring access to the legal system for low-income New Yorkers who cannot afford to pay private counsel. During these last few years, we have faced many difficult situations and made some very hard and painful decisions when the very survival of the Society has been at stake. In 2004, the Society accomplished a dramatic financial and managerial turnaround, which included a total restructuring of the Society’s finances and management. The Society faced a substantial operating deficit for the 2004 fiscal year ending June 30 and a projected $21 million deficit for the fiscal year ending June 30, 2005. As a result of the restructuring, those deficits were eliminated and the Society achieved a balanced budget for its fiscal years ending June 30, 2005, and June 30, 2006. There were many critical elements to this dramatic turnaround. A special infusion of $11 million from the City and the City Council at the end of June 2004 was an important early step. An additional $9.5 million infusion from our supporting private law firms in December 2004 enabled the Society to eliminate more than $40 million in debt and other liabilities from its balance sheet as creditors agreed to settle claims at a substantial discount. Part of the restructuring included downsizing staff and reducing our real estate obligations through consolidations. Significant sacrifices have been made and continue to be made by managers, exempt personnel and staff members of The Association of Legal Aid Attorneys/UAW and the 1199/SEIU, as a result of compensation and benefit reductions that have been implemented. The Board benefited greatly from the restructuring expertise provided by Marti Kopacz and her team from Alvarez & Marsal. Throughout all of the long days and nights, I was blessed to have Steve Banks, the Attorney-inChief, and Pat Bath, Director of Communications, by my side. Their commitment and good judgment were largely responsible for our success in the restructuring effort. It has been my goal to have The Legal Aid Society be the Gold Standard for Not For Profit legal services organizations and I believe we have achieved that goal. The Board of Directors brought in new management, including Allan Fox, a professional Human Resources director, who already has made a difference, hired a new outside auditor, and instituted strict financial controls. A Board Finance Committee was formed which instituted detailed monthly financial reporting to the Board and put in place procedures whereby prior approval of the Finance Committee had to be obtained before entering into significant financial commitments. We have made enormous strides in Board governance and are compliant with Sarbanes Oxley through the efforts of Faith Grossnickle of Shearman & Sterling LLP, and Rochelle Korman of Patterson, Belknap, Webb & Tyler LLP, who assisted the Board in revising the By-Laws and creating charters for each of the standing Board committees. I am very grateful to Janet Sabel, our Secretary and General Counsel, for spearheading this effort. Members of the Board have demonstrated an outstanding commitment to the Society by devoting enormous amounts of time and energy on Board committees. Christopher P. Bogart of Glenavy Capital LLC was the first chair of the Finance Committee, followed by Theodore A. Levine of Wachtell, Lipton, Rosen & Katz, and Douglas F. Curtis of Wilmer Cutler Pickering Hale and Dorr LLP . They are working closely with Christopher Conroy, our Chief Financial Officer, who came to us after retiring from Simpson Thacher & Bartlett LLP. Noel J. Spiegel’s (of Deloitte & Touche LLP) chairmanship of the Audit Committee also has been exceptional. The Committee hired new outside auditors and has instituted a number of new policies and procedures. Richard J. Davis and a team from Weil, Gotshal & Manges LLP have provided outstanding representation of the Society on crucial legal matters in addition to representing Legal Aid clients on a number of important matters. Alan Levine of Cooley Godward Kronish LLP has made great strides as Chair of the Board’s Real Estate Committee and is obtaining pro bono assistance to upgrade Society offices throughout the five boroughs. Both Alan and Mel Immergut (Milbank, Tweed, Hadley & McCloy LLP), his successor as Chair of the Nominating and Governance Committee, have brought new members to the Board of Directors with significant expertise and commitment. Richard W. Clary of Cravath, Swaine & Moore LLP has played a key role in the Board’s strategic oversight of the Society’s operations and has led his firm’s outstanding pro bono service to the Society’s clients. Paul S. Bird of Debevoise & Plimpton LLP has brought in expertise from his firm to work with his Committee on Retirement and Benefits. The complete turnaround of the Society has been recognized in the success of our recent private fund-raising efforts, with the assistance of Nicholas L. Grimaldi, our new Director of Development. Richard A. Eisner of Eisner LLP has headed the Development Committee’s efforts to expand our donor base. Daniel Kolb, the Committee’s Co-Chair and a partner at Davis Polk & Wardwell, has led a successful effort to expand the number of Sustaining Law Firms from 34 to 61. We emerged from the crisis a much stronger, better managed institution and we now are able to embark on new and exciting innovations to better serve our clients. Under the leadership of Theodore A. Levine, a Vice Chair, a major technology initiative was developed in the Spring. Ted Levine organized an advisory committee of the Chief Information Officers at six of the Sustaining Law Firms that are represented on the Board of Directors — Cravath Swaine & Moore LLP; Davis Polk & Wardwell LLP; Simpson Thacher & Bartlett LLP; Skadden, Arps, Slate, Meagher & Flom LLP; Sullivan & Cromwell LLP, and Wachtell, Lipton, Rosen & Katz — and the President of Doar Litigation Consulting. The committee, on a pro bono basis, helped to analyze the Society’s current systems and evaluate what a modern law firm of the Society’s size and complexity should have in place. The committee developed an overall technology plan for the Society and brought in two nationally known consulting firms, mindSHIFT Technologies and Baker Robbins & Company, to give The Legal Aid Society a complete overhaul and modernization of our technology infrastructure and applications. Through the assistance of Alexander D. Forger, a former President and former Chairman of the Society, and the Nominating and Governance Committee, the Board has created the Board of Advisers to promote the Society’s work in the legal community and to support the Society’s fund raising activities. The Nominating and Governance Committee has recommended that Alan Levine succeed me as Chair of the Board. Alan, the partner in charge of the New York office of Cooley Godward Kronish LLP, developed a pro bono immigration practice at his firm to benefit the Society’s Immigration Unit. He was very involved in the restructuring efforts and will be an excellent chair. Peter v. Z. Cobb, who had served as Co-Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP, was appointed President of the Society in early 2005 to complete the financial and management rehabilitation of the Society. Peter, as you will read in his report, has accomplished what he set out to do and has decided not to seek another term as President. We wish him well in his future endeavors and thank him for his contribution to the work of the Society during 2005 and 2006. He has played an important role in helping the Society achieve its goals of financial and management stability. The Nominating Committee has recommended to the Board the election of Ted Levine as President. Ted, currently serving as a Vice Chair and Co-Chair of Finance, has government, private practice and corporate executive experience as the Associate Director of the SEC’s Division of Enforcement, the Chief Legal Officer of UBS PaineWebber Inc., and a partner in a major private law firm. Ted is currently Of Counsel at Wachtell, Lipton, Rosen & Katz and will continue in that capacity. The Board is confident that he is well positioned to assume the position of President of the Society and to devote the necessary time to continue the Society’s progress. As you read the Report of the Attorney-in-Chief, you will learn about the work of our dedicated staff who accomplish great results for our clients on a daily basis. This annual report is dedicated to them. No report of The Legal Aid Society would be complete without mentioning Steven Banks, our dynamic and tireless Attorney-in-Chief. Steve, who is one of the best known poverty lawyers in the United States, has devoted his entire legal career to the work of The Legal Aid Society. As the Society’s chief lawyer and an excellent manager, Steve ably leads our staff of some 600 support personnel and 840 lawyers to perform with excellence. Steve manages a legal practice that is extraordinary. The range of legal services provided by the Society is vast — almost staggering — 275,000 client cases in the Civil, Criminal and Juvenile Rights practices in addition to impact litigation on behalf of thousands of clients including immigrants, survivors of domestic violence, children in foster care, homeless children and adults, disabled New Yorkers and people who are incarcerated. I am proud to have served the Society through these difficult years. I am thankful for the support from everyone that has made it possible for the Society to move forward. In the coming years, the Society will need increased support from both the private and public sectors to continue its important work and provide the essential legal services critical to the preservation of our system of justice. REPORT OF THE PRESIDENT A s many of you know, I will be stepping down as President of the Society after its Annual Meeting on November 15. I will be sad to leave such a dedicated and effective staff but I am proud of what we have Peter v. Z. Cobb accomplished in the past two years. I will be leaving the Society in very good hands — an extraordinarily talented and hard-working staff, a cohesive, collegial and dedicated senior management group, and a Board of Directors that brings tremendous energy and resources to the governance of the Society. Under the leadership of our wonderful Attorney-in-Chief, Steve Banks, our staff continues to bring the very highest level of service to the poor people of New York — this past year, in more than 275,000 cases, we provided legal and other services to people who literally have no other place to turn. This past year we put in place new financial and management systems and laid the groundwork for a thorough revamping of the Society’s technology infrastructure and case management systems. The Society is entering the modern age! Financially, each of our practice areas is stronger than it was at the beginning of the year. Through a strong advocacy effort we received increased funding from the New York City Council and the City Administration and New York State with respect to our Criminal and Juvenile practices. In the Civil practice we benefited from a number of significant efforts by the Board and the Development staff. I would particularly like to thank the members of the Board of Directors for their outstanding support in the past year. With strong leadership from Development Committee co-chairs Richard A. Eisner, of Eisner LLP, and Daniel F. Kolb, of Davis Polk & Wardwell, more than $13.3 million was raised for our Civil practice through a variety of funding sources. Central to this effort were several initiatives that secured the extraordinary generosity of firms and individual attorneys of the local, private bar. The Sustaining Law Firm Campaign, with Mr. Kolb leading the charge, was especially successful. An additional 28 firms came aboard at the sustaining level, bringing the drive to a conclusion with a total of 61 firms making contributions at $600 per attorney in their New York offices. Additional support was secured from other firms at the non-sustaining level. The Associates Campaign, reinvigorated through the joint efforts of Sean Wissman, of Debevoise & Plimpton LLP, and Patricia Bath, Legal Aid’s Director of Communications, captured the interest and support of the younger attorneys at 35 firms. Top contributors included associates at Chadbourne & Parke LLP; Debevoise & Plimpton LLP; Hughes Hubbard & Reed LLP; Wachtell, Lipton, Rosen & Katz; Proskauer Rose LLP; Kaye Scholer LLP; Milberg Weiss Bershad & Schulman LLP; Cooley Godward Kronish LLP; Cleary, Gottlieb, Steen & Hamilton LLP; Simpson, Thacher & Bartlett LLP and Fitzpatrick, Cella, Harper & Scinto LLP. Firms with 70 percent or more participation included Arnold & Porter LLP; Fitzpatrick Cella; Cooley Godward and Milberg Weiss. On May 16, Robert D. Joffe, Presiding Partner of Cravath, Swaine & Moore LLP, was the honoree at the 29th Annual Servant of Justice Award Dinner at the WaldorfAstoria Hotel, with Richard D. Parsons, Chairman and CEO of Time Warner Inc., serving as presenter. The event raised nearly $1 million for the Civil practice. The all-volunteer Civil Support Division, co-chaired by Barbara Latz Cohen and Mary Anne Hatch, put on three other major fundraising events during the year that netted close to $450,000. These included the 43rd Annual Legal Aid Society Ball, chaired by Ms. Cohen with co-chair Betsy C. Stapleton; The Cabaret at the Rainbow Room, co-chaired by Deirdre Kane and Cynthia Smith; and the Thinking Out Loud Luncheon chaired by Angela Duff, Carol Duffy and Louise Firestone. During this year we have laid the groundwork for the expansion of other important sources of current funding for the Civil practice. Alexander Forger, a past president and past chairman of The Legal Aid Society and former chairman of Milbank, Tweed, Hadley & McCloy, initiated a formal Planned Giving Program. A series of mailings was launched to renew and upgrade the support of loyal individuals contributing to the Civil practice, and other mailings were initiated to acquire new donors. Similar steps were taken to identify new foundation and corporate supporters to join those already very generously supporting our work. Throughout the year, the Board of Directors, under the leadership of Patricia M. Hynes, has continued to play a central role in all of our development efforts. Through their efforts and the generosity of the law firms and companies that many of them come from, the Society has a very strong philanthropic base that is essential to all of our efforts. The Legal Aid Society is a wonderful organization that is absolutely essential to the moral well-being of this wonderful city of ours. I will miss everyone that I have worked with here. THE LEGAL AID SOCIETY 2006 SUSTAINING LAW FIRMS The Legal Aid Society acknowledges the outstanding support of the following law firms. These firms sustain the work of The Legal Aid Society’s Civil Program by contributing at a leadership level of $600 per New York attorney. Arnold & Porter LLP Axinn, Veltrop & Harkrider Baker & Hostetler LLP Bingham McCutcheon LLP Cadwalader, Wickersham & Taft LLP Cahill Gordon & Reindel LLP Chadbourne & Parke LLP Cleary, Gottlieb, Steen & Hamilton LLP Cooley Godward Kronish LLP Covington & Burling Cravath Swaine & Moore LLP Davis Polk & Wardwell Debevoise & Plimpton LLP DePetris & Bachrach LLP Dewey Ballantine LLP DLA Piper Rudnick Gray Cary US LLP Fitzpatrick, Cella, Harper & Scinto LLP Fried, Frank, Harris, Shriver & Jacobson LLP Friedman Kaplan Seiler & Adelman LLP The Jacob D. Fuchsberg Law Firm LLP Gibson, Dunn & Crutcher LLP Goodwin Proctor Heller Ehrman LLP Hughes Hubbard & Reed LLP Hunton & Williams LLP Kasowitz, Benson, Torres & Friedman Kaye Scholer LLP Kelley Drye & Warren LLP Kirkland & Ellis LLP Kramer, Dillof, Livingston & Moore Kramer, Levin, Naftalis & Frankel LLP Lankler Siffert & Wohl LLP Latham & Watkins LLP LeBoeuf, Lamb, Greene & MacRae L.L.P. Lowenstein Sandler P.C. Milbank, Tweed, Hadley & McCloy LLP Milberg Weiss Bershad & Schulman LLP Morgan, Lewis & Bockius LLP Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer P.C. O’Melveny & Myers LLP Orans, Elsen & Lupert LLP Orrick, Herrington & Sutcliffe LLP Patterson Belknap Webb & Tyler LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Pillsbury Winthrop Shaw Pittman LLP Proskauer Rose LLP Richards Spears Kibbe & Orbe LLP Ropes & Gray LLP Seiff Kretz & Abercrombie Shearman & Sterling LLP Sidley Austin LLP Simpson Thacher & Bartlett LLP Skadden, Arps, Slate, Meagher & Flom LLP Sullivan & Cromwell LLP Wachtell, Lipton, Rosen & Katz Weil, Gotshal & Manges LLP Weitz & Luxenberg, P.C. White & Case Willkie Farr & Gallagher LLP Wilmer Cutler Pickering Hale and Dorr LLP Wollmuth Maher & Deutsch LLP The Legal Aid Society expresses its appreciation and gratitude to Daniel Kolb, a Director of the Society and a partner at Davis Polk & Wardwell, for successfully leading the law firm expansion effort. The Legal Aid Society’s Civil practice provides legal representation to the most vulnerable New Yorkers, including senior citizens, survivors of domestic violence, disabled children and adults, homeless and imminently homeless children and adult, low wage workers, immigrants and persons living with HIV/AIDS. The support of the Sustaining Law Firms helps to ensure that poverty is not a barrier to accessing the justice system. legal aid supporters Robert D. Joffe, Presiding Partner at Cravath, Swaine & Moore LLP, was honored at the 29th annual Servant of Justice Award Dinner at the Waldorf-Astoria. Richard D. Parsons, Chairman and CEO of Time Warner Inc., introduced Mr. Joffe. Patricia M. Hynes, Chairperson of the Board of Directors, presented the award to him. Richard W. Clary, a Vice Chair of the Society and head of litigation at Cravath, and Patricia M. Hynes congratulate Mr. Joffe at the reception before the dinner. HAVING A BALL – Theodore A. Levine and his wife, Lucia Swanson, and Patricia M. Hynes congratulated Betsy Stapleton and Sheila Kaplowitz for their work on the Legal Aid Ball, sponsored by the Civil Support Division. Sheila served as Chair of the successful event at Tavern on the Green with Betsy as the Co-Chair. THE ASSOCIATES’ CAMPAIGN – Wachtell, Lipton, Rosen & Katz hosted the Associates’ Campaign Awards Ceremony in June to honor the associate solicitors who had worked so hard to raise funds for the Society. Above center, Bruce Fader presents an award to Sean Wissman, of Debevoise & Plimpton LLP, who chaired the Campaign. Top contributors included associates at Chadbourne & Parke LLP; Debevoise & Plimpton LLP; Hughes Hubbard & Reed LLP; Wachtell, Lipton, Rosen & Katz; Proskauer Rose LLP; Kaye Scholer LLP; Milberg Weiss Bershad & Schulman LLP; Cooley Godward Kronish LLP; Cleary, Gottlieb, Steen & Hamilton LLP; Simpson, Thacher & Bartlett LLP, and Fitzpatrick, Cella, Harper & Scinto LLP. Firms with 70 percent or more participation included Arnold & Porter LLP; Fitzpatrick Cella; Cooley Godward and Milberg Weiss. Above right are Theodore A. Levine, who served as the master of ceremonies, and Lawrence B. Pedowitz, who spoke at the event. Officers of The Legal Aid Society President – Peter v. Z. Cobb Attorney-in-Chief – Steven Banks Secretary – Janet E. Sabel Chief Financial Officer – Christopher A. Conroy The Board of Directors of The Legal Aid Society Chairman of the Board Patricia M. Hynes Vice Chairs Ruth Atkins, Richard W. Clary, Richard J. Davis, Theodore A. Levine, Lawrence B. Pedowitz, Grace Lyu-Volckhausen Directors Roger S. Aaron Ruth Atkins Paul S. Bird Christopher P. Bogart Richard W. Clary Peter v. Z. Cobb Barbara L. Cohen J. Peter Coll, Jr. Douglas F. Curtis Richard J. Davis Richard A. Eisner Bruce E. Fader Vincent R. FitzPatrick, Jr. Michael D. Fricklas Michael B. Gerrard Hervé Gouraige Noah J. Hanft Michael S. Helfer Steven G. Horowitz Patricia M. Hynes Mel M. Immergut Jerome C. Katz Alfreida B. Kenny John J. Kirby, Jr. David Klingsberg Daniel F. Kolb Rochelle Korman William F. Kuntz II Carmen J. Lawrence Alan Levine Theodore A. Levine Robert O. Link, Jr. Loretta E. Lynch Randy Mastro E. Leo Milonas Sara E. Moss Gary P. Naftalis Lawrence B. Pedowitz Linda E. Rappaport Lisa Rosenblum Charles H. Scherer Alan D. Schnitzer Elizabeth M. Sheehan Richard Shutran Jonathan D. Siegfried Thomas R. Smith, Jr. Noel J. Spiegel Myron Trepper Alan Vinegrad Grace Lyu-Volckhausen Paul F. Washington Perry Weitz Alfred D. Youngwood REPORT OF THE ATTORNEYIN-CHIEF More than 1,000 volunteer lawyers and paralegals from leading private law firms and corporate law departments participate in the Society’s pro bono program that further leverages the Society’s resources. C lients seek the services of The Legal Aid Society under desperate circumstances when no one else can or will stand up for them. Their cases are assigned to Society staff by the courts; or clients may be referred to Society offices by community organizations, social services agencies, elected officials, government agencies, or word of mouth. During 2006, with a staff of more than 1,400 — including nearly 840 lawyers and 600 social workers, investigators, paralegals, and support and administrative staff — the Society handled 275,000 legal matters for clients with civil, criminal, or juvenile rights legal problems. Through a network of borough, neighborhood, and courthouse offices in 25 locations in all five counties of the city, the Society provides comprehensive legal services for clients who cannot afford to pay for counsel. The Society’s legal program operates three major practices – Civil, Criminal, and Juvenile Rights. The Society’s Pro Bono Practice supports all three of these practice areas. Steven Banks Each practice area provides advice and counsel and legal representation in individual client cases and law reform legal advocacy to groups of similarly situated clients to address common problems. Society staff members represent clients at literally every level of the state and federal trial and appellate courts as well as in state and federal administrative proceedings. Based on the Society’s expertise, staff is frequently asked to testify before federal, state, and City Council legislative committees and comment on administrative regulations and procedures. The Society also operates extensive “know your rights” community outreach programs for clients and community-based organizations as well as Continuing Legal Education programs for Society staff, pro bono volunteers, and the legal community in general. More than 1,000 volunteer lawyers and paralegals from leading private law firms and corporate law departments participate in the Society’s pro bono program that further leverages the Society’s resources. The Society’s pro bono program increasingly involves partnering with a firm to target legal assistance to specific substantive areas within the Civil, Juvenile Rights, and Criminal practices. Firms accept cases in a priority area of client need and then provide oversight in conjunction with Legal Aid staff specialists. A new Buttenwieser Senior Attorney Project enlists the pro bono assistance of retired lawyers to serve clients who otherwise cannot be helped. Government funds the constitutionally mandated representation of clients provided by the Criminal practice and the Juvenile Rights practice. Aside from some targeted government funding for special Civil programs, the Civil practice is largely dependent on private funding for client services. In all three practice areas, securing adequate resources is a challenge each year. This report on the Society’s legal work during the past year is a tribute to the extraordinary work of the Society’s staff. With limited resources, every day of the year Society staff members provide high quality services in a high volume legal practice under difficult circumstances. The Civil Practice The Society’s Civil practice helps clients obtain and maintain the basic necessities of life — housing, health care, food and subsistence income or self-sufficiency. During 2006, the Civil practice provided advice and counsel and representation in some 30,000 individual legal matters through a network of neighborhood and courthouse-based offices in all five boroughs and citywide programs or special projects. Because of lack of resources, however, the Society has to turn away at least six potential clients for every client who can receive legal help. The Civil practice serves as a “one-stop” legal resource for clients with a broad variety of legal problems, including access to housing, homelessness, employment, government benefits, health care and/or medical insurance, immigration, elder law, domestic violence, family law, education, wills, community development and other general civil matters. The practice’s clients present the most desperate situations: survivors of domestic violence, frail senior citizens living alone, disabled or chronically-ill children and adults, unemployed or low-wage workers, immigrants, homeless or imminently homeless children and adults, and persons living with HIV or AIDS. The Society Changes Lives Cases involving domestic violence and family law represent situations in which Society staff make a critical difference in the lives of clients. Cases involving domestic violence and family law represent situations in which Society staff make a critical difference in the lives of clients. During this past year, for example, Society staff represented Ms. R., an immigrant who speaks no English. Her husband, a lawful permanent resident, regularly abused her, and then abandoned her and left their two children living in poverty. At the time that a judge referred Ms. R.’s divorce proceeding to the Society, the children were on public assistance and Ms. R. herself had to resort to collecting bottles in order to pay for basic expenses. Society staff quickly discovered that despite his claims to the contrary, Ms. R.’s husband was a successful entrepreneur whose annual income far exceeded the $17,000 he claimed. Based on evidence the Society presented during six days of trial, the judge found that Mr. R. earned more than $106,000 a year and owed significantly more child support than the $40 per week he had been paying. The Judge also awarded Ms. R. 100 percent of the marital property that the Society had uncovered. As a result, Ms. R. and her children will be able to live independently without public assistance. This is the first decision that awards a spouse 100 percent of the assets that could be established at trial when the other spouse had wrongfully concealed assets and income. In his decision, the judge concluded that “[Ms. R] has gone on alone without any real assistance from the husband and would probably have continued in that lifestyle were it not for the efforts of The Legal Aid Society.” Pascale Nijhof, Program Manager for the Civil practice, and Erin Liotta, Program Associate, discuss disability grant proposals with Ian Feldman, Assistant Attorney-in-Charge of the Bronx Neighborhood Office, and Richard Lombino of the Coalition for the Homeless. Legal Aid’s Civil practice stretches resources by working closely with community partners to serve more clients. The Society’s Health Law Unit untangled the web of government bureaucracy and restored the status quo so that Mr. and Mrs. T. could continue to fill their prescriptions without this $300 monthly fee. The Society Fights Bureaucracy To Help Vulnerable Clients – Clients frequently are denied the assistance that they need because of bureaucratic errors. For example, Mr. and Mrs. T. are an elderly couple struggling to get by each day. Like many senior citizens, they take numerous medications for ailments, including high cholesterol, high blood pressure, hypertension, a thyroid condition, and diabetes. As mandated by a new federal law, their Medicaid prescription drug coverage ended on January 1, 2006, and their new coverage with Medicare began. Under the new Medicare program, the T.’s were shocked when they refilled their prescriptions on January 3 and were told they owed more that $300 in new co-payments for the month. The Society’s Health Law Unit untangled the web of government bureaucracy and restored the status quo so that Mr. and Mrs. T. could continue to fill their prescriptions without this $300 monthly fee. The Society Keeps Clients In Their Homes – Preventing and alleviating homelessness is a priority area for the Society’s clients. For instance, during this past year, after she had been evicted for non-payment of rent, Society staff successfully restored Ms. B. to possession of an apartment in which she had lived for 30 years. Ms. B. works as a home attendant but fell into arrears with her rent when she had to cover extraordinary expenses resulting from the death of her grandchild who was born prematurely, suffered a heart attack, and died shortly after birth. Similarly, the Civil practice recently obtained two major appellate decisions that protect large numbers of clients from arbitrary eviction. In one case, the Appellate Division in the First Department required landlords to continue to accept federal Section 8 rent subsidies from tenants covered by the rent stabilization law. In that case, the Society represented Ms. R. who is disabled and lives with her disabled daughter and two young grandchildren in the same apartment in which Ms. R. has lived for 31 years. Sixty thousand tenants will benefit as a result of the ruling in Ms. R.’s case. Robert Desir, a staff attorney in the Queens Neighborhood Office, meets with a client in Legal Aid’s Housing Court office to discuss a problem. In another case, the Appellate Division in the Second Department held unanimously that a tenant who has been sued for alleged non-payment of rent in Housing Court may raise a defense or counterclaim of a rent overcharge if the landlord has sought a rent increase based on a claimed individual apartment improvement. The appellate court found that New York law did not require such rent overcharge complaints to be first raised with the state housing agency before a court can hear the claim. Otherwise, the appellate court concluded, a tenant could be evicted for not paying what may be an illegal rent increase. Meanwhile, with the Society’s Homeless Rights Project, Cravath, Swaine & Moore LLP has continued to provide critical pro bono assistance to protect homeless children and their families from harm. The Society Helps Immigrants To Make A New Life – The Civil practice is able to represent additional immigrant clients with the assistance of pro bono counsel at Cooley Godward Kronish LLP, which is working in conjunction with Society Immigration Unit staff to run an Immigration Detention Defense Pro Bono Project that provides representation to lawful permanent residents with valid claims to remain in this country who are facing imminent deportation based on long-ago convictions. Hughes, Hubbard & Adriene Holder, Attorney-in-Charge of the Civil practice, right, reviews some case files with Nilsa Saniel, a paralegal in the Harlem Community Law Office. Reed LLP has joined the project this past year and is staffing Legal Aid’s Immigration Hotline. Simpson Thacher & Bartlett LLP is also working with the Immigration Unit to run a Washington Heights Immigration Project, and LeBoeuf, Lamb, Greene & McCrae’s expanded representation has augmented Legal Aid’s resources in handling these kinds of immigration cases. The crucial role of the Society’s immigration work is illustrated by a case that was publicized in The New York Times during this past year. Working together with pro bono counsel at Wilmer Cutler Pickering Hale and Dorr LLP; Latham & Watkins LLP; and Weil, Gotshal & Manges LLP, the Society’s Immigration Unit obtained lawful status for Amadou Ly, a young immigrant from Senegal. He had been abandoned in this country as a young teenager but he excelled in high school and was heading to college. However, he faced certain deportation until the Society and its pro bono partners stepped in to help him. The Society represents thousands of immigrant survivors of domestic violence and their children living legally in New York City who were wrongfully denied public assistance, food stamps, and Medicaid. The Society Secures Critical Financial Assistance For Clients – Often, clients are wrongfully denied wages which they have earned or subsistence benefits for which they are eligible, like disability or unemployment benefits, public assistance, food stamps, Medicaid, or an earned income tax credit. For example, the Society’s Employment Law Project represented Mr. K., who performed seasonal work from December to April for the same employer for many years and received unemployment insurance for the remainder of the year. During this past year, Mr. K.’s unemployment benefits were terminated when his employer erroneously claimed that Mr. K., who has mental health problems, had worked for several days during the off-season period four years ago. Society staff represented Mr. K. at three separate administrative hearings before the dispute was resolved and Mr. K.’s benefits were restored. Likewise, Society staff represented Ms. A., a 58-year-old woman who does not speak English and did not complete high school. Ms. A worked for many years in a sewing factory but had to quit due to poorly controlled diabetes mellitus, diabetic neuropathy, a herniated disc, and arthritis. Ms. A.’s initial application for federal Supplemental Security Income disability benefits was denied. However, with the help of Society staff, following an administrative hearing, Ms. A. was awarded monthly disability benefits along with over $10,000 in retroactive benefits. The Society’s Law Reform Litigation Secures Aid For Immigrant Survivors of Domestic Violence – In the M.K.B. v. Eggleston class action case, co-counseled with Hughes, Hubbard & Reed LLP and another legal group, the Society represents thousands of immigrant survivors of domestic violence and their children living legally in New York City who were wrongfully denied public assistance, food stamps, and Medicaid. The situation has been devastating because these destitute women and children were left without money to buy food, clothing, diapers and other essentials and without any access to medical care. The case established Staff Attorney Camille Carey (left) and Emily Ruben (right), Attorney-in-Charge of the Brooklyn neighborhood office, enjoy playing with little Carlos, 4, and talking with his mother, Iris, during a meeting at the Livingston Street office. Iris, a domestic violence survivor, calls Camille and Emily “my angels” because they prevented her ex-husband from taking her son away from her and having her deported to Honduras. Now Iris is able to rebuild her life with little Carlos. that the city and state failed to train caseworkers to recognize which legal immigrants are eligible for benefits. In addition, erroneously programmed city and state computers made it nearly impossible to provide benefits to many eligible immigrants. In a major legal victory, the federal district court ordered the city and state to stop denying these subsistence benefits. The federal judge found that the evidence “suggests that...dire consequences are occurring with respect to these and certain other immigrant groups who...have fallen between the cracks of New York’s welfare system.” The Society’s Class Action Litigation Protects Disabled New Yorkers – In the Lovely H. v. Eggleston class action, Society staff and Milbank, Tweed, Hadley & McCloy LLP achieved a groundbreaking federal district court ruling that New York City violated the federal Americans with Disabilities Act when it set up the WeCare program for disabled individuals who receive public benefits, and then required disabled recipients to transfer their public assistance cases from local offices to one of three “disabled only” segregated centers in Manhattan, the Bronx and Brooklyn in order to continue to receive food stamps, Medicaid and public assistance. The federal judge concluded that “[t]o permit the continued expansion of the current involuntary program...would be to turn back the clock not only for the individual who is denied access to the neighborhood center that welcomes her able-bodied neighbors, but also for a society that Geoffrey Mason proudly shows off his 4-month-old son, Kenneth, as he meets with Salome Thompson (center), social worker supervisor, and Janet A. has made tremendous efforts and strides to Chaplan, staff attorney, in the Staten Island Juvenile Rights office, to discuss improve, rather than constrict, accessibility for his case. and integration of the disabled into all aspects of mainstream life.” The court described in detail the irreparable harm suffered by the Society’s clients because of their “physical and mental barriers to mobility,” concluding that “the day-today mobility challenges they face are exacerbated by anxiety as to whether their safety-net welfare benefits will be terminated if they fail to make the journey.” The court ordered the city to allow 23,000 disabled individuals who had already been transferred to move back to their neighborhood centers. Pro Bono Assistance Enables The Society To Help Client Community Development Initiatives – Pro bono attorneys at 20 firms handle a substantial portion of the Society’s Community Development Project caseload to help clients form tenant organizations to manage their buildings and preserve affordable housing or assist clients to set up non-profit organizations and small businesses to move out of poverty, create jobs, and bring educational and social services into low income neighborhoods. The leading firms handling this transaction- During 2006, the Society’s Juvenile Rights practice continued to serve as the court-appointed law guardian representing over 27,000 children in abuse, neglect, juvenile delinquency, and persons in need of supervision proceedings in all five boroughs. al work this past year are Cadwalader Wickersham and Taft LLP; Patterson Belknap, Webb & Tyler LLP; Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Nixon Peabody LLP. The Prisoners’ Rights Project Provides Critical Legal Help For Society Clients – As a result of a settlement that the Project achieved during this past year, disabled clients are now permitted to participate in programs to prepare prisoners for reentry into the community from which they were previously excluded. Likewise, as a result of an individual Project case brought in conjunction with Darby & Darby, a woman who was separated from her newborn baby when she was transferred from a city jail to a state prison, was reunited with her child in a special prison nursery. During this past year, the Society, pro bono counsel from Sullivan & Cromwell LLP, and the law firm of Emery Celli Brinckerhoff & Abady LLP, also obtained a major settlement in a federal class action case to protect clients jailed at Rikers Island from the use of excessive force by prison guards. The Juvenile Rights Practice During 2006, the Society’s Juvenile Rights practice continued to serve as the courtappointed law guardian representing over 27,000 children in abuse, neglect, juvenile delinquency, and persons in need of supervision proceedings in all five boroughs. Juvenile Rights law guardians have also appeared on behalf of their clients in custody, visitation, and adoption matters and in the Integrated Domestic Violence parts in the Criminal and Supreme Courts and in mediation matters. The work of the staff at the Juvenile Rights practice remains the single most significant factor in the court’s decision-making process regarding the children and young adults who are the subject of Family Court proceedings. This year, Juvenile Rights staff faced an unanticipated increase in the number of abuse and neglect petitions filed in Family Court as well as problems presented by the implementation of the new state permanency planning law aimed at ensuring that the Family Court cases of children are resolved promptly. The tragic deaths of several children at the end of 2005 created a groundswell of calls to the State Central Registry with information about suspected child abuse or neglect. During the first five months of 2006, 4,029 petitions were filed, a 139 percent increase Tamara Steckler, Attorneyin-Charge of the Juvenile Rights practice, conducts a meeting with her senior staff. From left: Judy Waksberg, Director of Appeals; Kim McLaurin, Attorney-in-Charge of the Queens Juvenile Rights Office; Nancy Rosenbloom, Director of the Special Litigation and Law Reform Unit; and Nanette Schrandt, Director of the Juvenile Services Unit. In abuse and neglect cases, Juvenile Rights staff provided representation to children in the city’s most horrifying cases this year. from 2005. In accordance with the new state permanency law, these petitions will be calendared every six months for a permanency hearing, thereby doubling court time for Society staff. The Juvenile Rights Practice Represents Children In Desperate Circumstances – In one recent case, based on a extraordinary trial court record that a Juvenile Rights attorney created, the Juvenile Rights Appeals Unit obtained a landmark ruling reversing a Family Court order that had placed a child in custody for 12 months. The Appellate Division, First Department, in reversing the placement decision, found that the 12-month placement was not the least restrictive environment for a child who might have been raised in a “chaotic home environment,” but was only in court for his first offense for an alleged single instance of smoking marijuana. Members of the new class in the Juvenile Rights practice receive training. The new class consists of attorneys, social workers and paralegals. Educational advocacy is extremely critical for Juvenile Rights clients. In a representative case this year, a 16-year-old student with a learning disability who was eligible for special resource room services was denied entry into school in September 2005 and did not receive any educational services for approximately six months. Society education experts requested an impartial hearing and negotiated a settlement on his behalf obtaining an immediate school placement and agreement by the Department of Education to pay for 450 hours of compensatory tutoring services, valued at $36,000. In abuse and neglect cases, Juvenile Rights staff provided representation to children in the city’s most horrifying cases this year. Staff in the Brooklyn office did an exceptional job representing and ensuring all necessary services are provided to the siblings of Nixzmary Brown, who tragically died in the beginning of 2006. In another well-publicized case, Queens staff zealously advocated for the best permanency plan for the four-year-old child who was found wandering in the streets of Queens at night after her mother had been killed by her boyfriend. New Initiatives Are Aimed At Enhancing Assistance For Children – In anticipation of the varied advocacy and service needs of the practice’s increasing caseload of teenage clients, the Manhattan office has started an Adolescent Advocacy Project. The Manhattan social work staff has also developed a “Books for Kids” project, renovating a small storage room in the Manhattan Family courthouse and creating an appropriate environment for children who are waiting for their cases in court. Each child receives a book to take home with them to encourage reading. The Brooklyn staff has organized two workgroups: one to deal with problems faced by clients either gang involved or thought to be gang involved, and one to discuss the implementation of mediation for delinquency clients which is a priority for Family Court. Likewise, following a recent youth summit, Bronx office staff is working with the Interdisciplinary Center at Fordham University to develop a protocol for Family Court judges and attorneys to utilize when making the difficult decision of when children should come to court. The Bronx staff has also played a key role in organizing the borough’s Teen Day, a day in which service providers come to Family Court and present their programs to teen clients and Family Court practitioners. Juvenile Rights Appellate And Law Reform Work Helps Children – During 2006, the practice’s Appeals Unit continued to cope with an increased number of appeals over the past four years. In a representative case, the Unit handled an appeal in which the appellate court agreed with the Society’s position that an identification is “police-arranged” when a policeman goes to a school with the express purpose of finding and identifying a juvenile. As a Cahill, Gordon & Reindel LLP has initiated a special advocacy project with the Society to help meet the educational and developmental needs of very young abused and neglected children in foster care. result, the prosecution’s failure to provide timely notice of the identification resulted in the identification being precluded. At the same time, the Juvenile Rights Special Litigation and Law Reform Unit continues to address the pressing systemic issues that are identified from the recurring problems faced by Juvenile Rights practice clients. Current litigation initiatives include efforts to reunify families with children ready for discharge from foster care where the lack of adequate housing is a barrier; challenging removals of children from kinship foster homes without due process of law; enforcing the educational rights of children returning to New York City community schools from court-ordered settings; ensuring children in juvenile detention facilities receive legally mandated medical and mental health services; and securing timely residential treatment of children with mental health needs. Pro Bono Projects Help Increase Services For Children – Cahill, Gordon & Reindel LLP has initiated a special advocacy project with the Society to help meet the educational and developmental needs of very young abused and neglected children in foster care. Latham & Watkins LLP continues to specialize in assisting undocumented foster youth found by the Family Court to have been abused, abandoned or neglected to gain permanent residency status. Without this life-changing legal relief, these youths would age out of eligibility and face deportation. Proskauer Rose’s pro bono assistance to foster children includes taking more than 30 appeals that remove the final barrier to these children’s adoption. Cravath, Swaine & Moore LLP has continued its outstanding Paralegal Support Project, which teams paralegals working from the firm’s offices with Juvenile Rights staff in Brooklyn to help ensure that youth who are aging out of foster care have the skills and support services to live independently. Cadwalader Wickersham & Taft LLP has initiated its own Paralegal Support Project, assisting the Manhattan Juvenile Rights office. Marshall Green, Attorney-in-Charge of the Bronx Neighborhood Office, and Julian Leshin, a community representative, are explaining the situation to the niece of a client. The Society stretches its resources by working with community partners to expand its outreach to clients. The criminal defense trial offices, which operate in the Bronx, Brooklyn, Manhattan and Queens, handled some 210,000 cases on charges ranging from minor infractions to the most serious felony charges. The Criminal Practice With a Criminal practice that includes trials, appeals and parole revocation defense, the Society is the largest public defender organization in the country, as well as the primary provider of indigent defense services in New York City. In addition to attorneys, each office is staffed with social workers, paralegals, investigators, staff who can translate or provide access to interpreters, and others who support the criminal defense work. The criminal defense trial offices, which operate in the Bronx, Brooklyn, Manhattan and Queens, handled some 210,000 cases on charges ranging from minor infractions to the most serious felony charges. The Society Provides Zealous Representation – An acquittal is clearly a significant achievement. Zealous advocacy that secures a dismissal or a plea that avoids incarceration can be just as important and can have a profound impact on a client ’s life. For example, during this past year, a Society staff attorney and social worker represented a veteran who had been mentally and physically abused in foster care as a child and had been repeatedly hospitalized for mental illness since his initial treatment at 18 while serving as a Marine during the Vietnam War. He was charged with committing a robbery at a time when he had stopped taking his medication and suffered from auditory hallucinations. He faced a mandatory sentence of three-and-a-half to 15 years in state prison if convicted. The attorney was able to persuade the District Attorney and the judge to permit the client to enroll in an intensive long-term treatment program. The client completed the program, was stabilized on medication, and relocated to assisted living. In another case, a client was charged with assault for allegedly punching and breaking the jaw of an individual with whom he had been arguing. At the time of the incident, the client, who asserted that he had acted in self defense, had been accompanied by a former co-worker, who he Seymour James, Attorney-in-Charge of the Criminal practice, conducts a meeting of Criminal practice senior staff including (from left) David Clarke, Attorney-in-Charge of the Bronx County Office; Steven Golden, Deputy Attorney-in-Charge of the Manhattan office; Irwin Shaw, Attorney-in-Charge of the Manhattan office; Seymour; Timothy Rountree, Attorney-in-Charge of the Queens County Office; Dawn Ryan, Attorney-in-Charge of the Kings County Office; and Edward Mayr, Deputy Attorney-in-Charge of the Queens office. Aida Ramos, Director of Administration, is seated with her back to the camera. Michael Pineiro, a Queens Criminal practice supervisor, and Risa Procton, a staff attorney, meet with Timothy Rountree to discuss a custody problem involving one of Risa’s clients who has been arrested. only knew by a nickname. A Society investigator located the witness and secured his attendance at trial. Despite the fact that the complainant, along with four of his friends who were present, testified at trial, the client was acquitted based on his testimony and that of his witness. Likewise, a Criminal Defense attorney represented a client who was charged with a gunpoint robbery of a local bodega he and his family had frequented since his childhood. The bodega owner, his wife and child were present at the robbery. The client was offered probation but declined the offer, insisting on his innocence. The Society attorney arranged for the client to take a polygraph test, which he passed, and arranged for his teachers and guidance counselor to serve as character witnesses. A motion to dismiss in the interest of justice was denied, but the Criminal Defense staff eventually persuaded the District Attorney to dismiss the case. Adriene Holder Attorney-in-Charge of the Civil practice Criminal Defense staff also represented a client who was alleged to have entered a crowded bar wearing a motorcycle helmet and visor and fired two shots at point blank range into the complaining witness. The shooting victim claimed that the Society’s client, a former roommate, was the shooter. An interview of the victim revealed several inconsistent statements and a bias against the Society’s client. At trial, the Society was able to impeach the shooting victim with his prior statements and demonstrate his prejudice against the Society’s client. After the not guilty verdict, the jurors told the Society staff that the victim’s inconsistent statements, his biased opinions of the client and the inconsistent testimony of several other prosecution witnesses gave them reasonable doubt that the right man was arrested. The Society Achieves Significant Appellate Victories For Clients – The Society’s Criminal Appeals Bureau represents clients on direct appeals in the Appellate Divisions and Appellate Terms of the Supreme Courts and the New York Court of Appeals. In addition the Bureau represents clients in post-conviction proceedings in the State trial courts, and has a substantial habeas corpus practice in the federal district and appeals courts. Tamara Steckler Attorney-in-Charge of the Juvenile Rights practice During this past year, in its first interpretation of new United States Supreme Court precedent on the right to confront witnesses, the New York Court of Appeals reversed the conviction of a Criminal Appeals Bureau client and found that he had been denied the right to confront and cross examine witnesses against him in the presentation of his insanity defense. In another major Appeals Bureau case, the New York Court of Appeals held that clients are not required to admit possession of contraband on a motion to suppress evidence seized by the police. Likewise, in a landmark Appeals Bureau post-conviction case, the Second Circuit Court of Appeals concluded that New York State had violated the right to a public trial of two clients accused of non-violent drug offenses by excluding their family members from the courtroom during the testimony of crucial prosecution witnesses. The Bureau continued its efforts to expand post conviction services for our clients. Since the Legislature amended the “Rockefeller drug law,” the Bureau has represented more than 200 clients in their re-sentencing petitions. During the past year, Appeals Bureau lawyers have also become experts in the handling of Sexual Offender Registration Act hearings and represented more than 50 clients at hearings classifying their registration status. Seymour James Jr. Attorney-in-Charge of the Criminal practice During the past year, pro bono volunteers working with Society staff represented about 75 clients in appeals to the Appellate Divisions, drug re-sentencing cases, state collateral challenges and federal habeas corpus proceedings. Eleven law firms collaborated with the Society to represent clients in applying for re-sentencing relief from “Rockefeller drug law” prison sentences. Proskauer Rose LLP and Fried, Frank, Harris, Shriver & Jacobson LLP led the way, along with Sullivan & Cromwell LLP; Milbank, Tweed, Hadley & McCloy LLP; Debevoise & Plimpton LLP; Skadden, Arps, Slate, Meagher & Flom LLP; O’Melveny & Myers; Weil, Gotshal & Manges LLP; Cleary, Gottlieb, Steen & Hamilton LLP; Cadwalader Wickersham & Taft; DLA Piper Rudnick Gray Cary US LLP; and clinical programs at Columbia University and CUNY law schools. Ten additional law firms accepted criminal appeals assignments supervised by the Criminal Appeals Bureau: Arnold & Porter LLP; Cahill Gordon & Reindel LLP; Davis Polk & Wardwell; Dewey Ballantine LLP; Kaye Scholer LLP; Kramer Levin Naftalis & Frankel LLP; Shearman & Sterling LLP; Simpson Thacher & Bartlett LLP; White & Case LLP; and Willkie Farr & Gallagher LLP. Special Litigation Representation Helps Large Numbers Of New Yorkers – During this past year, in a victory for any New Yorker whose car has been seized after an arrest, the Criminal practice Special Litigation Unit successfully argued in the United States Court of Appeals for the Second Circuit that prosecutors are required to justify to a judge the need to hold a vehicle as evidence. The holding was the first to require judicial review before automobiles can be retained for use as evidence at a criminal trial. The Society’s Parole Representation Helps Clients Get a Second Chance – The Society’s Parole Revocation Defense Unit was founded in 1972 and was the first office in the nation established to exclusively represent people discharged from prison to community supervision. Over the past year, the Parole Unit continued to serve as the primary provider of representation to parolees charged with violating conditions of their release from prison. The Unit has achieved considerable success diverting mentally ill and drug addicted clients from prison to community-based treatment programs. The Parole Unit has also developed a substantial habeas corpus practice. In a recent case, Society staff secured the release of a client who had been denied a preliminary hearing as a result of a fraudulent entry by a parole officer indicating that the client had waived the hearing. Ted Levine, a Vice Chair of the Board, and Seymour James, Attorney-in-Charge of the Criminal Practice, back row left, visited the Society’s Defender Legal Assistants Program at Rikers Island to meet with staff there. Pictured are, seated left to right: Saundra J. Mills, Ulex George, Kasandra Robinson and Nadine Johnson. First row standing, left to right: Marie L. Washington, Director of the Program; Pauline Quiñones, Benjamin Siebel, Adrienne Branch, Robert Febles and Guy C. Mills. Back row standing left to right: Ted Levine, Seymour James, Yvonne Nicks, Charles Glover Jr., Diego Gerardi, Kenneth A. Walcott. In another case illustrating the need for zealous representation, Parole staff established that an immigrant woman in Florida Family Court was misidentified as a New York parole violator, and was then flown to New York to face a parole revocation proceeding. She was languishing in jail on Rikers Island until Society staff obtained a court order requiring that the Division of Parole take the client’ s fingerprints, which established that she had been wrongly identified. Orison S. Marden Awards The 2006 Orison S. Marden recipients are: JASMIN LEWIS, a paralegal in the Manhattan Criminal Defense Office; STEVEN GODESKI, a staff attorney in the Civil practice’s Bronx neighborhood office; PASCAL NIJHOF, Grants and Program Manager for the Civil practice; and JOHN BOSTON, Director of the Prisoners’ Rights Project. The Orison S. Marden Awards were established in 1976 on The Legal Aid Society’s 100th anniversary to recognize the outstanding work and dedication of the staff of the Society and to honor the memory of Orison S. Marden, a senior partner at White & Case LLP, who was known as “Mr. Legal Aid” throughout the United States. Mr. Marden devoted four decades to the work of the Society. He served as a member of the Board of Directors for 27 years and as its Chairman from 1970 until his death in 1975. He was a devoted volunteer at the Civil practice’s Harlem neighborhood office where he represented hundreds of clients over the years. During his outstanding career, he served as the President of the American Bar Association, the New York State Bar Association and The Association of the Bar of the City of New York. Past Recipients of the Orison S. Marden Award 1976 Irene Parker Betner Julius Biervliet 1985 Michael Paciello Eve S. Plotkin 1994 Jonathan Latimer Margaret O’Marra 1977 Harold Townes Milton Adler 1986 Ruth Lichter Lawrence Halfond 1995 Irma Camacho Barbara H. Dildine 1978 Ruby Harrison Adorno Mara T. Thorpe 1987 Delzorra Preshae-Wilson Paula Semmes Deutsch 1996 Willie Rivera Deborah Kaplan 1979 Elise Stark Margaret H. McDowell 1988 Daniel Barrett Andrew C. Fine 1997 Marguerite Piazza Susan Sternberg 1980 Erma Saunders Brooks Morton B. Dicker 1989 Nelson Rivera Thomas V. Curtis 1981 Emma C. Stucchio Myra K. Wallach 1990 Herbert Grant David I. Waldman 1998 Richie Flores Jerry Washington Kay McNally 1982 Maria Lebron Robert Kaplan 1991 Ligia Rivers Michele Maxian 1983 George C. Colon Joan F. Mangones 1992 Akil Al-Jundi Steven Banks 1984 Sonia Robles Sigmund Israel 1993 Angelina Cooper Roland Thau 1999 Phyllis Cherebin Cynthia Wolpert Pedro Caban 2000 Janet Sabel Rita Horvath Nancy Ginsberg Patricia Thorne 2001 Dan Kessler Edward Braunstein Candace Kurtz Andre Rodriguez 2002 Harold Mandelbaum Mel Schubert Alla Reznik José Torres 2003 Marie A. Richardson Nanette Schrandt Marcia Egger Vera Mitchell 2004 Melvin Kenny Aida Ramos Herrera Edward McCarthy Robert Zuss 2005 Ernst Giordani Cassandra Dorvil Eileen McCann Marshall Green Recognition of Pro Bono Service The Legal Aid Society's 2006 Pro Bono Awards and Law Firm Recognition ceremony was held on November 6, 2006, in recognition of the outstanding contributions of individual lawyers, law firms, corporations and other organizations to the cause of equal justice. Hughes Hubbard & Reed LLP was the recipient of the 2006 Outstanding Pro Bono Publico and Public Service Law Firm Award for the outstanding pro bono work performed by the law firm, its partners and associates for the low-income clients of The Legal Aid Society. Individual partners and associates at the firm are being recognized for the successful federal law reform litigation involving immigrant domestic violence survivors who were denied benefits. In addition, associates from the firm staff the Society’s immigration hotline, assisting in the defense of detainees facing deportation. For the last 15 years, HHR has provided pro bono representation through Legal Aid’s AIDS Project at the HIV/AIDS clinic at Beth Israel representing women who need to plan for the future of their children and other legal matters. Honor Roll In recognition of the outstanding commitment of the following law firms, corporations and other organizations to the cause of equal justice through pro bono service. Akin Gump Strauss Hauer & Feld LLP Baker Robbins & Company Butler Rogers Baskett Architects Cadwalader, Wickersham & Taft LLP Cahill Gordon & Reindel LLP CB Richard Ellis Cleary Gottlieb Steen & Hamilton LLP Columbia Law School’s Lawyering in the Digital Age Clinic Cooley Godward Kronish LLP Covington & Burling Cravath, Swaine & Moore LLP Davis Polk & Wardwell Debevoise & Plimpton LLP Dechert LLP Dewey Ballantine LLP Doar Litigation Consulting Fried, Frank, Harris, Shriver & Jacobson LLP Holland & Knight LLP Kaye Scholer LLP Kelley Drye & Warren LLP Kramer Levin Naftalis & Frankel LLP Latham & Watkins LLP LeBouef, Lamb, Greene & MacRae LLP Lehr Construction Corporation Manatt, Phelps, & Phillips, LLP Mayer, Brown, Rowe & Maw LLP Milbank, Tweed, Hadley & McCloy LLP mindSHIFT Technologies Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, PC National Economics Research Associates O’Melveny & Myers LLP Patterson Belknap Webb & Tyler LLP Pfizer Inc. Proskauer Rose LLP Pryor Cashman Sherman & Flynn LLP Shearman & Sterling LLP Sheppard, Mullin, Richter & Hampton LLP Sidley Austin LLP Simpson Thacher & Bartlett LLP Skadden, Arps, Slate, Meagher & Flom LLP Sullivan & Cromwell LLP Thompson Hine LLP Viacom Inc. Wachtell, Lipton, Rosen & Katz Weil, Gotshal & Manges LLP White & Case LLP Willkie Farr & Gallagher LLP Wilmer Cutler Pickering Hale and Dorr LLP Chief Judge Judith S. Kaye presided over the Pro Bono Award Ceremony on December 5, 2005, at Shearman & Sterling LLP. With the Chief Judge are: Alexander D. Forger, a former President and a former Chairman of the Society, who has been instrumental in the creation of a Board of Advisers. Daniel Kolb, a Director of the Society and a partner at Davis Polk & Wardwell, who has led the effort for expanded law firm support after the restructuring. David Klingsberg, a Director of the Society and a partner at Kaye Scholer, who has organized the Helen L. Buttenwieser Senior Attorney Project. Lorenzo Cleveland and Nicholas Vidal are clients of the Kathryn A. McDonald Education Project of the Juvenile Rights practice. They are meeting their new lawyers from Cahill Gordon & Reindel LLP. The firm initiated a special pro bono advocacy project in partnership with the Society. From left are: Yael Aufgang, an associate; Roger Meltzer, a member of Cahill’s Executive Committee; and Howard G. (Peter) Sloane, a Cahill partner. Cooley Godward Kronish Associates Greg Plotko (left) and Michael Klein (right) discuss case strategy with Bryan Lonegan of the Society’s Immigration Unit, and Alan Levine, partner in charge of Cooley’s New York office, regarding a 28-year-old mentally ill Russian refugee who had been sexually assaulted as a minor in Russia. Mike and Greg’s extensive pre-trial submissions, including psychiatric evaluations, witness preparation, and sincere compassion for the client convinced the judge and the government’s lawyer to grant her one more chance and to release her to her family. They were recognized at the Society’s 2006 Pro Bono Awards ceremony at Shearman & Sterling LLP. David W. Weschler and Chief Judge Judith S. Kaye present awards for outstanding service to Damon Rowe and Vilia Hays of Hughes Hubbard & Reed LLP. Teams of lawyers from the firm have assisted thousands of families and individuals over the last 15 years by providing pro bono representation at the ambulatory HIV/AIDS clinic at Beth Israel Medical Center. Judith Goldiner, staff attorney in the Civil Law Reform Unit and a housing expert, discusses a case with the client and attorneys from Hughes Hubbard & Reed LLP. GOLDSTEIN GOLUB KESSLER LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT The Board of Directors The Legal Aid Society We have audited the accompanying statement of financial position of The Legal Aid Society (the "Society") as of June 30, 2006, and the related statements of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of the Society's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior-year summarized comparative information has been derived from the Society's 2005 financial statements and, in our report dated November 17, 2005, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstateme nt. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Legal Aid Society as of June 30, 2006, and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. GOLDSTEIN GOLUB KESSLER LLP October 13, 2006 1185 Avenue of the Americas Suite 500 New York, NY 10036-2602 TEL 212 372 1800 FAX 212 372 1801 www.ggkllp.com THE LEGAL AID SOCIETY STATEMENT OF FINANCIAL POSITION Year ended June 30, 2006 2005 $ 6,602,500 $ 10,909,337 11,586,998 11,343,237 ASSETS Cash and Cash Equivalents Receivables from Governmental Agencies Contributions Receivable, net Investments, at fair value 237,368 2,123,607 2,062,818 Deferred Charges and Other Assets 383,901 552,047 Property and Equipment, at cost, net 9,358,438 11,123,438 $ 30,055,444 $ 36,228,245 $ 3,235,655 18,757,401 4,471,845 16,127,856 16,469,466 14,428,538 $ 5,181,376 18,358,264 5,562,004 16,140,876 16,643,115 31,091,712 73,490,761 92,977,347 (16,371,600) (4,519,092) (16,469,466) (9,909,446) (12,824,939) (10,088,133) (16,643,115) (21,003,579) (47,269,604) (60,559,766) 1,778,264 2,056,023 1,754,641 2,056,023 (43,435,317) (56,749,102) Total Assets LIABILITIES AND NET ASSET DEFICIENCY Liabilities: Accounts payable and accrued expenses Accrued payroll and other employee expenses Program advances Deferred lease incentives and lease obligations Accrued postretirement health and life insurance benefits cost Pension liability Total liabilities Commitments and Contingencies Net Assets: Unrestricted: Undesignated Accrued pension liability Accrued postretirement health and life insurance benefits cost Accumulated minimum pension liability adjustment Total unrestricted Temporarily restricted Permanently restricted Total net asset deficiency Total Liabilities and Net Asset Deficiency $ 30,055,444 $ 36,228,245 See Notes to Financial Statements 2 THE LEGAL AID SOCIETY STATEMENT OF ACTIVITIES (with summarized financial information for the year ended June 30, 2005) 2006 Year ended June 30, Total Summarized Comparative Total $ 88,121,046 3,142,567 25,579,175 13,737,135 28,474,575 11,407,102 $ 84,536,569 9,765,969 24,454,652 12,949,689 20,256,122 9,162,873 244,393 1,780,762 526,148 3,996,638 19,067 235,259 136,797 173,012,903 165,513,635 83,298,286 2,750,122 25,085,030 19,976,320 28,474,575 83,298,286 2,750,122 25,085,030 19,976,320 28,474,575 80,953,789 10,040,053 23,094,920 21,775,170 20,256,122 159,584,333 159,584,333 156,120,054 10,467,743 741,175 10,467,743 741,175 8,894,733 708,186 Unrestricted Support and revenue: Program support and revenue: Criminal Defense Practice Federal Defender Practice Juvenile Rights Practice Civil Practice Pro Bono Services Contributions Insurance recoveries relating to the events of September 11, 2001 Return on investments, net Court awards for services Other income Net assets released from restrictions satisfaction of program and time restrictions Total support and revenue Operating expenses: Program services: Criminal Defense Practice Federal Defender Practice Juvenile Rights Practice Civil Practice Pro Bono Services Total program services Supporting services: Administrative expenses Fund-raising expenses 2005 $ 88,119,796 3,142,567 25,283,644 11,241,062 28,474,575 11,407,102 183,453 1,780,762 526,148 2,830,171 172,989,280 Temporarily Restricted $ Permanently Restricted 1,250 295,531 2,496,073 60,940 (2,830,171) 23,623 Total supporting services 11,208,918 11,208,918 9,602,919 Total operating expenses 170,793,251 170,793,251 165,722,973 Restructuring income: Special contributions Net settlement on sale of building and other creditors Pro bono legal and other services 6,153,248 6,761,989 2,755,919 Total restructuring income 15,671,156 Restructuring expense: Creditor settlements Pro-bono legal and other services Pension curtailment and settlement 1,445,181 2,755,919 7,273,352 Total restructuring expense 11,474,452 Change in net assets before pension liability adjustment 2,196,029 Minimum pension liability adjustment 11,094,133 Change in net assets 13,290,162 Net assets (deficiency) at beginning of year Net assets (deficiency) at end of year 23,623 23,623 2,219,652 3,987,366 11,094,133 (3,152,786) 13,313,785 834,580 (60,559,766) 1,754,641 $ 2,056,023 (56,749,102) (57,583,682) $ (47,269,604) $ 1,778,264 $ 2,056,023 $ (43,435,317) $ (56,749,102) See Notes to Financial Statements 3 91,714 285,610 $ 83,298,286 $ 85,208,618 Total 2005 expenses 83,298,286 $ 10,515,528 $ 2,750,122 2,750,122 640,165 19,430 42,505 49,696 67,848 14,987 66,228 3,600 12,869 519,457 565,401 739,338 551,673 166,068 116,806 85,048 178,758 9,821,511 271,288 2,109,957 $ 1,186,662 303,411 619,884 Federal Defender Practice 6,613,352 73,476,775 $ 45,836,864 10,196,764 17,443,147 Criminal Defense Practice Total 2006 expenses Restructuring expenses: Creditor settlements Pro bono legal and other services Pension curtailment and settlement Total expenses before restructuring Total other expenses Other expenses: Occupancy costs Contributed legal services Communications expenses Office operating expenses Purchases and leases of furniture and equipment Law books and reference materials Trial minutes Cost of investigations and expert witnesses Professional services Transportation Interest Other Total employee expenses Employee expenses: Professional staff salaries Support staff salaries Fringe benefits and other employee costs Year ended June 30, $ 24,282,045 $ 25,085,030 25,085,030 2,826,037 278,760 181,419 142,150 269,901 219,931 178,025 18,336 67,510 47,516 1,422,489 22,258,993 $ 12,401,249 4,575,700 5,282,044 Juvenile Rights Practice $ 22,786,269 $ 19,976,320 19,976,320 3,121,884 130,714 176,782 183,127 343,195 229,861 7,218 3,984 6,084 38,045 2,002,874 16,854,436 $ 9,661,819 3,186,046 4,006,571 Civil Practice Program Services Pro Bono Services $ 20,256,122 $ 28,474,575 28,474,575 28,474,575 $ 28,474,575 2006 $ 163,048,582 $ 159,584,333 159,584,333 44,884,172 786,798 10,310,003 28,474,575 897,088 933,183 1,402,130 1,069,313 366,298 205,354 162,242 277,188 114,700,161 $ 69,086,594 18,261,921 27,351,646 Total Program Services $ 13,413,684 $ 10,467,743 10,467,743 4,773,378 768,546 16,175 143 1,043,297 61,843 300,395 129,742 61,174 5,294 2,386,769 5,694,365 $ 2,555,565 1,769,180 1,369,620 Administrative $735,159 $741,175 741,175 232,532 85,524 57,398 297 473 121 101 76,941 11,677 508,643 $270,406 115,897 122,340 Fundraising $ 170,793,251 170,793,251 49,890,082 12,708,449 28,474,575 959,032 1,310,519 1,531,872 1,130,960 371,713 205,354 988,186 293,660 143 1,915,619 120,903,169 $ 71,912,565 20,146,998 28,843,606 Total $ 177,197,425 1,445,181 2,755,919 7,273,352 165,722,973 45,452,255 15,401,918 20,256,122 1,305,212 2,045,912 1,514,811 938,700 462,315 434,882 952,308 401,993 737,425 1,000,657 120,270,718 $ 70,704,507 20,719,182 28,847,029 Summarized Comparative Total 4 See Notes to Financial Statements $ 14,148,843 $ 11,208,918 11,208,918 5,005,910 825,944 16,472 143 1,128,821 61,944 377,336 129,742 61,647 5,415 2,398,446 6,203,008 $ 2,825,971 1,885,077 1,491,960 Total Supporting Services Supporting Services 2005 (with summarized financial information for the year ended June 30, 2005) STATEMENT OF FUNCTIONAL EXPENSES THE LEGAL AID SOCIETY THE LEGAL AID SOCIETY STATEMENT OF CASH FLOWS Year ended June 30, Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Amortization of deferred lease incentives Amortization of deferred lease obligations Depreciation and amortization Realized and unrealized loss on investments Net settlement on disposal of building Other creditor settlements Accrued pension liability and postretirement health and life insurance benefits cost Changes in operating assets and liabilities: Increase in receivables from governmental agencies Decrease in contributions receivable Decrease in deferred charges and other assets Decrease in deferred lease incentives and obligations Increase in accrued payroll and other employee expenses Decrease in accounts payable and accrued expenses (Decrease) increase in program advances Net cash provided by (used in) operating activities Cash flows from investing activities: Purchase of investments Decrease in funds held by bond trustee Purchases of property and equipment Disposal of property and equipment Net cash provided by (used in) investing activities 2006 $ 13,313,785 (634,580) 621,560 1,821,156 (16,836,823) (243,761) 237,368 168,146 2005 $ 834,580 (634,580) 2,222,118 3,676,194 40,900 (1,204,462) (5,557,527) 6,673,817 399,137 (1,945,721) (1,090,159) (4,018,234) 3,012,632 9,149,555 (2,278,998) 567,188 (10,682,071) 2,173,438 (4,189,892) 3,974,550 (60,789) (56,156) (116,945) Cash flows from financing activities: Principal payments on capital leases Payment on loan payable Payment on long-term debt (2,056,023) 3,872,656 (1,340,054) 8,000,000 8,476,579 (779,108) (2,256,371) (10,045,000) Cash used in financing activities (13,080,479) Net decrease in cash and cash equivalents (4,306,837) Cash and cash equivalents at beginning of year 10,909,337 11,538,687 $ 6,602,500 $ 10,909,337 Cash and cash equivalents at end of year (629,350) See Notes to Financial Statements 5 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 1. ORGANIZATION: The Legal Aid Society (the "Society") is a not-for-profit corporation founded in 1876 that provides legal services to the indigent of New York City through a number of operating practices. The Criminal Defense practice, which provides the majority of trial level public defender services in New York City as well as Criminal Appeals, Parole Revocation and (prior to May 1, 2005) Capital Defense services, is financed through contracts with the City and State of New York. The Juvenile Rights practice is financed principally through a contract with the Office of Court Administration of the State of New York. The Civil Practice relies on contracts with agencies of the City and the State of New York and federal government, as well as on financial support from the public, including foundations, law firms, corporations and individuals. The Federal Defender practice, which is funded entirely by a contract with the Administrative Office of the United States Courts, separated from the Society on October 1, 2005. Management does not expect the separation to have a significant impact on the results of operations in future years. Although the Society is not a governmental institution, it receives significant program revenue and other support through government contracts that are entered into on a periodic basis and are cancelable at any time. As a general rule, those contracts provide revenue to cover expenses of funded programs where there is a current cash cost associated with the expenses. At June 30, 2006, the Society had a net asset deficiency of $43,000,000 due to substantial accumulated liabilities on its statement of financial position reflecting a variety of deferred costs, including postretirement health and pension benefits, deferred compensation and deferred lease obligations. This amount was $13,000,000 lower than at the end of the prior fiscal year. During 2005 and 2006, through concerted efforts of the board and management, the Society has taken a number of significant steps to reduce those liabilities and to prevent any further build-up (see Note 10 - restructuring). Management expects these liabilities to continue to decrease over time, and continues to review the Society's policies and programs with a view to dealing effectively with any continuing challenges to the Society's financial position or liquidity. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of accounting - The financial statements of the Society have been prepared on the accrual basis. In the statement of financial position, assets and liabilities are presented in order of liquidity or conversion to cash and their maturity resulting in the use of cash, respectively. Financial statement presentation - The classification of a not-for-profit organization's net assets and its support and revenue is based on the existence or absence of donor-imposed restrictions. It requires that the amounts for each of three classes of net assets - unrestricted, temporarily restricted and permanently restricted - be displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities. 6 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 The net assets of the Society and changes therein are classified and reported as follows: (i) Unrestricted Unrestricted net assets represent those resources that are not subject to donor restrictions. Unrestricted amounts may be designated by the board of directors to cover any purposes determined by the Society. (ii) Temporarily restricted Net assets resulting from contributions and other inflows of assets whose use by the Society is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Society pursuant to those stipulations. When such stipulations end or are fulfilled, such temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities. (iii) Permanently restricted Net assets resulting from contributions and other inflows of assets whose use by the Society is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the Society. Use of estimates - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reported period. Actual results could differ from those estimates. Cash and cash equivalents - For purposes of the statement of cash flows, the Society considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, except for such investments purchased by the Society's investment managers as part of their long-term investment strategies. Contributions receivable - The Society reports unconditional promises to give as contributions. If amounts are expected to be collected in less than one year, they are recorded at the estimated realizable amount. If contributions receivable are to be paid to the Society over a period of years, they are recorded at the present value of their estimated future cash flows using a risk-free rate. Investments - Investments in equity and debt securities are stated at their fair values based on quoted market prices. Investment return is allocated among unrestricted and temporarily restricted net assets, based on donor restrictions or the absence thereof. Interest, dividends, and net appreciation (depreciation) in fair value of investments are included in investment return in the statement of activities. 7 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 Property and equipment - Depreciation of property and equipment is computed using the straight-line method and charged to expense over the estimated useful lives of the assets, ranging primarily from 3 to 10 years. Leasehold improvements are amortized over the estimated useful life of the asset or the term of the lease, whichever is shorter. Program advances - Program advances represent advances from third parties for services not yet performed. Court awards for services - Fees are awarded by the courts for certain cases handled by the Society. However, payment of such awards generally occurs in years subsequent to the year in which the service was performed. As the amount of awards earned in a year cannot be estimated, awards revenue is recognized upon receipt. Revenue and support - Contracts awarded by governmental agencies are recognized as revenue in the unrestricted net asset class as the related services are performed. The Society records as revenue the following types of contributions when they are received unconditionally, at fair value: cash, promises to give, certain contributed services and gifts of long-lived assets and other assets. Conditional contributions, including cost reimbursement grants, are recognized as support when the conditions on which they depend have been substantially met. Contributed services which of services provided by attorneys on a pro bono basis are recorded as revenue and expenses at the fair value , based on the attorneys' average billing rates. Contributions and promises to give - Contributions and promises to give are recorded as revenue when either unsolicited cash is received or when donors make a promise to give. Contributions and promises to give are classified either as unrestricted, temporarily restricted or permanently restricted support, based on the donor's intent. Tax-exempt status - The Society is qualified as a Section 501(c)(3) tax-exempt organization under Section 501(a) of the Internal Revenue Code (the "IRC") and, accordingly, is not subject to federal income taxes. As a not-for-profit organization, the Society is also exempt from New York State and New York City sales and income taxes. The Society has been classified as a publicly supported charitable organization under Section 509(a)(1) of the IRC and qualifies for the maximum charitable contribution deduction for donors. Functional allocation of expenses - The costs of providing the various programs and other activities have been summarized in the statement of activities. Accordingly, certain costs have been allocated around the programs and supporting services benefited. 8 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 Concentration of credit risk - Financial instruments which potentially subject the Society to concentration of credit risk consist primarily of cash and cash equivalents. At various times, the Society has cash deposits at financial institutions which exceed the Federal Depository Insurance Corporation insurance limits. The Society has not experienced any losses on these accounts. Reclassifications - Certain prior-year balances have been reclassified to be consistent with the current-year financial statement presentation. The reclassifications had no impact on changes in net assets. Prior-year summarized comparative information - The accompanying financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Society's financial statements for the year ended June 30, 2005, from which the summarized information was derived. 3. INVESTMENTS: The Society's investments at June 30, 2006 and 2005 consisted of short-term investments held at a financial institution. 4. CONTRIBUTIONS INCOME: Contributions, excluding special contributions related to the restructuring, consist of the following for the years ended June 30, 2006 and 2005: June 30, Contributions Benefits and special events, net of related direct expenses of $338,996 and $305,340, respectively Bequests 5. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS: 2006 2005 $ 9,642,366 $7,835,744 1,750,769 13,967 1,220,644 106,485 $11,407,102 $9,162,873 Property, equipment and leasehold improvements are summarized as follows: June 30, Property and leasehold improvements Furniture and equipment Less accumulated depreciation and amortization 2006 2005 $ 9,146,937 8,284,537 $ 9,090,781 17,915,438 17,431,474 (8,073,036) $ 9,358,438 27,006,219 (15,882,781) $ 11,123,438 9 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 Depreciation and amortization of property and equipment amounted to $1,821,156 and $3,676,194 for the fiscal years ended June 30, 2006 and 2005, respectively. During fiscal year 2006, the Society wrote off fully depreciated furniture and equipment of approximately $9,631,000. 6. COMMITMENTS: As of June 30, 2006, annual future minimum (base) lease payments, which exclude payments based on pass-through expenses and escalations under noncancelable operating leases for all of the Society's facilities, are approximately as follows: Year ending June 30, 2007 2008 2009 2010 2011 Thereafter $ 8,846,000 8,521,000 8,134,000 7,033,000 7,033,000 103,578,000 $143,145,000 Several leases for office space contain escalation clauses related to the lessor's real estate taxes, utilities and other building operating expenses. Rental expense was approximately $9,103,000 and $9,337,000 for the years ended June 30, 2006 and 2005, respectively. The Society received net incentives from certain landlords of approximately $12,692,000 for the purchase of furniture and equipment and leasehold improvements, which is included in deferred lease obligations and lease incentives in the accompanying statement of financial position and is being amortized over 20 years, the term of the respective leases. The balance of the deferred lease incentive , including the value of certain rent-free periods, as of June 30 2006 and 2005 is approximately $16,128,000 and $16,141,000, respectively. 10 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 7. TEMPORARILY RESTRICTED AND PERMANENTLY RESTRICTED NET ASSETS: Temporarily restricted net assets at each fiscal year-end were available for certain program activities. Net assets released from restrictions due to satisfaction of time and purpose restrictions amounted to $2,830,000 and $6,637,000 during the years ended June 30, 2006 and 2005, respectively. Permanently restricted net assets are restricted to investment in perpetuity, provide support for programmatic and general purposes, and consisted of the following: June 30, Centennial Fund endowment Other endowment funds Melvin C. Steen Fellowship Fund 8. EMPLOYEE BENEFIT PLANS: 2006 2005 $ 400,000 1,154,153 501,870 $ 400,000 1,154,153 501,870 $2,056,023 $2,056,023 Substantially all employees of the Society were covered by either The Legal Aid Society Retirement Plan (the "Retirement Plan"), a defined benefit plan, or by defined contribution plans. The defined contribution plans relate to staff attorneys and other employees who are covered by union contracts entered into by the Society under collective bargaining agreements. The Retirement Plan relates to the Society's remaining employees. Retirement Plan benefits are generally based upon years of service and salary of the employee, as defined. The assets of the Retirement Plan consist primarily of corporate bonds and equities. Effective July 1, 1999, the Society amended its Retirement Plan to include a cash balance feature and a lump-sum option. On November 30, 2004, the Society froze the accumulation of Retirement Plan benefits as part of its restructuring program. Curtailment and settlement expenses associated with the freezing of Retirement Plan benefits in fiscal year 2005 were categorized as restructuring expenses and amounted to approximately $7,273,000. A new defined contribution plan for management and exempt employees was established effective December 1, 2004. The Society recognized contribution expenses related to this new plan of approximately $1,296,000 and $350,000 in 2006 and 2005, respectively. The Society funds its postretirement benefits other than pensions on a pay-asyou-go basis. Such benefits consist of medical, dental, vision and life insurance premiums. Also on November 30, 2004, the Society reduced the postretirement health and life insurance benefits as part of its restructuring program. 11 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 June 30, Accumulated benefit obligation at June 30 Curtailment Settlement Pension Benefits 2006 2005 $ 76,460,577 $ 13,318,150 $ 15,468,116 (3,474,552) $ 95,603,286 1,099,702 (9,382,889) $ 72,986,025 $ 87,320,099 $ 13,318,150 $ 15,468,116 $ 91,004,440 976,852 5,040,832 $ 15,468,116 387,422 763,401 1,872,220 (4,054,227) (292,308) $ 20,389,867 471,099 985,789 (4,839,943) (515,512) (826,474) (1,023,184) Change in benefit obligation: Benefit obligation at beginning of year $ 87,320,099 Service cost Interest cost 4,336,265 Amendments Actuarial (gain) loss (11,742,812) Curtailment Settlement 1,910,571 Benefits paid (8,838,098) Benefit obligation at end of year Postretirement Health and Life Insurance Benefits 2006 2005 6,267,629 (3,732,788) 1,085,684 (13,322,550) $ 72,986,025 $ 87,320,099 $ 56,228,387 $ 62,620,820 4,791,689 7,467,279 (8,838,098) (1,091,770) 5,005,911 2,489,194 (13,322,550) (564,988) $ 58,557,487 $ 56,228,387 $ Funded status Unrecognized prior service cost Unrecognized net actuarial loss (gain) $(14,428,538) $(31,091,712) $(13,318,150) $(15,468,116 ) (2,168,389) (4,583,318) Net amount recognized $ (4,519,092) Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions Benefits paid Expenses paid Fair value of plan assets at end of year 9,909,446 21,003,579 $(10,088,133) $ 13,318,150 $ 15,468,116 $ $ 1,023,184 (1,023,184) 826,474 (826,474) -0- (982,927) $(16,469,466) $ -0 - 3,408,319 $(16,643,115) (continued) 12 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 Postretirement Health and Life Insurance Benefits 2006 2005 Pension Benefits 2006 2005 June 30, Amounts recognized in the statement of financial position consist of: Accrued benefit liability Accumulated minimum pension liability Net amount recognized $(14,428,538 ) 9,909,446 $ (4,519,092) Components of net periodic benefit cost : Discount rate Expected return on plan assets Rate of compensation increase Service cost Expense cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized actuarial loss Amortization of losses Curtailment gain Settlement Net periodic cost $(31,091,712 ) 5.25% 21,003,579 $(10,088,133) 6.00% and 5.75% 8.5% 8.50% 3.50% 500,000 4,336,265 $ 976,852 400,000 5,040,832 (4,734,508) (4,699,524) $ 346,378 1,065,333 546,835 731,148 4,907,743 2,365,609 $ 1,898,238 $ 9,884,725 $ 387,422 $ 471,099 763,401 985,789 (370,070) (256,625) 44,710 (172,639) 102,840 $ 652,824 $1,303,103 Weighted-average assumptions to determine pension benefit obligations at: June 30, 2006 Discount rate Rate of compensation increase Expected return on plan assets 6.25% N/A 8.5% 2005 5.25% 3.5% 8.5% The projected benefit obligation was actuarially determined using an assumed discount rate of 6.25%. The assumed rate of future increase in healthcare in 2006 was 10.0% and is expected to gradually decline to 4.5% over a six-year period. 13 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 Curtailment resulted from the voluntary termination program for nonunion employees. Settlement expenses resulted from a higher than estimated rate of employees selecting the lump-sum option for distribution. The Society expects to contribute $2,533,000 to its defined benefit plan and $832,000 to it postretirement benefit plans in fiscal year 2007. The following benefit payments which reflect expected future service, as appropriate, are expected to be paid as follows: Year ending June 30, Pension Benefits 2007 2008 2009 2010 2011 2012-2016 $ 6,000,000 6,200,000 6,400,000 7,100,000 5,900,000 27,700,000 Postretirement Health and Life Insurance Benefits $ 832,000 869,000 901,000 926,000 939,000 4,985,000 The asset allocation of the Retirement Plan at June 30 is as follows: June 30, Pension Benefits 2006 2005 Asset category: Cash Equity securities $ 1,315 58,556,172 $ 788,019 55,440,368 Total $58,557,487 $56,228,387 Postretirement Health and Life Insurance Benefits 2006 2005 The Society also makes contributions to union-sponsored defined contribution plans in accordance with the provisions of negotiated labor contracts. Such contributions are based on employee compensation, as defined. The Society recorded expenses totaling approximately $3,568,000 in 2006, and $1,659,000 in 2005 related to such plans. In addition, the Society accounts for long-term disability benefits in accordance with Statement of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits. The costs recognized in fiscal years 2006 and 2005 amounted to approximately $390,000 and $451,000, respectively. 14 THE LEGAL AID SOCIETY NOTES TO FINANCIAL STATEMENTS June 30, 2006 9. CONTINGENCIES: There are a number of pending legal actions against the Society which, in the opinion of management, will not result in material loss to the Society. Certain grants and contracts may be subject to audit by the funding sources. Such audits might result in disallowances of costs submitted for reimbursement. Management is of the opinion that such cost disallowances, if any, will not have a material effect on the accompanying financial statements. Accordingly, no amounts have been provided in the accompanying financial statements for such potential claims. 10. RESTRUCTURING: During the second half of calendar year 2004, the Society implemented an overall restructuring of its operations and financial position in an effort to improve its long-term financial viability. This initiative enabled the Society to eliminate a substantial operating loss projected for fiscal year 2005. The main elements of this initiative were as follows: • Special contributions from New York City law firms; • Reduction in staff of approximately 220 positions; • Reduction in employee benefits; • Reduction in operating costs and operating systems improvements; • Settlement of outstanding obligations for accounts payable, loans payable and long-term debt. Prior to 2005 the Society had a $9,000,000 line of credit and a $9,000,000 bridge loan agreement with a financial services institution. During 2005, the Society settled its obligations on these loans. Interest expense under these obligations amounted to $337,957 for the year ended June 30, 2005. The Society also settled its debt with The New York City Industrial Development Agency. Interest costs on these bonds amounted to $396,000 for the fiscal year ended June 30, 2005. • Consolidation of office locations, including disposal of the Harlem building and surrender of certain leases. The restructuring resulted in net gains to the Society of $4,197,000, consisting of gross revenue and gains amounting to $15,671,000 and gross costs and expenses of $11,474,000. 15 K Laufer, Ellen N Lauter, Patricia A Lavelle, Joseph Lavine, Lisa Lavitt, Simone C Lawson, Valerie H Le Brew, Joann C Le Bright, Janet M Le Maire, Carl L Leacock, Amber L Leaders, Felicia G Leak, Alan G Lebenbaum, Hwan-Hui Lee, Jeff Yuh-Fu Lee, Young W Lee, Joanne Legano-Ross, Andrew E Lehrer, Marty Lentz, Adrian A Lesher, William A Lesman, Michael Z Letwin, Clifford D Levin, Simone A Levine, Steven Douglas Levine, Robin Levinson-Zalewski, Renee K Leviton, Jane Levitt, Eric D Levy, Ezra C Levy, Allison M Lewis, Donna M Lewis, Dorothy A Lewis, Jasmin Lewis, Jennifer Y Lewis, Leif E Lewis, Michael K Lewis, Amy C Licht, Laura J Lieberman-Cohen, Susan E Light, Vicki E Light, Beile M Lindner, Tamara S Ling, Lawrence Linzer, Erin B Liotta, Alan C Lippel, Susan L Litt, Nancy E Little, Meng Jen Liu, Paul Liu, Kathryn L Liverani, Amanda J Lockshin, Melissa A Loehr, John Lombardo, Michele Lombardo, Bryan K Lonegan, Armando Lopez, Graciela Lopez, Melinda Lopez, Zoraida Lopez, Oscar H Lopolito, Milande Louima, Kesha Louis, Raymond L Loving, Marianna Lowenfeld, Allison K Lowy, Roza Loziner, Martin M Lucente, Gordon M Ludwig, Edmond C Lugo, Sheree A Lukowicz, Justine Luongo, Diane E Lutwak, Leonard S Lynch, Beth Lyons, Douglas B Lyons, Dianna Lysius, Lorraine Maddalo, Anya Maddow-Zimet, Jacob Madubuko, Xinmia Malave, Yvette Malave, Rudolph F Maldonado, Wilfredo Maldonado, Kathleen M Maloney, Eileen Malunowicz, Shreya Mandal, Andrew R Mandel, William T Mantlo, Marco A Marinez, Elizabeth A Maris, Russell D Markham, Ilana Marmon, Maud J Maron, Nizaly M Marrero, Brad D Martin, Margaret W Martin, Conway C Martindale, Jocelyne G Martinez, Jose L Martinez, Mariella Martinez, Maximino Martinez, Mildred Martinez, Marianela Martinez-Echevarria, Elaine C Martinez-Ortega, Katheryne M Martone, James Martorano, Lori A Masco, Irma A Mason, Bobette M Masson-Churin, Titus Mathai, Nancy Matos-Rodriguez, Alexandra M Matta Quinones, Julia L Mattson, Michele Maxian, Walter J Mayott, Edward Gordon Mayr, Prudencio Maysonet, Eileen A Mc Cann, Edward D Mc Carthy, Margaret Mc Clean, Colette M Mc Crae, Dorothy K Mc Donald-Starace, Lorraine C Mc Evilley, Deborah A Mc Gee, Thomas A Mc Givney, Edna T Mc Goldrick, Amelia P Mc Govern, Patricia A Mc Govern, Caroline M Mc Grath, Sheneka Mc Kenzie Sage, Irmin B Mc Kenzie, Acola S Mc Knight, Tanisha S Mc Knight, Kim M Mc Laurin, James M Mc Queeney, Peter L Mc Shane, Meighan M Mc Sherry, Steven L Mechanic, Mimi M Medina, Samuel Medina, Eric D Meggett, Irene Melendez, Luisa Melian, Stanley H Melnick, Nisha Menon, Jennifer Menscik, Margarita Menuar, Sonia Mercado, Fern R Merenstein, Claire V Merkine, Amy V Meselson, Richard A Meyerson, Jennifer Michaelson, Luz Y Milanes, Ezra M Miller, Joseph A Miller, Guy C Mills, Saundra J Mills, Tatyana Mints, Steven J Miraglia, Heather D Misterka, Dawne A Mitchell, Peter R Mitchell, Vera T Mitchell, Renee F Mittler, Robert Moeller, Kate A Mogulescu, Cesar Molina, Cynthia Molina-Santos, Marie I Mombrun, Michael J Monaghan, Curtis Moner, Lauren D Monosoff, Edwin Montano, Paul S Montgomery, Claudia E Montoya, S Maquita Moody, Daniel C Moore, David L Moore, Hermine Moore, Michael E Moore, Mara Moradoff, Ana C Morales, Edward Morales, Jose A Morales, Lorca Morello, Amanda C Moretti, Christen A Morgan, Florence Morgan, Martin H Morris, Siobhan M Morris, Susan Olivia Morris, Roslyn R Morrison, Colleen A Morrissey, Marie L Moser, Theresa B Moser, Magnus Mukoro, Nicole M Mull, Katherine E Mullen, Luanne M Muller, Kerry B Mulvihill, Helen M C Munro, Fay A Munro-Cole, Gabriel R Munson, Dennis R Murphy, Joyce Murphy, Michael Murphy, Eileen Murphy-Zadoff, Makela Murray, Michael J Murray, Stephen J Myers, Anyika K Nance, Sherry M Narodick, Bharati Narumanchi, Lorin B Nathan, Maria E Navarro, John C Needham, Jose M Negron, Kenwyn M Nelson, Sheila Lin Nelson, William P Nelson, Edda Ness, Patricia Nevergold, April A Newbauer, John A Newbery, Lucy C Newman, Robert C Newman, Elizabeth J Newton, William F Nicholas, Derek G Nichols, Yvonne C Nicks, Yumi L Nielsen, Anna Niewdach, Pascale V Nijhof, Yvonne Nix, Michelle Iris Noah, Frantz Noel, Sateesh K Nori, Linda Norona, Russell Novack, Edwin I Novillo, John M Novoa, Joanna E Nowokunski, Kevin V O’Brien, Thomas M O’Brien, John Burke O’Connell, Randi J O’Donnell, Niamh P O’Flaherty, Oona O’Flaherty, Scott H O’Gara, Heather J O’Hayre, Margaret M O’Marra, Grace L Oboma-Layat, Judy Ocasio, Ward J Oliver, Milagros Oliveras, Efrain Olmo, Jeffrey L Olshansky, Lisa B Orloff, Natalie M Orr, Rosalie Orta, Carlos A Ortiz, Elsie Ortiz, Kate S Paek, Lisa Palanjian, Tina Palazzo, Girish Panchal, Damjan Panovski, Latania Parham, Eun Hai Grace Park, Sandra S Park, Wendy Park, Sean T Parmenter, Michael Pate, Vanessa Paugh, Emily K Paul, Diane H Pazar, Harold A Peaks, Alan L Peck, Robert Peck, Rachel M Peckerman, Arthur N Peeples, Sandra Pemberton, Anne J Pentola, Mary B Peppito, Arthur Perahia, Michael A Perkins, Cornelius Perry, Pamela Ann Peters, Teers Peterson, Polixene Petrakopoulos, Janet C Pew, Hollis V Pfitsch, Vance L Phillip, Vincent T Phillips, Valeria Philpot, James T Pierce, Richard B Pierret, Asia P Pina, Jeniffer J Pinales, Michael Pineiro, Monica P Pinnock, Mary F Pinto, Salvatore L Pisano, Christopher P Pisciotta, James R Pitt, Laura L Pitter, Lisa N Pitts, Jean M Pizzini, Alvin Player, Mia Plehn, Steven Plotkin, Stephen P Pokart, Aaron D Pollack, Deborah Pollack, Robert J Pollitto, Gene R Popowytsch, Allen S Popper, Dawn J Post, Linda Postell, Laura Potter-Cahn, Linda M Poust Lopez, Ashwani Prabhakar, Frederic G Pratt, Zenobia D Prattis-Montgomery, Bethany S Pray, Judith Preble, Norma Prescod, Gabrielle Prisco, Risa B Procton, Dominic J Profaci, Frank S Proscia, Elizabeth R Pruser, Gene W Pudberry, Noemi Puntier, Galina Pyetranker, Veronica Pauline Quinones, Jennifer Quintana, Lillian Quintana, Kenneth Brian Rabb, Scott R Rabe, James B Radford, Patricia L Ragone, Karena L Rahall, Jasmine Ramirez-Burgos, Ushadevi Ramjit, Stephanie J Ramos, Yolanda Ramos, Aida L Ramos-Herrera, Michael A Raskin, Kyla L Ratliff, Georgia Y RattrayGray, Philip S Rauch, Kai-lin H Rausch, Ora J Raymore-Kenlock, Natalie Bocca Rea, Marcus A Reina, Sara H Reisberg, Alison D Reisner, Jane E Remler, Wendy Remy, Luz Jacqueline Requena-Rangel, Kenny Rey, Marie Lauthie Reyes, Mary Ellen G Reyes, Alex Reznik, Michael T Ricci, Joseph Richardson, Marie A Richardson, Jeffrey Richman, Tasha N Ricks, Michael Riou, Cristina W Ritchie, Jennifer L Ritter, Alfredo B Rivera, Arnaldo Rivera, Edwin R Rivera, Janet I Rivera, Jeffrey D Rivera, Migdalia Rivera, Nicholas Rivera, Ricardo Rivera, William Rivera, Yvette Rivera, Yevgeniya Rivkina, Jeffrey W Rizzo, Lauren L Roberts, Joan H Robinson, Kasandra M Robinson, Yolanda Robles, Hara A Robrish, Natasha R Roche, Evan M Rock, Ana L Rodriguez, Andre S Rodriguez, Angela Rodriguez, Carmen Rodriguez, Celena L Rodriguez, Lia A Rodriguez, Miriam Rodriguez, Osvaldo Rodriguez, Gwendolyn Rogers, James A Rogers, Patricia M Rogers, Raymond E Rogers, Jacob B Rolls, Jonathan Roman, Luis A Roman, Lurica Roman, Rosemary R Roman-Hare-Bey, Antoinette M Romano, Vincent J Romano, Cristina Romero, Michael P Rooney, Ismael Rosa, Mily R Rosa, Magda I Rosa-Rios, Armando Rosado, Jose F Rosado, Eve S Rosahn, Orlando Rosario, Sylvia Rosario, Ariane G Rosen, Mimi Rosenberg, Scott A Rosenberg, Nancy Rosenbloom, Gertrude Rosenfeld, Joy Rosenthal, Mary R Ross, Timothy B Rountree, Ralph Henry Roye, Gail Beth Rozansky, Emily Ruben, Michael P Ruben, Brett E Rubin, Stanley M Rubin, Paulette A Rubinsky, Scott L Rudnick, Hector M Ruiz, Ines L Ruiz, Deborah Fox Rush, Judith B Russell, Dawn C Ryan, Theodora M Saal, Janet Ellen Sabel, Elizabeth Sack Felber, David B Sackiel, Ellen S Sacks, Louis D Sainvil, Diana R Salierno, Jacqueline Samuels-Jaffee, Wanda Sanchez-Day, Gloria Sanders, Ronald Sanders, Sara A Sanders, Antoinette Sands, Nilsa A Saniel, Geida D Sanlate, Marlene V Santana, Carol Santangelo, Mary R Santiago, Evelyn Santiago-Valdez, Ekaterini Saoulis, Eugene Sarchiapone, Louis S Sartori, Heather J Saslovsky, Rachel L Saunders, Gerard C Savage, Lisa B Sbrana, Ann Marie Scalia, Randall R Schaefer, Kenneth D Schaeffer, Jeannie Schaldach, Joshua F Scheier, Ronald T Schneider, Stacy Schneider, John C Schoeffel, Nanette Schrandt, Edna Schwartz, Kristina Schwarz, Eric A Scott, Marcia Seckler, Samantha C Seda, Nadia N Seeratan, Ashok K Sehgal, Benjamin C Seibel, Douglas J Seidman, David G Seman, Julie A Sender, Amy B Serlin, Susan Sevin, Hasan Shafiqullah, Bejal J Shah, Shekera Shahid, Taramanie Shakur, Melanie Dawn Shapiro, Rita J Shapiro, Efrat B Sharony, Irwin Shaw, Sophia L Shaw, Monica Sheehan, Wadeedah Sheeheed, Nicole Sheindlin, Desiree Sheridan, Barbara J Sherman, Susan S Shin, Adam D Shlahet, Jane K Shortell, Khristina L Sibley, Cynthia K Sichenze, Debra Siegel, Steven Silberblatt, Elana J Silberman, Jennifer A Siletti, Christine Siley, Benjamin A Silverman, Carolyn J Silvers, Anna Sim, Karen P Simmons, Kawan L Simmons, Clark E Simpkins, Steven H Sindos, Gurmeet Singh, Lawrence J Siry, Shana E Skaletsky, Jennifer A Skidmore, Brian C Slater, Debra C Sloane, Dorothy Smalls, Alexander D Smith, Denzil Smith, Elizabeth P Smith, Heather A Smith, Jodi R Smith, Michelle A Smith, Natalie L Smith, Sondra D Smith, Todd P Smith, Theresa M Smoot-Robinson, Cassandra J Snyder, Marvin S Sobers, Gary Solomon, Meridith F Sopher, Angel Soto, Christopher J Spellman, Diane K Spicer, Malika S.J Spruiell, Andrew M St Laurent, Shannon J Stallings, Sharon L Stapel, Adam T Starritt, Laura H Stasior, Robert Staten, Tamara A Steckler, Kenneth R Stephens, David M Stern, Judith S Stern, Susan Sternberg, John Stewart, Barbara Stock, Jack Stoller, Yevgeny Strupinsky, Janelle L Stuart, Lisa-Ann N Stuart, Elaine Stulbaum, Stephen G Sturman, Stacy-Ann E Suckoo, Jeffrey S Sugarman, Kannan Sundaram, Alice L Swenson, Dorine H Sylvester, Sharona M Tabacznik, Michael C Taglieri, Meredith L Takahashi, Tanya Talaba, Stephen J Talaber, Jose A Tapias, Ian B Tarasuk, Sonia Tate-Cousins, Tennille M Tatum, Bret J Taylor, W Brett Taylor, Emely A Terc, Stephen B Terry, Rumona Thadani, Sidney W Thaxter, Rosalina Then, Kathryn H Thiesenhusen, Anthony Thomas, Cheryl Thompson, Salome A Thompson, Bettina H Thomsen, Raynita Thornton, Lisa M Timmes, Alia L Toran-Burrell, Marilyn Toro, Alba Iris Torres, Azalia Torres, Brunilda Torres, Joseph Torres, Richard J Torres, Thomas Tracy, Rekha Trivikram, Matthew F Tropp, Andrew K Tso, Lisa E Tuntigian, Howard Turman, Rebecca D Turner, Roseanne Tzitzouris, Ferdinand I Ubozoh, Chinyelu O Udoh, Jesse Uhrman, Louis Ullrich, Stella N Umutoni, Beth A Unger, John M Vaccaro, Jennifer M Valentin, Sandrine A Valentine, Maria F Valvik, Norah E Van Dusen, Renee S Vanden Wallbake, Jessica Vargas, Marlene Vasquez, Anna Vaysleyb, Edwin Vega, Pedro J Vega, Rosemary Vellucci, Linda M Venuto, Andrea M Veras, Nicholas J Vitek, John F Volpe, Laurence Voss, Jill L Wade, Andrea L Wagner, Eliezer Wagner, Judith Waksberg, Kenneth A Walcott, Jackie Walker, Albert Nelson Wall, Ernesto D Walsh, Rosalyn E Warren, Agnieszka Was, Jerry Washington, Marie L Washington, Roy Wasserman, Steven B Wasserman, Kelly C Watkins, Senora A Watkins, Joshua B Watson, Meggan E Ways, Karen A Webb, Alison Webster, Edwina C Webster, Jill B Wechsler, Jamien O Weddle, Elizabeth E Weiner, Jessica S Weinstein, Danielle S Weisberg, Harvey Weiss, Hilary S Weiss, Ronald Weiss, Susan E Welber, Nathaniel Welkes, David Werber, Mary L Werlwas, David Weschler, Mark Whalen, Amanda E White, Lawrence H White, Lois A White, Monyca White, Thomas D White, Mayphill P Whyte, Paul M Wiener, Dale A Wilker, Alison Wilkey, Diana Wilks, Edlyn L Willer, Cheryl N Williams, Cheryl P Williams, Deborah M Williams, Donald R Williams, Eric S Williams, Gregory C Williams, Rochelle Williams, Ramon Willoughby, Freddie Winn, Angela M Winston, Leslie S Winston, Michael L Wittman, Frank P Witty, Jason C Wohlford, Alexander E Wolff, Liron B Wolff, Cynthia Wolpert, Kathleen N Wolters, Carrie E Wood, Susan G Woodward, Andrea C Woody, Christopher Wright, Deborah L Wright, Marco J Wright, Caesar Z Xavier, Cynthia Yahia, Jonathan A Yates, Karen M Yazmajian, Jenny S Yelin, Jeannie Yi, Dawn L Yuster, Yosef M Zablocki, Becky S Zalewski, Yonatan E Zamir, Mary Zaslofsky, Milton Zelermyer, Andrei V Ziabkin, Marnie L Zien, Sandra H Zucker THE SO D AI GAL LE 1876 CIET Y THE LEGAL AID SOCIETY 199 Water Street New York, NY 10038 Phone: 212-577-3300 • Fax: 212-509-8432 www.legal-aid.org