Raleigh – A funding freeze impacting North Carolina’s legal aid organizations is forcing program cuts and staff layoffs, threatening access to civil legal services for low-income residents. The freeze, enacted last summer by the Republican-led General Assembly, affects the North Carolina Interest on Lawyers’ Trust Accounts (NC IOLTA) program, a critical source of funding for non-profits providing legal assistance in areas like housing, employment and domestic violence.
As of January , more than 56 full-time employees across multiple organizations have lost their jobs, according to an update from NC IOLTA. Legal Aid of North Carolina, the state’s largest non-profit law firm, is bearing a significant portion of the impact, facing a budget gap of approximately $6 million – roughly 15% of its total budget. The organization is responding by closing nine offices and reducing its workforce by 40 positions.
Ashley Campbell, CEO of Legal Aid of North Carolina, stated the cuts will result in the organization assisting approximately 8,000 fewer people in compared to the previous year. Last year, Legal Aid served over 47,000 household members, including more than 21,000 children.
What is NC IOLTA and Why Was Funding Frozen?
The NC IOLTA program, established in by the North Carolina State Bar and state Supreme Court, operates by pooling interest earned on attorneys’ trust accounts – funds held in escrow for clients. This interest is then distributed as grants to non-profit organizations providing civil legal aid. In , the program awarded nearly $12 million in grants to 35 non-profits across the state.
The freeze, implemented through a provision in a crime bill passed in late June , suspended IOLTA’s grant-making process from , to . The move prompted a legislative investigation into how IOLTA’s board and grantees are selected.
GOP Concerns and Allegations
State Representative Harry Warren, a Republican from Salisbury, has been a vocal critic of NC IOLTA, alleging that the program has “gone somewhat rogue” by awarding grants to organizations with “leftist ideologies.” At a House Select Committee on Oversight and Reform hearing in October , Warren highlighted concerns about the Amica Center for Immigrant Rights, which received $55,000 in IOLTA funds. He presented a quote from the organization stating that “the United States’ wealth and power is built upon stolen land from enslaved labor and under the racist lie that white people were superior to Black people, indigenous people, and people of color.”
IOLTA officials responded by explaining that some of the agencies they support provide both legal services and advocacy. Peter Bolac, executive director of the N.C. State Bar, suggested at the hearing that IOLTA could add restrictions to prevent funding from going to organizations involved in grassroots lobbying.
Uncertain Future and Impact on Services
As of , NC IOLTA officials report receiving no information from GOP leaders regarding future hearings or the potential restoration of funding. Mary Irvine, NC IOLTA’s executive director, stated, “The freeze is in place through the end of June, and we really don’t know when there might be movement on that.”
The funding freeze is occurring at a time of increased demand for legal services. The situation is further complicated by widespread cuts in funding for legal nonprofits at both the federal and state levels, including impacts from Hurricane Helene disaster relief efforts in Western North Carolina. Legal services organizations dedicated thousands of hours and allocated significant resources to assist survivors with issues ranging from replacing lost documents to securing death benefits.
The cuts are forcing organizations like Legal Aid to prioritize cases and potentially reduce the scope of services offered. Campbell expressed hope that a resolution can be reached that addresses legislative concerns while ensuring continued support for civil legal aid in the state. The uncertainty surrounding IOLTA funding casts a shadow over the future of access to justice for vulnerable populations across North Carolina.
