Rural NC legal aid offices close after General Assembly freezes public assistance fund over politics ...Middle East

The North Carolina Legislative Building as it appeared on March 14, 2025. (Photo: Brandon Kingdollar/NC Newsline)

For 40 years, the Interest on Lawyers’ Trust Accounts program has funded legal assistance for low-income North Carolinians. That money is now grinding to a halt over Republican accusations of bias toward progressive groups in the program’s grant awarding process.

The General Assembly voted in June to bar the awarding of new IOLTA grants from this July until June 2026, cutting off millions of dollars to groups like Legal Aid of North Carolina, who announced in October they are closing offices in Rocky Mount and Pembroke as a result.

In an Oct. 22 House Select Committee on Oversight and Reform hearing over IOLTA, committee chair Rep. Harry Warren (R-Rowan) said the program has violated its mandate by funding legal organizations aligned with progressive causes. The pause, he said, is to allow lawmakers to “investigate the group’s board and how they choose their grantees.”

“We’ve heard from a number of folks that IOLTA does good work, and we have seen evidence of that, but IOLTA has also gone somewhat rogue, awarding grants to leftist groups with leftist ideologies,” Warren said.

As the state legislature carries out inquiries over the political activities of grant recipients and probes the awarding process, tens of thousands of low-income North Carolinians stand to lose access to free legal services.

What is IOLTA?

In its first four decades of operation, IOLTA has been an obscure, noncontroversial program for funding legal aid to those without the means to afford representation, from assistance in the wake of hurricanes to helping remedy elder abuse and family violence.

The funds come from interest accrued on private trust accounts that lawyers are required to maintain in the course of their practice, often arising from real estate transactions and legal settlements among other sources. That interest is used for charitable purposes, issuing grants to programs that provide financial assistance for civil legal aid.

IOLTA executive director Mary Irvine told NC Newsline that until 1983, these trust accounts were all non-interest-bearing, until a voluntary IOLTA program overseen by the State Bar was approved by the North Carolina Supreme Court.

“If these funds are sitting in a trust account, it could be an interest-bearing account, and that interest could be directed to the public’s benefit by supporting activities that would improve the justice system and ensure that folks that didn’t have money to pay for an attorney would have that legal support,” Irvine said in an interview.

The program has awarded $134 million in grants since its inception, more than 90% of which goes to organizations that provide legal assistance to low-income clients. About 7% goes to Administration of Justice grants, which aim to facilitate legal services around the state.

IOLTA has also played a key role in disaster relief in particular, delivering nearly $1 million to residents impacted by Hurricane Helene in 2024 — helping them get justice in consumer fraud cases and navigate complex insurance claims.

In 2025, according to a January press release, IOLTA issued $12 million in grants, about $6 million of which went to Legal Aid of North Carolina. The North Carolina Justice Center and Pisgah Legal Services, a western North Carolina-focused legal aid nonprofit, each received more than $1 million.

“Our primary focus is on individuals who are under-resourced. They do not have the ability to pay for an attorney. They have limited income,” Irvine said. “These are folks that are seniors, veterans, people with disabilities, survivors of domestic violence, families that are facing, you know, some kind of economic hardship.”

Because the funds overseen are entirely private, some Democratic lawmakers argued the General Assembly should not be overseeing them. The Republican theory is that because IOLTA is administered by the State Bar, it is subject to scrutiny by the state legislature.

“Since it was not created as a state-taxpayer-dollar fund, there was no aspiration or expectation that it should be accountable to the state of North Carolina and have accountability here in our legislature, correct?” asked Rep. Maria Cervania (D-Wake) during the oversight hearing.

“I don’t want to speak on what the legislature can and can’t review or take a look at,” said NC Bar Association executive director Peter Bolac. “I think that this was a program from the Supreme Court and the legal profession to be able to provide these services, and it has not in the past had any interactions with the legislature.”

‘An echo chamber’

Republican lawmakers said during the oversight hearing that their primary concern is over funding for progressive legal causes.

Warren began the oversight hearing by listing groups funded by IOLTA whose mission statements espouse left-wing ideas.

He said that the Amica Center for Immigrant Rights, which received $55,000 from IOLTA this year, has stated 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.”

Warren also took aim at the Carolina Migrant Network, the recipient of a $55,000 grant, for impeding ICE activities in Charlotte, and at Emancipate NC, whose program Carolina Parent Defenders received $98,000, for opposing “mass incarceration and structural racism,” among other organizations whose mission statements have involved diversity, equity, and inclusion aims.

“The IOLTA board of advisors did not have a single Republican from 2015 until 2020. It now has three Republican members,” Warren said. “This is a good program with the potential to improve access to the legal system for those who cannot otherwise afford it. But we need to understand how it strayed from its original mission.”

Bolac said political affiliation plays no part in the selection of IOLTA board members, though he conceded that conservative views have at times been absent from the organization.

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“I think it’s fair to say, in the past, there used to be a little bit of an echo chamber,” Bolac said. “Now, while we have put an interest form on our website, we’re promoting it in the State Bar Journal and on our website to make it clear that anyone is eligible to apply and show interest in these positions.”

Rep. Grant Campbell (R-Cabarrus) said his concern is that the General Assembly “may be financing” political activities conducted by grant recipients. He noted that the Amica Center made social media posts celebrating Gov. Roy Cooper’s veto of an ICE cooperation bill in 2022 and describing “how we’re fighting back” against the Trump administration.

“I worry about funds being fungible, where you give an organization and say, ‘Here’s the money and only do it with this,” Campbell said. “But do you have concerns that [that] frees up funds for them to do other things that certainly would not be in line with the mission of this grant program’s purpose?”

Bolac said that the IOLTA program strictly prohibits the use of funds for political activities and is considering additional restrictions on funding to entities that engage in lobbying.

“I recognize that funds given for one purpose can free up funds for another purpose. Part of that acknowledgement and hearing these concerns is [the fact that] we have come to the table when addressing this issue during the last five or six months,” he said.

‘A situation that we didn’t cause’

The funding freeze means the tens of thousands of North Carolinians who depend on legal aid funded by IOLTA are left with few options for assistance. And even if grants resume next July, some organizations may not be able to recover from the impact.

Legal Aid of North Carolina is shutting down two of their 12 rural offices, with more closures likely to come as they seek to recoup about $6 million in lost funding next year. While grants from local governments in places like Durham and Charlotte are enough to maintain those offices, rural counties do not have the same cushion.

“We’ve received IOLTA funding for over three decades, and it is a critical component of our ability to provide access in rural areas,” said Ashley Campbell, CEO of Legal Aid NC. “We have very few grants from local governments in rural areas because they don’t have enough money.”

She questioned why her organization, which receives about half of IOLTA’s grant money each year and which lawmakers on both sides of the aisle praised for its work during the hearing, should be thrown into chaos because of controversy over nonprofits receiving far smaller sums.

“It just feels so frustrating to know that we have $6 million of investments on the line and that, like 8,000 people will be impacted by the loss of that money — and that no one is expressing concern about the work that we do or how we spend that IOLTA money, but it’s frozen,” she said in an interview. “We’re caught in a situation that we didn’t cause. And our clients are, because of our volume, we’re going to have the biggest impact.”

That means more counties where Legal Aid attorneys are unable to attend court alongside their clients. The cuts will cause long-term staffing issues even if funding resumes, due to the difficulty of recruiting rural attorneys, Campbell added.

Some of the largest effects may be borne by residents of western North Carolina still recovering from the impacts of Hurricane Helene. Legal Aid NC handled more than 4,000 cases related to the storm and provided about $3 million in legal assistance — a level of support that would not be possible should another major storm hit the state during the funding freeze.

Some lawmakers raised the possibility of letting funding for Legal Aid NC continue while the IOLTA inquiry proceeds.

“Is it possible that we can unfreeze some of these funds to fully fund Legal Aid?” asked Rep. Allison Dahle (D-Wake.) “We seem to have questions about other organizations and Legal Aid seems to be well-documented, and I’m really concerned that so many lives depend on domestic violation protections.”

Beyond Legal Aid, many of the organizations dependent on IOLTA funds have had to conduct layoffs or roll back operations amid the loss of funding.

In a letter to lawmakers circulated by Cervania, Disability Rights NC wrote that they have had to cut hours and reduce intake, limiting their ability to provide legal services to children and families with disability needs. Inner Banks Legal Services, a family law small nonprofit, will have to cease free services entirely, the firm wrote in its own letter.

“Each delay or denied intake represents a real person whose safety or stability is on the line. One such person is Mrs. Jones, a devoted wife and mother of four,” wrote Inner Banks Legal Services executive director Sarah Beth Withers. “Her husband controlled all family income, assets, and banking. Over time, he became abusive, and the violence escalated until Mrs. Jones was hospitalized. Criminal charges were filed against her husband, but because she has no income and no access to family funds, Mrs. Jones cannot afford legal representation.”

With Inner Banks unable to provide free aid to help her obtain a domestic violence protection order, Withers wrote that Jones and others may “remain trapped in danger.”

Rep. Mike Schietzelt (R-Wake) said that his own personal situation would have been much different if his family had access to free legal aid services during his youth. He said the pause on funding is “deeply unfortunate” but raised his own concerns about resources going to groups that carry out political advocacy.

“I share the concerns voiced by so many of my colleagues that access to justice is being impeded here — that there are great organizations, like Legal Aid and Pisgah Legal Services that are doing critically important work in areas that desperately need it, particularly communities that are impacted by Helene,” he said. “I’m upset that we’re in this situation right now. I would like to find a pathway out of it.”

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