Will NC budget end aid for people seeking justice in civil court? What we know.
AI-generated summary reviewed by our newsroom.
- House budget plan would divert funds from civil court aid to criminal defense.
- NC IOLTA grants assist 40,000 low-income residents with civil legal aid.
- Critics argue redirection jeopardizes access to housing, benefits and safety orders.
For 43 years, attorney bank accounts have raised millions of dollars used to help North Carolina families hold onto their housing, veterans access their benefits, and domestic violence survivors seek protective orders in local courts.
Most recently, an emergency fund of nearly $1 million helped pay for legal assistance for Hurricane Helene survivors seeking to rebuild their homes and businesses.
But that and other financial support that helps thousands across the state access civil courts could all go away if language in a House budget bill is approved by the General Assembly.
The House budget bill diverts the money from the North Carolina Interest on Lawyers Trust Account board, which gives grants to agencies that provide legal education and advice on civil issues or helps improve the administration of justice. The House budget bill would send funds raised by interest rates on a pooled bank account to the Office of Indigent Defense Services, which oversees the public defense system across the state.
The money would be used to pay private attorneys to represent criminal defendants who can’t afford to pay a lawyer. Historically, money from the state general fund covered the private attorney payments. The Senate’s proposed budget doesn’t divert the money.
Durham state Rep. Marcia Morey, a former district court judge, called the move “abominable,” in an interview.
“They’re trying to take this money from private attorneys’ trust accounts, put it to a public purpose that the state’s obligated to be paying anyway,” Morey said.
But in a written statement released by his office, Republican House Speaker Destin Hall said the money was being redirected due to concerns about the money going to pet projects or services that help people who are living in the U.S. without legal permission.
“IOLTA funds were shifted to ensure they’re not being utilized to bankroll progressive political pet projects like the NC Justice Center or provide government services to illegal immigrants. Instead, those funds will be used to provide legal services to underserved communities,” the statement said.
The News & Observer asked for more specific concerns about the use of the money, but Hall didn’t respond.
Over the years years, NC IOLTA has awarded more than $134 million in grants in North Carolina, according to its website. In 2025, NC IOLTA plans to distribute $12 million in grants, it states.
NC IOLTA funds help about 40,000 individuals, families and children across all 100 counties navigate the civil system each year. Last year that included 1,429 low income veterans and 5,893 seniors.
The North Carolina Justice Center received more than a $1 million grant from NC IOLTA for legal aid supporting issues that include housing, employment, education, health, public benefits criminal justice and immigration, according to NC IOLTA’s website.
Other organizations, including Amica Center for Immigration Rights, the Carolina Migrant Network, CWS Greensboro, also received $55,000 or less in NC IOLTA funds to help with legal aid related to immigration.
Mary Irvine, NC IOLTA executive director, declined to be interviewed about the proposed changes. But provided a statement saying that NC IOLTA shares Hall’s commitment to serving underserved communities, as it has done for more than 40 years.
“NC IOLTA supports meaningful, nonpartisan access to legal services for those who need it most with a focus on children, disaster relief, seniors, veterans, and survivors of domestic violence. Without this funding, thousands of North Carolinians facing serious problems will go without legal support.”
A threat to the civil legal aid infrastructure?
NC IOLTA Is one of many state agencies and nonprofits in 50 states that have used the IOLTA accounts to raise money to help people and families with low incomes navigate civil courts to bring challenges related to housing, child custody and other issues.
“These funds help civil courts run efficiently and save taxpayers money by ensuring small civil legal issues don’t turn into big problems. NC IOLTA seeks to preserve this critical source of funding for civil legal aid, which provides a lifeline for low-income North Carolinians in crisis,” according to a statement shared by NC IOLTA.
An information sheet from NC IOLTA in response to the language in the House budget bill says the funds were never meant to go to criminal indigent defense.
“Redirecting these funds won’t fully solve the public defense funding problem — but it will devastate civil legal aid and leave North Carolinians without help when it matters most,” the briefing states.
People need access to civil court
Civil courts are where people seek help for protection from abusive partners, employers and landlords. Or really anyone violating their constitutional rights.
The Sixth Amendment requires that people facing certain criminal charges be provided an attorney if they can’t afford one. But there is no equivalent for those who can’t afford to pay attorneys for civil actions, NC IOLTA’s briefing points out.
“Legal aid levels the playing field and provides a lifeline for low-income North Carolinians,” the NC IOLTA briefing said.
A 2021 study revealed a severe shortfall in affordable legal resources in North Carolina. Some 71% of families with low-incomes face at least one civil legal problem each year, according to the study by UNC Greenboro’s Center for Housing and Community Studies and other agencies.
Corye Dunn, director of public policy for Disability Rights North Carolina, said people navigating complex issues, like the Medicaid system or making sure their housing is safe and stable, need help accessing the civil justice system.
“North Carolinians cannot afford to lose this critical lifeline to help them access the health care, education, housing and employment that they need,” Dunn said during an interview.
History of IOLTA
IOLTA accounts were established across the county following changes to a federal banking law in 1980, allowing some checking accounts to accrue interest.
The change allowed lawyers to continue to pool clients’ money, typically small amounts or other amounts held for short periods of time, to accrue interest from banks that grant the accounts favorable interest rates. The accrued interest is used by agencies and projects that increase access to civil courts and processes.
The North Carolina State Bar Council and the Supreme Court established the program here in 1983. In 2007, the program became mandatory for North Carolina attorneys.
The NC IOLTA falls under the NC Bar. The American Bar Association back in 1991 passed a resolution opposing using the funds for criminal defense cases.
“It would be unfortunate,” if the resources “which would not exist but for the efforts of the legal community, were diverted from their well-defined original purposes in order to meet obligations which government, by constitutions and statutes, is legally required to fund,” the resolution states.
Virginia Bridges covers criminal justice in the Triangle and across North Carolina for The News & Observer. Her work is produced with financial support from the nonprofit The Just Trust. The N&O maintains full editorial control of its journalism.
This story was originally published June 23, 2025 at 8:36 AM.
