NC Legal Aid closing offices, cutting staff as GOP offers no update on frozen funds

As North Carolina lawmakers remain silent about the future of a program that funds legal services for low-income residents — from pursuing Hurricane Helene relief to escaping abusive relationships — the state’s largest legal aid provider is closing offices and laying off staff.

As of January, more than 56 full-time employees across multiple organizations have lost their jobs amid GOP lawmakers’ concerns about how attorney-generated funds are being spent, according to a January update from the agency that manages the N.C. Interest on Lawyers’ Trust Accounts. Hardest hit may be Legal Aid of North Carolina, which ​​​provides free legal help to low-income North Carolinians in civil court.

The freeze produced a $6 million budget gap in 2026, about 15% of its budget, forcing it to start closing offices and cut jobs, Ashley Campbell, Legal Aid’s CEO, told The News & Observer.

Other organizations reduced or consolidated positions, according to the IOLTA January update.

That has meant slower response times and, at times, attorneys offering advice by phone instead of appearing in court — and thousands of people not receiving help, according to the report and interviews.

Meanwhile, the money raised last year, remains frozen under legislation passed last summer. For both NC IOLTA, the agency that awards the grants, and groups that rely on them, it’s unclear when — or whether — the money will flow again.

GOP leaders have given NC IOLTA’s leaders no information about future hearings or when the funding might be restored, said the organization’s executive director Mary Irvine.

“The freeze is in place through the end of June, and we really don’t know when there might be movement on that,” Irvine said.

What is NC IOLTA? Why are funds frozen?

The IOLTA, a program of the North Carolina State Bar, is one of many across the 50 states using bank account interest to help people and families with low incomes navigate civil courts.

N.C. IOLTA collects interest earned on attorneys’ bank accounts holding clients’ money. The interest pays for IOLTA staff and grant money. Last year, IOLTA gave about $12 million in grants to about 40 organizations that provide legal services across the state.

But the process for awarding grants with the money halted in North Carolina by a July provision tucked in a bill that suspended IOLTA’s grant-making process from July 1, 2025, to June 30, 2026.

The pause allowed the legislature to investigate how IOLTA’s board and grantees are selected, Rep. Henry Warren, a Salisbury Republican, said at an October House Select Committee on Oversight and Reform hearing.

GOP leaders’ concerns

Warren, who is a committee co-chair, has accused NC IOLTA of straying from its mission by supporting “leftist” groups that are actively working to break or dismantle laws.

Among the organizations that Warren expressed concern about was the Amica Center for Immigrant Rights, which has received $55,000 in IOLTA funds to provide legal services in the state. At the 2025 hearing, he flashed a slide on the screen with a quote from the Washington D.C.-based group.

“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,” the quote said.

IOLTA officials responded, explaining that some of the agencies they support provide both legal services and advocacy.

IOLTA critics raised questions about whether the money should be directed elsewhere.

“As we looked into it, we wondered, “Whose money is it anyway?” Does the interest earned belong to the client? Or, since the State Bar is a state agency, should the money be considered part of the General Fund to be appropriated by the General Assembly?” Warren said.

Peter Bolac, executive director of the N.C. State Bar, said at the October hearing that IOLTA could add additional restrictions to prevent money from going to organizations involved in grassroots lobbying.

What’s next?

Towards the end of the more than one-hour and 10-minute question-and-answer session before the GOP-led committee, Warren indicated that there would be more discussion about legislators’ concerns.

“We’re going to ask you to come back because obviously there’s a lot of interest from the Committee on the organization,” Warren said.

But more than three months have passed, and IOLTA officials don’t know where things stand, Irvine said in an interview.

Demi Dowdy, deputy chief of staff for House Speaker Destin Hall, said additional hearings regarding IOLTA are not planned.

The uncertainty is already reshaping legal aid across the state, according to interviews

Due to its need to do more with less money, Legal Aid is closing nine offices, cutting staff by 40 people, and scaling back programs that could help with disaster recovery, domestic violence protection and health and consumer issues, said Campbell, CEO of Legal Aid of North Carolina.

The organization will serve 8,000 fewer people than in 2025, Campbell said. Last year, Legal Aid assisted over 47,000 total household members, including over 21,000 children, Campbell said.

“What we’re hoping is that there can be a resolution that addresses whatever concerns they have, while allowing civil legal aid to be supported in our state,” Campbell said.

This story was originally published February 9, 2026 at 10:21 AM.