Following their testimony before the NC House oversight committee, NC IOLTA and NC State Bar leadership continue to seek a resolution to preserve funding for civil legal aid, which plays a critical role in building a legal system that works for everyone, breaking down barriers and creating strong communities across North Carolina.
Grantees Plan for Budget Shortfalls Amid Freeze on NC IOLTA Grantmaking
Share
The North Carolina General Assembly’s yearlong freeze on NC IOLTA grantmaking remains in place.
On Oct. 22, NC IOLTA Executive Director Mary Irvine and NC State Bar Executive Director Peter Bolac testified before the North Carolina House Select Committee on Oversight and Reform to respond to lawmakers’ questions and concerns about NC IOLTA grantmaking.
A transcript of the hearing, Irvine’s and Bolac’s prepared statements, and related materials are available in the folder for Oct. 22, 2025, on the committee’s webpage.
The hearing came as the NC General Assembly’s unexpected freeze on disbursement of monies generated by interest earned on lawyers’ trust accounts for the period from July 1, 2025, to June 30, 2026, has led to nonprofit legal aid organizations’ reporting staffing reductions, caps on intake of new clients, and office closures in anticipation of the loss of critical operating and project funds.
Among these organizations is Legal Aid of NC, a statewide nonprofit that received approximately $6M in grant funding from NC IOLTA in 2025. On Oct. 21, LANC announced the closure of its Rocky Mount office — which serves a six-county area that includes three counties designated as legal deserts — as a result of the freeze. It has since announced the closure of its offices in Pembroke and Goldsboro.
“Without IOLTA funding, Legal Aid of North Carolina estimates that thousands of North Carolinians — including veterans, seniors, survivors of domestic violence and disaster victims — will go unserved,” the Oct. 21 announcement explained. “Rural areas will be hardest hit, with 48 of North Carolina’s 100 counties already considered ‘legal deserts.’”
Another 2025 grantee, Pisgah Legal Services, which serves Western North Carolina and has been a vital source of assistance to residents recovering from Hurricane Helene, noted in their Fall 2025 Newsletter that they have “serious concerns that without replacing this funding we will have to turn away thousands of people in the coming year.” Similarly, Disability Rights North Carolina, a statewide nonprofit that advocates for and protects the civil rights of people with disabilities, noted on their website the “severe” impact of lost funds: a more than 10% reduction in their workforce, reduced hours across the agency and a 20% cut in their intake services.
This graphic from the 2024 Annual Report reflects the impact of NC IOLTA grant funding.
NC IOLTA awards grants using interest paid on lawyers’ general trust accounts. This funding comes at no cost to attorneys, firms, clients or taxpayers. Since the program’s inception in 1983, more than $134M in grant funding has supported access to justice for low-income North Carolinians. In 2024, nearly 96,000 North Carolinians benefited from legal aid services funded by NC IOLTA grants, including nearly 10,000 clients given support for domestic violence, child custody and other family law matters and more than 11,000 assisted with housing, employment and access to benefits.
On Nov. 6, Bolac shared a communication with the Bar membership about the status of the funding freeze. In it, he addresses the impact on North Carolina’s legal aid community and goes on to note:
State Bar leadership and some court officials with whom we have spoken are concerned that the anticipated reduction in civil legal services funding will not only adversely affect clients and communities but also will adversely affect the functioning of our court system. Fewer legal aid attorneys mean more individuals will appear in court without representation, resulting in longer hearings, more continuances and increased administrative burdens on clerks, judges and attorneys. The absence of legal assistance can also lead to more procedural errors and a rise in filings that might otherwise have been resolved without the necessity of court intervention.
Over time, these challenges will strain judicial resources and diminish the efficiency of court proceedings. Lawyers in both the public and private sectors are likely to see the effects firsthand through heavier caseloads, slower case movement and the growing presence of unrepresented litigants across all civil dockets.
The full text of Bolac’s communication is available on the State Bar website.
With the North Carolina General Assembly currently in recess, it is uncertain when legislators might revisit the funding freeze. NC IOLTA and State Bar leadership continue to seek a resolution to preserve funding for civil legal aid, which plays a critical role in building a legal system that works for everyone, breaking down barriers and creating strong communities across North Carolina.
Stories exploring the impact of NC IOLTA funding are available at nciolta.org/stories/.