Legal Aid of North Carolina filed a lawsuit on Friday, October 9th, asking the courts to strike down recent legislation that strips funding from civil legal assistance for low-income North Carolinians.
At issue in the lawsuit is the 2026 state budget enactment, which dramatically alters the court-ordered program that has historically funded civil legal aid through grants issued by the State Bar, the Interest on Lawyers’ Trust Accounts program, or IOLTA. The legislation departs from the program’s four decades of supporting civil legal assistance and imposes restrictions on the legal advocacy that any organizations receiving IOLTA funds may engage in.
Legal Aid of North Carolina provides free civil legal assistance to low-income North Carolinians. Our mission is to ensure that people facing serious civil legal problems, including domestic violence, housing issues, disaster-related legal needs and many other challenges, have access to the legal advice and representation they need.
When unlawful government action deprives the people we serve of resources that are essential to that access, we have an obligation to act on their behalf.
Equal Justice Is a Core American Value
For generations, American leaders have recognized that equal treatment under the law cannot depend on wealth.
In 1789, the First Congress required federal judges to swear that they would “do equal right to the poor and to the rich.” Federal Judiciary Act 1789.
Thomas Jefferson later identified “equal and exact justice to all men” as one of the essential principles of American government. Thomas Jefferson, First Inaugural Address March 4, 1801.
Nearly two centuries later, President Richard Nixon carried that principle forward. In urging Congress to establish the Legal Services Corporation to fund civil legal services for low-income people, President Nixon described equal access to the civil justice system as a basic right of all Americans.
“As American society has grown increasingly complex, we have come to realize that without access to legal assistance, the poor in America often stand defenseless in their struggle to lead a decent life. With a legal services program…, the law can function more effectively as a servant of the people.” Legal Services Corporation Signing Statement, Legal Services Bill, July 19, 1974.
The commitment to equal treatment under the law has continued across generations and political parties.
At the 50th anniversary celebration of the Legal Services Corporation in 2024, Chief Justice John Roberts put the principle plainly: “Equality under law requires lawyers.”
The Chief Justice noted that many Americans cannot afford legal representation and that legal aid organizations help fill that gap by helping people navigate the civil justice system. Chief Justice John G. Roberts Jr.’s Keynote Remarks, Legal Services Corporation 50th Anniversary Gala, April 9, 2024.
The need is substantial in North Carolina.
Our state is home to more than 11 million people, and approximately 1.35 million live in poverty. That is roughly 1 in every 8 North Carolinians. Hundreds of thousands of them are children.
For a single person, the federal poverty guideline is approximately $15,960 a year, or $1,330 a month. For a family of four, it is approximately $33,000 a year.
People living on those incomes cannot afford to hire a private attorney when they face an eviction, domestic violence, the loss of income or benefits, a consumer problem, a threat to their property, or another serious civil legal matter.
But their legal rights matter just as much as the rights of someone who can afford counsel.
Our job is to make sure low-income North Carolinians can understand their rights, be heard, and receive the legal advice and representation when they need it.
IOLTA Was Created to Fund Civil Legal Services for Low-Income North Carolinians
IOLTA is not a taxpayer-funded program. It was created by the legal profession and the courts decades ago as a way to promote equal access to justice through the legal profession.
IOLTA allows the small amount of interest generated on client funds held in lawyers’ trust accounts to be pooled for the greater good to fund civil legal services and other programs that support the administration of justice.
The concept began in Florida in the late 1970s and ultimately spread nationwide. Every state and the District of Columbia has adopted an IOLTA program.
The North Carolina Supreme Court established the IOLTA program in 1983. At first, participation was voluntary. The mandatory program was established by a unanimous decision of the North Carolina Supreme Court in 2007.
From the beginning, supporting civil legal services for people who could not afford lawyers was the central purpose of North Carolina’s IOLTA program. And Legal Aid of North Carolina’s history is directly connected to that purpose.
In 1984, Legal Services of North Carolina (a predecessor to Legal Aid of North Carolina) joined the North Carolina Bar Association, the North Carolina Academy of Trial Lawyers, the North Carolina Association of Women Attorneys and the North Carolina Association of Black Lawyers in endorsing North Carolina’s new IOLTA program as a means of generating funding for civil legal services for low-income people throughout our state.
Legal Aid did not simply become a recipient of IOLTA funding years after the program was created. Funding for civil legal services providers like Legal Aid of North Carolina was the purpose for which North Carolina established IOLTA in the first place.
Legal Aid Serves North Carolinians in Every County
With support from IOLTA and other public and private funding, Legal Aid of North Carolina has developed a statewide system for delivering civil legal services to people who cannot afford an attorney.
In 2025 alone, Legal Aid handled more than 24,000 cases for North Carolinians in all 100 counties.
Our lawyers help survivors of domestic violence seek protection from abuse. We represent families facing eviction. We protect income and property for seniors. We help veterans obtain benefits they have earned. We help people remove legal barriers to employment and economic opportunity.
And when Hurricanes Matthew, Florence and Helene devastated communities across North Carolina, Legal Aid served as a first legal responder, helping families address the legal problems that follow a disaster.
Legal Aid of North Carolina does not engage in political or policy advocacy. We do not represent a political party, an ideology or a political agenda.
We advise and represent people on their civil legal needs, regardless of their political affiliation, where they live or whom they vote for.
We are here for all North Carolinians.
The Consequences of the IOLTA Changes Are Already Real
Legal Aid of North Carolina has historically received approximately half of North Carolina’s annual IOLTA funding, including approximately $6.2 million in 2025.
The loss of that funding has already forced Legal Aid to reduce its workforce, close or consolidate offices, and reduce services across the state.
We estimate that we will serve several thousand fewer North Carolinians in 2026 than we served in 2025, when full IOLTA funding was available.
If this loss of funding continues, tens of thousands of North Carolinians who would otherwise have received legal advice or representation will instead be required to navigate serious legal problems on their own. It is unclear whether there will be any financial support for civil legal services in North Carolina following another natural disaster.
Why We Filed This Lawsuit
We did not take this action lightly.
Legal Aid never wanted to be in the position of challenging an act of our state legislature.
We believe that Legal Aid, the General Assembly, our courts, the organized bar, private lawyers, local governments and community organizations all have important roles in serving the people of North Carolina.
But our first responsibility is to our clients and to our mission.
We believe the provisions challenged in this lawsuit are unconstitutional. By depriving civil legal aid organizations of funding that has supported low-income North Carolinians for more than four decades, the legislation nullified a decision of the state Supreme Court. And by banning organizations who receive IOLTA funding from engaging in legal advocacy on certain topics, the legislation violates the First Amendment to the Constitution.
We have faith in our courts and in the judicial process. We do not anticipate making further statements as the matter proceeds through the courts.
In the meantime, Legal Aid of North Carolina will continue doing what we have always done: providing high-quality legal advice and representation to low-income people in every part of our state.