Statement in Opposition to the Diversion of IOLA Funds – No Matter How Worthy the Cause
The New York City Bar Association is deeply disappointed by the inclusion in the FY2024-25 New York State budget of a late-breaking proposal from Governor Kathy Hochul to sweep $55 million of non-taxpayer dollars from the Interest on Lawyers Account Fund (IOLA). The initial executive budget had proposed sweeping $100 million from IOLA to the general fund, which was rescinded on February 15 following widespread protest from legal aid advocates, other nonprofit leaders, and a diverse cross-section of the private bar. The eleventh-hour re-emergence of this proposal is deeply troubling and sets a dangerous precedent – notwithstanding that the money apparently is being directed towards worthy and previously independently funded homeowner protection programs and emergency rental assistance for tenants. We strongly agree with IOLA’s opposition statement issued on April 17, 2024, and are further discouraged that this proposal was publicly resurrected only during the final hours of budget negotiations, leaving little time for public input.
City Bar President Susan J. Kohlmann said, “The City Bar is extremely disappointed with the news that IOLA funds have been swept to the tune of $55 million in the final budget deal. This was done despite earlier collective and sustained opposition from the legal profession, which must now direct its efforts toward advocating for measures that will protect IOLA funds from this sort of sweep in the future.”
The City Bar remains deeply concerned that the diversion of IOLA funds in this manner undermines the independence of the profession and of IOLA, and the belief among lawyers that using an IOLA account comports with ethical rules and triggers an accountable and robust grant-making process guided by the fiduciary obligations of the IOLA Board. The Governor’s last-minute diversion of IOLA funds sets a precedent that could lead lawyers to question whether they should use IOLA accounts at all, creating an existential threat to a primary funding stream for civil legal services in New York.
Stakeholders can freely and fairly debate whether the universe of IOLA grantees should be expanded or whether changes to the IOLA structure should be considered, but a last-minute sweep of funds to be diverted to a particular cause or causes outside the grant-making purview and integrity of the IOLA governance structure should raise alarm bells for the legal profession and policymakers alike.
About the Association
The mission of the New York City Bar Association, which was founded in 1870 and has 23,000 members, is to equip and mobilize a diverse legal profession to practice with excellence, promote reform of the law, and uphold the rule of law and access to justice in support of a fair society and the public interest in our community, our nation, and throughout the world. The Association’s affiliated City Bar Justice Center, a comprehensive provider of civil legal services benefiting over 25,000 New Yorkers of limited means each year, is an IOLA and Homeowner Protection Program (HOPP) grantee and has previously advised New Yorkers in need regarding Emergency Rental Assistance Program (ERAP) relief. The Justice Center views IOLA, HOPP, and ERAP as complementary but unique legal aid and housing stability programs, each of which helps vulnerable New Yorkers secure services and maintain resources for essential shelter and sustenance, and each of which accordingly should be preserved as stand-alone programs, with independent and fully funded budgets.
