Four Bar Associations Prevent Illegal Seizure of Millions of Dollars From Civil Legal Services Fund
1.31.2025
Four bar associations reached an historic settlement with New York State to help ensure that needy New Yorkers have lawyers when facing civil court battles – such as a parent’s fight for custody of a child or a plea to save the family home.
“When the state created a fund in 1983 to help everyday New Yorkers afford legal services during the most consequential moments of their lives, the state promised that the fund would own its own assets, and for four decades, the state never took a penny of it. But last year for the first time, the state usurped $55 million of the fund for its own purposes,” the New York State Bar Association, the New York City Bar Association, the New York County Lawyers Association and the Monroe County Bar Association said.
Under the threat of a lawsuit from the four bar associations and the fund itself, Gov. Kathy Hochul and Comptroller Thomas DiNapoli agreed this week to put the fund off limits from the normal politics of budget making. By agreeing to characterize the Interest on Lawyer Account Fund of the State of New York, known as IOLA, as a ‘fiduciary fund,’ it guarantees that this vital lifeline to legal services remains intact. The fund has distributed almost a billion dollars in grants.
The state’s raid of the fund last year could not have come at a worse time; the access to justice gap between those who can afford a lawyer and those who cannot is now a canyon widening into an abyss, into which an untold number of New Yorkers are now falling.
“The harsh truth is that justice is growing increasingly out of reach for all but the well-to-do,” the bar associations said. “Most of the poor simply cannot afford a lawyer to help them with civil legal problems of central importance to their lives, such as child custody, debt collection, eviction, foreclosure, and guardianship.”
Greenberg Traurig is the pro bono counsel for the bar associations and IOLA in this matter. The Greenberg team is led by Henry M. Greenberg, a litigation shareholder at the firm and former president of the New York State Bar Association, and includes shareholders Elizabeth Garvey, Stephen Saxl and Caroline J. Heller, chair of the firm’s pro bono practice, and litigation associate Ben Wood.
The vast bulk of the money in the IOLA fund comes from pooled interest paid on lawyers’ trust accounts – interest generated without taxing the public and at no cost to lawyers or their clients.
Read what the bar associations are saying about the settlement:
- “We thank the governor for recognizing how vital providing justice to everyday New Yorkers actually is. This fund was set aside to assist our most vulnerable neighbors during some of the most traumatic moments in their lives – the removal of a child from a home, eviction, foreclosure,” said Domenick Napoletano, president of the New York State Bar Association. “Today the state’s legal profession proved that it is willing to stand up for what it believes in no matter how uncomfortable.”
- “When New York’s lawmakers created the IOLA Fund to help millions of low-income New Yorkers in desperate need of legal services, it was well understood that the state would keep its hands off of it,” said Muhammad U. Faridi, president of the New York City Bar Association. “This decision is a win for the most disadvantaged among us.
- “The state’s actions contravened the explicitly stated purpose of the IOLA Fund’s creation, and were inconsistent with its mission and legislative history,” said New York County Lawyers Association President Adrienne Koch. “This settlement is a testament to our core policy to support civil legal service funding and improve access to justice.”
- “The governor, comptroller, budget director and the state’s collective leadership now understand the importance and mission of the IOLA fund,” said Sareer A. Fazili, president and chairman of the Monroe County Bar Association. “We are here to ensure that access to civil legal services remains accessible at all times and for all time.”
