City Bar challenges proposed $100 million IOLA Fund diversion

The New York City Bar Association, representing a broad spectrum of the legal community, is spearheading opposition against Gov. Kathy Hochul’s proposal to divert $100 million from the Interest on Lawyer Account (IOLA) Fund to the state’s general budget. 

The association warns that this action could critically restrict access to essential legal services for the indigent, with far-reaching implications for New York’s justice system and economic well-being.

Established in 1984, the IOLA Fund has been instrumental in providing essential legal services to those unable to afford them, funded by the interest generated from lawyer trust accounts. This model, mirrored across the United States, has proven effective in supporting a wide array of legal aid initiatives. 

In the last year alone, IOLA-funded organizations have resolved more than 300,000 cases, directly benefiting over 600,000 residents and contributing an estimated $3.5 billion in economic benefits to New York, spanning areas such as food security, housing, employment, and healthcare.

Susan Kohlmann, president of the New York City Bar Association, highlighted the profession’s trust in the IOLA system as a means to bridge the state’s justice gap, which requires up to an additional $1 billion in funding.

“Lawyers across New York recognize, trust and expect that their use of IOLA escrow accounts will result in contributions to legal services for those in need, at a time when up to an additional $1 billion is required to close the justice gap in the state,” Kohlmann said.

Kurt Denk, executive director of the City Bar Justice Center, pointed out the human impact of the proposed IOLA sweep, which threatens to dismantle established services essential to New Yorkers lacking legal representation. 

“The risk of the governor’s proposed ‘IOLA Sweep’ for IOLA-funded…