Statement of City Bar Justice Center Executive Director Kurt M. Denk Opposing Governor’s Proposed “IOLA Sweep” in NYS Executive Budget That Would Put Civil Legal Aid Further at Risk

New York, February 6, 2024 – A recent proposal by New York Governor Kathy Hochul to divert $100 million in IOLA funds to the State General Fund risks an essential support for civil legal aid for the most vulnerable New Yorkers, and should be withdrawn. 

As recently reported by the New York Legal Services Coalition, even before the governor’s proposed “IOLA Sweep” further described below, the wage gap between civil legal aid attorneys’ salaries and their government peers has been fueling a crisis for pro bono legal services providers including the City Bar Justice Center, worsening our state’s Access to Justice Gap (read more at this link). Additionally, the proposal in Governor Hochul’s Executive Budget to sweep to New York’s General Fund, $100 million from the Interest on Lawyers Account (IOLA) – a fiduciary fund comprised of interest on attorney-held escrow monies, and NO taxpayer dollars, earmarked solely for civil legal aid – would further harm New Yorkers of limited means who require pro bono legal services to help them secure the essentials of life – housing, food and income stability, abuse prevention, health care, and civil rights (read Statement of New York City Bar Association President Susan J. Kohlmann Opposing Governor’s Proposal to Divert IOLA Funds; Written Statement of the City Bar Justice Center Submitted to the Joint Legislative Budget Hearing on Public Protection; Testimony of the New York Legal Services Coalition at the Joint Legislative Budget Hearing on Public Protection).  

The risk of the governor’s proposed “IOLA Sweep” for IOLA-funded organizations like the City Bar Justice Center and 80 other IOLA grantees across New York State is a deeply human one, because it risks unsettling longstanding services that provide those essentials of life to our neighbors who cannot afford legal help. The Justice Center alone helped over 25,000 such people in calendar year 2023, in part thanks to IOLA funding, and in FY2023, the community of IOLA Grantees closed over 307,000 cases benefiting more than 639,000 New Yorkers in need. IOLA-funded legal services also benefit New York’s economy, with independent economic analyses calculating $2.8 billion of overall financial benefit of IOLA grantees’ work to New York’s economy, eight thousand jobs, and up to a ten dollar overall economic benefit generated by every one dollar invested in civil legal aid (see IOLA Board Statement).  

What can our supporters, partners and peers in the legal community do about this? 

• Endorse a Community Sign-On Letter opposing the governor’s proposed IOLA sweep by emailing iolaf@iola.org with the subject line “Support for IOLA” and indicating in the body of the email exactly how you would like IOLA to list your individual name and/or organizational name on the letter. 
• If you are an attorney, review and sign a Lawyers’ Letter of Concern hosted at this link. 
• Learn more about how the wage gap between civil legal aid attorneys and their government peers is fueling a civil legal services crisis and worsening New York’s “Access to Justice Gap” – and how the proposed “IOLA Sweep” will exacerbate this problem – by reading the New York Legal Services Coalition’s statement and in-depth white paper on the issue.  
• Reach out to your elected representatives in the New York State Legislature, urging them to oppose the governor’s proposal. You can use bullet points included in – or, simply repurpose – the IOLA Community Letter described in the first bullet point above.  
• Do any or all of the above, after reading what the following community and elected leaders have said about the proposed IOLA sweep:  

• “The Governor’s proposal to divert $100 million in IOLA funds to the General Budget is extremely misguided and ill-advised. This remarkable program, whereby interest on lawyers’ accounts is used exclusively to deliver critical civil legal services to low-income New Yorkers in areas affecting life’s essentials, should be heralded and preserved, not undercut. Lawyers across the state recognize, trust and expect that their use of IOLA escrow accounts will result in contributions to the legal services landscape,” said Susan J. Kohlmann, President of the New York City Bar Association. 
• “The City Bar Justice Center is a grateful IOLA grantee, and stable IOLA and other funding have in recent years allowed us to expand services to meet continuingly increasing need – including an 11% increase in persons benefited by our services in 2023 over 2022. It has also allowed us to diversify our services, and if we were to have to cut back, needs that many of our present clients can meet in a holistic way through our organization, presumably would need to be met by other providers or would be sought through government agencies – or, simply but tragically, would go unaddressed,” said Kurt M. Denk, Executive Director of the City Bar Justice Center. 
• “No Governor in IOLA’s 40-year history has ever transferred the non-taxpayer money earned on attorney escrow accounts into the General Fund.  IOLA urges Governor Hochul to rescind the proposed transfer in her 30-day amendments and avoid harming the provision of civil legal aid in New York,” said Christopher B. O’Malley, Executive Director of The Interest on Lawyer Account Fund of the State of New York.   
• “The proposed $100 million sweep from the IOLA fund would have a devastating impact on low-income New Yorkers who rely on civil legal services for eviction prevention and assistance with housing, healthcare and government benefits. If New York is to close the justice gap, we must ensure that we’re properly funding the legal services organizations and programs that are dedicated to helping those in need. The State Legislature must firmly reject this sweep outright and in no uncertain terms,” said Senator Brad Hoylman-Sigal. 
• “In order to close the Access to Justice gap, we must strengthen and grow the dedicated civil legal aid workforce that is providing direct representation and counsel to clients. This starts with achieving pay parity between the civil legal services and government positions,” said Tina Monshipour Foster, Executive Director, JustCause and Board President, NY Legal Services Coalition. 
• “Sweeping the IOLA funds into the General Fund would have a terrible impact on New York’s civil legal aid community, and, more importantly, the people we serve. The New York Legal Services Coalition is calling on the governor to rescind this proposal in her 30-day budget amendments. We ask Governor Hochul, please don’t undermine our community’s plan to make progress in fixing these pernicious problems – instead, work with us to close the justice gap,” said Kristin Brown, President and CEO of Empire Justice Center and co-vice President of the New York Legal Services Coalition.  
• “Governor Hochul’s proposal to siphon IOLA funding for critical civil legal services to the general fund would only exacerbate the harm to low-income New Yorkers who already face deep inequities in the justice system, and cost the state millions of dollars. We urge Governor Hochul to rescind this proposal in her 30-day amendments and stand with New York’s civil legal services community and the communities we serve,” said Adriene Holder, chief attorney of the Civil Practice at The Legal Aid Society.  
• “The Governor’s proposal to sweep $100 million in IOLA funds into the general fund is misguided and undermines her stated commitment to expand access to justice for all New Yorkers. The IOLA Fund was created to provide lawyers with an ethical way to manage client escrow funds by supporting legal services to low-income New Yorkers. For forty years, it has accomplished that purpose. Reducing those funds, at a time when New York is falling far short of meeting the justice gap and when legal services providers are losing lawyers due to pay inequity, will be a giant step backward for those of us seeking justice for all,” said Raun Rasmussen, Executive Director of Legal Services NYC. 

About the City Bar Justice Center  

The City Bar Justice Center – the largest division of the New York City Bar Association’s charitable affiliate, the City Bar Fund – furthers access to justice by addressing unmet civil legal needs of New Yorkers struggling with poverty and other systemic socioeconomic barriers. The Justice Center mobilizes law firms, corporate legal departments, and other legal institutions to provide pro bono legal services; educates the public on pertinent legal issues; fosters strategic community relationships; and impacts public policy. The Justice Center’s dozen civil justice projects, including the most comprehensive civil legal hotline in New York, are led by a staff of dedicated attorneys and professionals who provide high-quality civil legal services through brief advice and information, referrals, and both limited scope and extended representation that benefit more than 25,000 New Yorkers each year. 

Contact: Sammy Darris (sdarris@nycbar.org) (212.382.6743) 

About the New York Legal Services Coalition  

The New York Legal Services Coalition is a statewide association that represents the interests of civil legal services organizations and the communities they serve. Our members collectively provide services in the areas of family law, housing, immigration, and public benefits across all 62 counties of New York State.