RALEIGH, N.C. — Three groups that provide civil legal help to low-income North Carolinians sued the state and top Republican legislative leaders, saying recent budget changes wipe out a court-supervised funding program ordered by the state Supreme Court in 2007.
The statewide civil legal aid nonprofit, Pisgah Legal Services and the Charlotte Center for Legal Advocacy filed the complaint in Wake County Superior Court. Defendants include legislative leaders, the North Carolina State Bar and the board that oversees the Interest on Lawyers Trust Accounts program, known as IOLTA.
For more than 40 years, interest earned on client trust accounts has financed nonprofit legal aid for people who cannot afford a lawyer in civil cases. In 2007 the Supreme Court made the program mandatory and kept it under court supervision, directing that the money support civil legal aid and not pay private lawyers.
The lawsuit says the latest budget effectively abolishes that court program, replaces it with one designed by the General Assembly, and redirects IOLTA money received from July 1, 2025 onward into the Private Assigned Counsel Fund at the Office of Indigent Defense Services, which pays private lawyers in criminal cases.
The lead plaintiff said it historically received about half of the states annual IOLTA grants, including roughly $6.2 million in 2025, and that the loss has already forced workforce cuts, office consolidations and fewer services. Pisgah Legal Services pointed to IOLTA data showing nearly 100,000 household members statewide benefited from grantee help in a recent year, including about 10,000 domestic violence victims.
Plaintiffs also argue the budget tries to cut off funding for organizations that speak on certain topics, which they say violates free-speech and association rights. They ask the court to block the new rules and restore the Supreme Courts IOLTA order.
