Republican State Auditor Dave Boliek released an audit this week on the philanthropic arm of the State Bar that said its grant awards complied with current requirements, but the program could improve the process for monitoring how those funds are used.
The North Carolina Interest on Lawyers’ Trust Accounts, or NC IOLTA, distributes millions of dollars a year to legal-aid organizations from the interest accrued when lawyers hold clients’ money in escrow.
Last year, the Republican-led General Assembly put a year-long freeze on those funds that expires June 30. The hold has created hardships for dozens of legal-aid organizations that were counting on the $12 million they had expected to be allocated this year. Some, such as Legal Aid of North Carolina, a statewide nonprofit law firm that provides free counsel to low-income people, had to reduce services, cut staff positions, or close offices.
Republican lawmakers called IOLTA executive director Mary Irvine and Bar executive director Peter Bolac in front of the House Select Committee on Oversight and Reform in late October and questioned the missions of some grant recipients that advocate for immigrants and equity.
Some lawmakers criticized organizations whose missions clashed with their political priorities, while also offering praise for recipients such as Legal Aid, the largest IOLTA grantee.
In a statement released this week, Bolac said the audit “demonstrates NC IOLTA’s steady, focused commitment to achieving our mission with the highest standards for how we work.”
“Notably, the audit did not identify any instances of funds being improperly disbursed by the Board or misused by grant organizations,” Bolac said.
The audit was initiated on August 4 and concluded this month, according to a statement from Karen Lewis Taylor, IOLTA communications and outreach coordinator. Auditors initially focused on multiple programs of the state Bar as well as the agency’s overall finances, she added, but later narrowed the focus to the IOLTA grant funding process.
The two key recommendations from that review include expanding outcomes-based goals and more stringent oversight after funds are disbursed. Proposed changes are to be presented to the IOLTA Board of Trustees within six months.
Ashley Campbell, CEO of Legal Aid of North Carolina, also highlighted the state auditor’s finding that IOLTA funding had been properly directed to organizations providing needed civil aid across the state. She said the nonprofit law firm maintains strong internal controls to ensure that IOLTA funds are used for their intended purposes.
“IOLTA funding is essential to ensuring access to justice for people who otherwise could not afford legal help,” Campbell said. “Our recent independent audit confirms that Legal Aid of North Carolina manages resources responsibly, complies fully with all requirements, and delivers meaningful results for the people we serve.”