Biglaw

New York Governor Provokes Ire Of Biglaw

Gov. Hochul is diverting money from legal aid for low-income New Yorkers.

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New York State Governor Kathy Hochul

(Photo by Howard Schnapp/Newsday RM via Getty Images)

Dozen of Biglaw leaders have come together to condemn the latest funding plan of New York Governor Kathy Hochul that would divert $100 million from the New York Interest on Lawyer Account Fund (IOLA). That money has historically been used to fund legal aid for low-income New Yorkers, and Hochul’s plan would move the money to the state’s general fund.

Leaders from a wide swath of Biglaw firms including Paul Weiss, Cravath, Hogan Lovells, Cleary, Cooley, Debevoise, Sidley, Skadden, and Sullivan & Cromwell wrote that the move is “misguided” and “an existential threat” to essential legal services.

“We are deeply concerned that this unprecedented diversion of funds would impose lasting harm on low-income New Yorkers by taking money from legal aid organizations, would severely undermine the stability of a critical source of financial support for legal services and would violate the statute that created IOLA.”

As reported by Law360, the funds collected through IOLA are used to fund legal services:

The state’s IOLA program requires attorneys to maintain special interest-bearing trust accounts for “qualified funds,” or funds that the attorney determines to be too small or held for too short a time to generate net interest, according to the IOLA website. Those funds are kept together in an IOLA account, and the interest from the account goes to legal aid as well as improvements in the “administration of justice” in the state, according to the program’s description.

Biglaw isn’t the only segment of the legal profession miffed at this plan.

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The New York City Bar Association wrote their own letter about the plan, “Food security, shelter, jobs, health care and other life necessities would be at risk if these non-taxpayer, IOLA funds were to be diverted.”

In another letter, social service agencies including Access to Justice Brooklyn, Community Service Society of New York, and the City Bar Justice Center, opposed Hochul’s plan:

“Ethics opinions approving attorney use of IOLA accounts were expressly predicated on the IOLA Fund enhancing civil legal services to low-income New Yorkers,” they said. “Therefore, diversion of any IOLA interest to the General Fund could jeopardize the legal profession’s ethical basis for participating in the IOLA Fund.”

Even the IOLA Board of Trustees came out against the plan, urging the fund not be diverted, despite the state’s budget problems. “In the 40 years of IOLA’s existence, New York state has faced many crises including housing, education, financial and a global pandemic,” the board said. “Despite these challenges, IOLA’s funds cannot and should not be diverted to the general fund.”

Read Biglaw’s letter below.

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Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].

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