Civil legal services face funding loss in new state budget, advocates say

Civil legal services nonprofits say they face significant funding losses unless more money is allocated towards a public legal fund in the state’s budget, which is currently being negotiated.  Eagle file photo by Walter Karling

By Noah Powelson

Civil legal services for New Yorkers could be severely reduced in the coming years if the governor does not increase the spending authority for a public fund that keeps legal nonprofits afloat, advocates warned this week.

The week after Governor Kathy Hochul unveiled her proposed executive budget for 2027, legal advocates are again calling for more money to be allocated to the Interest on Lawyer Account, otherwise known as the IOLA Fund. A public legal fund, the IOLA Fund provides grant funding for over 80 legal nonprofits that represent low-income and indigent New Yorkers in their civil cases.

Previously, the IOLA Fund was allocated $77.5 million in the governor’s 2026 executive budget, a $15.5 million increase from last year – the fund has more than doubled since Hochul took office, though at one point she threatened to pull $100 million out of the fund for other state expenses.

But the IOLA Fund had requested $102.5 million, part of which is for the development of legal services infrastructure projects.

In the governor’s most recently proposed 2027 executive budget, the IOLA fund was allocated an additional $3.3 million, leaving it a little less than $25 million short of the request.

IOLA funding is not generated from taxes – the money is generated through interest on attorney escrow accounts.

Advocates say the additional funding is going to be needed sooner rather than later as the IOLA Fund enters the second year of its five-year competitive contracting cycle. During this five-year period, civil legal service providers apply for funding contracts from the IOLA Fund in order to pay for their staff, services and bills. If the IOLA Fund doesn’t receive more funding, they can’t award as many contracts, and many legal service providers will start cutting back.

The NY Legal Services Coalition, a nonprofit legal services organization that provides representation to low-income persons and families, called on Hochul to grant the additional requested funding to avoid potential disruptions for their clients.

“Civil legal services providers are essential partners in implementing the Governor’s own budget priorities, including protecting immigrants’ rights and helping New Yorkers navigate economic hardship,” NYLSC said in a statement. “New York cannot meaningfully address affordability, protect immigrant communities, or deliver on its promise of fairness without a strong and stable civil legal services system.”

Kristin Brown, the president of NYLSC and the CEO of the nonprofit law firm the Empire Justice Center, said the lack of full IOLA funding came as a surprise. If current funding allocation holds, Brown said, the Empire Justice Center would be facing a 25 percent cut for the 2026-2027 year.

“Knowing the governor's appreciation for the civil legal services, the state's reliance on civil legal services providers to do really crucial work, it very much came out of nowhere,” Brown told the Eagle. “Hopefully once there's an understanding of the impact of that cut, there will be a swift effort to provide the money so that we are able to move ahead as planned.”

Brown said her organization, like many other legal service providers, will have to make significant reductions in their budget to keep services going.

“Without the additional $25 million needed to fully fund IOLA’s request, there will be significant cuts to the second year of contracts,” Brown said in a separate statement. “Those reductions would mean the loss of jobs, fewer services for vulnerable communities, and the potential unraveling of carefully planned investments that were intended to strengthen the civil legal services system for the long term—directly undermining the policy goals this budget seeks to advance.”

The IOLA Fund has seen increases in spending authority in recent years, but advocates say it has not kept pace with the growing costs and looming budget cuts from the federal government. With federal funding cuts being implemented across agencies and safety net programs last year, legal advocates have repeatedly called on more funding to ensure indigent New York still have access to legal services.

At a panel before the New York State Court of Appeals in September 2025, Christine Fecko, the executive director of the IOLA Fund, said they were informing their partners and grantees to expect significant reductions in contract awards compared to previous years.

A reintegration pilot program bill sponsored by Queens Assemblymember Andrew Hevesi was sent to the Ways and Means Committee on Wednesday.  File photo via NYS Assembly

“Recent and anticipated additional federal funding cuts and restrictions pose a serious threat to the civil legal services safety net in New York State,” Frecko said at the time. “This moment requires urgency. The erosion of federal support for civil legal services threatens not only our sector, it threatens the bedrock principle of equal justice for all.”

Fecko said that IOLA partners received $137 million in federal funding in 2025, roughly 14 percent of all legal services funding in the state. The Legal Services Corporation, which is the largest federal funder for legal services, has told IOLA grantees to expect a minimum cut of 20 percent. Fecko said the loss would account for about $6.8 million.

“The future of this funding is entirely unclear,” Fecko said. “The recent targeting of other safety net programs like Medicaid and SNAP, and the open hostility recently demonstrated towards the homeless population in Washington DC would suggest these grants are at high risk.”

Brown told the Eagle that reductions in IOLA Fund contracts will have a domino effect as legal services organizations like NYLSC and the Empire Justice Network cut costs, services for New Yorkers will naturally be reduced.

“It will reduce the amount of legal assistance available to low-income New Yorkers,” Brown said. “We're talking about access to eviction prevention. We're talking about access to assistance for domestic violence victims in need. We're talking about real bread and butter issues like being able to get access to public assistance benefits and healthcare benefits. So, there’s an immediate loss to our clients who rely upon us.”

Brown said she is hopeful that once the impact of IOLA funding reduction becomes apparent, the governor will address the issue in upcoming budget proposals