On September 13, 2017, current and former trustees, grantees, and staff of NC IOLTA (the North Carolina Interest on Lawyers’ Trust Account program) gathered with colleagues from across the legal community to honor Evelyn Pursley, former executive director, upon her retirement. Evelyn Pursley completed her 20th year as executive director of NC IOLTA this summer and retired at the end of August. 

During her tenure, she saw many changes at the program—both positive and negative. For example, she remembers, “When I started at IOLTA, the concept—using the interest from lawyers’ general pooled trust accounts for grants to support access to justice—was in the midst of a court challenge in another state. After making its way to the United States Supreme Court twice, it was decided in 2003 that the concept is not unconstitutional.”

John McMillan, former chair of the Board of Trustees, unveiled artwork which has been donated to the State Bar’s art collection in Pursley’s honor. The artwork was secured with the generous contributions of many attendees assembled as well as other supporters of the program. The piece, Sedimentary: Johnston Canyon, is a hand-dyed and woven tapestry by North Carolina fiber artist Mary Kircher. The artwork was recently installed on the first floor of the State Bar building.

In remarks at the event, Celia Pistolis, Equal Justice Alliance chair, a coalition of the legal aid organizations across the state, thanked Evelyn for her involvement in the legal services community and her instrumental role in the formation of the alliance. “It was always clear that the work we were engaged in was just as important to Evelyn as it was to us.”

Increasing Program Participation

NC IOLTA was not a mandatory program at the time Pursley was hired. The trustees asked that Pursley work on increasing the number of lawyers with IOLTA accounts. “I believe that one reason I was selected for the position was that I was doing some fundraising and public relations work, and working with volunteers, at my former position with Duke Law School,” Pursley said.

Pursley recognizes the assistance of IOLTA trustees as well as various State Bar councilors and other bar leaders who made personal contacts with non-participants. Former IOLTA trustees remember how rewarding and yet time-consuming it was to reach out to law firms to take part in the program prior to it becoming mandatory.

She notes that her office also worked to raise visibility of the program by putting regular updates in the State Bar Journal, by speaking to law students, by participating in continuing legal education programs, and by making reports at State Bar meetings as well as meetings of other voluntary bar groups.

“The program did well in signing up attorneys and, prior to going mandatory, had almost all the largest firms in the state participating,” she said.

Moving to a Mandatory Program

By 2007, participation of eligible attorneys had increased from 59% to 75%, and North Carolina seemed ready to move to a mandatory program. In August 2007 the North Carolina State Bar Council, with support from the North Carolina Equal Access to Justice Commission and the North Carolina Bar Association, petitioned the North Carolina Supreme Court to direct the State Bar to implement a mandatory IOLTA program. In October of that year, the NC Supreme Court did just that—and the IOLTA program registered more than 3,300 new IOLTA accounts.

Ed Aycock, trustee from 1999 to 2005, reflected on one result of this change in 2009 upon IOLTA’s 25th anniversary. “Mandatory participation eliminated the need for trustees to devote time, energy, and resources to achieving full participation in the program by eligible lawyers, thereby enabling them to focus on enhancing revenue and effectively allocating funds to grant recipients,” he said.

“As it turns out, we made the change to a mandatory program at a particularly good time, as the economic crisis that hit in 2008 meant that IOLTA programs immediately saw serious declines in IOLTA income,” said Pursley.

In North Carolina, however, the IOLTA program’s income surpassed $5 million for the first time in 2008, increasing by 16% over 2007. The 2008 income allowed more than $4.1 million in grant money to be awarded in the next calendar year, an NC IOLTA record for most money granted in a year.

“If we had not gone to mandatory, we figure our IOLTA account income would have decreased by 13% that year,” Pursley said. “Approximately 25% of our total income in 2008 came from the new IOLTA accounts recorded from November 2007 through June 2008.”

Though the income downturn that began with the economic recession and continued as interest rates remained low is the longest downturn suffered by IOLTA programs, there has always been fluctuation in income as interest rates paid by banks on the accounts vary over time. “Because our grants often support operating expenses, it affects individuals’ salaries as well as the financial health of grantee organizations and their ability to provide equal access to justice,” Pursley said. “So, grant decreases are particularly difficult for everyone.”

In an effort to have funds available to keep grant-making as steady as possible, the reserve fund was established in 1996 at the urging of Ward Hendon, an Asheville attorney who served as a trustee from 1993 to 1999. Though grants have decreased by more than 50% during the long downturn in interest rates, the reserve fund has allowed for a more measured decrease than would have been possible otherwise.

Grantmaking

Since its first grants were awarded in 1984, the NC IOLTA program has administered over $83 million in grants for legal assistance for at-risk children, the elderly, the disabled, and the poor in need of basic necessities. In addition, the program has helped lawyers connect with those who need their pro bono assistance.

The majority of NC IOLTA grants—89%—have always gone to support legal aid organizations. These grants became more important after the 2008 downturn when many more people were in need of legal aid services. As previously noted, the IOLTA trustees were forced to dramatically reduce the number and size of grants beginning in 2010 to respond to a significantly changed income environment due to the economic downturn. The trustees decided to focus grant-making on organizations providing core legal aid services.

Steve Michael, former NC State Bar president and current NC IOLTA trustee, finds it appropriate that most of the grant money goes to legal services for the poor, noting “IOLTA grants help us fulfill our responsibilities as outlined in the Rules of Professional Responsibility. Providing access to justice is one of the big obligations we assume, and this is one method of fulfilling those obligations.”

NC IOLTA has also been an active participant in determining how providing access to justice in our state should be addressed. For instance, recognizing a need for more collaboration among legal aid entities, IOLTA was instrumental in creating the Equal Justice Alliance as a forum for civil legal aid providers who receive IOLTA funding to discuss coordination of legal services and efforts to increase resources. That group now meets regularly.

IOLTA also funded staffing and activities of the NC Equal Access to Justice Commission when it was launched by then NC Supreme Court Chief Justice I. Beverly Lake Jr. Now the commission receives funding through the State Bar.

Working with Banks

Since the NC IOLTA program is not part of a bar foundation, nor does it take part in fundraising, the income for grants comes from the interest remitted from IOLTA accounts. Over the last 20 years, Pursley has worked to improve the connection with North Carolina banks. “I always saw the program as a partnering of lawyers and bankers to do something good for the people of North Carolina, and we have worked hard to connect with the North Carolina Bankers Association and individual bankers.”

Including trustees from the banking industry has been particularly useful. Ed Aycock, who was counsel at the Bankers Association when he served on the IOLTA Board, thought it essential that the board include a representative of the banking industry. He found that such representatives act as liaison to the banking industry, helping bankers understand IOLTA and helping IOLTA trustees understand banking procedures.

Having a good rapport with the Bankers Association has been very helpful in working through changes like the move to a mandatory program and the subsequent move to requiring lawyers to hold accounts only at banks that agree to pay a comparable rate to that paid on similar accounts, known as comparability.

“We were able to meet with staff at the Bankers Association to work through these changes in the most efficient way, and to communicate with the banks about the changes,” says Pursley. “And more recently, we have been providing information on the work of the program at least annually through their publications, which came about when one of our banker trustees said that she had always been aware of IOLTA, but had not known how much good was being done with the funds before serving on the board. We decided we needed to get that information disseminated more widely to bankers, and we appreciate the assistance of the Bankers Association in doing so.”

Even given the comparability requirement, NC IOLTA encourages banks to provide the very best policies for IOLTA and become “Prime Partner” banks, which pay 75% of the fed rate, or currently 0.75. “We highlight the banks that give us the best policies on our bank list, which is on the IOLTA website, and we publish good news about changes to bank policies in the Journal,” says Pursley.

IOLTA staff members are also working with the Bankers Association to make presentations regarding trust accounting policies and procedures so banks can better serve their attorney customers.

Administration of Other Funding

In addition to its own funds, NC IOLTA has been administering the state funding provided for legal aid (access to civil legal assistance and domestic violence work) in North Carolina that passes through the NC State Bar since 2004. That funding has also fluctuated over time since it began in 1989, and has come from both appropriated funds and court filing fees. It reached a peak of $6 million in 2008 before decreasing to $2 million in 2016. Unfortunately, the General Assembly ended the funding for legal aid work (excepting domestic violence funding) in its last session.

During the long downturn in income from IOLTA accounts, the program has relied heavily on cy pres and other court awards designated for the provision of civil legal aid to the poor. Since 2007 the program has received over $2 million from class action residual funds. Over a half million of that has arrived in accordance with the provisions of NCGS 1-267.10, the statute that sets out a procedure by which the court enters an order directing payment of the sum of the unpaid residue from class action settlements to be divided equally to the Indigent Person's Attorney Fund and to the North Carolina State Bar for the provision of civil legal services for indigents. The State Bar has asked IOLTA to administer these funds.

Beginning in 2015, IOLTA programs around the country received funding from the Bank of America settlement with the Justice Department, specifically for the provision of funding to civil legal aid programs for legal assistance with foreclosure prevention and community redevelopment work. NC IOLTA received just over $12 million. Not only were these funds crucial to our ability to continue grant-making in 2016 and 2017, but the IOLTA trustees decided to open a separate grant cycle in 2016-17 to make ($5 million) multi-year grants for community redevelopment projects.

Leadership Transition

The IOLTA Board of Trustees planned for transition as Pursley retired. In 2014, Mary Irvine began working with IOLTA, the Equal Justice Alliance, and the Equal Access to Justice Commission. Irvine brought significant experience in access to justice and philanthropy issues having served as a program associate for both the UNC Center on Poverty, Work, and Opportunity and the NC Network of Grantmakers. The trustees were delighted to learn that Mary Irvine was interested in moving to the IOLTA directorship upon Evelyn Pursley’s retirement. They believed that the opportunity she had to learn IOLTA from the ground up and to establish relationships with IOLTA grantees, trustees, and with other bar leaders would be invaluable to her and to the program.

“I predict great success for Mary in this position as she is proactive and energetic in planning, and methodical and meticulous in execution; and she is unfailingly pleasant,” says Pursley.

As the interest rate climate improves, Irvine will strengthen IOLTA’s relationship with banks to encourage policies most favorable to IOLTA and ensure IOLTA is receiving a comparable interest rate on accounts. She also plans to work with other philanthropic organizations in North Carolina to educate them as to the benefits that legal aid organizations bring to our state, having received a grant from the National Association of IOLTA Programs for that purpose. 

Mary Irvine is the executive director of IOLTA.