By Tom Jarvis
House Bill 253, a proposed measure in the New Hampshire Legislature, has sparked considerable discussion among legal professionals and policymakers. The bill aims to redirect funding generated through the Interest on Lawyers Trust Accounts (IOLTA) Program from civil legal services to the New Hampshire Public Defender’s (NHPD) office.
HB 253 would require attorneys managing interest-bearing pooled trust accounts to remit the interest or dividends quarterly to the NHPD, contingent on the NHPD adhering to specific restrictions. These restrictions include prohibiting the NHPD from allocating funds to any nonprofit organization or political campaign within the same quarter. If the NHPD fails to comply, the funds would be remitted to the State’s general fund.
However, the NHPD refutes the implication that it allocates funds in the manner described by the bill.
“The NHPD did not seek or request this bill,” says NHPD Board President and NHBA Board Member Michael Iacopino. “The NHPD does not contribute to other nonprofit organizations, and does not make contributions to political candidates, their election committees, or political action committees. The sole focus of NHPD is to zealously represent our clients as envisioned by our constitutional mandate.”
Background on IOLTA
The IOLTA Program, established in the Granite State in 1982 and governed by New Hampshire Supreme Court (NHSC) Rule 50, allows lawyers to pool nominal or short-term client funds in interest-bearing accounts. Before IOLTA, these funds were typically held in non-interest-bearing accounts because it was not economically feasible to manage separate accounts for each client. IOLTA solved this by collectively generating interest that would not otherwise exist, turning unused funds into a valuable resource.
The interest earned is distributed through grants administered by the New Hampshire Bar Foundation (NHBF) to nonprofit organizations providing free or reduced-fee civil legal services, as well as educational programs about the law and courts, ensuring broader access to justice and legal education across the state.
Over the past four decades, the program has raised over $40 million, supporting organizations such as New Hampshire Legal Assistance (NHLA), 603 Legal Aid (603LA), and the Disability Rights Center-NH (DRC-NH), which provide free civil legal aid to low-income Granite Staters primarily in the areas of housing, domestic violence, family law, disability rights, and public benefits.
The program is overseen by the Bar Foundation. The Foundation’s IOLTA Grants Committee, members of which are elected by New Hampshire Bar members, evaluates grant applications based on comprehensive submissions, including narratives, financial data, and audits, ensuring careful oversight of how the funds are allocated.
Support for HB 253
Proponents of the bill argue that redirecting IOLTA funds would better serve New Hampshire’s indigent defense system.
“The IOLTA program is a de facto tax on New Hampshire citizens that no one ever voted for, and the proceeds are sent to a slush fund that feeds far-left NGOs, which engage in a variety of activities that are harmful to New Hampshire citizens,” says Representative Travis Corcoran (R), the bill’s primary sponsor. “This bill redirects those funds away from activist organizations to the Public Defender’s office, where the money will be used to protect our society’s most vulnerable.”
The bill’s co-sponsor, Representative Mike Belcher (R), agrees with the sentiment.
“In the general sense, I believe we have an interest in adjusting incentives in a manner that mitigates against ideological activism on the part of Public Defenders’ offices,” he says. “[It] is one of many efforts being made to break the Progressive partisan NGO-industrial complex driving social revolution, economic cartelization, and partiality in the judiciary.”
Criticism of HB 253
Opponents of the bill have raised concerns about the potential consequences for civil legal services in the state.
“For almost half a century, the IOLTA program has raised over $40 million,” says NHBF Board of Directors Chair Scott Harris. “Those funds have been spent to enable thousands of New Hampshire’s most vulnerable citizens to gain access to the courts and to educate the public on the importance of the Rule of Law. IOLTA has enabled this access to justice and education without imposing on the State’s budget.”
Attorney Russell Hilliard, a former NHBA president and former NHBF chair who was on the NHBA Board of Governors when the IOLTA program was created in the Granite State, says HB 253 would hinder access to justice.
“This bill blatantly violates Supreme Court Rule 50,” he says, adding that he had attended oral arguments at the NHSC in the early 1980s, which led to the adoption of Rule 50. “The State has a constitutional obligation to provide defense for criminal defendants, but this bill shifts IOLTA revenue, which has funded civil legal services for over 40 years, to fulfill that obligation. This is not a criticism of the New Hampshire Public Defender – they are among the best in the nation in terms of delivering legal services to indigent criminal defendants – but the State must fund criminal defense. The IOLTA program supports civil legal services, and diverting these funds would devastate the ability to provide access to justice. I hope common sense prevails and the program continues, as passing this bill would be squarely in violation of the Supreme Court Rule.”
NHLA Executive Director Sarah Mattson Dustin expresses concern about the precedent set by using IOLTA funds for indigent defense.
“IOLTA revenues should continue to flow to the Bar Foundation for distribution through its grant-making process to fund civil legal services, as is true in other states,” she says. “The Public Defender – and the indigent defense system more broadly – should also get all the resources that it needs. We just don’t want to address that challenge by significantly reducing the resources available to NHLA and our civil legal services partners like 603 Legal Aid and the Disability Rights Center, who are all serving some of the most vulnerable folks in our communities.”
Mattson Dustin highlights the potential ripple effects of HB 253, warning that it could drastically reduce the availability of civil legal services across New Hampshire.
“We already don’t have enough staff to help everyone,” she says. “We already turn many people away. Not just people who aren’t financially eligible, but people who are financially eligible with meritorious cases in which we know we could make a positive difference. IOLTA is typically one of our largest sources of revenue in any given year. The impact that [the bill] would have is likely the need to reduce the size of our staff by six to eight positions. If we were faced with the need for such a reduction, we would also have to consider closing one or more regional offices. It’s not hyperbolic to say that this would have a catastrophic impact.”
603LA Executive Director Ariel Clemmer shares a similar viewpoint.
“Without IOLTA funding, our ability to provide critical civil legal aid would be devastated,” she says, noting that IOLTA is 603LA’s second-largest funding source. “These dollars empower us to remain nimble, responsive, and effective. The reality is clear: IOLTA funding is used to directly serve the people of New Hampshire and ensures they have the tools, information, and sometimes a pro bono attorney standing by their side, so they can navigate their civil legal crisis with dignity.”
Stephanie Patrick, Executive Director of DRC-NH, emphasizes the role of IOLTA funds in supporting individuals with disabilities.
“The funding from IOLTA is critical,” she says. “Even with that funding, we are only able to take a limited number of cases. There are cases every week that we turn away because we don’t have the capacity. The work of the Public Defender is very important – people, including the people that we serve, need access to robust representation within the criminal justice system – but these funds are critical to serve people with disabilities, who make up about 12 percent of the population in the state.”
National Perspective and Lack of Precedent
The Sixth Amendment Center (6AC), a nonprofit organization focused on indigent defense, questioned the viability of the proposed bill.
“The Sixth Amendment Center is not aware of an indigent defense system that is funded through IOLTA funds,” says 6AC Deputy Director Aditi Goel. “National standards call for state funding through appropriation, rather than funding from an alternative source, to allow for a predictable stable revenue stream necessary to ensure effective public defense services under the Sixth Amendment.”
Goel continues: “Alternative revenue sources, such as IOLTA funds, do not work as a source of public defense funding because there is no direct correlation between the resources needed to provide effective public defense services and the amount of funding that can be raised through alternative means.”
Conclusion
HB 253 represents a significant shift in New Hampshire’s approach to funding legal services, reallocating resources from civil legal aid to indigent criminal defense. As the debate over the bill continues, lawmakers and stakeholders will have to carefully consider the potential impacts to access to justice. The outcome of this proposal could have lasting implications for the state’s legal system and the vulnerable population it serves.