Major Lawsuit Challenges Maine’s Mandatory Slush Fund for Left-Wing Groups

A lawsuit filed in federal court on Thursday challenges the constitutionality of Maine’s Interest on Lawyers’ Trust Accounts (IOLTA) program, alleging it violates the First and Fourteenth Amendment rights of lawyers and their clients.

The complaint, filed by Dedham resident E. David Wescott and the limited liability company Russell Johnson Beaupain, contends that the mandatory IOLTA program forces them to support causes they oppose.

The plaintiffs are suing several state entities, including the Chief Justice of the Maine Supreme Judicial Court, the State Court Administrator, the Maine Justice Foundation, and the Maine Board of Overseers of the Bar. According to the complaint, the mandatory IOLTA program requires lawyers to place client funds in accounts where the interest generated is used to fund various legal services organizations. The plaintiffs argue this violates their constitutional rights by compelling them to financially support speech and advocacy they disagree with.

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“This case concerns the well-established right of the public, under the First and Fourteenth Amendments to the United States Constitution, to be free from the tyranny of compelled speech,” the complaint states. The plaintiffs further allege that the interest accrued on client funds, which would otherwise benefit the clients, is being used to support organizations with political and ideological stances contrary to their beliefs.

Although the theory of the IOLTA program when it was founded was that the money generated would go toward funding access to legal services for the poor, since its inception the program has morphed into a slush fund for far-left organizations, many of which actively seek to influence State House policy and elections.

The lawsuit highlights that the Maine Justice Foundation, the non-profit group designated to distribute IOLTA funds and one of the defendants in the case, distributes IOLTA funds to various legal aid organizations, which the plaintiffs describe as “almost universally ‘left-wing’ in their political orientation.”

The complaint argues that the distribution of these funds creates a perception of bias within the judiciary and violates the principle of impartiality in the judicial system.

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Even a cursory review of the nonprofit groups the Maine Justice Foundation has distributed IOLTA money to reveals a decidedly left-wing bias.

Among the primary beneficiaries are the Immigrant Legal Advocacy Project (ILAP) and Maine Equal Justice Partners (MEJP).

ILAP’s stated priorities for 2024 include advocating for the removal of wait times for asylum seekers to obtain work permits, legalizing driver’s licenses and state IDs for non-citizens, establishing a Maine Office of New Americans, and ensuring non-citizens have access to welfare programs and MaineCare without affecting future immigration cases.

ILAP also aims to encourage the Department of Homeland Security to expand the “Temporary Protected Status” designation to more countries, enabling a greater number of non-citizens to attain legal status in the U.S.

Additionally, the organization seeks increased taxpayer funding to assist asylum seekers in immigration court and to eliminate policies that hinder non-citizens from seeking asylum in the United States.

MEJP, a well known progressive nonprofit with a headquarters close to the State House, actively lobbies for legislation introduced almost exclusively by members of the Democratic Party.

Like ILAP, one of MEJP’s central lobbying priorities is ensuring that non-citizens have access to government-funded benefits and health care.

Although such advocacy may relate to IOLTA’s original aim of helping the poor access legal services, the distribution of those funds has come at the same time that Maine’s public defender program is broadly regarded as underfunded and understaffed. This raises questions as to whether progressive political priorities have now superseded the goal of helping poor Mainers access legal resources.

The amount of money the Maine Justice Foundation distributes in a given year can vary, but it’s usually a sizable tranche of cash. In 2011 alone, the IOLTA fund accrued $3.6 million.

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The plaintiffs are seeking a court order declaring the current implementation of the IOLTA program unconstitutional. They also seek an injunction preventing the enforcement of the program insofar as it subsidizes systemic advocacy or legislative lobbying.

Alternatively, they are asking the court to allow lawyers to opt out of the IOLTA program and provide clients with notice that their funds may be used to support systemic advocacy.

Maine’s IOLTA program, which became mandatory in 2007, is one of many such programs across the United States. However, the plaintiffs argue that not all states have mandatory participation, and they contend that they have no practicable alternative to storing client funds other than in IOLTA accounts, making the program coercive.

The plaintiffs are represented by attorneys Stephen C. Smith of Augusta and Kyle Singhal of Washington, D.C. The case has been filed in the U.S. District Court for the District of Maine.

If successful, the plaintiffs’ legal challenge to the use of IOLTA to fund left-wing political projects could reverberate nationally.

A legal win in Maine would, in theory, provide precedent to challenge similar IOLTA programs in other states, potentially stopping the flow of hundreds of millions, if not billions of dollars, into progressive nonprofits.

(Full Disclosure: Stephen C. Smith advertises with the Maine Wire in exchange for legal assistance with Freedom of Access Act requests.)