For a long time, the alternative to IOLTA was that lawyers would hold onto that money themselves, and skim the interest. Because the money was held only for a short period to time, nobody really noticed, but the cumulative amounts could add up for attorneys whose work involved a large number of such transactions. Obviously, that's unethical.
IOLTA was created as sort of an answer to the question of what you do with the interest that's earned. It's not practical to track it for individual clients. So they figured it was a way to fund representation for the poor.
Not everyone who is poor is a lefty parasite undeserving of representation. Maybe they have an eminent domain case, etc. Some good conservative causes out there, and lawyers are supposed to have an ethical obligation to make representation available for those who can't afford it anyway. And the Feds fund some of that stuff anyway.
I personally don't think the problem is as much the funding as it is the lefty bias of some of the activities that may be funded. But that's a separate problem, and one that varies between states. An IOLTA-funded public service firm in Massachusetts has nothing to do with Texas -- each state runs its own program.
Anyway, I'm not a huge fan of the pogram myself, but this is getting overblown -- particularly when people start citing to cases in other jurisdictions and act like that's Miers' fault.
That is incorrect. IOLA money is taken from pooled escrow accounts that contain money belonging to multiple clients, which if deposited in a seperate accounts, would produce insignificant interest because the deposit is small and/or held for a very short period of time. The amount of interest that we used to earn on these accounts in pre-IOLA days barely covered the bank fees and administrative charges. If the amount held in escrow was sufficient to generate net interest, then we would open a seperate, non-pooled escrow account and credit the client for all interest net of bank charges. In fact, under most IOLA laws, attorneys are still required to maintain large escrow deposits in a seperate, non-pooled interest bearing accounts, except unlike IOLA accounts, the interest goes to the client. (In other words, wealthy people who give their attorneys large sums of money to hold in escrow don't have to fund legal services for the poor and underepresnted, whereas regular people who give their attorneys small amounts of money to hold are forced to finance various legal programs that they might find objectionable.