(a) No IOLA funds distributed pursuant to section 97-v of the State Finance Law, section 497 of the Judiciary Law and this Part may be used for any of the following purposes:

1. (1) the provision of legal services with respect to any fee-generating case unless adequate representation is unavailable;

   1. (i) for the purposes of this subparagraph, fee-generating case shall mean any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds, or from the opposing party;

   2. (ii) other adequate representation is deemed unavailable if any one of the following factors are met:

      1. (a) it has been determined that free referral is not possible for any of the following reasons:

         1. (1) the case has been rejected by the local lawyer referral service or by two attorneys in private practice who have experience in the subject matter of the case;
         2. (2) neither the referral service nor at least two attorneys in private practice who have experience in the subject matter of the case will consider the case without payment of a consultation fee;
         3. (3) the case is of the type which attorneys in private practice in the area ordinarily do not accept without prepayment of a fee;
         4. (4) emergency circumstances compel immediate action before referral can be made, but the client is advised that, if appropriate and consistent with the code of professional responsibility, referral will be attempted at a later time;
      2. (b) recovery of damages is not the principal object of the case and a request for damages is ancillary to an action for equitable or other nonpecuniary relief, or inclusion of a counterclaim requesting damages is necessary for effective defense or because of applicable rules governing joinder of counterclaims;
      3. (c) a court has appointed a qualified recipient or an attorney employed by a qualified recipient pursuant to a statute or a court rule or practice of equal applicability to all attorneys in the jurisdiction;

      4. (d) the case involves the rights of a claimant under a publicly supported benefit program for which entitlement to benefit is based on need.

         (b) Criminal proceedings.

         No funds distributed pursuant to this Part shall be used for the provision of legal assistance with respect to any criminal proceeding or any action in the nature of habeas corpus collaterally attacking a criminal conviction.

         (c) Prohibition on the use of funds for political purposes.

         No funds distributed pursuant to this Part shall be used either directly or indirectly to contribute to any political party or association, or any candidate for public or party office, and no political test or qualification shall be used in making any decision, taking any action, or performing any function under these regulations.