It was especially inappropriate since the teacher was apparently white and the student black. The teacher targeted her son intentionally with something he/she knew would be a problem. Denial of that fact, saying it was unknown doesn't fly unless the teacher was a complete idiot. You don't work with kids on a daily basis and not know this information. Then to compound the insult the people in charge didn't step up and do their job which should be zero tolerance of any kind of bullying whether from a student or staff member.

Teens are notorious for picking up anything, especially if they get the signal from an adult, that they can use to torment someone else. Sadly in our world, being gay makes someone a target as much as race does.

As for affording an attorney, see if there's a local ACLU office in her area and have her check with them about civil violations if she can't get any satisfaction from this school or school board. Sometimes just the threat is enough to get some kind of action. There's been a lot of bad press about bullying allowed to go unchecked and nobody wants that kind of heat.

Sadly, if she can't, perhaps she might need to find a way for the boy to switch schools. A lot depends on how the boy and his friend are handling it, which from what you said, isn't very well. I wish her luck.