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Early innings thumpings in federal courts threatened a $160
million loss for poverty law services in all 50 states. A
ninth inning comeback secured victory recently in the U.S.
Supreme Court. The score was very close, 5-4. But in court
rulings as in sports, a win is a win; take it and don't fuss
about the officiating.
The subject of the case, Brown v. Legal Foundation of
Washington, has an imposing sound interest on lawyers'
trust accounts, or IOLTA but a simple explanation. Lawyers
place client funds into a pooled, interest bearing account
if the amount is too small or held too briefly to earn interest
greater than bank charges and handling fees to set up a separate
account. If a client's money can earn a profit, then lawyers
must open a separate account. Thus, no client should experience
the slightest financial loss under IOLTA.
Rather than allow banks to grow fat on the pooled accounts,
legislatures and state courts have chosen worthy beneficiaries
for the interest legal services for the poor, projects to
aid the administration of justice and scholarships for law
school students.
But the high court found, in a 5 4 decision in 1998, that
the escrow account money is the clients' private property,
and interest is, too. That ruling didn't extend beyond ownership
to two other basic questions whether the money was "taken"
and whether "just compensation" is owed.
Now the Supreme Court has settled the issue. Yes, technically
property has been taken, but compensation is not due. The
constitutional core of the court's ruling: It's impossible
to "take" something that a client has no reasonable
expectation of receiving; thus, no compensation is owed.
The national effect: States will be able to keep sending
trust account interest to poverty legal services. The local
impact: Only 18 percent of low income Oregonians could get
help for their noncriminal legal problems three years ago.
Oregon's jobless rate then was 4.9 percent, the nation's lowest.
Now, at 7.6 percent, the rate is almost certainly the nation's
highest. Legal services for the poor needs the money more
than ever.
The happy ending: The high court implicitly recognized that
the rule of law can be out of reach in this country if you
can't afford a lawyer, and it chose not to make that problem
worse.
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