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Legal Services Spared
Every now and then, the Supreme Court confronts
a thoroughly uninteresting legal question that carries huge
practical consequences. For example, the court recently issued
its decision in the case of Brown v. Legal Foundation of
Washington, which asked whether a state can seize tiny
amounts of interest from money held in trust by lawyers. At
a legal level, the case involves the fine points of the Fifth
Amendment's prohibition against governmental "takings"
of private property without "just compensation."
But the case was really about whether states can continue
funding legal services for the poor with $160 million a year
in interest from lawyer-held trusts. A narrow five-member
majority fortunately prevented a major source of legal services
funding from becoming a casualty of a needlessly technical
reading of the Constitution.
Every state in the country has a program like the one the
court considered from Washington state. When lawyers hold
money for clients, they place that money in interest-bearing
accounts. If the lawyer can invest the money for the client's
benefit, he must. But often, lawyer-held money gets moved
so quickly that the interest it earns is trivial; the costs
of accounting for the interest and delivering it to the client
exceed its value. So for situations in which attorneys would
not otherwise use an interest-bearing account, state rules
have created a novel way of creating something from nothing:
They require the lawyers to put the money in pooled accounts,
and the interest then is siphoned off to support legal services.
The clients aren't harmed, because they wouldn't have received
interest anyway. The result is a huge amount of money for
an important, if politically unpopular, state function.
You might think that such a win-win scenario would be uncontroversial.
Yet somehow, these accounts had become the target of property
rights enthusiasts who argued that state seizures of such
otherwise unusable -- and in any event trivial -- monies represent
takings, requiring compensation. This seems both mean-spirited
and a bit ridiculous. But the court, in a prior case, actually
spurred on the attack. This time, however, it drew back. Justice
John Paul Stevens, writing for the majority, held that while
the program may technically amount to a taking, no compensation
is required, because no victim actually suffers a net loss.
This common-sense reasoning may not produce an important precedent.
But it does permit programs that collectively fund about 15
percent of legal services nationwide to remain in place. The
alternative -- which fell one vote short of carrying the day
-- would have been terribly destructive.
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