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Atlanta Journal-Constitution
Tuesday, December 10, 2002
Bill Rankin
A Georgia foundation that hands out about $5
million a year to legal programs that help the poor could
be in jeopardy because of a case considered Monday by the
U.S. Supreme Court.
The court heard arguments about whether states can allow
the short term interest earned on escrow accounts used by
lawyers to be used to help pay for legal services for the
poor. The accounts, known as IOLTAs, are set up to handle
law clients' real estate transactions and other deals. Lawyers
say it is cheaper and easier to combine money in large trust
accounts than to set up individual accounts for each client.
About $160 million nationwide is collected each year. In
Georgia, the IOLTA money is administered by the Georgia Bar
Foundation, which gave out $5.1 million in grants during its
last fiscal year.
A conservative public interest law firm, the Washington
Legal Foundation, has been challenging the funds since 1990.
It won the first round at the Supreme Court in 1998, with
a 5 4 ruling that the interest earned from those IOLTA trust
accounts are the private property of the clients.
In this latest challenge in a case out of Washington state,
justices are being asked to decide whether the states' use
of the money violates the Fifth Amendment, which says property
shall not be taken for public use without fair compensation.
"I'm very concerned about this attack on IOLTA because
thousands of Georgians are depending on IOLTA dollars for
help," the foundation's executive director, C. Len Horton,
said in an interview Monday. "A lot of this money makes
a significant impact on very serious problems."
Amy Gellens, executive director of the Athens Justice Project,
said the Bar Foundation gave "vital" startup money
to her legal aid group.
"The money continues to be so important, especially
in this day when economic times have taken a downturn and
there's generally lessmoney available for nonprofit organizatons,"
Gellens said. "These funds enable us to serve our clients
as they strive to change theirlives and become productive
citizens."
Under a 1990 order of the Georgia Supreme Court, 40 percent
of the money each year goes to the Georgia Indigent Defense
Council, which gives grants to county programs that provide
lawyers for poor people accused of crime. Another 10 percent
goes to the GeorgiaCivil Justice Foundation.
The Georgia Bar Foundation decides where the other half
of the IOLTA money goes. Last year, the foundation gave its
largest grants to the Georgia Legal Services Program and to
Atlanta Legal Aid. Others receiving grants included the Aid
to Children of ImprisonedMothers, Battered Women's Shelter
and Georgia Law Center for the Homeless.
During Monday's arguments before the U.S. Supreme Court,
Justice Anthony M. Kennedy asked whether clients should be
allowed to designate their interest for another charity or
to claim it themselves. "Doesn't the state have some
duty to recognize the Constitution protects property and you
can't take property that doesn't belong to you?" Kennedy
asked.
Attorney Walter Dellinger, a former U.S. solicitor general,
defended the practice. Dellinger argued that the small individual
deposits would generate no interest on their own and would
be hard to track.
Much of the attention Monday was on Justice Sandra Day O'Connor,
who could provide the swing vote in the case. She noted that,
with administrative costs, the interest in individual cases
might amount to nothing.
Missing from Monday's argument was Chief Justice William
H. Rehnquist, who wrote the 1998 opinion. Rehnquist, who had
surgery for a torn leg tendon last month, has been working
but is not sitting on the bench.
The Associated Press contributed to this article.
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