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Associated Press
Monday, December 9, 2002
Gina Holland
WASHINGTON -- The Supreme Court wrestled Monday
over the constitutionality of a practice used in every state
to raise money for legal services for the poor.
About $160 million is collected each year from short-term
interest earned on escrow accounts lawyers set up to handle
clients' real estate transactions and other deals.
The concept started in Florida in 1981 and was adopted by
every state and the District of Columbia. Lawyers say it's
cheaper and easier to combine money into large trust accounts
than to set up individual accounts for each client.
Supporters say the money keeps courthouse doors open to the
indigent. Opponents told justices the practice is unconstitutional
and should be stopped.
Justice Anthony M. Kennedy questioned 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. He argued that the small individual
deposits would generate no interest on their own and would
be hard to track. States should be allowed to pool them together
for a good cause, he said.
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 trust accounts are the
private property of clients.
In this follow-up case, justices will decide if the government's
use of the money violates the Fifth Amendment, which says
property shall not be taken for public use without fair compensation.
Before the programs began, banks got to keep the interest
from legal transactions, said Justice Ruth Bader Ginsburg.
"If you succeed, it goes back to the banks," she
told Washington Legal Foundation lawyer Charles Fried, a Harvard
University law professor.
If the program is revised to provide more options, people
would have to pay taxes on any income they collect or interest
they designate for another charity, she said.
The challenge justices reviewed is from Washington state.
Missing from Monday's argument was Chief Justice William H.
Rehnquist, who wrote the 1998 opinion in the dispute. He also
was absent from three days of arguments last week. Rehnquist
had surgery for a torn leg tendon last month. He has been
working at the court, but because of physical restrictions
from the surgery is not sitting on the bench.
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
may amount to nothing.
"Is it a taking if the compensation is zero?" she
asked Fried.
Fried said it was a taking.
Justice Antonin Scalia said later: "It's not a whole
lot of money. But it's their money."
Not all law firms participate in the pool, and justices were
told that someone with objections could use those other firms.
In another case Monday, justices reviewed a complicated tax
dispute between Boeing Co. and the Internal Revenue Service
over a $419 million refund. An appeals court said Boeing was
not entitled to the money.
The cases are Washington Legal Foundation v. Legal Foundation
of Washington, 01-1325; and Boeing v. United States,
01-1209, and United States v. Boeing, 01-1382.
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