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Chicago Tribune
Tuesday, December 10, 2002
Tribune News Services
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.
The arguments were conducted in the dry and arcane language
of takings law, the jurisprudence governing the appropriation
of private property for public use. But beneath the jargon
was an ideologically charged and highly consequential debate.
The money pays for legal aid lawyers who help low income
people with all manner of civil court problems, from divorces,
domestic violence and child custody orders to disputes over
medical care, housing and employment.
Under the justices' microscope was a program that all 50
states and the District of Columbia use to pool the short
term interest generated on escrow accounts lawyers set up
to handle clients' real estate transactions and other deals.
The interest, which would be eaten up by transaction costs
and taxes if held in individual accounts, is instead aggregated
and channeled to organizations that provide legal services.
Last year, these programs, known as Interest on Lawyers Trust
Accounts, known as IOLTA, generated more than $160 million,
which is about 15 percent of the money spent on legal services
for the poor from all public and private sources. The concept
started in Florida in 1981 and was adopted by the rest of
the nation.
The Washington Legal Foundation, a conservative policy group,
has targeted the programs for years and sponsored litigation
against them. Four years ago, in a case challenging the trust
account program in Texas, the Supreme Court agreed with the
group that the interest generated by the client funds was
the property of the clients. But the court in that case stopped
short of declaring that the public use of the money amounted
to a "taking" under the 5th Amendment, which provides
that private property shall not be "taken for public
use without just compensation."
That ultimate question was the issue before the court on
Monday in the Washington Legal Foundation's challenge to the
trust account program in the state of Washington.
One of the foundation's clients would have earned a gross
amount of $5 on a two day escrow deposit of $90,500, while
the other would have earned $2 on a smaller deposit.
Charles Fried, a Harvard Law School professor arguing for
the Washington Legal Foundation, said the two had suffered
a taking of the full $7, even if, as several justices suggested,
they would have earned no net interest at all had their money
been deposited in individual accounts.
David Burman, a Seattle lawyer defending the Washington
program on behalf of the non profit foundation that administers
it, told the justices that the plaintiffs' "real complaint
is a subjective, ideological one." That was not a proper
complaint to bring under the 5th Amendment, he said, adding,
"If there is no value lost, there is no taking."
The outcome may depend on the vote of Justice Sandra Day
O'Connor, who voted with the majority four years ago in finding
the interest to be the clients' property. She seemed skeptical
on Monday about the further step of declaring that an uncon-stitutional
taking had occurred. "How is it a taking if the compensation
is zero?" she asked Fried.
Also on Monday, the court refused to consider giving indigent
Death Row inmates more free legal help.
The court had been asked to force the government to pick
up the cost for inmates' legal bills during clemency proceedings
and some last minute appeals.
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