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Pittsburgh Post-Gazette
December 29, 2002
Editorial
An ingenious way to fund legal services for
the poor, one that is employed in all 50 states, has been
challenged before the U.S. Supreme Court as an unconstitutional
"taking" of private property. But the legal argument
brought by a public interest group is a kind of shell game.
The court should see it as such, and allow the program to
continue.
The case, argued earlier this month, involves technical,
even metaphysical issues, but the policy at stake is an important
one: providing legal assistance to the poor. The system is
called IOLTA which stands for Interest on Lawyers Trust Accounts.
Here's how it works:
When lawyers deposit funds for their clients in short term
escrow accounts, the minuscule interest is pooled with interest
from other lawyers' accounts and the proceeds go to organizations
that provide legal aid to the indigent. The genius of the
system is that the aggregation of interest results in a bigger
amount than the product of the cumulative interest earned
by individual accounts, because tax and transaction costs
are saved by pooling.
Last year, according to The New York Times, IOLTA programs
generated more than $160 million, about 15 percent of all
the money spent on legal aid for the poor.
The Washington Legal Foundation argues that this process
violates the Fifth Amendment, which holds that private property
cannot be "taken for public use without just compensation."
The foundation makes this argument despite the fact that,
if one does the math, the "property" taken from
any individual client is minuscule if not nonexistent.
In the case argued before the high court this month, involving
an IOLTA program in the state of Washington, the worst harm
that lawyers challenging the program could demonstrate was
that one of their clients would have earned $5 in interest
on a two day escrow deposit of $90,500. More typically, as
Justice Sandra Day O'Connor suggested during oral arguments,
there is no loss to the client at all. "How is it a taking,"
she asked, "if the compensation is zero?"
In a decision four years ago, the Supreme Court opened the
way for this challenge by conceding that interest earned on
a client's account was "property" under the Constitution.
But that case left unresolved the question of whether the
IOLTA system involves an unconstitutional "taking"
of property. The court should use this case to make it clear
that the answer is no.
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