Decision Hurts Legal Aid for Poor

P. Myers (mpwr@u.washington.edu)
Mon, 15 Jun 1998 12:20:48 -0700 (PDT)


This is an attempt at the politics of division at it's worst.  Pat Myers

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"To live dangerously is to live
in the Borderland, where desire,
justice and love meet."
                    Henry Giroux

---------- Forwarded message ----------
Date: Mon, 15 Jun 1998 9:55:43 PDT
From: "AP / RICHARD CARELLI, Associated Press Writer" 
Subject: Decision Hurts Legal Aid for Poor
  	  				 
	WASHINGTON (AP) -- The Supreme Court today dealt a severe blow to  
a multistate program that provides some $100 million a year for 
legal help for the poor. 
	The justices, by a 5-4 vote, ruled in a Texas case that the  
interest earned from short-term trust accounts lawyers hold for 
their clients are the private property of those clients. 
	Every state has a similar program, a supplement to the  
politically controversial Legal Services Corp., which this year is 
receiving $283 million from Congress to provide legal services for 
the poor. 
	Under such programs, the interest on the short-term deposits  
lawyers hold in trust for their clients -- various escrow accounts, 
for example -- is pooled. As individual accounts, most would not 
generate enough interest to cover administrative costs. But the 
pooling of the money creates a considerable value. 
	At issue was whether that interest may be taken by the state  
government and used for various charitable purposes. 
	The sharply divided court stopped short of killing all such  
programs. Instead, the Texas case was sent back to a lower court 
for a determination of whether the state has ``taken'' private 
property and must pay ``just compensation'' for it. 
	Today's decision upheld a ruling in which the 5th U.S. Circuit  
Court of Appeals found that the interest generated was the property 
of legal clients -- raising the possibility that any diversion and 
pooling of that money might be an unlawful taking of private 
property. Other appeals courts had reached the opposite conclusion 
in that first step to finding a constitutional violation. 
	The state programs, begun in the 1980s, are known as IOLTA  
plans, the acronym for ``interest on lawyers' trust accounts.'' 
	In Texas, the program is called the Texas Equal Access to  
Justice Foundation and is incorporated into the state's rules for 
lawyers. From 1985 to 1988, participation in the program was 
voluntary -- left up to individual lawyers. In 1989, the Texas 
Supreme Court made participation mandatory. 
	The conservative Washington Legal Foundation and William  
Summers, a Texan who uses lawyers and has had money deposited in 
mandatory IOLTA accounts, challenged the Texas program in 1994. 
	Writing for the court today, Chief Justice William H. Rehnquist  
said, ``We hold that the interest income generated by funds held in 
IOLTA accounts is the 'private property' of the owner of the 
principal.'' 
	But Rehnquist added: ``We express no view as to whether these  
funds have been 'taken' by the state; nor do we express an opinion 
as to the amount of 'just compensation,' if any, is due'' to those 
who sued. 
	The vote split followed closely the court's ideological fault  
line. Joining Rehnquist were Justices Sandra Day O'Connor, Antonin 
Scalia, Anthony M. Kennedy and Clarence Thomas. 
	Justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg  
and Stephen G. Breyer dissented. 
	The case is Phillips vs. Washington Legal Foundation, 96-1578.  
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