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Bar News - July 5, 2002 US Supreme Court to Review Conflicting Rulings on IOLTA THE U.S. SUPREME Court has accepted another case for review on the issue of whether interest earned from pooled trust accounts should be, or even can be, attributed to individual clients. In the most recent case, involving Washington State’s IOLTA program, the pooled accounts include escrow accounts used by non-lawyers licensed by a court, such as closing officers. Typically, interest proceeds from IOLTA accounts are used to fund legal services for low-income people and legal education programs. On June 10, the high court announced it would review a 9th U.S. Circuit Court of Appeals case, Washington Legal Foundation v. Legal Foundation of Washington, which upheld the use of that state’s IOLTA program. The ruling said that interest earned from client funds for pro bono programs does constitute a government "taking," but it does not rise to a violation of Fifth Amendment guarantees against government takings without just compensation. That ruling conflicts with a ruling from the 5th Circuit last year, Washington Legal Foundation v. Texas Equal Access to Justice Foundation, in which a three-judge panel ruled that clients "own" the interest earned through IOLTA programs, regardless of the difficulty or inefficiency involved in compensating them for the interest earned in pooled accounts. Last week, the 5th Circuit rejected on a 7-7 vote a request to rehear that case en banc. Advocates of IOLTA programs say they are confident their view of IOLTA is sound, and the National Association of IOLTA Programs plans to file an amicus brief in the case. The New Hampshire Bar Foundation’s IOLTA program this year distributed more than $1 million to legal services programs. It is the state’s largest funding source for NH Legal Assistance and the NHBA Pro Bono Referral Program. Bar Foundation Executive Director Tina Abramson said the Foundation’s Board is monitoring the litigation, but she is confident that the program’s constitutionality will be ultimately upheld. The New Hampshire IOLTA program is celebrating its 20th anniversary this year. In May 1982, the New Hampshire Supreme Court adopted Rule 37, which allowed the creation of the IOLTA program. "The foresight of the New Hampshire Supreme Court, the cooperation of New Hampshire banks, and the cooperation of New Hampshire lawyers has enabled the Foundation to raise and distribute over $16 million for legal services for the disadvantaged in New Hampshire," according to Jack Middleton, a former NHBA president and Bar Foundation chair, who was instrumental in helping to make New Hampshire one of the first states in the country to create an IOLTA program. For more information about the NH Bar Foundation, or the IOLTA program, visit the Foundation’s page or contact Tina Abramson at (603) 224 6942 or at cabramson@nhbar.org.
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