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Bar News - April 4, 2003 US Supreme Court Upholds IOLTA IN A 5-4 DECISION issued March 26, 2003, the US Supreme Court upheld the concept of the Interest on Lawyers Trust Accounts concept, rejecting arguments that such arrangements constituted a "regulatory taking." In Brown v. Legal Foundation of Washington, et al., the court, in an opinion written by Associate Justice John Paul Stevens, said there was no violation of the "just compensation clause" in the Constitution because clients do not suffer pecuniary losses as a result of the transfer to pooled IOLTA accounts of small amounts of clients’ funds held for short periods in lawyers’ escrow accounts. In New Hampshire and every other state, the interest from these pooled accounts are used for charitable purposes including legal aid for low-income people and public education about the law. In New Hampshire, IOLTA is the largest single source of funding for NH Legal Assistance and the NHBA Pro Bono Referral Program. "This court’s consistent and unambiguous holdings support the conclusion that the ‘just compensation’ required by the Fifth Amendment is measured by the property owner’s loss rather than the government’s gain," the Brown majority wrote. Joining Stevens were Justices O’Connor, Souter, Ginsburg and Breyer. In a dissent, Justice Scalia, joined by Chief Justice Rehnquist and Justices Kennedy and Thomas, wrote: "In so holding the Court creates a novel exception to our oft-repeated rule that the just compensation owed to former owners of confiscated property is the fair market value of the property taken." Find the case online at http://supct.law.cornell.edu/supct/html/01-1325.ZS.html or through Casemaker. The citation is: BROWN V. LEGAL FOUNDATION OF WASH. (01-1325) 271 F.3d 835, affirmed. |
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