Taking but not stealing
© St. Petersburg Times
published April 16, 2003
Can the government be accused of taking an individual's private property when there is no property to take? The U.S. Supreme Court answered that question recently with the obvious answer: No. The decision salvaged a vital funding source for legal services programs across the country.
The case, Brown vs. The Legal Foundation of Washington, challenged a program providing funding of legal services to the poor. Opponents of the program claimed that the way it generates revenue is unconstitutional.
When lawyers hold money for clients for short periods of time, such as real estate deposits held in escrow, that money is typically set aside in a separate trust account. Any interest that might be earned on that short-term account is eaten up by administrative fees. However, by directing attorneys to utilize a combined account, interest can be accumulated into substantial amounts. That money -- about $160-million annually nationwide -- has been used by states to underwrite legal services to the poor. In Florida, the Interest on Trust Accounts, or Iota, funds are distributed by the Florida Bar Foundation and amount to about $12-million per year.
For the past decade, the Washington Legal Foundation -- a conservative litigation group -- has been challenging these funding programs arguing that the money being diverted is the private property of attorney clients. The Constitution's prohibition on government takings without just compensation is violated, said the group, when the trust account interest money is used without permission of the clients.
Justice John Paul Stevens rebutted this assertion for the five-justice majority. He said the actual loss to the attorneys' clients was "zero." Therefore, there could be no "taking" and no lost compensation. The ruling makes perfect sense and is so narrowly drawn it isn't likely to apply to many other situations.
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