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Sam Heldman


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Sunday, December 08, 2002
No. 01-1325 Washington Legal Foundation v. Legal Foundation of Washington

Although it has been stated many times, I must point out that despite the named parties, this is not a trademark case. The case is about whether states may require that interest paid on lawyers' trust accounts be donated to programs that pay for lawyers for indigent persons. All fifty states have some form of IOLTA (Interest on Lawyers' Trust Accounts) program. Generally it works like this: Lawyers keep their clients' money for all sorts of reasons. For instance, when closing a real estate transaction, the buyer often writes a check to the lawyer, who deposits it to make sure it clears, then distributes the proceeds to the seller, the real estate agent and the prior mortage company as appropriate. Lawyers also will receive settlement payments or payments to satisfy judgment. When lawyers are not keeping the money long enough to justify opening a separate interest-bearing account, they put it in their general account. It is only the interest on these accounts that is at issue. The petitioners here claim that the states are working a taking by requiring the money in the trust accounts, which belongs to clients, to be paid to a charitable organization without any just compensation.

Because I am attending a Christmas party tonight for which I have to get ready, and because I procrastinated making this decision until now, I will do something I haven't done yet and hope not to do again. I'm going with my gut: I don't think this is a taking, so I predict the Court will AFFIRM.