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staff reporter Washington-The U.S. Supreme Court has rejected a property rights challenge to state IOLTA programs-the second-largest source of funds for legal services for the poor-but some opponents contend the programs remain vulnerable to a free-speech First Amendment attack. Whether another front in IOLTA litigation will open remains to be seen. The Washington Legal Foundation, a conservative public interest law group that waged the decade-long property rights battle, has preserved First Amendment claims in both the Washington case that the high court decided on March 26 and in a case involving the Texas program. IOLTA stands for interest on lawyers’ trust accounts. IOLTA programs, authorized by statute or state supreme court rules, require lawyers to pool client funds, which are incapable of earning net interest on their own, in IOLTA accounts. The programs generate roughly $160 million annually nationwide for legal services. “Our argument has been that, in general, litigation is something that is an expressive activity and to force people to finance activities, some of which they may find objectionable, violates the First Amendment,” said Richard Samp, counsel of record in Brown v. Legal Foundation of Washington, No. 01-1325. Kennedy’s dissent Samp said claims in the Washington and Texas cases based on the prohibition against compelled speech rely on two cases that Justice Anthony Kennedy, dissenting in Brown, cited when he suggested IOLTA programs present a serious First Amendment claim. Those cases challenged the use of union and bar dues for certain activities. Abood v. Detroit Bd. Of Ed., 431 U.S. 209 (1977), and Keller v. State Bar of California, 496 U.S. 1 (1990). Pursuing a First Amendment claim against IOLTA programs would be long and difficult, said James Burling of the Pacific Legal Foundation. His organization, he said, was in follow-up litigation with the State Bar of California for 10 years after the Keller decision. “If you’re talking about money used simply to help indigent persons in civil litigation, like divorces and landlord-tenant problems, I think that would be tough to raise a First Amendment challenge to,” said Burling, who filed an amicus brief supporting Samp’s clients. “If you’re talking about money used for impact litigation-to make policy decisions-you might be on more fertile ground. I really haven’t spent any time looking specifically at how they use their IOLTA money. It would be a formidable task.” A First Amendment challenge doesn’t present much risk, said David Burman of Seattle’s Perkins Coie, counsel to the Washington IOLTA program. “Justice [John Paul] Stevens very strongly upheld the public interest of these programs. There might be isolated uses of the funds that might be challenged, but we don’t think that’s the case in Washington or anywhere else in the country.” But the primary reason for the IOLTA challenge, said Samp, was the property rights issue. Stevens, writing for the 5-4 majority, said the IOLTA program does not violate the Fifth Amendment prohibition against the taking of private property without just compensation. In Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998), the high court held that the interest earned in IOLTA accounts belonged to the client, but the court did not answer whether the programs constituted a taking without just compensation. IOLTA funds, explained Stevens, are funds that cannot earn net interest (after deducting transition costs and bank fees). Just compensation is measured by the net value of the interest that was actually earned. The high court “reaffirmed sensible old law” in examining the just compensation clause, said Burman. Samp said the decision puts the onus on lawyers and state bars to ensure that funds going into IOLTA programs properly belong there. Coyle’s e-mail address is <a href=”mailto:[email protected][email protected] .

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