The Raisins of Wrath: The Constitutionality of Interest on Lawyers’ Trust Accounts Following Horne v. USDA
Legal aid programs in this country are funded in a peculiar way. Although Congress directly appropriates funds for the Legal Services Corporation, there exists a second program that requires lawyers and their clients to transmit all interest on certain accounts to government-established funds that pay for free legal services to the poor. Lawyers often hold money in trust for their clients. These trusts are required by law to be deposited in interest-bearing accounts. When the amounts involved are too small to warrant either the bank’s fees or the lawyer’s labor to set up a new account, a lawyer is permitted to pool the client’s funds with other similarly situated clients so that interest may be earned collectively. These pooled accounts are known as interest on lawyers’ trust accounts (“IOLTA accounts”).
The Supreme Court, in a five-to-four 2003 decision in Brown v. Legal Foundation of Washington, upheld such a program against a Fifth Amendment takings challenge.2 The Brown Court agreed there was a taking under the Fifth Amendment, but that no compensation was due because “if petitioners' net loss was zero, the compensation that is due is also zero.”3 In light of subsequent Supreme Court decisions, the Court’s reasoning in Brown is no longer tenable. The culmination of the post-Brown jurisprudence is Horne v. United States Department of Agriculture, which held that government conferred benefits to personal property cannot be conditioned on the relinquishing of a constitutional right.
Much like Kelo v. New London,5 Horne has captured the imagination of the American public.6 Given the broad language the Supreme Court used to affirm an expansive reading of the Fifth Amendment, Horne urges a reconsideration of the rationale of Brown.
