Just Deserts for Sneaky Lawyers, and Yet Another Demonstration that Takings May Produce Pie in the Sky

Macklin Fleming, Associate Justice of the California Court of Appeal, once observed (speaking in the context of redevelopment) that promoters of “public projects” promise that their schemes will bake a bigger economic pie, with larger slices going to all. But in reality, noted Fleming, what many of these schemes produce is pie in the sky. Here is a proverbial Exhibit A for Fleming’s wisdom, and it doesn’t even involve redevelopment, though it does involve uncompensated takings.

You know about IOLTA (Interest on Lawyers Trust Accounts), don’t you? It gave rise to two famous SCOTUS taking cases. See Brown v. Legal Foundation, 538 U.S. 216 (2003). It’s that sneaky, kleptocratic setup whereby interest on clients’ money deposited in lawyers’ trust accounts is diverted from them and  used by do-gooder folks in local bar associations for funding good deeds, such as providing legal services for the poor. The Supreme Court checked it out and concluded that, yes, that money is the property of the clients, and yes, the IOLTA program is its taking, but no, the clients are not entitled to  just compensation like it says in the Constitution, because in the usual case the amounts are small, and they remain in lawyers’ trust accounts for short periods of time. And so, reasoned SCOTUS the cost of administering and handling such small amounts would eat up that interest, so its rightful owners lose nothing when the local bar snatches it away. Then, it’s OK for noble-minded bar associations to pool these many small amounts into large sums and use them to do good for poor folks, including advancing politically correct causes of those who are not noted for suffering from poverty — like doctors, for example, who are plumping for some environmental cause that also appeals to the bar nabobs willing to dispense other people’s money to worthy causes. How large? When first established, California’s IOLTA funds came to a tidy sum of $20.3 million per year. Ah, but that was BC — before the crash. Now, with a recession abroad for past few years and what with microscopic interest rates,  it’s a much more modest $$6.8 million. Ouch! These days, you don’t get to do much litigational good for a lousy $6.8 mil. What to do?

So the California State Bar has gone schnorring, asking the state’s lawyers to chip in — gasp! — their own, not their clients’ money, in order to help out. We now learn from an op-ed in the Los Angeles Times (Charlotte Allen, Legal Larceny by Lawyers, L.A. Times, Jan.2, 2013, at p. A15) that California lawyers who, with a nonchalant wave of the hand, had it that a mere twenty mil per year (of their clients’ money) was so piddly an amout as to not require compensation when it was diverted from the clients’ accounts, are not eager to replace it with funds of their own.

Concludes Allen:

“Margaret Thatcher famously said: ‘The problem with socialism is that eventually you run out of other people’s money.’ IOLTA is an experiment in using other people’s money to buy advocacy that liberal lawyers like — but not enough to pay for it themselves.”

Which can be true of other takings too. Their promoters are always touting the wonders of their proposed projects, but when it comes to providing fair compensation for all economic losses inflicted on people whose property winds up in the path of the bulldozers, they tell us that “it’s  the price of progress.” But they never explain why that price shouldn’t be paid by the the beneficiaries of that “progress” instead of its victims.


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