Thomas R. Phillips, et al. v. Washington Legal Foundation, et al. (524 U.S. 156)
U.S. Supreme Court · decided June 15, 1998 · Supreme Court Database (Spaeth)
- Citation
- 524 U.S. 156 · 118 S. Ct. 1925
- Decided
- June 15, 1998
- Term
- October Term 1997
- Vote
- 5–4
- Majority author
- Justice Rehnquist
- Issue area
- Due Process
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Conservative
Opinion excerpt
CHIEF Justice Rehnquist delivered the opinion of the Court. Texas, like 48 other States and the District of Columbia, has adopted an Interest on Lawyers Trust Account (IOLTA) program. Under these programs, certain client funds held by an attorney in connection with his practice of law are deposited in bank accounts. The interest income generated by the funds is paid to foundations that finance legal services for low-income individuals. The question presented by this case is whether interest earned on client funds held in IOLTA accounts is “private property” of either the client or the attorney for purposes of the Takings Clause of the Fifth Amendment. We hold that it is the property of the client. I In the course of their legal practice, attorneys are frequently required to hold client funds for various lengths of time. Before 1980, an attorney generally held such funds in noninterest-bearing, federally insured checking accounts in which all client trust funds of an individual attorney were pooled. These accounts provided administrative convenience and ready access to funds. They were nonin-terest bearing because federal law prohibited federally insured banks and savings and loans from paying interest on cheeking accounts. See 12 U. S. C. §§371a, 1464(b)(1)(B), 1828(g). When a lawyer held a large sum in trust for his client, such funds were generally placed in an…
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