IOLTA Litigation - Recent News
Washington State Litigation
Texas Litigation
Litigation Involving IOLTA Programs
Washington State Litigation
Supreme Court Victory for IOLTA!
On March 26, 2003, the U.S. Supreme Court issued its decision in
Brown v. Legal Foundation of
Washington, 538 U.S. ___ (2003), upholding the constitutionality of IOLTA under the Just Compensation Clause of the Fifth
Amendment. Justice Stevens authored the 5-4 majority decision, which Justices O'Connor, Souter, Ginsburg and Breyer
joined. In its ruling, the Court held that even assuming that a law requiring that the interest generated on IOLTA
accounts be transferred to a different owner amounted to a per se taking, such a taking was for a valid public use
and the amount of just compensation due was zero. As a result, the Court found that the operation of the IOLTA
program in Washington does not violate the Fifth Amendment.
The case has been remanded for consideration of the plaintiffs' First Amendment claims. The Supreme Court's decision
affirms previous decisions in favor of the Washington State program by the Ninth Circuit Court of Appeals
Washington Legal Foundation vs. Legal Foundation of Washington, 271 F.3d 835 (9th Cir. 2001), and the
District Court of the Western District of Washington. Washington Legal Foundation v. Legal Foundation of Washington,
No. C97-0146C (W.D. Wash. January 30,1998).
The Brown v. Legal Foundation of Washington decision comes as a remarkable victory for the efforts to
obtain equal access to justice for low-income people. As American Bar Association President Alfred P. Carlton, Jr.
stated: "The real beneficiaries of this ruling are the tens of thousands of poor people who receive legal assistance
because of IOLTA." In addition to the ABA, more than a dozen organizations—with the help of countless individual
and advocates—filed amicus curiae briefs with the Court or provided other assistance over the course of the Brown
litigation.
Read more:
- Supreme Court decision in Brown v. Legal Foundation of Washington
- Detailed analysis of Brown decision
- Comments from Commission on IOLTA Chair Darrell E. Jordan
- Background and previous decisions in Washington State IOLTA case
Texas Litigation
Supreme Court Remands Texas IOLTA Case to Fifth Circuit
On March 31, 2003, the U.S. Supreme Court granted the Texas IOLTA program's petition for writ of certiorari, which
was filed on June 26, 2002. The Court also vacated the decision of the Fifth Circuit Court of Appeals, which had
found that the Texas program violated the Fifth Amendment, and remanded the case to the Fifth Circuit for further
consideration in light of the Court's decision in Brown v. Legal Foundation of Washington.
The Texas Equal Access to Justice Foundation had filed the petition in June 2002, seeking review of the October 15, 2001 decision by a panel of the Court of Appeals for the Fifth Circuit in the case of Washington Legal Foundation vs. Texas Equal Access to Justice Foundation, 271 F.3d 835 (5th Cir. 2001). In 2000, a district court ruling had dismissed both the First and Fifth Amendment Claims filed in the case. The decision by the Fifth Circuit did not address the First Amendment issues in its 2001 decision.
The Texas case was originally filed in 1994, and led to a trip to the Supreme Court in 1997, when the Court issued its decision in Phillips, et al. v. Washington Legal Foundation, et al., 524 U.S. 156, 118 SCt 1925 (1998), which found that clients have a property interest in the interest generated on lawyer's trust accounts. The Court remanded further consideration of Fifth Amendment issues to the lower courts, resulting in the district court and Fifth Circuit rulings in 2000 and 2001.
Read more:
- Background on the litigation against the Texas IOLTA program.
- The Supreme Court's decision in Phillips v. Washington Legal Foundation
Litigation Involving IOLTA Programs
The past decade has witnessed several legal challenges against the operation of IOLTA programs, notably in Texas
and Washington State. The American Bar Association remains convinced that IOLTA programs are both constitutional
and sound public policy. The ABA has passed three resolutions in support of IOLTA and, at the request of the ABA
Commission on IOLTA, it has filed seven amicus curiae briefs in support of IOLTA in these legal challenges.
News of the most recent developments in the Texas and Washington State cases is on this page.
Other litigation resources on this site can be accessed through the links below:
- Full description of the Texas litigation
- Full description of the Washington State litigation
- Description of prior IOLTA litigation
