Supreme Court Takes Legal-Aid Case

The Supreme Court has agreed to review a case involving the financing of legal-aid groups.

The case deals with the disposition of interest earnings from pooled accounts that lawyers in many states must use to hold certain kinds of deposits and other payments from their clients.

At issue: the constitutionality of state laws that require lawyers to turn over interest from those accounts to legal-aid charities that serve the poor.

The Washington Legal Foundation, a District of Columbia charity, has argued that a Texas law violates the Fifth Amendment, which prohibits the government from taking anybody’s property without “just compensation.”

All of the money collected in Texas — about $10-million a year — goes to the Texas Equal Access to Justice Foundation, which then gives it to legal-aid groups.

According to the Washington group, the interest earned on the accounts belongs to the clients who provided the accounts’ principal or to their lawyers.

But the Texas foundation and others have argued that the interest is not their property because only payments that are too small or are being held for too short a time period to generate any interest on their own are deposited.

The U. S. Court of Appeals for the Fifth Circuit sided with the Washington Legal Foundation, overruling a U.S. District Court.

A decision in the case, Phillips, Thomas, et al. v. Washington Legal Foundation, et al. (No. 96-1578), is likely to be issued by the summer.