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PHILLIPS v. WASHINGTON LEGAL FOUNDATION

Opinion of the Court

(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 pre-
sented 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 fre-
quently 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 con-
venience 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 checking 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 interest-
bearing savings account because the interest generated

Prof. Conduct 1.15(d)(1) (1997); Ohio Rev. Code Ann. § 4705.09(A)(1) (1997);
Okla. Rule Prof. Conduct 1.15(d) (1997); Ore. Code Prof. Responsibility
DR 9–101(D)(2) (1997); Pa. Rule Prof. Conduct 1.15(d) (1997) and Pa. Rule
Disciplinary Enforcement 601(d) (1997); R. I. Rule Prof. Conduct 1.15(d)
(1997); S. C. App. Ct. Rule 412 (1988); S. D. Rule Prof. Conduct 1.15(d)(4)
(1995); Tenn. Code Prof. Responsibility DR 9–102(C)(2) (1997); In re Inter-
est on Lawyers’ Trust Accounts, 672 P. 2d 406 (Utah 1983); Va. Sup. Ct.
Rules, Pt. 6, § 4, ¶ 20 (1997); Vt. Code Prof. Responsibility DR 9–103
(1996); Wash. Rule Prof. Conduct 1.14(c)(1) (1997); W. Va. Rule Prof. Con-
duct 1.15(d) (1997); Wis. Sup. Ct. Rules 13.04, 20:1.15 (1997); Wyo. Rule
Prof. Conduct 1.15(II) (1997).
Indiana is the only State that has not im-
plemented an IOLTA program. See In re Indiana State Bar Assn. Peti-
tion, 550 N. E. 2d 311 (Ind. 1990).