Brown et al. v. Legal Foundation of Washington et al.
In recent years, the legality of IOLTA (Interest on Lawyers' Trust Accounts) has been called into question in several court cases. The matter has now been resolved by the U.S. Supreme Court in a five to four decision that upholds the legality of IOLTA. The Court held that a state law which required an attorney or a real estate escrow agent to place client funds that would not otherwise generate net interest earnings into an IOLTA account was not a "regulatory taking" under the Fifth Amendment. As a side note, if an attorney mistakenly places into an IOLTA account client funds which would have generated net interest earnings after payment of the expenses of the account, the client has a claim against the attorney and not the state. No claim was made against the financial institution where the IOLTA account was maintained.