Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.forbes From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: ON THE DOCKET Date: Wed, 18 Nov 92 14:52:03 EST Message-ID: "Copyright 1992 Forbes, Inc. Any further reproduction or redistribution without the express written permission of Forbes and ACC is prohibited." ON THE DOCKET Taxation without representation Left-wing activist lawyers have found yet another way to tap the public till. By David Frum BACK IN MAY 1984 David Freeman, a Duxbury, Mass. fireman, savagely clubbed his wife, fracturing her skull, severing an ear and leaving her partial- ly deaf. His punishment? A judge found Freeman temporarily insane and acquitted him. Nevertheless, his employer, the town of Duxbury, de- cided that it would rather not have Freeman responsible for the safety of its citizens. Freeman was fired. Freeman filed a complaint. Seven years of legal proceedings later, he won. The Massachusetts Commission Against Discrimination determined that the town had engaged in ''handi- cap discrimination'' in firing Freeman for his aberrant behavior. A commis- sioner ordered the wife beater rein- stated and awarded him $200,000 plus 12% interest for back pay and emotional distress. The town of Dux- bury is appealing the Freeman result, but however it comes out, local tax- payers will have hefty legal bills. If the idea of brutal wife beaters being thus rewarded offends you, the story gets worse. The lawyers who represent Freeman are supported by a Boston group called the Disability Law Center. And guess who helps support the Disability Law Center? Anybody who's had money pass through a Massachusetts law firm. Here's how that works: In the course of legal business, colossal sums of clients' money pass through lawyers' hands. Normally, a lawyer will establish a separate escrow account for each of the checks given to him, and the interest earned on the account will belong to the client or will be assigned by the client. Sometimes the interest that will be earned is worth less than the trouble of accounting for it. A client buys a house and the $25,000 down pay- ment is left in the lawyer's hands for a few hours. Or a client wins a $5,000 personal injury lawsuit and collects his money from his lawyer the following day. Or a client retains a lawyer and puts down a $200 retainer against future services. Instead of tabulating the amount owed to each client, reporting it to the IRS, cutting a check and then charging the client for the time in doing each of these things, lawyers create--in addi- tion to their big escrow accounts--a pooled ''trust account'' into which they put all the checks on which the interest due is going to amount to less than $25 or $50. So far, so boring. But in the late 1970s radical lawyers, sniffing about for money to fund their social engi- neering projects, noticed these inter- est-free trust accounts. In 1978 they persuaded the Florida Supreme Court to order every lawyer in the state to collect interest on his pooled trust account, and to hand that interest to the state bar association to be divided up among Florida's ''public interest'' law firms. The scheme spread, imposed by state supreme courts or by state legis- latures--largely composed of lawyers themselves. Lawyers' participation in these IOLTAs--Interest On Lawyers' Trust Accounts programs--is now compulsory in 24 states. It is optional or quasi-optional in 25 others, plus the District of Columbia. (Indiana is the only state with no IOLTA program at all.) Since 1988 the American Bar Association has recommended mak- ing IOLTA programs compulsory everywhere. Who gets the money? Lots of left- wing groups. The group that won the Freeman case, Boston's Disability Law Center, is one example. The National Center for Youth Law in California--which has sued to chal- lenge parental notice statutes for abortion--is another. A third is the Boston Bar Association's Lawyers Committee for Civil Rights, which has brought lawsuits to redraw Mas- sachusetts' electoral districts. Beyond that, it's hard to know, because the state bar associations that grant IOLTA money release such vague informa- tion about what it is used for. What is known, however, is that since Congress told the federally funded Legal Services Corp. to cut back funds for lobbying, class-action lawsuits and other political action, IOLTAs have become the legal lifts most reliable source of income. Ac- cording to the summer 1992 issue of Regulation magazine, published by the Cato Institute, the total revenue from IOLTA programs in the 49 states and the District of Columbia was $153 million in 1990. If all of this doesn't make you an- gry, this certainly will: No matter how fervently you oppose what they do, you have no choice but to go on kicking money into a slush fund for Massachusetts held in May that IOLTAs are neither a Fifth Amendment-pro- hibited ''taking'' of clients' money nor a violation of clients' or lawyers' First Amendment right not to associate with causes they dislike. In Freeman's home state, they used to call this taxation without represen- tation--and made rather a lot of fuss over it. "This information is the property of Forbes, Inc., ACC takes no responsibility for its content, or the actions of any individual or institution, predicated on the information herin. Forbes Subscriptions are available to students and faculty members at the student/educator rate of $33 for one year, 27 issues. Regularly priced $52. Information about print subscriptions may be had by calling 1-800-888-9896. 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