
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, March 8, 1994                   TAG: 9403080179
SECTION: EDITORIAL                    PAGE: A-4   EDITION: METRO 
SOURCE: By ROY V. CREASY
DATELINE:                                 LENGTH: Medium

TRUST ACCOUNTS AREN'T PUBLIC FUNDS

A FEB. 16 letter to the editor, ``Using public funds without consent'' by banker Leton L. Harding Jr., mourns the General Assembly defeat of the Virginia Bankers Association bill to undo regulation of lawyers' trust accounts. The Interest On Lawyer Trust Accounts rule adopted last year by the Virginia Supreme Court requires lawyers who pool clients' money in bank accounts between transactions to choose interest-bearing accounts. The interest thus earned goes to the nonprofit Virginia Law Foundation for law-related public services, mostly legal aid for the poor.

A little history is in order. At one time, lawyers didn't keep interest-bearing accounts because it was unethical for them to keep any interest that was generated from clients, and it wasn't feasible to divide the interest among all their clients. With the passage of IOLTA, lawyers had a way that interest could be earned and distributed to a worthwhile public purpose through the Virginia Bar Foundation. Obviously before IOLTA, bankers got all the interest on this money. And now that IOLTA has become mandatory, bankers lose this interest.

Harding's main concern is that ``a non-public group has complete discretion over public funds.'' This is simply untrue. The Virginia Law Foundation's grant-making discretion is severely confined by tax laws and its own charter to charitable and educational endeavors.

But even more curious is his logic that these sums are public money. These sums aren't public money. And without IOLTA, these would be monies that the bank received - free. No one's asking that banks not receive fair compensation for any services they provide to members of the bar. If these public-service grants cannot be allocated by the government itself, he's saying, then we'd better give the interest back to the banks to enjoy. Logic like that is what got the bankers' bill killed in the first place.

The nub of it is that banks are now expected to pay interest on lawyers' trust accounts the same as they have to pay on other large accounts. No surprise that they're sulky. They call it ``taxation without representation.'' It's not taxation, of course, just an end to the unearned interest. And it's not money from taxpayers, either.

As a lawyer who's participated in IOLTA voluntarily from the beginning, I see it as a very laudable effort at policing lawyer conduct. As a board member of Roanoke's Legal Aid Society, I know the bulk of the proceeds are going to assure equal justice under law. Mandatory IOLTA will prove itself as a service to the public and should be here to stay.

Roy V. Creasy is a lawyer and a board member of Roanoke's Legal Aid Society.

by CNB