Legal Aid Survives Challenge in Supreme Court

The nation’s second largest program of legal aid for poor people narrowly survived a challenge from conservative activists Wednesday, thanks to a 5-4 ruling from the Supreme Court.

The decision was greeted with relief by lawyers who represent victims of domestic abuse, children in foster care, elderly consumers who have been defrauded and others who are too poor to afford legal representation.

“This is a victory for expanding access to justice,” said Bruce Iwasaki, executive director of the Legal Aid Foundation of Los Angeles.

Legal aid lawyers do not represent criminals, but their cases can be controversial nonetheless. Sometimes, they represent landlords against tenants, farm workers against growers or welfare recipients against the government.

Funding for legal aid has been controversial as well.

In 1981, after Congress cleared the way for banks to pay interest on checking accounts, advocates of legal aid devised a novel funding method. Tiny amounts of interest earned on trust funds held briefly by lawyers -- and in some states, escrow from real estate transactions -- are swept into a state legal aid fund.

Last year, this yielded about $200 million nationwide for legal aid. Only Congress provides more money to fund lawyers for the poor, through the $338 million a year given to the Legal Services Corp.

But the program had a powerful enemy in the Washington Legal Foundation, a conservative group in the nation’s capital. It launched a legal attack 11 years ago seeking to have the funding program declared unconstitutional, and it appeared on the verge of victory.

In 1998, the Supreme Court sided with the group in a 5-4 ruling that said the interest earned by these accounts belonged to the clients.

“We can deal a death blow to the single most important source of income for radical legal groups all across the country,” Daniel Popeo, the foundation’s legal counsel, said in a fund-raising letter last year.

But their effort came up one vote short in the Supreme Court Wednesday. Justice Sandra Day O’Connor, who had joined the conservative colleagues in the 1998 decision, switched sides and created a liberal majority to save the program.

O’Connor is both a swing vote and a pragmatist. She is less likely to be swayed by ideology than by practical facts.

It turned out that the conservative clients who sued had lost no money.

The lead plaintiff, Allen D. Brown, from the Seattle area, had deposited $90,521 in escrow for two days in 1997. He said he was due $4.96 in interest.

But it would have cost more than that to set up a checking account for two days.

A federal judge in Seattle concluded that Brown had no actual loss, and the U.S. 9th Circuit Court of Appeals agreed and upheld the legal aid program.

The Reagan administration’s former U.S. solicitor general, Charles Fried, took up the appeal to the Supreme Court in Brown vs. Legal Foundation of Washington. He urged the court to strike down the program nationwide. It amounts to taking private property for public use without just compensation, he said, a violation of the 5th Amendment.

Instead, the court upheld the program in a decision written by Justice John Paul Stevens.

“Just compensation for a net loss of zero is zero,” Stevens said.

He also noted “the dramatic success of these programs in providing legal services to literally millions of needy Americans.”

Besides O’Connor, Justices David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer joined his opinion.

In dissent, Justice Antonin Scalia faulted what he called “the Robin Hood Taking, in which the government’s extraction of wealth from those who own it is so cleverly achieved, and the object of the government’s larcenous beneficience is so highly favored by the courts (taking from the rich to give to indigent defendants) that the normal rules of the Constitution protecting private property are suspended.” Chief Justice William H. Rehnquist and Justices Anthony M. Kennedy and Clarence Thomas agreed.

California’s program is somewhat smaller than others because it does not include interest from real estate transactions.

“It also fluctuates with the interest rates,” said Judy Garlow, director of the legal services trust fund for the California state bar. This year, the program yielded $7.5 million for legal aid.

“It is our second largest source of funding for legal services in California,” she said.

Alfred P. Carlton Jr., the president of the American Bar Assn., said the court’s ruling lifted a cloud from the program. “The real beneficiaries of this ruling are the tens of thousands of poor people who receive legal assistance,” he said.