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

DATE: WEDNESDAY, February 16, 1994                   TAG: 9402160337
SECTION: EDITORIAL                    PAGE: A10   EDITION: METRO 
SOURCE: LETON L. HARDING JR.
DATELINE:                                 LENGTH: Medium

USING PUBLIC FUNDS WITHOUT CONSENT

RECENTLY, much has been said about a proposal, now withdrawn from consideration at the 1994 General Assembly, to roll back the mandatory interest on lawyer-trust accounts (IOLTA's). The banking industry supported this measure. While I don't speak for the entire industry, as a banker and citizen, I do support rolling back the system to a voluntary one.

First the facts: Virginia has long had a voluntary IOLTA program. It's my understanding that nearly 80 percent of attorneys choose not to participate in the voluntary program.

Under the voluntary system, only attorneys could make the decision to participate or not. It's true that bankers and their loan customers have benefited from interest-free funds when attorneys choose not to participate in the IOLTA program. It's also true that as bank-interest costs increase, loan customers pay more. However, the decision whether to participate is made by the attorney and not by the bank.

Any money that's earned on IOLTA's technically belongs to the public. The interest earned on the money in these accounts should belong to the consumers and businesses for which the attorney performs work, not to the attorney and not to the Virginia Bar.

I feel that basic questions about IOLTA's haven't been answered completely. Why did the Virginia Bar decide to force attorneys into a mandatory system? Why did most attorneys in Virginia choose not to participate in the voluntary system? Why has the Virginia Bar added millions of dollars to reserve accounts vs. dispensing the money to the public?

Personally, one of my greatest concerns with the IOLTA program (in addition to the mandate mentality sweeping our country) is the fact that a non-public group has complete discretion over public funds. I don't like the idea of a select group of attorneys in Richmond, who aren't elected by the people, having taxing power and then utilizing the funds as they see fit. I suspect that many of this newspaper's readers would be extremely disappointed to learn that interest earned on their money under the IOLTA program was used to pay for lawyers' drug treatment and to defend death-row inmates.

Expenditure of this money for the causes supported by IOLTA may be appropriate, but the public isn't deciding how to spend its own money. I'd prefer that the interest be used to buy computers for local schools, fund down payments on homes for low- to moderate-income consumers, or returned to the clients whose funds generated the income to begin with. I'm sure that a computer programmer somewhere could develop a software package that would allow the funds to be traced and allocated back to the attorney's client. And what about consumer selection? Why not allow the client to direct where the funds are to be used?

Even though legislation is no longer before the '94 legislature, this is an issue about which the public needs to become more aware. Perhaps the debate surrounding IOLTA's will bring more press attention and study to quasi-public programs.

Our forefathers fought a revolution against taxation without representation. Although the IOLTA program is well-intentioned, it's yet another example of someone (besides the government) using the public's money without the public's consent and full knowledge of the way in which the funds are used.

\ Leton L. Harding Jr. is vice president of The First Bank and Trust Co. in Abingdon.

by CNB