The D.C. Bar's rule on interest-bearing attorney trust accounts does not govern the $1.5 billion settlement fund in a high-profile Indian trust case in Washington, a federal judge has said.
Senior Judge Thomas Hogan of Washington's federal trial court, who is presiding over the suit, raised the question with U.S. Justice Department attorneys and the lawyers for lead plaintiff Elouise Cobell during a telephone conference Dec. 17.
The District’s Interest On Lawyers Trust Accounts, or IOLTA, program is mandatory for attorneys who receive program-eligible funds. The D.C. Bar Foundation distributes interest on the funds to local legal service providers.
A lead attorney for Cobell, Washington solo practitioner Dennis Gingold, said in court papers this week the IOLTA program only governs the administration of funds in the possession of an attorney. IOLTA-eligible funds, Gingold said, must be nominal and held for a short period of time. Neither requirement, he said, applies to the Cobell settlement money.
The settlement money, Gingold said, will be wired directly from the Department of Treasury into one or more trust accounts at J.P. Morgan, which Hogan yesterday in court identified as the qualifying bank. The money will never be in the hands of class counsel, Gingold said.
“The goal of the Bar Foundation is lofty and important. However, the funds do not qualify because here both principal and interest belong to the Cobell plaintiffs, not Class Counsel and not the Bar Foundation,” Cobell’s lawyers said in court papers [.pdf] filed Dec. 20.
Cobell's lawyers said an appropriation of interest would violate the Fifth Amendment prohibition on government taking. Interest belongs to the plaintiffs, not the Bar Foundation, Cobell’s attorneys said.