BROWN et al. v. LEGAL FOUNDATION OF WASHINGTON et al.

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216 OCTOBER TERM, 2002
Syllabus
BROWN et al. v. LEGAL FOUNDATION OF
WASHINGTON et al.
certiorari to the united states court of appeals for
the ninth circuit
No. 01–1325. Argued December 9, 2002—Decided March 26, 2003
Every State uses interest on lawyers’ trust accounts (IOLTA) to pay for
legal services for the needy. In promulgating Rules establishing Wash-
ington’s program, the State Supreme Court required that: (a) all client
funds be deposited in interest-bearing trust accounts, (b) funds that can-
not earn net interest for the client be deposited in an IOLTA account,
(c) lawyers direct banks to pay the net interest on the IOLTA accounts
to the Legal Foundation of Washington (Foundation), and (d) the Foun-
dation use all such funds for tax-exempt law-related charitable and edu-
cational purposes. It seems apparent from the court’s explanation of
its IOLTA Rules that a lawyer who mistakenly uses an IOLTA account
for money that could earn interest for the client would violate the Rule.
That court subsequently made its IOLTA Rules applicable to Limited
Practice Officers (LPOs), nonlawyers who are licensed to act as escrow-
ees in real estate closings. Petitioners, who have funds that are depos-
ited by LPOs in IOLTA accounts, and others sought to enjoin respond-
ent state official from continuing this requirement, alleging, among
other things, that the taking of the interest earned on their funds in
IOLTA accounts violates the Just Compensation Clause of the Fifth
Amendment, and that the requirement that client funds be placed in
such accounts is an illegal taking of the beneficial use of those funds.
The record suggests that petitioners’ funds generated some interest that
was paid to the Foundation, but that without IOLTA they would have
produced no net interest for either petitioner. The District Court
granted respondents summary judgment, concluding, as a factual mat-
ter, that petitioners could not make any net returns on the interest
accrued in the accounts and, if they could, the funds would not be sub-
ject to the IOLTA program; and that, as a legal matter, the constitu-
tional issue focused on what an owner has lost, not what the taker has
gained, and that petitioners had lost nothing. While the case was on
appeal, this Court decided in Phillips v. Washington Legal Foundation,
524 U. S. 156, 172, that interest generated by funds held in IOLTA ac-
counts is the private property of the owner of the principal. Relying
on that case, a Ninth Circuit panel held that Washington’s program
caused an unconstitutional taking of petitioners’ property and remanded

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217 Cite as: 538 U. S. 216 (2003)
Syllabus
the case for a determination whether they are entitled to just compensa-
tion. On reconsideration, the en banc Ninth Circuit affirmed the Dis-
trict Court’s judgment, reasoning that, under the ad hoc approach ap-
plied in Penn Central Transp. Co. v. New York City, 438 U. S. 104, there
was no taking because petitioners had suffered neither an actual loss
nor an interference with any investment-backed expectations, and that
if there were such a taking, the just compensation due was zero.
Held:
1. A state law requiring that client funds that could not otherwise
generate net earnings for the client be deposited in an IOLTA account
is not a “regulatory taking,” but a law requiring that the interest on
those funds be transferred to a different owner for a legitimate public
use could be a per se taking requiring the payment of “just compensa-
tion” to the client. Pp. 231–235.
(a) The Fifth Amendment imposes two conditions on the State’s
authority to confiscate private property: the taking must be for a “public
use” and “just compensation” must be paid to the owner. In this case,
the overall, dramatic success of IOLTA programs in serving the compel-
ling interest in providing legal services to literally millions of needy
Americans qualifies the Foundation’s distribution of the funds as a “pub-
lic use.” Pp. 231–232.
(b) The Court first addresses the type of taking that this case
involves. The Court’s jurisprudence concerning condemnations and
physical takings involves the straightforward application of per se rules,
while its regulatory takings jurisprudence is characterized by essen-
tially ad hoc, factual inquiries designed to allow careful examination
and weighing of all relevant circumstances. Tahoe-Sierra Preservation
Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 322.
Petitioners separately challenged (1) the requirement that their funds
must be placed in an IOLTA account and (2) the later transfers of inter-
est to the Foundation. The former is merely a transfer of principal and
therefore does not effect a confiscation of any interest. Even if viewed
as the first step in a regulatory taking which should be analyzed under
the Penn Central factors, it is clear that there would be no taking be-
cause the transaction had no adverse economic impact on petitioners and
did not interfere with any investment-backed expectation. 438 U. S., at
124. A per se approach is more consistent with the Court’s reasoning
in Phillips than Penn Central’s ad hoc analysis. Because interest
earned in IOLTA accounts “is the ‘private property’ of the owner of the
principal,” Phillips, 524 U. S., at 172, the transfer of the interest to the
Foundation here seems more akin to the occupation of a small amount
of rooftop space in Loretto v. Teleprompter Manhattan CATV Corp.,

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218 BROWN v. LEGAL FOUNDATION OF WASH.
Syllabus
458 U. S. 419, which was a physical taking subject to per se rules. The
Court therefore assumes that petitioners retained the beneficial owner-
ship of at least a portion of their escrow deposits until the funds were
disbursed at closings, that those funds generated interest in the IOLTA
accounts, and that their interest was taken for a public use when it was
turned over to the Foundation. This does not end the inquiry, however,
for the Court must now determine whether any “just compensation” is
due. Pp. 233–235.
2. Because “just compensation” is measured by the owner’s pecuniary
loss—which is zero whenever the Washington law is obeyed—there has
been no violation of the Just Compensation Clause. Pp. 235–241.
(a) This Court’s consistent and unambiguous holdings support the
conclusion that the “just compensation” required by the Fifth Amend-
ment is measured by the property owner’s loss rather than the govern-
ment’s gain. E. g., Boston Chamber of Commerce v. Boston, 217 U. S.
189, 195. Applying the teachings of such cases to the question here, it
is clear that neither petitioner is entitled to any compensation for the
nonpecuniary consequences of the taking of the interest on his deposited
funds, and that any pecuniary compensation must be measured by his
net losses rather than the value of the public’s gain. Thus, if petition-
ers’ net loss was zero, the compensation that is due is also zero.
Pp. 235–237.
(b) Although lawyers and LPOs may occasionally deposit client
funds in an IOLTA account when those funds could have produced net
interest for their clients, it does not follow that there is a need for fur-
ther hearings to determine whether petitioners are entitled to compen-
sation from respondents. The Washington Supreme Court’s Rules un-
ambiguously require lawyers and LPOs to deposit client funds in
non-IOLTA accounts whenever those funds could generate net earnings
for the client. If petitioners’ money could have generated net income,
the LPOs violated the court’s Rules, and any net loss was the conse-
quence of the LPOs’ incorrect private decisions rather than state action.
Such mistakes may give petitioners a valid claim against the LPOs, but
would provide no support for a compensation claim against the State or
respondents. Because Washington’s IOLTA program mandates a non-
IOLTA account when net interest can be generated for the client, the
compensation due petitioners for any taking of their property would be
nil, and there was therefore no constitutional violation when they were
not compensated. Pp. 237–240.
271 F. 3d 835, affirmed.
Stevens, J., delivered the opinion of the Court, in which O’Connor,
Souter, Ginsburg, and Breyer, JJ., joined. Scalia, J., filed a dissent-

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219 Cite as: 538 U. S. 216 (2003)
Syllabus
ing opinion, in which Rehnquist, C. J., and Kennedy and Thomas, JJ.,
joined, post, p. 241. Kennedy, J., filed a dissenting opinion, post, p. 253.
Charles Fried argued the cause for petitioners. With him
on the briefs were Daniel J. Popeo, Richard A. Samp, James
J. Purcell, and Donald B. Ayer.
David J. Burman argued the cause for respondents Legal
Foundation of Washington et al. With him on the brief were
Nicholas P. Gellert, Kathleen M. O’Sullivan, Carter G. Phil-
lips, and Stephen B. Kinnaird.
Walter Dellinger argued the cause for respondent Justices
of the Washington Supreme Court. With him on the brief
were Christine O. Gregoire, Attorney General of Washing-
ton, and Maureen Hart, Senior Assistant Attorney General.*
*James S. Burling filed a brief for the Pacific Legal Foundation as ami-
cus curiae urging reversal.
Briefs of amici curiae urging affirmance were filed for the State of
California et al. by Bill Lockyer, Attorney General of California, Richard
M. Frank, Chief Assistant Attorney General, J. Matthew Rodriquez,
Senior Assistant Attorney General, Daniel L. Siegel, Supervising Deputy
Attorney General, Christiana Tiedemann, Deputy Attorney General,
Thomas F. Reilly, Attorney General of Massachusetts, and William W.
Porter and Amy Spector, Assistant Attorneys General, and by the Attor-
neys General for their respective jurisdictions as follows: Janet Napoli-
tano of Arizona, Ken Salazar of Colorado, Richard Blumenthal of Con-
necticut, Robert A. Butterworth of Florida, Earl I. Anzai of Hawaii, James
E. Ryan of Illinois, Steve Carter of Indiana, Thomas J. Miller of Iowa,
Carla J. Stovall of Kansas, Richard P. Ieyoub of Louisiana, G. Steven Rowe
of Maine, J. Joseph Curran, Jr., of Maryland, Jennifer M. Granholm of
Michigan, Mike Hatch of Minnesota, Mike Moore of Mississippi, Mike Mc-
Grath of Montana, Frankie Sue Del Papa of Nevada, Philip T. McLaugh-
lin of New Hampshire, David Samson of New Jersey, Patricia A. Madrid
of New Mexico, Eliot Spitzer of New York, Roy Cooper of North Carolina,
Wayne Stenehjem of North Dakota, Betty D. Montgomery of Ohio, W. A.
Drew Edmondson of Oklahoma, Hardy Myers of Oregon, D. Michael
Fisher of Pennsylvania, Sheldon Whitehouse of Rhode Island, Charlie
Condon of South Carolina, Mark Barnett of South Dakota, Paul G. Sum-
mers of Tennessee, Mark L. Shurtleff of Utah, William H. Sorrell of Ver-
mont, Darrell V. McGraw, Jr., of West Virginia, and Anabelle Rodrı´guez
of Puerto Rico; for the City and County of San Francisco by Andrew W.

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220 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
Justice Stevens delivered the opinion of the Court.
The State of Washington, like every other State in the
Union, uses interest on lawyers’ trust accounts (IOLTA) to
pay for legal services provided to the needy. Some IOLTA
programs were created by statute, but in Washington, as in
most other States, the IOLTA program was established by
the State Supreme Court pursuant to its authority to regu-
late the practice of law. In Phillips v. Washington Legal
Foundation, 524 U. S. 156 (1998), a case involving the Texas
IOLTA program, we held “that the interest income gener-
ated by funds held in IOLTA accounts is the ‘private prop-
erty’ of the owner of the principal.” Id., at 172. We did
not, however, express any opinion on the question whether
the income had been “taken” by the State or “as to the
amount of ‘just compensation,’ if any, due respondents.”
Ibid. We now confront those questions.
I
As we explained in Phillips, id., at 160–161, in the course
of their legal practice, attorneys are frequently required to
hold clients’ funds for various lengths of time. It has long
been recognized that they have a professional and fiduciary
obligation to avoid commingling their clients’ money with
Schwartz and John D. Echeverria; for AARP et al. by John H. Pickering,
Seth P. Waxman, Stephen W. Preston, Jody Manier Kris, Stuart R. Cohen,
Rochelle Bobroff, Michael Schuster, Donald M. Saunders, Burt Neuborne,
David S. Udell, and Laura K. Abel; for the American Bar Association by
Alfred P. Carlton, Jr., Paul M. Smith, and Stephen M. Rummage; for the
Conference of Chief Justices by Brian J. Serr, Drew S. Days III, Beth S.
Brinkmann, and Seth M. Galanter; for the National League of Cities et al.
by Timothy J. Dowling; for 49 State Bar Associations et al. by Richard
A. Cordray, Joanne M. Garvey, Charles N. Freiberg, and Thomas P.
Brown; and for the Chief Justice and Justices of the Supreme Court of
Texas et al. by John Cornyn, Attorney General of Texas, Robert A. Long,
Jr., Caroline M. Brown, Julie Caruthers Parsley, John M. Hohengarten,
Darrell E. Jordan, and David J. Schenck.
Christopher G. Senior filed a brief for the National Association of Home
Builders as amicus curiae.

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221 Cite as: 538 U. S. 216 (2003)
Opinion of the Court
their own, but it is not unethical to pool several clients’
funds in a single trust account. Before 1980 client funds
were typically held in non-interest-bearing federally insured
checking accounts. Because federal banking regulations in
effect since the Great Depression prohibited banks from pay-
ing interest on checking accounts, the value of the use of
the clients’ money in such accounts inured to the banking
institutions.
In 1980, Congress authorized federally insured banks to
pay interest on a limited category of demand deposits re-
ferred to as “NOW accounts.” See 87 Stat. 342, 12 U. S. C.
§ 1832. This category includes deposits made by individuals
and charitable organizations, but does not include those
made by for-profit corporations or partnerships unless
the deposits are made pursuant to a program under which
charitable organizations have “the exclusive right to the
interest.” 1
In response to the change in federal law, Florida adopted
the first IOLTA program in 1981 authorizing the use of NOW
accounts for the deposit of client funds, and providing that
all of the interest on such accounts be used for charitable
purposes. Every State in the Nation and the District of Co-
lumbia have followed Florida’s lead and adopted an IOLTA
program, either through their legislatures or their highest
courts.2 The result is that, whereas before 1980 the banks
1 Letter from Federal Reserve Board General Counsel Michael Bradfield
to Donald Middlebrooks (Oct. 15, 1981), reprinted in Middlebrooks, The
Interest on Trust Accounts Program: Mechanics of Its Operation, 56 Fla.
B. J. 115, 117 (1982).
2 Five IOLTA programs were adopted by state legislatures. See Cal.
Bus. & Prof. Code Ann. § 6211(a) (West 1990); Conn. Gen. Stat. § 51–81c
(Supp. 2002); Md. Bus. Occ. & Prof. Code Ann. § 10–303 (2000); N. Y. Jud.
Law § 497 (West Supp. 2003); Ohio Rev. Code Ann. § 4705.09(A)(1) (Ander-
son 2000). The remaining programs are governed by rules adopted by
the highest court in the State. See Ala. Rule Prof. Conduct 1.15(g)
(1996); Alaska Rule Prof. Conduct 1.15(d) (2001); Ariz. Sup. Ct. Rule
44(c)(2) (2002); Ark. Rule Prof. Conduct 1.15(d)(2) (1987–2002); Colo. Rule

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222 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
retained the value of the use of the money deposited in non-
interest-bearing client trust accounts, today, because of the
adoption of IOLTA programs, that value is transferred to
Prof. Conduct 1.15(e) (2002); Del. Rule Prof. Conduct 1.15(h) (2002); D. C.
Rules of Court, App. B(a) (2002); Fla. Bar Rule 5–1.1 (2002 Supp.); Ga. Bar
Rule 1.15(II) (2002); Haw. Sup. Ct. Rule 11 (2002); Idaho Rule Prof. Con-
duct 1.15(d) (2003); Ill. Rule Prof. Conduct 1.15(d) (2002); Ind. Rule Prof.
Conduct 1.15(d) (2000); Iowa Code Prof. Responsibility DR 9–102 (rev. ed.
2002); Kan. Rule Prof. Conduct 1.15(d)(3) (2002); Ky. Sup. Ct. Rule 3.130,
Rule Prof. Conduct 1.15 (2002); La. Stat. Ann., Tit. 37, ch. 4, App., Art. 16,
Rule Prof. Conduct 1.15(d) (West Supp. 2003); Me. Code Prof. Responsibil-
ity 3.6(e)(4) (2002); Mass. Rule Prof. Conduct 1.15 (2002); Mich. Rule Prof.
Conduct 1.15(d) (2002); Minn. Rule Prof. Conduct 1.15(d) (2002); Miss. Rule
Prof. Conduct 1.15(d) (2002); Mo. Sup. Ct. Rule Prof. Conduct 4–1.15 (2002);
Mont. Rule Prof. Conduct 1.18(b) (2002); Neb. Code Prof. Responsibility
DR 9–102 (2000); Nev. Sup. Ct. Rule 217 (2000); N. H. Sup. Ct. Rule 50
(2002); N. J. Rules Gen. Application 1:28A–2 (2003); N. M. Rule Prof. Con-
duct 16–115(D) (June 2002 Supp.); N. C. Rule Prof. Conduct 1.15–4 (2001);
N. D. Rule Prof. Conduct 1.15(d)(1) (2002); Okla. Rule Prof. Conduct 1.15(d)
(2002); Ore. Code Prof. Responsibility DR9–101(D)(2) (2002); Pa. Rule Prof.
Conduct 1.15(d) (2002); R. I. Rule Prof. Conduct, Art. V, 1.15(d) (2001);
S. C. App. Ct. Rule 412 (1990); S. D. Tit. 16, ch. 16–18, App., Rule Prof.
Conduct 1.15(e) (1995); Tenn. Sup. Ct. Rule 8, Code Prof. Responsibility
DR 9–102(C)(2) (2002); Tex. Rule Prof. Conduct 1.14 (2002); Utah Sup. Ct.
Rule, Rule Prof. Conduct 1.15 (2002); Vt. Rule, Code Prof. Responsibility
DR 9–103 (2002); Va. Sup. Ct. Rules, pt. 6, § II, Rule Prof. Conduct 1.15
(2002); Wash. Rule Prof. Conduct 1.14 (2002); W. Va. Rule Prof. Conduct
1.15(d) (2002); Wis. Sup. Ct. Rule 20:1.15 (2002); Wyo. Rule Prof. Conduct
1.15(d) (2002).
In Virginia, the legislature has overridden the State Supreme Court’s
IOLTA Rules. See 1995 Va. Acts ch. 93 (making lawyer participation in
the IOLTA program optional rather than mandatory by adding Va. Code
Ann. § 54.1–3915.1 (2002)). In Indiana, the program was created by legis-
lation but was struck down by the Indiana Supreme Court as an impermis-
sible encroachment on the court’s power to regulate the practice of law.
See In re Public Law No. 154–1990, 561 N. E. 2d 791 (1990). Later, the
Indiana Supreme Court adopted an IOLTA program. See Ind. Rule Prof.
Conduct 1.15(d) (2000); Remondini, IOLTA Arrives in Indiana: Trial
Judges to Play Key Role in Pro Bono Plan, 41 Res Gestae 9 (1998). Like-
wise, in Pennsylvania, the state legislature passed the original program
but the Pennsylvania Supreme Court took over the program in 1996, sus-
pending the state statute and amending the Rules of Professional Con-

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223 Cite as: 538 U. S. 216 (2003)
Opinion of the Court
charitable entities providing legal services for the poor.
The aggregate value of those contributions in 2001 appar-
ently exceeded $200 million.3
In 1984, the Washington Supreme Court established its
IOLTA program by amending its Rules of Professional Con-
duct. IOLTA Adoption Order, 102 Wash. 2d 1101. The
amendments were adopted after over two years of delibera-
tion, during which the court received hundreds of public
comments and heard oral argument from the Seattle-King
County Bar Association, designated to represent the propo-
nents of the Rule, and the Walla Walla County Bar Associa-
tion, designated to represent the opponents of the Rule.
In its opinion explaining the order, the court noted that
earlier Rules had required attorneys to hold client trust
funds “in accounts separate from their own funds,” id., at
1102, and had prohibited the use of such funds for the law-
yer’s own pecuniary advantage, but did not address the ques-
tion whether or how such funds should be invested. Com-
menting on then-prevalent practice the court observed:
“In conformity with trust law, however, lawyers usually
invest client trust funds in separate interest-bearing ac-
counts and pay the interest to the clients whenever the
trust funds are large enough in amount or to be held for
a long enough period of time to make such investments
economically feasible, that is, when the amount of inter-
est earned exceeds the bank charges and costs of setting
up the account. However, when trust funds are so nom-
duct to require attorney participation in IOLTA. See Azen, Building a
Base for Pro Bono in Pennsylvania, 24 Pa. Law. 28 (Mar.–Apr. 2002).
Petitioners appear to suggest that a different constitutional analysis
might apply to a legislative program than to one adopted by the State’s
judiciary. See Brief for Petitioners 23, n. 7; Tr. of Oral Arg. 50–51. We
assume, however, that the procedure followed by the State when promul-
gating its IOLTA Rules is irrelevant to the takings issue.
3 See Brief for AARP et al. as Amici Curiae 11 (citing ABA Commission
on Interest on Lawyers’ Trust Accounts, IOLTA Handbook 98, 208 (Jan.
1995, updated July 2002)).

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224 BROWN v. LEGAL FOUNDATION OF WASH.
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inal in amount or to be held for so short a period that
the amount of interest that could be earned would not
justify the cost of creating separate accounts, most
attorneys simply deposit the funds in a single
noninterest-bearing trust checking account containing
all such trust funds from all their clients. The funds in
such accounts earn no interest for either the client or
the attorney. The banks, in contrast, have received the
interest-free use of client money.” Ibid.
The court then described the four essential features of its
IOLTA program: (a) the requirement that all client funds be
deposited in interest-bearing trust accounts, (b) the require-
ment that funds that cannot earn net interest for the client
be deposited in an IOLTA account, (c) the requirement that
the lawyers direct the banks to pay the net interest on the
IOLTA accounts to the Legal Foundation of Washington
(Foundation), and (d) the requirement that the Foundation
must use all funds received from IOLTA accounts for tax-
exempt law-related charitable and educational purposes.
It explained:
“1. All client funds paid to any Washington lawyer or
law firm must be deposited in identifiable interest-
bearing trust accounts separate from any accounts con-
taining non-trust money of the lawyer or law firm. The
program is mandatory for all Washington lawyers.
New CPR DR 9–102(A).
“2. The new rule provides for two kinds of interest-
bearing trust accounts. The first type of account bears
interest to be paid, net of any transaction costs, to the
client. This type of account may be in the form of
either separate accounts for each client or a single
pooled account with subaccounting to determine how
much interest is earned for each client. The second
type of account is a pooled interest-bearing account with
the interest to be paid directly by the financial institu-

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225 Cite as: 538 U. S. 216 (2003)
Opinion of the Court
tion to the Legal Foundation of Washington (hereinafter
the Foundation), a nonprofit entity to be established pur-
suant to the order following this opinion. New CPR
DR 9–102(C)(1), (2).
“3. Determining whether client funds should be de-
posited in accounts bearing interest for the benefit of
the client or the Foundation is left to the discretion of
each lawyer, but the new rule specifies that the lawyer
shall base his decision solely on whether the funds could
be invested to provide a positive net return to the client.
This determination is made by considering several enu-
merated factors: the amount of interest the funds would
earn during the period they are expected to be depos-
ited, the cost of establishing and administering the ac-
count, and the capability of financial institutions to cal-
culate and pay interest to individual clients. New CPR
DR 9–102(C)(3).
. . . . .
“5. Lawyers and law firms must direct the deposi-
tory institution to pay interest or dividends, net of
any service charges or fees, to the Foundation, and to
send certain regular reports to the Foundation and the
lawyer or law firm depositing the funds. New CPR
DR 9–102(C)(4).
“The Foundation must use all funds received from
lawyers’ trust accounts for tax-exempt law-related char-
itable and educational purposes within the meaning of
section 501(c)(3) of the Internal Revenue Code, as di-
rected by this court. See Articles of Incorporation and
Bylaws of the Legal Foundation of Washington, 100
Wash. 2d, Advance Sheet 13, at ii, vi (1984).” Id., at
1102–1104.
In its opinion the court responded to three objections that
are relevant to our inquiry in this case. First, it rejected
the contention that the new program “constitutes an uncon-

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226 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
stitutional taking of property without due process or just
compensation.” Id., at 1104. Like other State Supreme
Courts that had considered the question, it distinguished our
decision in Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
449 U. S. 155 (1980), on the ground that the new “ ‘program
creates income where there had been none before, and the
income thus created would never benefit the client under any
set of circumstances.’ ” 102 Wash. 2d, at 1108 (quoting In re
Interest on Trust Accounts, 402 So. 2d 389, 395 (Fla. 1981)).
Second, it rejected the argument that it was unethical for
lawyers to rely on any factor other than the client’s best
interests when deciding whether to deposit funds in an
IOLTA account rather than an account that would generate
interest for the client. The court endorsed, and added em-
phasis to, the response to that argument set forth in the pro-
ponents’ reply brief:
“ ‘Although the proposed amendments list several fac-
tors an attorney should consider in deciding how to in-
vest his clients’ trust funds, . . . all of these factors are
really facets of a single question: Can the client’s money
be invested so that it will produce a net benefit for the
client? If so, the attorney must invest it to earn inter-
est for the client. Only if the money cannot earn net
interest for the client is the money to go into an
IOLTA account.’
“Reply Brief of Proponents, at 14. This is a correct
statement of an attorney’s duty under trust law, as well
as a proper interpretation of the proposed rule as pub-
lished for public comment. However, in order to make
it even clearer that IOLTA funds are only those funds
that cannot, under any circumstances, earn net interest
(after deducting transaction and administrative costs
and bank fees) for the client, we have amended the pro-
posed rule accordingly. See new CPR DR 9–102(C)(3).
The new rule makes it absolutely clear that the enumer-

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227 Cite as: 538 U. S. 216 (2003)
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ated factors are merely facets of the ultimate question
of whether client funds could be invested profitably for
the benefit of clients. If they can, then investment for
the client is mandatory.” 102 Wash. 2d, at 1113–1114.
The court also rejected the argument that it had failed to
consider the significance of advances in computer technology
that, in time, may convert IOLTA participation into an un-
constitutional taking of property that could have been dis-
tributed to the client. It pointed to the fact that the Rule
expressly requires attorneys to give consideration to the ca-
pability of financial institutions to calculate and pay interest
on individual accounts, and added: “Thus, as cost effective
subaccounting services become available, making it possi-
ble to earn net interest for clients on increasingly smaller
amounts held for increasingly shorter periods of time, more
trust money will have to be invested for the clients’ benefit
under the new rule. The rule is therefore self-adjusting and
is adequately designed to accommodate changes in banking
technology without running afoul of the state or federal con-
stitutions.” Id., at 1114.
Given the court’s explanation of its Rule, it seems apparent
that a lawyer who mistakenly uses an IOLTA account as a
depositary for money that could earn interest for the client
would violate the Rule. Hence, the lawyer will be liable
to the client for any lost interest, however minuscule the
amount might be.
In 1995, the Washington Supreme Court amended its
IOLTA Rules to make them applicable to Limited Practice
Officers (LPOs) as well as lawyers. LPOs are nonlawyers
who are licensed to act as escrowees in the closing of real
estate transactions. Like lawyers, LPOs often temporarily
control the funds of clients.
II
This action was commenced by a public interest law firm
and four citizens to enjoin state officials from continuing to

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228 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
require LPOs to deposit trust funds into IOLTA accounts.
Because the Court of Appeals held that the firm and two
of the individuals do not have standing,4 Washington Legal
Foundation v. Legal Foundation of Washington, 271 F. 3d
835, 848–850 (CA9 2001), and since that holding was not chal-
lenged in this Court, we limit our discussion to the claims
asserted by petitioners Allen Brown and Greg Hayes. The
defendants, respondents in this Court, are the justices of the
Washington Supreme Court, the Foundation, which receives
and redistributes the interest on IOLTA accounts, and the
president of the Foundation.
In their amended complaint, Brown and Hayes describe
the IOLTA program, with particular reference to its applica-
tion to LPOs and to some of the activities of recipient orga-
nizations that have received funds from the Foundation.
Brown and Hayes also both allege that they regularly pur-
chase and sell real estate and in the course of such transac-
tions they deliver funds to LPOs who are required to deposit
them in IOLTA accounts. They object to having the inter-
est on those funds “used to finance the Recipient Organiza-
tions” and “to anyone other than themselves receiving the
interest derived from those funds.” App. 25. The first
count of their complaint alleges that “being forced to associ-
ate with the Recipient Organizations” violates their First
Amendment rights, id., at 25, 27–28; the second count alleges
that the “taking” of the interest earned on their funds in the
IOLTA accounts violates the Just Compensation Clause of
4 The firm is the Washington Legal Foundation, “a nonprofit public inter-
est law and policy center with members and supporters nationwide, [that]
devotes a substantial portion of its resources to protecting the speech and
property rights of individuals from undue government interference.”
App. 13. The two individuals found to have no standing are LPOs who
alleged that the 1995 amendment adversely affected their earnings be-
cause banks that had previously provided them with special services no
longer did so; they did not allege that any of their own funds had been
“taken.”

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the Fifth Amendment, id., at 28–29; and the third count
alleges that the requirement that client funds be placed in
IOLTA accounts is “an illegal taking of the beneficial use
of those funds,” id., at 29. The prayer for relief sought a
refund of interest earned on the plaintiffs’ money that had
been placed in IOLTA accounts, a declaration that the IOLTA
Rules are unconstitutional, and an injunction against their
enforcement against LPOs. See id., at 30.
Most of the pretrial discovery related to the question
whether the 1995 Amendment to the IOLTA Rules had in-
directly lessened the earnings of LPOs because LPOs no
longer receive certain credits that the banks had provided
them when banks retained the interest earned on escrowed
funds. Each of the petitioners, however, did identify a spe-
cific transaction in which interest on his escrow deposit was
paid to the Foundation.
Petitioner Hayes and a man named Fossum made an ear-
nest money deposit of $2,000 on August 14, 1996, and a fur-
ther payment of $12,793.32 on August 28, 1996, in connection
with a real estate purchase that was closed on August 30,
1996. Id., at 117–118. The money went into an IOLTA ac-
count. Presumably those funds, half of which belonged to
Fossum, were used to pay the sales price, “to pay off liens
and obtain releases to clear the title to the property being
conveyed.” Id., at 98. The record does not explain exactly
how or when the ultimate recipients of those funds received
or cashed the checks issued to them by the escrowee, but the
parties apparently agree that the deposits generated some
interest on principal that was at least in part owned by
Hayes during the closing.
In connection with a real estate purchase that closed on
May 1, 1997, petitioner Brown made a payment of $90,521.29
that remained in escrow for two days, see id., at 53; he esti-
mated that the interest on that deposit amounted to $4.96,
but he did not claim that he would have received any interest

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230 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
if the IOLTA Rules had not been in place.5 The record thus
suggests, although the facts are not crystal clear, that funds
deposited by each of the petitioners generated some interest
that was ultimately paid to the Foundation. It also seems
clear that without IOLTA those funds would not have
produced any net interest for either of the petitioners.
After discovery, the District Court granted the defend-
ants’ motion for summary judgment. As a factual matter
the court concluded “that in no event can the client-
depositors make any net returns on the interest accrued in
these accounts. Indeed, if the funds were able to make any
net return, they would not be subject to the IOLTA pro-
gram.” Washington Legal Foundation v. Legal Founda-
tion of Washington, No. C97–0146C (WD Wash., Jan. 30,
1998), App. to Pet. for Cert. 94a. As a legal matter, the
court concluded that the constitutional issue focused on what
an owner has lost, not what the “ ‘taker’ ” has gained, and
that petitioners Hayes and Brown had “lost nothing.” Ibid.
While the case was on appeal, we decided Phillips v.
Washington Legal Foundation, 524 U. S. 156 (1998). Rely-
ing on our opinion in that case, a three-judge panel of the
Ninth Circuit decided that the IOLTA program caused a tak-
ing of petitioners’ property and that further proceedings
were necessary to determine whether they are entitled to
just compensation. The panel concluded: “In sum, we hold
that the interest generated by IOLTA pooled trust accounts
is property of the clients and customers whose money is de-
posited into trust, and that a government appropriation of
that interest for public purposes is a taking entitling them
to just compensation under the Fifth Amendment. But just
compensation for the takings may be less than the amount
5 “Q Are you saying that without IOLTA in place you would have earned
$4.96 on this transaction?
“A Without IOLTA in place I may not have earned anything but it would
have been earned in the sense of earning credits for the title company in
this case.” Id., at 130.

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Opinion of the Court
of the interest taken, or nothing, depending on the circum-
stances, so determining the remedy requires a remand.”
Washington Legal Foundation v. Legal Foundation of
Washington, 236 F. 3d 1097, 1115 (2001).
The Court of Appeals then reconsidered the case en banc.
271 F. 3d 835 (CA9 2001). The en banc majority affirmed
the judgment of the District Court, reasoning that, under
the ad hoc approach applied in Penn Central Transp. Co. v.
New York City, 438 U. S. 104 (1978), there was no taking
because petitioners had suffered neither an actual loss nor
an interference with any investment-backed expectations,
and that the regulation of the use of their property was per-
missible. Moreover, in the majority’s view, even if there
were a taking, the just compensation due was zero.
The three judges on the original panel, joined by Judge
Kozinski, dissented. In their view, the majority’s reliance
on Penn Central was misplaced because this case involves a
“per se” taking rather than a regulatory taking. 271 F. 3d,
at 865–866. The dissenters adhered to the panel’s view that
a remand is necessary in order to decide whether any com-
pensation is due.
In their petition for certiorari, Brown and Hayes asked us
not only to resolve the disagreement between the majority
and the dissenters in the Ninth Circuit about the taking
issue, but also to answer a question that none of those judges
reached, namely, whether injunctive relief is available be-
cause the small amounts to which they claim they are enti-
tled render recovery through litigation impractical. We
granted certiorari. 536 U. S. 903 (2002).
III
While it confirms the State’s authority to confiscate pri-
vate property, the text of the Fifth Amendment imposes two
conditions on the exercise of such authority: the taking must
be for a “public use” and “just compensation” must be paid

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232 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
to the owner.6 In this case, the first condition is unquestion-
ably satisfied. If the State had imposed a special tax, or
perhaps a system of user fees, to generate the funds to fi-
nance the legal services supported by the Foundation, there
would be no question as to the legitimacy of the use of the
public’s money.7 The fact that public funds might pay the
legal fees of a lawyer representing a tenant in a dispute with
a landlord who was compelled to contribute to the program
would not undermine the public character of the “use” of the
funds. Provided that she receives just compensation for the
taking of her property, a conscientious pacifist has no stand-
ing to object to the government’s decision to use the prop-
erty she formerly owned for the production of munitions.
Even if there may be occasional misuses of IOLTA funds, the
overall, dramatic success of these programs in serving the
compelling interest in providing legal services to literally
millions of needy Americans certainly qualifies the Founda-
tion’s distribution of these funds as a “public use” within the
meaning of the Fifth Amendment.
6 Often referred to as the Just Compensation Clause, the final Clause of
the Fifth Amendment provides: “nor shall private property be taken for
public use, without just compensation.” It applies to the States as well
as the Federal Government. Chicago, B. & Q. R. Co. v. Chicago, 166 U. S.
226, 239 (1897).
7 As the dissenters in the Ninth Circuit observed in their original panel
opinion: “IOLTA programs spread rapidly because they were an exceed-
ingly intelligent idea. Money that lawyers deposited in bank trust ac-
counts always produced earnings, but before IOLTA, the clients who
owned the money did not receive any of the earnings that their money
produced. IOLTA extracted the earnings from the banks and gave it to
charities, largely to fund legal services for the poor. That is a very wor-
thy purpose.” 236 F. 3d 1097, 1115 (2001).
In his dissent from the en banc opinion, Judge Kozinski wrote: “It is no
doubt true that the IOLTA program serves a salutary purpose, one worthy
of our support. As a citizen and former member of the bar, I applaud the
state’s effort to provide legal services for the poor and disadvantaged.”
271 F. 3d 835, 867 (CA9 2001).

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Before moving on to the second condition, the “just com-
pensation” requirement, we must address the type of taking,
if any, that this case involves. As we made clear just last
term:
“The text of the Fifth Amendment itself provides a
basis for drawing a distinction between physical takings
and regulatory takings. Its plain language requires the
payment of compensation whenever the government ac-
quires private property for a public purpose, whether
the acquisition is the result of a condemnation proceed-
ing or a physical appropriation. But the Constitution
contains no comparable reference to regulations that
prohibit a property owner from making certain uses of
her private property. Our jurisprudence involving con-
demnations and physical takings is as old as the Repub-
lic and, for the most part, involves the straightforward
application of per se rules. Our regulatory takings ju-
risprudence, in contrast, is of more recent vintage and
is characterized by ‘essentially ad hoc, factual inquiries,’
Penn Central, 438 U. S., at 124, designed to allow ‘care-
ful examination and weighing of all the relevant circum-
stances.’ Palazzolo [v. Rhode Island], 533 U. S. [606,]
636 [2001] (O’Connor, J., concurring).
“When the government physically takes possession of
an interest in property for some public purpose, it has
a categorical duty to compensate the former owner,
United States v. Pewee Coal Co., 341 U. S. 114, 115
(1951), regardless of whether the interest that is taken
constitutes an entire parcel or merely a part thereof.
Thus, compensation is mandated when a leasehold is
taken and the government occupies the property for its
own purposes, even though that use is temporary.
United States v. General Motors Corp., 323 U. S. 373
(1945), United States v. Petty Motor Co., 327 U. S. 372
(1946). Similarly, when the government appropriates
part of a rooftop in order to provide cable TV access for

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234 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
apartment tenants, Loretto v. Teleprompter Manhattan
CATV Corp., 458 U. S. 419 (1982); or when its planes
use private airspace to approach a government airport,
United States v. Causby, 328 U. S. 256 (1946), it is re-
quired to pay for that share no matter how small. But
a government regulation that merely prohibits landlords
from evicting tenants unwilling to pay a higher rent,
Block v. Hirsh, 256 U. S. 135 (1921); that bans certain
private uses of a portion of an owner’s property, Village
of Euclid v. Ambler Realty Co., 272 U. S. 365 (1926);
Keystone Bituminous Coal Assn. v. DeBenedictis, 480
U. S. 470 (1987); or that forbids the private use of certain
airspace, Penn Central Transp. Co. v. New York City,
438 U. S. 104 (1978), does not constitute a categorical
taking. ‘The first category of cases requires courts to
apply a clear rule; the second necessarily entails com-
plex factual assessments of the purposes and economic
effects of government actions.’ Yee v. Escondido, 503
U. S. 519, 523 (1992). See also Loretto, 458 U. S., at 440;
Keystone, 480 U. S., at 489, n. 18.” Tahoe-Sierra Pres-
ervation Council, Inc. v. Tahoe Regional Planning
Agency, 535 U. S. 302, 321–323 (2002).
In their complaint, Brown and Hayes separately challenge
(1) the requirement that their funds must be placed in an
IOLTA account (Count III) and (2) the later transfers to the
Foundation of whatever interest is thereafter earned (Count
II). The former is merely a transfer of principal and there-
fore does not effect a confiscation of any interest. Conceiv-
ably it could be viewed as the first step in a “regulatory
taking” which should be analyzed under the factors set forth
in our opinion in Penn Central. Under such an analysis,
however, it is clear that there would be no taking because
the transaction had no adverse economic impact on petition-
ers and did not interfere with any investment-backed expec-
tation. See 438 U. S., at 124.

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Even the dissenters in the Court of Appeals did not dis-
agree with the proposition that Penn Central forecloses the
conclusion that there was a regulatory taking effected by the
Washington IOLTA program. In their view, however, the
proper focus was on the second step, the transfer of interest
from the IOLTA account to the Foundation. It was this step
that the dissenters likened to the kind of “per se” taking
that occurred in Loretto v. Teleprompter Manhattan CATV
Corp., 458 U. S. 419 (1982).
We agree that a per se approach is more consistent with
the reasoning in our Phillips opinion than Penn Central’s
ad hoc analysis. As was made clear in Phillips, the interest
earned in the IOLTA accounts “is the ‘private property’ of
the owner of the principal.” 524 U. S., at 172. If this is so,
the transfer of the interest to the Foundation here seems
more akin to the occupation of a small amount of rooftop
space in Loretto.
We therefore assume that Brown and Hayes retained the
beneficial ownership of at least a portion of their escrow de-
posits until the funds were disbursed at the closings, that
those funds generated some interest in the IOLTA accounts,
and that their interest was taken for a public use when it
was ultimately turned over to the Foundation. As the dis-
senters in the Ninth Circuit explained, though, this does not
end our inquiry. Instead, we must determine whether any
“just compensation” is due.
IV
“The Fifth Amendment does not proscribe the taking of
property; it proscribes taking without just compensation.”
Williamson County Regional Planning Comm’n v. Hamil-
ton Bank of Johnson City, 473 U. S. 172, 194 (1985). All of
the Circuit Judges and District Judges who have confronted
the compensation question, both in this case and in Phillips,
have agreed that the “just compensation” required by the
Fifth Amendment is measured by the property owner’s loss

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236 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
rather than the government’s gain. This conclusion is sup-
ported by consistent and unambiguous holdings in our cases.
Most frequently cited is Justice Holmes’ characteristically
terse statement that “the question is what has the owner
lost, not what has the taker gained.” Boston Chamber of
Commerce v. Boston, 217 U. S. 189, 195 (1910). Also directly
in point is Justice Brandeis’ explanation of why a mere tech-
nical taking does not give rise to an obligation to pay
compensation:
“We have no occasion to determine whether in law the
President took possession and assumed control of the
Marion & Rye Valley Railway. For even if there was
technically a taking, the judgment for defendant was
right. Nothing was recoverable as just compensation,
because nothing of value was taken from the company;
and it was not subjected by the Government to pecuni-
ary loss.” Marion & Rye Valley R. Co. v. United
States, 270 U. S. 280, 282 (1926).
A few years later we again noted that the private party “is
entitled to be put in as good a position pecuniarily as if his
property had not been taken. He must be made whole but
is not entitled to more.” Olson v. United States, 292 U. S.
246, 255 (1934).
In Kimball Laundry Co. v. United States, 338 U. S. 1
(1949), although there was disagreement within the Court
concerning the proper measure of the owner’s loss when a
leasehold interest was condemned, it was common ground
that the government should pay “not for what it gets but for
what the owner loses.” Id., at 23 (Douglas, J., dissenting).
Moreover, in his opinion for the majority, Justice Frank-
furter made it clear that, given “the liability of all property
to condemnation for the common good,” an owner’s nonpecu-
niary losses attributable to “his unique need for property or
idiosyncratic attachment to it, like loss due to an exercise of

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237 Cite as: 538 U. S. 216 (2003)
Opinion of the Court
the police power, is properly treated as part of the burden
of common citizenship.” Id., at 5.
Applying the teaching of these cases to the question before
us, it is clear that neither Brown nor Hayes is entitled to
any compensation for the nonpecuniary consequences of the
taking of the interest on his deposited funds, and that any
pecuniary compensation must be measured by his net losses
rather than the value of the public’s gain. For that reason,
both the majority 8 and the dissenters 9 on the Court of Ap-
peals agreed that if petitioners’ net loss was zero, the com-
pensation that is due is also zero.
V
Posing hypothetical cases that explain why a lawyer might
mistakenly deposit funds in an IOLTA account when those
funds might have produced net earnings for the client, the
Ninth Circuit dissenters concluded that a remand of this case
is necessary to decide whether petitioners are entitled to
any compensation.
“Even though when funds are deposited into IOLTA
accounts, the lawyers expect them to earn less than it
would cost to distribute the interest, that expectation
can turn out to be incorrect, as discussed above. Sev-
eral hypothetical cases illustrate the complexities of the
remedies, which need further factual development on re-
mand. Suppose $2,000 is deposited into a lawyer’s trust
account paying 5% and stays there for two days. It
earns about $.55, probably well under the cost of a stamp
and envelope, along with clerical expenses, needed to
send the $.55 to the client. In that case, the client’s
financial loss from the taking, if a reasonable charge is
8 “We therefore hold that even if the IOLTA program constituted a tak-
ing of Brown’s and Hayes’s private property, there would be no Fifth
Amendment violation because the value of their just compensation is nil.”
271 F. 3d, at 864.
9 Id., at 883–884.

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238 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
made for the administrative expense, is nothing. The
fair market value of a right to receive $.55 by spending
perhaps $5.00 to receive it would be nothing. On the
other hand, suppose, hypothetically, that the amount de-
posited into the trust account is $30,000, and it stays
there for 6 days. The client’s loss here would be about
$29.59 if he does not get the interest, which may well
exceed the reasonable administrative expense of paying
it to him out of a common fund. It is hard to see how
just compensation could be zero in this hypothetical tak-
ing, even though it would be in the $2,000 for 2 days
hypothetical taking. It may be that the difference be-
tween what a pooled fund earns, and what the individual
clients and escrow companies lose, adds up to enough to
sustain a valuable IOLTA program while not depriving
any of the clients and customers of just compensation
for the takings. This is a practical question entirely un-
developed on this record. We leave it for the parties to
consider during the remedial phase of this litigation.”
271 F. 3d, at 883.10
10 The first hypothetical posed by the Ninth Circuit dissenters illustrates
the fundamental flaw in Justice Scalia’s approach to this case. Under
his view that just compensation should be measured by the gross amount
of the interest taken by the State, the client should recover the $.55 of
interest earned on a 2-day deposit even when the transaction costs amount
to $2.00. Thus, in this case, under Justice Scalia’s approach, even if it
is necessary to incur substantial legal and accounting fees to determine
how many pennies of interest were earned while petitioners’ funds re-
mained in escrow and how much of that interest belonged to them rather
than to the sellers, the Constitution would require that they be paid the
gross amount of that interest, rather than an amount equal to their net
loss (which, of course, is zero). As explained above, this is inconsistent
with the Court’s just compensation precedents. See supra, at 235–237.
Ironically, Justice Scalia seems to believe that our holding in Webb’s
Fabulous Pharmacies, Inc. v. Beckwith, 449 U. S. 155 (1980), would sup-
port such a bizarre result. In Webb’s, however, the transaction cost that
is comparable to the postage in the Ninth Circuit’s hypothetical (and to
the potential professional fees in this case) is the clerk’s fee of $9,228.74,

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These hypotheticals persuade us that lawyers and LPOs
may occasionally deposit client funds in an IOLTA account
when those funds could have produced net interest for their
clients. It does not follow, however, that there is a need for
further hearings to determine whether Brown or Hayes is
entitled to any compensation from the respondents.
The Rules adopted and administered by the Washington
Supreme Court unambiguously require lawyers and LPOs to
deposit client funds in non-IOLTA accounts whenever those
funds could generate net earnings for the client. See supra,
at 224–225. Thus, if the LPOs who deposited petitioners’
money in IOLTA accounts could have generated net income,
the LPOs violated the court’s Rules. Any conceivable net
loss to petitioners was the consequence of the LPOs’ incor-
rect private decisions rather than any state action. Such
mistakes may well give petitioners a valid claim against the
LPOs, but they would provide no support for a claim for
compensation from the State, or from any of the respondents.
The District Court was therefore entirely correct when it
made the factual finding “that in no event can the client-
depositors make any net return on the interest accrued in
which was deducted from the amount held in the interpleader fund. See
id., at 157, 160. The creditors in Webb’s recovered an amount equal to
their net loss. Indeed, in Webb’s we expressly limited our holding to “the
narrow circumstances of this case,” id., at 164, and reserved decision on
the question whether any compensation would have been due if the clerk
had not charged a separate fee. See id., at 164–165.
Justice Scalia is mistaken in stating that we hold that just compensa-
tion is measured by the amount of interest “petitioners would have earned
had their funds been deposited in non-IOLTA accounts.” Post, at 244
(dissenting opinion). We hold (1) that just compensation is measured by
the net value of the interest that was actually earned by petitioners and
(2) that, by operation of the Washington IOLTA Rules, no net interest can
be earned by the money that is placed in IOLTA accounts in Washington.
See IOLTA Adoption Order, 102 Wash. 2d 1101, 1114 (1984) (“IOLTA funds
are only those funds that cannot, under any circumstances, earn net inter-
est (after deducting transaction and administrative costs and bank fees)
for the client”).

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240 BROWN v. LEGAL FOUNDATION OF WASH.
Opinion of the Court
these accounts. Indeed, if the funds were able to make any
net return, they would not be subject to the IOLTA pro-
gram.” No. C97–0146C (WD Wash., Jan. 30, 1998), App. to
Pet. for Cert. 94a.
The categorical requirement in Washington’s IOLTA pro-
gram that mandates the choice of a non-IOLTA account when
net interest can be generated for the client provided an inde-
pendent ground for the en banc court’s judgment. It held
that the program did “not work a constitutional violation
with regard to Brown’s and Hayes’s property: Even if their
property was taken, the Fifth Amendment only protects
against a taking without just compensation. Because of the
way the IOLTA program operates, the compensation due
Brown and Hayes for any taking of their property would be
nil. There was therefore no constitutional violation when
they were not compensated.” 271 F. 3d, at 861–862.
We agree with that holding.11
VI
To recapitulate: It is neither unethical nor illegal for law-
yers to deposit their clients’ funds in a single bank account.
A state law that requires client funds that could not other-
wise generate net earnings for the client to be deposited in
an IOLTA account is not a “regulatory taking.” A law that
requires that the interest on those funds be transferred to a
different owner for a legitimate public use, however, could
be a per se taking requiring the payment of “just compensa-
tion” to the client. Because that compensation is measured
by the owner’s pecuniary loss—which is zero whenever the
Washington law is obeyed—there has been no violation of
the Just Compensation Clause of the Fifth Amendment in
this case. It is therefore unnecessary to discuss the reme-
11 Contrary to Justice Scalia’s assertion, this conclusion does not de-
pend on the fact that interest “was created by the beneficence of a state
regulatory program.” Post, at 241. It rests instead on the fact that just
compensation for a net loss of zero is zero.

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241 Cite as: 538 U. S. 216 (2003)
Scalia, J., dissenting
dial question presented in the certiorari petition. Accord-
ingly, the judgment of the Court of Appeals is affirmed.
It is so ordered.
Justice Scalia, with whom The Chief Justice, Justice
Kennedy, and Justice Thomas join, dissenting.
The Court today concludes that the State of Washington
may seize private property, without paying compensation, on
the ground that the former owners suffered no “net loss”
because their confiscated property was created by the be-
neficence of a state regulatory program. In so holding the
Court creates a novel exception to our oft-repeated rule that
the just compensation owed to former owners of confiscated
property is the fair market value of the property taken.
What is more, the Court embraces a line of reasoning that
we explicitly rejected in Phillips v. Washington Legal Foun-
dation, 524 U. S. 156 (1998). Our precedents compel the
conclusion that petitioners are entitled to the fair market
value of the interest generated by their funds held in interest
on lawyers’ trust accounts (IOLTA). I dissent from the
Court’s judgment to the contrary.
I
In 1984 the Supreme Court of Washington issued an order
requiring lawyers to place all client trust funds in “identifi-
able interest-bearing trust accounts.” App. 150. If a cli-
ent’s funds can be invested to provide a “positive net return”
to the client, the lawyer must place the funds in an account
that pays interest to the client. If the client’s funds cannot
earn a “positive net return” for the client, the funds are to
be deposited in a pooled interest-bearing IOLTA account
with the interest payable to the Legal Foundation of Wash-
ington (LFW), a nonprofit organization that provides legal
services for the indigent. A lawyer is not required to obtain
his client’s consent, or even notify his client, regarding the

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242 BROWN v. LEGAL FOUNDATION OF WASH.
Scalia, J., dissenting
use of client funds in IOLTA accounts or the payment of in-
terest to LFW. Id., at 151. The Supreme Court of Wash-
ington dismissed all constitutional objections to its 1984
order on the now-discredited ground that any interest that
might be earned on IOLTA accounts would not be “property”
of the clients. Id., at 158; cf. Phillips, supra.
As the Court correctly notes, Washington’s IOLTA pro-
gram comprises two steps: First, the State mandates that
certain client trust funds be placed in an IOLTA account,
where those funds generate interest. Second, the State
seizes the interest earned on those accounts to fund LFW.
Ante, at 234. With regard to step one, we held in Phillips,
supra, that any interest earned on client funds held in
IOLTA accounts belongs to the owner of the principal, not
the State or the State’s designated recipient of the interest.
As to step two, the Court assumes, arguendo, that the appro-
priation of petitioners’ interest constitutes a “taking,” 1 but
holds that just compensation is zero because without the
mandatory pooling arrangements (step one) of IOLTA, peti-
tioners’ funds could not have generated any interest in the
first place.2 Ante, at 239–240. This holding contravenes our
1 Although the Ninth Circuit concluded that Washington’s IOLTA
scheme did not constitute a “taking” of petitioners’ property, Washington
Legal Foundation v. Legal Foundation of Wash., 271 F. 3d 835, 861 (2001),
the Court does not attempt to defend this aspect of the decision. Ante,
at 235.
2 The Court’s ruminations on whether the State’s IOLTA program satis-
fies the Fifth Amendment’s “public use” requirement, ante, at 231–232,
come as a surprise, inasmuch as they address a nonjurisdictional constitu-
tional issue raised by neither the parties nor their amici. Petitioners’
sole contention in this Court is that the State’s IOLTA program violates
the just compensation requirement of the Takings Clause. Brief for Peti-
tioners 18–48; Reply Brief for Petitioners 1–20.
In needlessly addressing this issue, the Court announces a new criterion
for “public use”: The requirement is “unquestionably satisfied” if the State
could have raised funds for the same purpose through a “special tax” or a
“system of user fees,” ante, at 232. This reduces the “public use” require-
ment to a negligible impediment indeed, since I am unaware of any use

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243 Cite as: 538 U. S. 216 (2003)
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decision in Phillips—effectively refusing to treat the inter-
est as the property of petitioners we held it to be—and
brushes aside 80 years of precedent on determining just
compensation.
II
When a State has taken private property for a public use,
the Fifth Amendment requires compensation in the amount
of the market value of the property on the date it is appro-
priated. See United States v. 50 Acres of Land, 469 U. S.
24, 29 (1984) (holding that just compensation is “ ‘market
value of the property at the time of the taking’ ” (emphasis
added) (quoting Olson v. United States, 292 U. S. 246, 255
(1934))); Kirby Forest Industries, Inc. v. United States, 467
U. S. 1, 10 (1984); United States v. 564.54 Acres of Monroe
and Pike County Land, 441 U. S. 506, 511 (1979); Almota
Farmers Elevator & Warehouse Co. v. United States, 409
U. S. 470, 474 (1973); United States v. Commodities Trading
Corp., 339 U. S. 121, 130 (1950); United States v. New River
Collieries Co., 262 U. S. 341, 344 (1923). As we explained in
United States v. Petty Motor Co., 327 U. S. 372, 377 (1946),
“just compensation . . . is not the value to the owner for his
particular purposes or to the condemnor for some special use
to which state taxes cannot constitutionally be devoted. The money thus
derived may be given to the poor, or to the rich, or (insofar as the Federal
Constitution is concerned) to the girlfriend of the retiring Governor.
Taxes and user fees, since they are not “takings,” see United States v.
Sperry Corp., 493 U. S. 52, 63 (1989), are simply not subject to the “public
use” requirement, and so their constitutional legitimacy is entirely irrele-
vant to the existence vel non of a public use.
By raising the analogy of a tax or user fee the Court does, however,
usefully call attention to one of the more offensive features of the takings
scheme devised by the Washington Supreme Court: A tax or user fee
would be enacted by a democratically elected legislature. The IOLTA
scheme, by contrast, circumvents politically accountable decisionmaking,
and effects a taking of clients’ funds through application of a rule purport-
edly regulating professional ethics, promulgated by the Washington Su-
preme Court. (The taking has nothing to do with ethics, of course.)

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244 BROWN v. LEGAL FOUNDATION OF WASH.
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but a so-called ‘market value.’ ” Our cases have recognized
only two situations in which this standard is not to be used:
when market value is too difficult to ascertain, and when
payment of market value would result in “ ‘manifest injus-
tice’ ” to the owner or the public. See Kirby Forest Indus-
tries, Inc., supra, at 10, n. 14.
In holding that any just compensation that might be owed
is zero, the Court neither pretends to ascertain the market
value of the confiscated property nor asserts that the case
falls within one of the two exceptions where market value
need not be determined. Instead, the Court proclaims that
just compensation is to be determined by the former prop-
erty owner’s “net loss,” and endorses simultaneously two
competing and irreconcilable theories of how that loss should
be measured. The Court proclaims its agreement with the
Ninth Circuit majority that just compensation is the interest
petitioners would have earned had their funds been depos-
ited in non-IOLTA accounts. Ante, at 239–240. See also
271 F. 3d 835, 862 (CA9 2001) (“[W]ithout IOLTA, neither
Brown nor Hayes would have earned interest on his princi-
pal because by regulatory definition, their funds would have
not otherwise been placed in an IOLTA account”). At the
same time, the Court approves the view of the Ninth Circuit
dissenters that just compensation is the amount of interest
actually earned in petitioners’ IOLTA accounts, minus the
amount that would have been lost in transaction costs had
petitioners sought to keep the money for themselves. Ante,
at 238–239, n. 10. The Court cannot have it both ways—as
the Ninth Circuit itself realized—but even if it could, neither
of the two options from which lower courts may now choose
is consistent with Phillips or our precedents that equate just
compensation with the fair market value of the property
taken.
A
Under the Court’s first theory, just compensation is zero
because, under the State Supreme Court’s Rules, the only

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245 Cite as: 538 U. S. 216 (2003)
Scalia, J., dissenting
funds placed in IOLTA accounts are those which could not
have earned net interest for the client in a non-IOLTA sav-
ings account. App. 150. This approach defines petitioners’
“net loss” as the amount of interest they would have received
had their funds been deposited in separate, non-IOLTA ac-
counts. See ante, at 239 (“[I]f the [Limited Practice Offi-
cers (LPOs)] who deposited petitioners’ money in IOLTA ac-
counts could have generated net income, the LPOs violated
the court’s Rules. Any conceivable net loss to petitioners
was the consequence of the LPOs’ incorrect private decisions
rather than any state action”).
This definition of just compensation has no foundation in
reason. Once interest is earned on petitioners’ funds held
in IOLTA accounts, that money is petitioners’ property. See
Phillips, 524 U. S., at 168 (“[A]ny interest that does accrue
attaches as a property right incident to the ownership of
the underlying principal”). It is at that point that the State
appropriates the interest to fund LFW—after the interest
has been generated in the pooled accounts—and it is at that
point that just compensation for the taking must be assessed.
It may very well be, as the Court asserts, that petitioners
could not have earned money on their funds absent IOLTA’s
mandatory pooling arrangements, but just compensation is
not to be measured by what would have happened in a hypo-
thetical world in which the State’s IOLTA program did not
exist. When the State takes possession of petitioners’ prop-
erty—petitioners’ money—and transfers it to LFW, the
property obviously has value. The conclusion that it is de-
void of value because of the circumstances giving rise to its
creation is indefensible.
Consider the implications of the Court’s approach for a
case such as Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
449 U. S. 155 (1980), which involved a Florida statute that
allowed the clerk of a court, in his discretion, to invest inter-
pleader funds deposited with that court in interest-bearing
certificates, the interest earned to be deemed “ ‘income of

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246 BROWN v. LEGAL FOUNDATION OF WASH.
Scalia, J., dissenting
the office of the clerk of the circuit court.’ ” Id., at 156, n. 1
(quoting Fla. Stat. § 28.33 (1977)). The appellant in Webb’s
had tendered nearly $2 million to a state court after filing
an interpleader action, and we held that the state court’s
retention of the more than $100,000 in interest generated by
those funds was an uncompensated taking of private prop-
erty.3 449 U. S., at 164.
But what would have been just compensation for the tak-
ing in Webb’s under today’s analysis? It would consist not
of the amount of interest actually earned by the principal,
but rather of the amount that would have been earned had
the State not provided for the clerk of court to generate the
interest in the first place. That amount would have been
zero since, as we noted in Webb’s, Florida law did not require
that interest be earned on a registry deposit, id., at 161.
Section 28.33’s authorization for the clerk of court to invest
the interpleader funds, like the Washington Supreme Court’s
IOLTA scheme, was a state-created opportunity to generate
interest on moneys that would otherwise lie fallow. As the
Florida Supreme Court observed, “[i]nterest accrues only
because of section 28.33. In this sense the statute takes
only what it creates.” Beckwith v. Webb’s Fabulous Phar-
macies, Inc., 374 So. 2d 951, 953 (1979) (emphasis added).
In Webb’s this Court unanimously rejected the contention
that a state regulatory scheme’s generation of interest that
3 A separate Florida statute, Fla. Stat. § 28.24 (1977), which was not even
challenged in Webb’s, 449 U. S., at 158, provided that the Clerk of the
Circuit Court would make “charges for services rendered,” including
charges for receiving money into the registry of court, § 28.24(14). These
charges were not deducted from the gross interest earned, as the Court
suggests, ante, at 238–239, n. 10, but from the principal, before any inter-
est had been generated on the interpleader fund. See 449 U. S., at 157–
158. The creditors in Webb’s sued to recover the entire interest that had
been earned on the fund pursuant to § 28.33, id., at 158, and we held that
“any interest on an interpleaded and deposited fund follows the principal
and is to be allocated to those who are ultimately to be the owners of that
principal,” id., at 162.

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247 Cite as: 538 U. S. 216 (2003)
Scalia, J., dissenting
would otherwise not have come into existence gave license
for the State to claim the interest for itself. What can possi-
bly explain the contrary holding today? Surely it cannot be
that the Justices look more favorably upon a nationally emu-
lated uncompensated taking of clients’ funds to support (hur-
rah!) legal services to the indigent than they do upon a more
local uncompensated taking of clients’ funds to support noth-
ing more inspiring than the Florida circuit courts. That
were surely an unprincipled distinction. But the real, prin-
cipled basis for the distinction remains to be disclosed. And
until it is disclosed, today’s endorsement of the proposition
that there is no taking when “the State giveth, and the State
taketh away,” has potentially far-reaching consequences.
May the government now seize welfare benefits, without
paying compensation, on the ground that there was no “net
los[s],” ante, at 237, to the recipient? Cf. Goldberg v. Kelly,
397 U. S. 254 (1970).4
What is more, the Court’s reasoning calls into question
our holding in Phillips that interest generated on IOLTA
accounts is the “private property” of the owners of the prin-
cipal. An ownership interest encumbered by the right of
the government to seize moneys for itself or transfer them
to the nonprofit organization of its choice is not compatible
with any notion of “private property.” True, the Fifth
Amendment allows the government to appropriate private
property without compensation if the market value of the
property is zero (and if it is taken for a “public use”). But
4 The Court claims that its holding “does not depend on the fact that
interest was created by a state regulatory program,” and “rests instead
on the fact that just compensation for a net loss of zero is zero.” Ante,
at 240, n. 11 (internal quotation marks omitted). This simply disclaims
the ultimate ground by appealing to the proximate ground: The reason
the Court finds there has been a “a net loss of zero” is that the interest
on petitioners’ funds is entirely attributable to the merging of those funds
into the IOLTA account—but for IOLTA, they would have earned no inter-
est at all. That is to say, no compensation is due on the interest because
the “interest was created by a state regulatory program.”

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248 BROWN v. LEGAL FOUNDATION OF WASH.
Scalia, J., dissenting
the Court does not defend the State’s action on the ground
that the money taken is worthless, but instead on the ground
that the interest would not have been created but for
IOLTA’s mandatory pooling arrangements. The Court
thereby embraces precisely the line of argument we rejected
in Phillips: that the interest earned on client funds in IOLTA
accounts could not be deemed “private property” of the cli-
ents because those funds “cannot reasonably be expected to
generate interest income on their own.” 524 U. S., at 169
(internal quotation marks omitted); cf. id., at 183 (Breyer,
J., dissenting).
B
The Court’s rival theory for explaining why just compen-
sation is zero fares no better. Contrary to its aforemen-
tioned description of petitioners’ “net loss” as the amount
their funds would have earned in non-IOLTA accounts, ante,
at 239–240, the Court declares that just compensation is “the
net value of the interest that was actually earned by peti-
tioners,” ante, at 239, n. 10 (emphasis added)—net value con-
sisting of the value of the funds, less “transaction and admin-
istrative costs and bank fees” that would be expended in
extracting the funds from the IOLTA accounts, ibid. To
support this concept of “net value,” the Court cites nothing
but the cases discussed earlier in its opinion, ante, at 235–
237, which establish that just compensation consists of the
value the owner has lost rather than the value the govern-
ment has gained. In this case, however, there is no differ-
ence between the two. Petitioners have lost the interest
that Phillips says rightfully belongs to them—which is pre-
cisely what the government has gained. The Court’s appar-
ent fear that following the Constitution in this case will pro-
vide petitioners a “windfall” in the amount of transaction
costs saved is based on the unfounded assumption that the
State must return the interest directly to petitioners. The
State could satisfy its obligation to pay just compensation by
simply returning petitioners’ money to the IOLTA account

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249 Cite as: 538 U. S. 216 (2003)
Scalia, J., dissenting
from which it was seized, leaving others to incur the account-
ing costs in the event petitioners seek to extract their inter-
est from the account.
In any event, our cases that have distinguished the “prop-
erty owner’s loss” from the “government’s gain” say nothing
whatever about reducing this value to some “net” amount.
Remarkably, the Court does not cite the recent case of ours
that specifically addresses this issue, and that does so in the
very context of an IOLTA-type scheme. Phillips flatly re-
jected the notion that just compensation may be reduced by
transaction costs the former owner would have sustained in
retaining his property. See 524 U. S., at 170 (“The govern-
ment may not seize rents received by the owner of a building
simply because it can prove that the costs incurred in collect-
ing the rents exceed the amount collected”); 5 see also Olson
v. United States, 292 U. S., at 255 (“It is the property and
not the cost of it that is safeguarded by [the] Constitutio[n]”).
5 All the Court can muster in response to Phillips’ rejection of its view
that the government may seize property for which the administrative
costs of retention exceed market value is a hypothetical posed by the
Ninth Circuit dissenters in support of their suggestion to remand. Ante,
at 238–239, n. 10. The doctrine of stare decisis adopts a different hierar-
chy: This Court’s precedents are to be followed over dissenting opinions
in the Courts of Appeals.
The Court also suggests that the confiscation of petitioners’ property is
“comparable to” the clerk’s fee under Fla. Stat. § 28.24 (1977), which we
discussed in Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U. S. 155
(1980). Ante, at 238–239, n. 10. The clerk’s fee imposed pursuant to
§ 28.24(14) had nothing to do with “transaction costs” but was a fee for
services rendered by the State itself. 449 U. S., at 157. Here, the State
does not even attempt to characterize its retention of petitioners’ interest
in that fashion. While petitioners, their escrow companies, and the banks
holding their funds may very well incur costs in returning the IOLTA-
generated interest to the clients, this does not convert the State’s seizure
into a fee. In any event, as noted earlier, supra, at 246, n. 3, we neither
approved nor disapproved the State’s retention of fees pursuant to
§ 28.24(14) in Webb’s because the parties did not challenge it. 449 U. S.,
at 158.

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250 BROWN v. LEGAL FOUNDATION OF WASH.
Scalia, J., dissenting
And if the Federal Government seizes someone’s paycheck,
it may not deduct from its obligation to pay just compensa-
tion the amount that state and local governments would have
taxed, on the ground that it need only compensate the “net
los[s],” ante, at 237, to the former owner. That is why we
have repeatedly held that just compensation is the “market
value” of the confiscated property, rather than the “net loss”
to the owner. “Market value” is not reduced by what the
owner would have lost in taxes or other exactions. “ ‘[J]ust
compensation’ means the full monetary equivalent of the
property taken.” United States v. Reynolds, 397 U. S. 14,
16 (1970).
But the irrationality of this aspect of the Court’s opinion
does not end with its blatant contradiction of a precedent
(Phillips) promulgated by a Court consisting of the same
Justices who sit today. Even if “net value” (rather than
“market value”) were the appropriate measure of just com-
pensation, the Court has no basis whatsoever for pronounc-
ing the “net value” of petitioners’ interest to be zero. While
the Court is correct that under the State’s IOLTA rules, peti-
tioners’ funds could not have earned net interest in separate,
non-IOLTA accounts, ante, at 238–239, n. 10, that has no
bearing on the transaction costs that petitioners would sus-
tain in removing their earned interest from the IOLTA ac-
counts.6 The Court today arbitrarily forecloses clients from
6 The Court quotes the Washington Supreme Court’s definition of IOLTA
funds as “only those funds that cannot, under any circumstances, earn net
interest (after deducting transaction and administrative costs and bank
fees) for the client.” Ante, at 239, n. 10 (quoting IOLTA Adoption Order,
102 Wash. 2d 1101, 1114 (1984) (emphasis deleted)). It is true that IOLTA
funds cannot earn net interest for the client in non-IOLTA accounts, and,
prior to our decision in Phillips v. Washington Legal Foundation, 524
U. S. 156 (1998), also could not earn net interest for the client in IOLTA
accounts because state law declared such interest to be the property of
LFW. After Phillips, however, IOLTA funds can earn net interest for
the client when placed in IOLTA accounts—because all interest earned by
funds in IOLTA accounts is the client’s property. See id., at 160.

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251 Cite as: 538 U. S. 216 (2003)
Scalia, J., dissenting
recovering the “net interest” to which (even under the
Court’s definition of just compensation) they are entitled.
What is more, there is no reason to believe that petitioners
themselves do not fall within the class of clients whose funds,
though unable to earn interest in non-IOLTA accounts, nev-
ertheless generate “net interest” in IOLTA accounts. That
is why the Ninth Circuit dissenters (who shared the Court’s
second theory of just compensation but not the first) voted
to remand to the District Court for a factual determination
of what the “net value” of petitioners’ interest actually is.
To confuse confusion yet again, the Court justifies its deci-
sion not to remand by simply falling back upon the different
theory of just compensation espoused by the Ninth Circuit
majority—namely, that just compensation will always be
zero because the funds would not have earned interest for
the clients in a non-IOLTA savings account. Ante, at 239–
240. See also 271 F. 3d, at 862 (“Brown and Hayes are in
actuality seeking compensation for the value added to their
property by Washington’s IOLTA program”). That does not
conform, of course, with the Court’s previously announced
standard for just compensation: “the net value of the interest
that was actually earned by petitioners.” Ante, at 239,
n. 10 (emphasis added).7 Assessing the “net value” of inter-
7 In this reprise of its first theory, designed to cover the embarrassing
fact that its second theory does not support its disposition, the Court
makes the assertion that, even if some lawyer mistakenly placed into the
IOLTA account client funds that could have generated net earnings inde-
pendently (thus rendering even the Court’s first theory factually inapplica-
ble), compensation would still not be required, because “[a]ny conceivable
net loss [would be] the consequence of the [lawyer’s] incorrect private
decisio[n] rather than any state action.” Ante, at 239. That is surely not
correct. Even on the Court’s own misbegotten theory, the taking occurs
when the IOLTA interest is transferred to LFW, and compensation is not
payable only if the principal generating that interest could not have
earned interest otherwise. How the principal got into the IOLTA ac-
count—mistakenly or otherwise—has nothing to do with whether there
has been a “taking” of “value.” The government would owe just compen-
sation for a taking of real property even if the action of some third party

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252 BROWN v. LEGAL FOUNDATION OF WASH.
Scalia, J., dissenting
est “actually earned” requires a factual determination of the
costs petitioners would incur if they sought to keep the
IOLTA-generated interest for themselves. By refusing to
undertake this inquiry, the Court reveals that its contention
that the value of interest “actually earned” is the measure
of just compensation is a facade. The Court’s affirmance of
the decision below can only rest on the reasoning adopted by
the Ninth Circuit majority (notwithstanding its rejection in
Phillips): that property created by virtue of a state regula-
tory program may be taken without compensation.
* * *
Perhaps we are witnessing today the emergence of a whole
new concept in Compensation Clause jurisprudence: 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 beneficence is so
highly favored by the courts (taking from the rich to give to
indigent defendants) that the normal rules of the Constitu-
tion protecting private property are suspended. One must
hope that that is the case. For to extend to the entire run of
Compensation Clause cases the rationale supporting today’s
judgment—what the government hath given, the govern-
ment may freely take away—would be disastrous.
The Court’s judgment that petitioners are not entitled to
the market value of their confiscated property has no basis
in law. I respectfully dissent.
had caused the property mistakenly to be included on the list of properties
scheduled for condemnation. The notion that the government can keep
the property without compensation, and relegate the owner to his reme-
dies against the private party, is nothing short of bizarre. Imagine the
fruitful application of this principle of “intervening private fault” in other
fields: “Yes, you were subjected to a brutally unlawful search and seizure
in connection with our raid upon a street corner where drugs were being
distributed. But since the only reason you were at that corner is that a
taxi dropped you at the wrong address, you must look to Yellow Cab for
your remedy.”

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253 Cite as: 538 U. S. 216 (2003)
Kennedy, J., dissenting
Justice Kennedy, dissenting.
The principal dissenting opinion, authored by Justice
Scalia, sets forth a precise, complete, and convincing case
for rejecting the holding and analysis of the Court. I join
the dissent in full.
It does seem appropriate to add this further observation.
By mandating that the interest from these accounts serve
causes the justices of the Washington Supreme Court prefer,
the State not only takes property in violation of the Fifth
and Fourteenth Amendments to the Constitution of the
United States but also grants to itself a monopoly which
might then be used for the forced support of certain view-
points. Had the State, with the help of Congress, not acted
in violation of its constitutional responsibilities by taking for
itself property which all concede to be that of the client, ante,
at 235; Phillips v. Washington Legal Foundation, 524 U. S.
156, 172 (1998), the free market might have created various
and diverse funds for pooling small interest amounts. These
funds would have allowed the true owners of the property
the option to express views and policies of their own choos-
ing. Instead, as these programs stand today, the true owner
cannot even opt out of the State’s monopoly.
The First Amendment consequences of the State’s action
have not been addressed in this case, but the potential for a
serious violation is there. See Abood v. Detroit Bd. of Ed.,
431 U. S. 209 (1977); Keller v. State Bar of Cal., 496 U. S. 1
(1990). Today’s holding, then, is doubly unfortunate. One
constitutional violation (the taking of property) likely will
lead to another (compelled speech). These matters may
have to come before the Court in due course.