Making Something Out of Nothing: The Law of Takings and 'Phillips v. Washington Legal Foundation'
Michael A. Heller
Columbia University - Columbia Law School
James E. Krier
University of Michigan Law School
Supreme Court Economic Review, Vol. 7, pp. 285-301, 1999
Phillips v. Washington Legal Foundation, 118 S Ct 1925 (1998), held that interest generated by the Texas Interest on Lawyers Trust Account (IOLTA) program is the "private property" of the clients who handed over the principal; the Court did not decide whether the IOLTA program worked a "taking," or, if it did, what "just compensation" was due. The debates among the justices about the meaning of private property, argued in terms of contextual and conceptual severance, are unlikely to prove fruitful. We elaborate a better approach that looks to the underlying purposes of just compensation: efficiency and justice are best served by uncoupling matters and methods of deterrence from matters and methods of distribution.
Note: A companion article, "Deterrence and Distribution in the Law of Takings," appears at 112 Harv. L. Rev. 997 (1999). Reprints of both articles are available from the authors.
JEL Classification: K1Accepted Paper Series
Date posted: September 15, 1999
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