Is a client entitled to the value of the interest generated on their attorney's funds?

Hooker v. Burr (1904) 194 U.S. 415, 419, 24 S.Ct. 706, 708, 48 L.Ed. 1046, says if a claimant is "not injured to the extent of a penny ..., his abstract rights are unimportant." Here, the affected class of legal clients is by definition limited to those persons whose deposited funds cannot, under present banking regulations be deposited in an interest-bearing trust account so as to earn net income for the client's individual profit after offsetting transactional costs. Thus, these persons suffer no real economic loss.

That the "taker" may reap a profit above and beyond the value of the property interest taken does not entitle the person from whom the property is taken to share in those profits. The owner is to receive no more than indemnity for the loss, the award cannot be enhanced by any gain to the taker. (United States v. Miller (1943) 317 U.S. 369, 375, 63 S.Ct. 276, 280, 87 L.Ed. 336.) Here, no client is stripped of earnings potential, because the statute excludes those client deposits which individually can, because of their size and/or length of time to be held, earn income net of transactional costs.

The Fifth Amendment guarantees private property shall not "be taken for public use, without just compensation." (Agins v. Tiburon (1980) 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106.) Here, respondents apparently contend they are entitled to the monetary value of the interest generated by their funds deposited with their attorney. However, to do this would, under ordinary trust principles, entitle the trustee-lawyer to be reimbursed for transactional costs incurred in generating that interest and accounting for it to the client. Where, by definition, those transactional costs exceed or equal the total interest income generated, the clients suffer no loss for which they are entitled to compensation. The abstract right to control where interest earned on a person's money may be funneled is not an economic loss subject to monetary compensation.