Recent Changes to the Lawyer's Fund for Client Protection
by Linda J. Barclay Mount
Your new client, Mrs. Y, walks into your office and presents you with a sad tale of woe. She is in the middle of a bitter divorce. You find out that she had been a client of Attorney X. She relates that she met once with Attorney X, who seemed at the time very capable and caring. Attorney X promised her that he would give her case his utmost attention and care and, in return, expected her to pay a $5,000 retainer before he began performing legal services. Mrs. Y ransacked all available sources of cash, sold her wedding ring, and took out a loan from her sister to raise the $5,000. Attorney X took the $5,000 and, then, for the next three months, failed to return Mrs. Y's telephone calls or to do any work at all. While reading the newspaper last week, Mrs. Y discovered that Attorney X had just been disbarred and was no longer in practice. She is distraught because she has just been served an Order to Show Cause by her husband and she now has no legal representation and no money. What do you, as Mrs. Y's new lawyer, do to help her?
Unfortunately, this sort of problem occurs with dismaying frequency. Accordingly, a number of states and the American Bar Association came up with a way to mitigate it. They proposed a fund, created by the state bar association or related entity, to reimburse clients for losses incurred by the dishonest conduct of their licensed attorneys. Following the American Bar Association Model Rules, and those of other states, the Utah State Bar established what is now known as the Lawyer's Fund for Client Protection (Client Security Fund or CSF or Fund). See Utah Sup. Ct. R. Prof'l Practice 14-902.
The purposes of the CSF are to provide meaningful prompt reimbursement to clients for losses caused by the dishonest conduct committed by lawyers admitted to practice in Utah, and, more broadly, to promote public confidence in the administration of justice and the integrity of the legal profession. See id. R.14-902 (a)-(b). The Fund is administered under the direction of the Utah State Bar Board of Bar Commissioners (Commission) with the assistance of the Office of Professional Conduct (OPC), with claims heard by the CSF Committee. The CSF Committee is currently comprised of a long-time chair, Judge David R. Hamilton, and several experienced lawyers. Basic administrative functions are supported by a Bar staff member. Once sufficient claims have accumulated, the staff member schedules hearings before the CSF Committee, which holds hearings several times per year. See id. R.14-906(c).
The CSF is funded by periodically assessing every lawyer licensed to practice and on active status in Utah. See id. R.14-904(c). Typically, the assessment, paid along with Bar dues, has been between $10 and $20 per year per lawyer. The BarÕs Executive Director and Financial Officer determine the amount of the annual assessment based on the previous yearÕs paid claims.
For a claim to be eligible for payment from the CSF, the loss must be caused by the dishonest conduct of the lawyer, and shall have arisen out of a lawyer/client or fiduciary relationship between the lawyer and the claimant and by reason of that relationship. See id. R.14-910(a). Dishonest conduct includes not only actual conversion of client funds but also failure to perform paid-for legal work. The CSF Committee also regards a lawyerÕs failure to maintain adequate funding in a trust account to cover obligations due to clients, including unearned funds, to be dishonest conduct. In Mrs. Y's case, Attorney X took her $5,000 retainer without performing any meaningful legal services, a dishonest act for CSF purposes.
You can instruct Mrs. Y to make a claim for reimbursement from the CSF by completing a form which is available through the Utah State Bar. This form requires the claimant to identify himself or herself, the lawyer, the amount paid to the lawyer, what services the lawyer was supposed to perform, the date and circumstances surrounding the loss, and the identification of anyone else to whom he or she has reported the loss. Claimant also must agree to cooperate with the CSF Committee regarding the claim, to assent to the publication of appropriate information about the claim and any reimbursement which might be made, and to provide the CSF with a pro tanto transfer of his or her rights against the lawyer and other relevant parties. See id. R.14-911; see also id. R.14-915(b), (e). The claim must be filed within one year after the date of the final order of discipline or the date of death or disability of the lawyer. See id. R.14-910(b).
The OPC provides available information to the CSF Committee about each claim. This process enables the CSF Committee to verify basic information about the claim. If it appears that any claim would not be eligible for reimbursement, administrative staff returns the claim to the claimant for submission of additional information. If the claimant cannot submit sufficient relevant information, the case is closed.
Once a claim has been successfully vetted, the Bar administrative staff notifies the claimant and the attorney of the date and time of the scheduled hearing. Both have a chance to respond and may appear before the CSF Committee in person or telephonically. They may either be represented by counsel or appear pro se. Prior to each hearing, the Committee Chairman describes the nature of the Fund and the requirements for reimbursement, states that no person has a legal right to reimbursement from the Fund, and notes that any payment is made as a matter of grace. See Utah Sup. Ct. R. Prof'l Practice 14-914. Hearings generally take fifteen to thirty minutes. The claimant is encouraged to explain the claim. If the attorney has chosen to appear, the claimant is excused and the attorney is allowed to present his or her position. Committee members are able to ask questions of both parties to clarify their understandings of the claim.
Although the claimant has a duty to support the claim with relevant evidence, there are neither technical rules of evidence and procedure, nor witness requirements. Any relevant evidence is admissible if it is the "sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of such evidence over objection in court proceedings." Id. R.14-912(h). The CSF Committee will, however, consider a certified copy of an order disciplining a lawyer, or a final judgment imposing civil or criminal liability for the same dishonest act as alleged in the claim, to be evidence that the lawyer committed the dishonest act. See id. R.14-912(b).
After the claimant and the lawyer have left the hearing room, the Committee discusses the case and determines, on the basis of all available evidence, (1) whether the claim is payable under the rules; (2) if payable, how much should be paid; and (3) any other pertinent issues. See id. R.14-912(g).
For a claim to be payable, the loss must have been caused by the dishonest conduct of the lawyer. See id. R.14-910(a). A claim is only considered if the lawyer has been disciplined to a threshold level of a public reprimand or is no longer in practice. See id. R.14-912(f). The OPC generally provides this evidence. Then, the Committee must find that the particular act complained of was the result of dishonest conduct. If there is an order or judgment regarding the act complained of in evidence, this determination is easily done. However, not all dishonest acts committed by a publicly disciplined lawyer come to an order or judgment, and not all acts done by the lawyer are necessarily dishonest. Accordingly, the CSF Committee may consider all the available evidence in determining whether a dishonest act actually occurred. The CSF Committee's finding of dishonest conduct is for purposes of recovery from the Fund, only, and does not constitute a finding of dishonest conduct for purposes of professional discipline. See id. No claim can be approved during the pendency of a disciplinary proceeding involving the conduct at issue in the claim. Any disciplinary proceeding must be concluded prior to any hearing. See id. R.14-912(j).