f/k/a archives . . . real opinions & real haiku

May 20, 2004


Filed under: — David Giacalone @ 5:28 pm

Defending lawyers is pretty low on our priority list, but a recent piece at Overlawyered.com was just so unfair, that we have to take our e-friend Walter Olson to task and try to set the record straight.

After correctly noting that the organized bar seldom supports capping victim recovery fees, Walter reports (emphasis added):

fr ventalone  “It turns out, however, that the bar enthusiastically supports the capping in nearly every state of one particular form of compensation, namely, the compensation of clients who are embezzled from or otherwise defrauded by their lawyers. In Pennsylvania, for example, the official Pennsylvania Lawyer Fund for Client Security (more) caps damages payable to defrauded clients at $75,000, although the loss actually sustained by the victimized client often runs far higher than that.   Columnist Don Spatz of the Reading, Pa. Eagle notices the irony: “Even if you can prove your lawyer stole $200,000 from you, you’re out of luck. There’s a cap. … I haven’t heard lawyers worry about caps taking away those victims’ rights.” (“First, lawyer, heal thyself“, Reading Eagle, Mar. 24, 2004, at HALT site).

Walter goes on to sort of “explain” and then dismiss the legal profession’s position:

In a number of states, it should be noted, lawyers impose an effective cap of zero on this particular kind of claim, by the simple method of not having established any collective client protection scheme at all. And there is a certain very plausible logic to that position: why after all should rank and file attorneys be asked to clean up the messes left by their errant brethren? Is a lawyer his brother’s keeper?  It’s just that this argument would sit better were the leaders of the bar not constantly denouncing the medical profession for its alleged failure to police itself.

no yabuts gray  If you didn’t know what kind of fund and claims Walter is talking about, you’d be very likely to read the posting and incorrectly conclude (like the fighting docs did) that lawyers had supported and states had imposed limits on the amounts that injured legal clients could received in malpractice claims or litigation against their lawyers.  That’s not at all what is happening.  Walter is referring to lawyer Funds for Client Protection (or Client Security).  You should know:

  1. Client Protection funds in no way limit thr amount of money a client injured by a lawyer can receive through the courts or from malpractice insurance.  As the NY Fund’s FAQ page explains: “The Lawyers’ Fund is a remedy for law clients who have been injured [by the dishonest conduct of a lawyer] but cannot get reimbursement from the lawyer who caused the loss, or from insurance or other sources.”

  2. The funds are financed totally from lawyer contributions (not a penny of taxpayer money).  In New York, for example, 20% of the registration fee paid by each member of the bar goes into the fund.

  3. Typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions.

  4. The funds have limitations on how much each client can be reimbursed, because there is a finite amount of money in each fund, and it would be unfair to have clients with the largest losses (often those with the largest estates or investments) receive payments that empty the fund, leaving nothing for other victims.  The limits differ in the various states.  As Walter Olson noted, it is $75,000 per client in Pennsylvania.  In New York, the fund Trustees (who receive no pay for their work) may grant “up to a maximum of $300,000 for each client loss.”  Such amounts are far from meaningless for clients who otherwise would be uncompensated.  For 2003, New York paid out almost $2 million dollars from its Fund, which has awarded about $100 million in total since 1982. 

You can learn more about Client Protection Funds in your particular state, by going to this state map provided by the The National Client Protection Organization

The ABA, which has a Client Protection homepage, has promulgated Model Rules for Client Protection Funds, and did a major survey of such funds in 2002.


This weblog has featured many postings on the inadequacies of the legal profession’s discipline system.   Much more money should be used to monitor unethical behavior and discipline needs to be both more swift and more strict. (See this op/ed by the Editor)   Nonetheless, I have seen no indication that lawyers are worse at policing themselves than are medical doctors. 

We also agree with the general proposition from HALT, that client protection funds need to be better funded in many states.  However, it would make little sense — and neither Walter Olson nor HALT is suggesting, I hope — that every lawyer be assessed whatever it takes to pay off every claim by a client hurt by another lawyer.  Even Prof. Yabut and the departed ethicalEsq believe that only a small portion of lawyers actually steal their clients’ money ot property. 

  • A personal note:  After spending his legal career working to protect consumers, children and the poor, your Editor would feel rather oppressed if asked to write a blank check to the Client Protection Fund.  That check would surely bounce.

Maybe the fighting docs or the cut to cure weblogging surgeon, who were so eager to believe the negative spin about client protection funds,  could let us know if the medical profession has anything analogous.  I could not find any such programs search the American Medical Association website, nor on the AMA’s Information for Patients webpage, or its page explaining how patients benefit when their doctor is an AMA member.   


prof yabut small flip  Around here, distorting facts — my omission or commission — to score points for one side against another is frowned upon (despite that J.D. degree on our wall).   Let us know if we seemed to be doing it.   Once we find such shenanighans on a website, we start to wonder just what we can believe from that source.  As we have told several teenagers: it’s easier to earn trust than to re-earn it.


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