Compendium of Client Protection Rules
Preface
" the practice of law is a profession;
" professionalism is a fundamental obligation of lawyers; and
" protection of client interests is at the heart of professionalism.
Nonetheless, noble intentions and aspirational goals are not enough.
Measures taken to directly protect clients serve as a centerpiece
of professionalism. In executing its mandate to enhance client protection,
the Standing Committee has employed Model Rules as calls to action
and found them effective.
Just as client protection is the centerpiece of professionalism,
a viable lawyers' fund for client protection is the hub of any client
protection system. These funds arose in response to the bar's unwillingness
to leave clients harmed by lawyer theft without a remedy. Thus, lawyers
fund awards are made by court appointed trustees to replace money
misappropriated within a client lawyer relationship. All lawyers are
besmirched by the wrongdoing of a few and all lawyers benefit a their
fund takes care of the injured clients. This is the basis upon which
lawyers financially support the fund, rather than relying on insurance
to cover a shared risk. The assumption is that the vast majority of
lawyers do not pose any risk whatever to Client Protection Funds,
and that assumption is borne out by experience.
However few their numbers may be, dishonest lawyers can cause significant
loss. Rather than simply reimbursing after the fact, jurisdictions
sought mechanisms to limit losses, thus protecting the public without
fund expenditures. The second rule presented, the Model Rules for
Trust Account Overdraft Notification, is an excellent example.
If a trust account check is returned for insufficient funds, one of
two things has occurred: (a) either the lawyer or the bank has made
a simple mistake or (b) the lawyer is out of trust. Situation (a)
can be readily demonstrated and easily forgotten, but situation (b)
is as relevant a red flag to the system as can be imagined. The rule's
concept is that disciplinary counsel receives a notice of dishonor
simultaneously with notice to the bank's customers and the payees
of the checks. There is very little burden to the bank, to the lawyer,
or to disciplinary counsel, while the occasional early warning can
be expected to save the system more money than the program costs.
Lawyers do not always understand the special requirements of trust
accounting and financial recordkeeping inherent in a sound practice
of law. The Model Rule on Financial Recordkeeping is intended
to help in this regard. Lawyers deserve an opportunity to know what
is expected; they should not have to look beyond the rule for the
fundamental principles. Lawyers can only benefit if such a rule is
supplemented by courses in law school and continuing legal education
programs, with sample sets of books and practical manuals made available
as well.
How can the system ensure that lawyers understand the requirements
of financial recordkeeping and are engaging in sound trust accounting
practice? One way is the fourth rule presented, the Model Rules
for Random Audit of Lawyer Trust Accounts. While most random audits
conclude as purely educational, occasionally a lawyer who actively
misappropriates from a trust account is discovered. Then, the random
audit ceases and a disciplinary investigation ensues. In every other
situation, no confusion should be permitted between random audits
and audits for cause. Selection for the random audit program should
be, as stated, purely random. No stigma whatever should attach to
selection for audit.
When a third party liability claim is settled, the client/claimant
should not be the last to know. This is the basis for the Model
Rule for Payee Notification, which is usually enacted either as
an insurance regulation or a statute. It requires carriers to notify
clients when payments of settlements are made to clients' lawyers
or other representatives. The notice should be brief, plain and inexpensive
to produce.
The Model Rules for Fee Arbitration and Model Rules for Mediation
of Client-Lawyer Disputes seek to provide fair, fast and inexpensive
resolution of disputes involving legal fees and instances of alleged
lesser misconduct. Since dissatisfaction with legal fees is consistently
one of the highest causes of complaints registered against lawyers
(along with the oft related "failure to communicate"), avoidance
of rancorous litigation is in everyone's best interests.
The Guidelines for the Adoption of a Definition of the Practice
of Law address the fact that there are an increasing number of
situations where nonlawyers, or lawyers licensed in a different state
or territory, are providing services that are difficult to categorize
under current statutes and case law as being, or not being, the delivery
of legal services. The adoption by states and territories of a definition
of the practice of law is an important step in protecting the public
from unqualified service providers and in eliminating uncertainty
for persons working in law-related areas, including lawyers licensed
in other states or territories, about the propriety of their conduct.
The Model Court Rule on Insurance Disclosure requires lawyers
to disclose on their annual registration statements whether they maintain
professional liability insurance. The Model Court Rule allows potential
clients to make fully informed decisions whether to hire particular
lawyers by allowing those potential clients access to relevant information
related to the lawyers' representation. The information submitted
by lawyers will be made available by such means as designated by the
highest court in the jurisdiction.
The Model Court Rule on Provision of Legal Services Following
Determination of Major Disaster provides that, after the highest
court in an affected jurisdiction, or in another jurisdiction to which
displaced persons temporarily relocate, determines that an emergency
exists that affects the state's justice system and the provision of
legal services, the court may allow: (1) out-of-state lawyers to provide
pro bono legal services to the citizens of the affected state
within certain constraints described in the model rule; and (2) lawyers
from an affected state can provide legal services in an unaffected
state on a temporary basis if these services are reasonably related
to the lawyer's practice in the affected jurisdiction. The Model Court
Rule incorporates the fundamental and well-settled Association policy
that regulation of the legal profession vests with the judicial branch
of government.
This last point applies to all these programs. Client protection
measures worthy of the name are not anti lawyer; they protect the
profession as well as clients. Client protection is where altruism
and prudence meet for the legal profession. The programs presented
in these Model Rules and Guidelines can be implemented without vast
expenditure of resources and are worthy of consideration by bar leaders
in all jurisdictions. While these Model Rules and Guidelines have
aspirational aspects, they are not "pie in the sky" concepts.
Rather, they reflect actual programs successfully administered in
a number of jurisdictions, some for many years.
Just because Model Rules and Guidelines are available does not mean
that they cannot be improved. Indeed, one of the benefits of availability
is that suggested improvements might be forthcoming. Programs, as
enacted, necessarily feature variations owing to local custom, culture
and law. It is hoped that new ideas that work well will be shared.
Any Prefaces that precede, and the Comments that follow, the Model Rules or Guidelines have not been adopted by the ABA House of Delegates and, therefore, do not reflect the policy of the American Bar Association. The Comments are offered as explanatory information to assist in the interpretation of the Rules and Guidelines and to provide guidance for implementing client protection programs. Text in brackets ("[ ]") denotes an alternative or suggested discretionary provision of the Model Rule.
Janet Green Marbley*
April 2007
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*Janet Green Marbley is the Chair of the ABA Standing Committee on
Client Protection.
Next - A HISTORY OF THE
CLIENT PROTECTION RULES
