November 2006

 

CLIENTS’ SECURITY FUND

 

Clients’ Security Fund Committee Has High Hopes for the Future

By: Laurie Diefenbach, Esq., Clients’ Security Fund Committee

 

The Clients’ Security Fund Committee held its first meeting of 2006 on July 28, in the offices of Woodburn and Wedge in Reno.  The committee thanks member Chris Wicker for his hospitality in hosting that meeting. 

 

The Clients’ Security Fund exists to compensate victims of deceitful lawyers.  It is administered by a committee, presently comprised of nine lawyers and two lay people.  All members serve on a volunteer basis.

           

The State Bar of Nevada provides a coordinator for this committee and for clerical support.

These State Bar employees help make it possible for the committee to investigate each claim submitted, discuss the claims at committee meetings, and come to a decision on which claims have merit and should be awarded.  Claims are then paid pursuant to the Rules of Procedure that govern the committee’s work.

           

The fund only compensates victims of deceitful lawyers.  Legal malpractice is not compensable.  This is why malpractice insurance does not protect clients who are eligible for compensation awarded by the Clients’ Security Fund.

 

At our July 28th meeting, the Committee considered 11 new claims, and granted nine of them.  Two were tabled pending further investigation.  The claims granted totaled $55,379.27.  However, that entire amount may not be paid to the aggrieved claimants, all former clients of now non-practicing Nevada lawyers, as there is only a finite amount of money in the Fund with which to pay those claims.  Each claim submitted is subject to the Rules of Procedure, which limit the amount that can be paid to each claimant. 

           

Presently, the Rules of Procedure limit claims to $15,000 per claimant.  However, following last year’s Board of Governors Task Force on the Clients’ Security Fund’s recommendations, work is in progress to implement some changes to the Rules of Procedure.  These changes include raising the limit paid per claim from $15,000 to $50,000.  The Board of Governors is the final arbiter of changes to the Clients’ Security Fund committee’s Rules of Procedure, and the changes were set to go before them at their October 2006 meeting (which will have taken place by the time of publication).

 

Although these changes have hopefully resulted in more claimants made whole after being cheated by unscrupulous lawyers, not all of them will get the awards they deserve.  It is the goal of the Clients’ Security Fund Committee to compensate everyone whose claim has been verified. However, some claimants have been so grievously wronged (in the past, some claims totaled over $100,000,) that this goal may still be far in the future.

 

Two of the claims awarded at the July meeting exceeded the present $15,000 cap; none exceeded $50,000.  Should the new Rules of Procedure be adopted, it would become possible for all claims awarded at the July 2006 meeting to be paid in their entirety, provided that there are sufficient monies in the fund. 

 

                                   

In years past, the total amount in the fund has been less than required in order to pay out each claim in its entirety.  This year, however, with additional contributions from each lawyer, coupled with payments from all pro hac vice applicants (estimated at $32,000), plus the newly implemented donation request line on everyone’s Dues Invoice (resulting in $1,340 in donations for 2006), there should be more money in the available money in the fund than in any prior year.  The estimated end of 2006 fund balance is approximately $195,000.  This is almost double what it has been in prior years.

 

The Clients’ Security Fund Committee’s second and final meeting for 2006 is planned for November 3.  It is anticipated that there will be more new claims to be evaluated, as well as a revisiting of the two tabled claims.  Whatever amount is approved in November will be added to the $55,379.27 worth of claims approved at the July 28 meeting. 

 

The Committee is hopeful that, for the first time in several years, it will be able to pay all approved claims in the full amount provided for by the Rules of Procedure, in effect at the time of the December 2006 annual payment.

 

Should there be any monies remaining in the Fund, they will be carried forward to next year.  As we learned in 2005, any one year can see wrongdoing of catastrophic proportion.  It is the Committee’s goal to be ready to handle those claims in their entirety.

 

Even with the influx of cash from the increase in contributions from current lawyers, the money from pro hac vice applicants, and donations from lawyers when they pay their dues, the Committee and Board of Governors are still working on a method to effect restitution from the former attorneys responsible for the wrong-doings that resulted in claims.  Many of these people are alive and well, and out earning a living.  The Committee believes that they should be required to pay back the Clients’ Security Fund.

 

To this end, the Committee is working on negotiating a contract with a law firm that can collect from these attorneys.  In addition, the Bar Counsel, on behalf of the State Bar of Nevada’s Clients’ Security Fund, has filed a claim against the estate of a deceased lawyer for reimbursement to the fund for the $18,250 it paid out due to his wrongdoing.

 

It is clear that the Committee is endeavoring to make as many victims whole as possible, using as many sources of revenue as possible.  We are optimistic that 2006 will see us compensate all approved claimants to the fullest extent allowable, and begin to build up a “rainy day” balance.

 

Laurie Diefenbach is a Deputy Public Defender at the Clark County Public Defender’s office.  She has been a member of the Clients’ Security Fund Committee since 1998.