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

Defending lawyers is pretty low on our priority list.  But, a recent piece at Overlawyered.com was just so unfair, that we need to take our e-friend Walter Olson to task, and try to set the record straight. Walter might not be a lawyer, but his posting Damage caps for me, but not for thee (May 13, 2004) proves he can parse words misleadingly with the best of them.

• The effect, as was predictable, is that others are calling lawyers hypocrites in a situation — the creation of Client Protection Funds paid for by lawyers — where the legal profession deserves at least a little praise (along with some encouragement to do more).

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

“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.”

If you didn’t already know what kind of fund and claims Walter is talking about, you’d be very likely to incorrectly conclude (like the fighting docs did when reading the original Reading Eagle column) that lawyers had supported and states had imposed limits on the amounts that injured legal clients could receive 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 the 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.
5. In a medical malpractice case, or other tort matter, it is the defendant who has been found liable who is asked to pay the victim.  Here, by definition, it is not the “guilty” lawyer, but all lawyers who are paying the victim.  That seems to me to be a very big distinction.

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.

We also agree with the general proposition from HALT, that client protection funds need to be better funded in many states. [see “The Sham of Client Compensation Funds” by HALT staff ATTORNEY, Steven Serdikoff (2000)] 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 or property.

• A personal note:  After spending his legal career working to protect consumers, children and the poor — with no complaint ever made about me to a disciplinary board or a malpractice insurer — your Editor would feel rather oppressed if asked to write a blank check to the Client Protection Fund.  That check would surely bounce.

Around here, distorting facts — by omission or commission — to score points for one side against another is frowned upon (despite that J.D. degree on our wall).   So is misleading pseudo-logic and guilt by association.  Let us know if we ever seem 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’ve told several teenagers: it’s easier to earn trust than to re-earn it.

Update (05-22-04): Cut and Cure has posted a Reply.  You can find it, along with our response here.