f/k/a . . . the archives

May 22, 2004

Client Protection Fund Comments

Filed under: — David Giacalone @ 7:34 pm

Our posting Sue-Dough-Logic has spurred responses and Comments that just don’t fit on our front page, or in the Comment section of other weblogs.  So, we’re providing interesting ones here.


Update (05-21-04)Walter Olson has filed a response to this posting, which he appended to his original piece.  I recommend taking a look at his full reponse, which fills in some of the very important details that we wish were in his first posting, and also challenges some of our arguments.  Here’ our reply.  



  • Walter’s first paragraph mixes a couple of our arguments, but it appears to be talking about writing a “blank check” to compensate all victims of lawyer dishonesty, when he says “I suspect that logic may strike a responsive chord among some other groups in society that get asked to pick up compensation bills of uncertain potential magnitude.”  Walter conveniently fails to distinguish between the actual perpetrators of injury and persons who merely happen to be in the same profession or industry as the perpetrators.   Asking the former group to pay the full bill is very different than asking the latter.

  • “$key small”  Walter notes that this Editor said ”client protection funds need to be better funded in many states.”  Walter then adds the (mis)leading question: “isn’t he simply making much the same point as mine in a different way?”   Well, no.  It is a far different thing for me agree with the “general proposition” that Funds need to be better financed in many states, than for Walter to insinuate that lawyers are hypocrites for not fully paying every single compensation claim that comes before a Fund, and they should be estopped from ever opposing real damages caps.  That was what he was “saying.”  

  • Op/ed writers often complain when headline editors soup up headlines to stir controversy, while distorting the message of an article.  Walter writes his own headlines.  The one he wrote here speaks loudly of his purpose.

  • HALT places all newspaper articles that mention HALT studies or quote their staff, in its In the News feature.   Walter should not assume that HALT would endorse the misleading way the issues are presented in Don Patz’s column, merely because it is reproduced on the HALT website.

  • Finally, Walter suggests that the legal profession as a whole should have to pay for all claims against lawyers, because doctors have high-risk pools and share liability costs through malpractice premiums.  That’s a non sequitur:

  • Lawyers don’t have high-risk pools, because the legal profession does not generate the immense level of damage liabilty that medical doctors do.  Lawyers in high-risk practices pay their premiums, they don’t go crying for special statutory relief in the form of risk pools and damage caps.
  • Lawyers do, of course, spread and share malpractice risk through their insurance premiums.  Lawyers who have never had a claim for malpractice, and are not likely to ever face a valid claim, do therefore pay “brother’s keepers” premiums.  The $45 “premiums” derided by Walter are Fund assessments that are totally separate from, and additional to, malpratice premiums.
  • There is no mechanism that requires doctors to compensate medical patients for damages that are not collectible from the doctor(s) found to have caused an injury or from their insurer.  Nor, it appears, do doctors voluntarily create funds similar to the lawyer client protection funds that might cover such uncompensated losses. 

  • check red Once again:  Lawyers have not sought, nor do there exist, any limits on the amount of damages law clients can seek in a court of law, if they are injured by the conduct of their lawyers.  Confusing that issue with limits on Client Protection Funds is misleading.  It may be good red meat for those hungry underdog doctors, but it will surely turn off fair minded, objective viewers, when they are alerted to this phony issue.

Update (05-22-04): Bard-Parker at Cut and Cure (May 22, 2004) wrote:



IN REPLY…..
Mr. David Giacalone takes issue with Mr. Olson’s and my opinion on caps for client protection funds. I appreciate the point made by Mr. Giacalone that the client protection funds are a separate entity and that individuals are free to pursue lawsuits against lawyers that they feel have defrauded them. Mr Giacalone writes:



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.


So these funds serve to compensate the client for what appears to be criminal conduct on the part of their attorney. A point that Mr. Giacalone does not mention, but Mr. Olson does, is that the caps advocated by physicians and others would apply only to non-economic damages. I have seen nothing that indicates that these funds provide any compensation for “pain and suffering”. And according to the Georgia Bar website there is not even a legal right to payment.


Mr Giacalone then inquires about any analogous programs for physicians. The Florida and Virginia no-fault cerebral palsy funds. These are funds, supported by annual contributions ($5,000 to $250)by all physicians, regardless if they practice obstetrics or not. While the argument may be made that this program’s primary purpose was to assist with liability insurance affordability, do not client protection programs also have an effect on liability insurance for attorneys?


     Your Editor’s Reply (which didn’t fit at Cut and Cure)



You say that you “appreciate” that Client Protection Funds are a separate entity from lawsuits against the cheating lawyer.  But, you don’t seem to understand that the difference totally negates your argument that limits on Funds coverage prove that lawyers are “hypocrites.”


Clients who have their property stolen or misappropriated must first seek compensation in the “usual” way — from the offending lawyer, using courts or insurers.  When they do so, they are free to seek pain and suffering damages and there are NO limits to any such damages — and lawyers have never sought such limits.


The Funds were set up to help clients that are unable to receive compensation for their proven financial losses (e.g., the lawyer is now bankrupt, insurance coverage was too low or non-existent).  To complain that the Funds don’t cover everything that could have been asked for or awarded in court is like a student complaining that a Scholarship program covers tutition but not room and board, and the sponsors are phony philanthropists.


It makes sense that a Fund may specify that no one has a “right” to be compensated by a Fund — they must meet the proper criteria, make the proper showing, etc., and, there must be sufficient funds in the Fund to make a payment. 


I don’t know whether the Client Funds have a significant effect on legal malpractice premiums, but I doubt it, because the Funds cover instances where insurance coverage is not available. 


I know of no lawyer who has criticized the legal profession in public as much as I have.  I’ve fought to help prevent frivolous suits and excessive fees.  Check out my website, especially the Legal Ethics archives.  However, I know cheapshots and strawmen when I see them, and your complaints about the limits on Client Funds are both.  Making such illogical and obviously biased arguments will make it very difficult for doctors to convince the public ar large to support their political goals, whether they are legitimate or not.


I’m not asking you to stop criticizing the legal profession, or to stop seeking caps and other solutions to professional problems.  There are plenty of genuine arguments for you to make.  Please don’t distort facts or make unfair analogies when making your points.

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