The Model Rules for Lawyers’ Fund for Client Protection are intended to serve as a national model for establishment and administration of a client protection fund. However, they cannot expect to accommodate every need of each Fund in the diverse constituency of the legal profession. The Model Rules aspire to establish standards for effective financing and efficient administration of Funds to achieve the purpose of client protection. They continue the basic intent and aspiration of the original Model Rules: to provide meaningful, prompt, and cost-free reimbursement to clients who have been injured by a lawyer's dishonest conduct.
Despite the best attempts of the legal profession to establish high standards of ethics and severe disciplinary sanctions for their breach, it is a fact that some lawyers misappropriate money from their clients. Typically, those lawyers lack the financial wherewithal to make restitution to their victims.
The organized bar throughout the United States has responded by creating Client Protection Funds to provide necessary reimbursement. The funds were either created by court rule, legislation or by the voluntary action of bar associations. In jurisdictions in which the bar is unified (i.e, membership in the state bar association is required for a license to practice law), the Fund may be part of the unified bar, which performs a variety of functions related to professional responsibility (e.g., administration of the lawyer regulatory system).
Funding can be generated from a variety of sources including mandatory assessment, legislative budget appropriation, and voluntary contribution. Mandatory assessment by court rule has proven to be the preferred method of assuring continual funding and staffing. Funds that receive revenues through mandatory assessment are preferred because the result is a reliable and predictable source of income. This allows a Fund to fully reimburse losses and to engage in public information, continuing legal education programs, and related activities. Voluntary contribution is the weakest funding method; it does not provide the Fund with broad-based and permanent income.
- RULE 1 PURPOSE AND SCOPE
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