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Compendium of Client Protection Rules - Preface


This volume is a compilation of policies adopted by the American Bar Association for the protection of the profession's clients and the public. The Model Rules were formulated by the Standing Committee on Client Protection and the Guidelines by the Task Force on the Model Definition of the Practice of Law and then proposed to the ABA House of Delegates for adoption. The effort to compile these policies for convenient reference is based upon several premises:

" 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

*Janet Green Marbley is the Chair of the ABA Standing Committee on Client Protection.


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Center for Professional Responsibility