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Model Rules for Lawyers' Funds for Client Protection - Rule 2

Rule 2 - Establishment

  1. There is established the Lawyers' Fund for Client Protection ("Fund") to reimburse claimants for losses caused by dishonest conduct committed by lawyers admitted to practice in this state.

  2. There is established, under the supervision of the highest court in this jurisdiction ("Court"), the Lawyers' Fund for Client Protection Board of Trustees ("Board"), which shall receive, hold, manage and disburse from the Fund such monies as may from to time be allocated to the fund.

  3. These rules shall be effective for claims filed with the Board after [date] and the Board shall not pay claims for losses incurred as a result of dishonest conduct committed prior thereto.


The practice of law is so directly connected to the exercise of judicial power and the administration of justice that the right to define and regulate it belongs to the judicial department. It is the court that bears the responsibility for establishing qualifications for practice and for seeing that lawyers subject to its jurisdiction adhere to the standards of conduct the Court mandates.

Paragraph B links the establishment of a Fund to the Court’s power to regulate the practice of law. The Court has the inherent power to establish a Fund and require lawyers admitted to practice in this jurisdiction to contribute to it. The Court not only has the power but also the duty to provide a system for reimbursement to clients whose lawyers have mishandled their funds.

The limitation imposed in Paragraph C is necessary to prevent the possibility of an immediate bankrupting of the Fund caused by the payment of claims for dishonest conduct committed before the Fund was established. The provision sets a time certain after which losses will be reimbursable.


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