The Client Security Fund Fulfilling Our Obligation to the Public by Justice Andree Roaf
O
ne of the most disheartening occurrences for most lawyers is to learn that a colleague
of the lawyer - client relationship are
by rule of the Arkansas Supreme Court.
covered. The Fund is not designed to
The Bar Associalion subsequel1lly presented its proposal in a petition LO the
or her clients by misappropriating client
court. and the Client Security Fund was
funds. It is particularly painful to read of
created by per curiam on April 30. 1973 2
cover negligence or similar acts. 2) Reimbursements arc a matter of grace, not a maller of right. and no claimant has any right in the Client Security
such events in our daily newspaper and know that our profession has suffered yet another blow to its image and reputation.
The initial fund was financed by voluntary contributions from members of the Arkansas Bar and by transfer of surplus funds from attorney's license fees.
erwise. The Client Security Fund COlllmittee may admit or reject claims in whole or in part.
has betrayed the trust of his
It is of no consolation LO consider that all professions and disciplines have a share of dishonest members or that dishonest lawyers comprise only a very small frac-
tion of the total membership of the bar. In this day of lawyer jokes and lawyerbashing from all corners. these occurrences are especially hurtful and damaging to lhe image of our profession. and to us as individual attorneys. It is therefore both timely and appropriate to review the efforts that Arkansas lawyers have made to protect clients from losses caused by the dishonest conduct of members of the
State Bar of Arkansas. Client security funds first came into existence in ew Zealand. which estab-
lished the Security Fund in 1929. A number of countries soon followed. with
England creating the Law Society's Fund in 1942. In 1959. Vermont was the first state in this country to establish a fund. I Today. the overwhelming majorily of states operate some type of client security
fund. The genesis of the fund in Arkansas was a resolulion adopted by the Ethics and Grievance Committee of the Arkansas Bar Association in 1968, which
20
recommended the establishment of a fund
The Arkansas Lawyer
Spring 1996
Beginning in 1974. the fund received 52 of the annual license fee paid by each attorney: claims were initially limited to
5.000. There have been a number of changes in the ensuing years LO increase
Fund as a third party beneficiary or oth-
3) Claims must be filed no later than three years ancr the claimant knew or
should have known of the dishonest conduct of the lawyer. 4) No claims may be paid until the
the annual contribution per lawyer and to
Committee on Professional Conduct
raise the claim limit. From 1973 to 1990
has certified that the member of the bar of Arkansas has been disbarred. is sus-
the annual per lawyer contribution was
2. from 1990 to 1994. 4 and. in 1995. the supreme court raised the contribution
to SID. The per claim limit was 55.000 from 1973 to 1991. In 1992 it was raised to S25.000 and in 1993 it was again raised to S40.000. There has never been a per-lawyer cap on claims in Arkansas. although many other stales have a limit on the dollar amount paid on claims attributable to anyone individual. The Client Securily Fund is administered by a committee appointed by lhe Arkansas Supreme Court. The rules for the committee can be found in the Court Rules volumc of the Arkansas Code. Some of Ihe more significant provisions are:
I) Only losses caused by the dishonest conduct of a lawyer and which arisc out
pended from practice. voluntarily resigned from the practice of law and surrendered his license. or died before a disablement. suspension. or surrender
of license could take place. 5) Lawyers may not be compensated for prosecuting a claim against the fund.
In 1993. the supreme court authorized a press release to further publicize the existence of the fund. The Administrative Office of the Courts also prepared and distribuled a pamphlet which provides inform3lion aboul
the fund. Consequently. the claims filed have increased dram;llically with the
public awareness of this fund. The following chart sets OUl the hisLOry of the submission and payment of claims since the inception of the fund