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AMERICAN BAR ASSOCIATION
STANDING COMMITTEE ON CLIENT PROTECTION
INFORMATIONAL REPORT TO THE HOUSE OF DELEGATES
Since its last informational report to the House of Delegates in February 2006, the Standing
Committee on Client Protection has continued to fulfill its mandate to develop and promote
mechanisms for client protection, including programs to ensure the reimbursement of financial
loss caused by lawyers’ misappropriation of client funds; promote and enhance mechanisms for
the arbitration of client-lawyer fee disputes; promote and enhance mechanisms for the mediation
of client-lawyer disputes; identify and comment on emerging issues in the regulation of the
unlicensed practice of law in conjunction with other ABA entities and, where advisable, refer
appropriate matters to other Association entities; and identify and comment on emerging issues
in the regulation of the practice of law, including the multijurisdictional practice of law, in
coordination with other ABA entities.
The Committee presented the 22nd National Forum on Client Protection on June 2-3, 2006 in
Vancouver, British Columbia. The Forum was co-sponsored by the National Client Protection
Organization (NCPO). There were over seventy-five attendees from the United States and
Canada at the Forum, including trustees and administrators of client protection funds,
administrators and board members of fee arbitration programs, judges and others. Robert W.
McDiarmid, President, Law Society of British Columbia, made the opening remarks at this year's
Forum. The subjects of this year’s Forum programs included: electronic fund transfer, the
multijurisdictional practice of law and choice of fund concepts, adopting new theft prevention
measures, website development for client protection funds and a fee arbitration workshop. The
Difficult Claims Workshop was a huge success. Carole R. Richelieu, president of the NCPO,
and the other members of the NCPO, did an outstanding job of selecting the problems and
facilitating the discussion. During the 22nd National Forum, the NCPO presented, for the third
time, its Isaac Hecht Law Client Protection Award. The award is in honor of Isaac Hecht, a
long-time Trustee of the Clients’ Security Fund of the Bar of Maryland and an 18-year member
of the Standing Committee. The Committee will conduct the 23rd National Forum on Client
Protection on June 1-2, 2007 in Chicago.
The Committee filed with the American Bar Association House of Delegates a Report and
Recommendation for consideration at the 2006 Annual Meeting. The Committee recommends
the adoption of amendments to Rules 1 and 10 of the ABA Model Rules for Lawyers' Funds for
Client Protection. The amendments are intended to address the increasing prevalence of the
multijurisdictional practice of law. Amended Rule 1 allows the Fund in a lawyer’s “home”
jurisdiction to compensate claims caused by the lawyer’s dishonest conduct even though the
lawyer’s conduct occurred in a second jurisdiction or even if the lawyer is representing a client
who is not a resident of the lawyer’s jurisdiction but whom the lawyer is representing in the
“host” jurisdiction. Amended Rule 1 also allows the “host” jurisdiction to reimburse losses
caused by a lawyer practicing temporarily in the jurisdiction, even if the lawyer has not paid into
the Fund. Amended Paragraph (B) of Rule 1 clarifies that the “host” Fund may entertain claims
for reimbursement from clients whose lawyers are authorized to practice law in the jurisdiction
as a foreign legal consultant, in-house counsel or under the Model Rule for Temporary Practice
by Foreign Lawyers. In most jurisdictions that have rules licensing foreign legal consultants and
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in-house counsel, those lawyers are required to financially contribute to the operation of the
“host” Fund through the payment of an annual assessment. The amendments to Rule 10 provide
Fund Trustees with an equitable balancing test to determine whether their Fund, another
jurisdiction’s Fund, or both Funds jointly should pay a particular claim for reimbursement. This
situation might arise where a lawyer is licensed in two or more jurisdictions; a lawyer is licensed
in only one jurisdiction and has engaged in the authorized multijurisdictional practice of law in
another jurisdiction; or a lawyer is licensed in only one jurisdiction and has engaged in the
unlicensed practice of law in another jurisdiction. New Paragraph F of Rule 10 recognizes that
there may be situations where it is appropriate for the Funds of two jurisdictions to contribute to
the loss suffered by a claimant. However, since Funds have different maximum dollar amounts
of reimbursement for individual losses, the Fund with a higher maximum amount should not be
required in every case to contribute more than the other Fund, or to contribute the maximum
amount. Such a requirement could result in an undue burden on the Fund. The Fund Trustees
still have discretion, in cases of extreme hardship or special and unique circumstances, to
recognize a claim which would otherwise be excluded under this proposed amendment
The Chair of the Committee met with the Professionalism and Competence of the Bar
Committee of the Conference of Chief Justices at Amelia Island, Florida and made a presentation
on lawyers' funds for client protection, the ABA Model Rule for Payee Notification and the new
ABA Model Court Rule on Insurance Disclosure.
A team consisting of a member of the Committee, the President of the NCPO and Client
Protection Counsel conducted a consultation with a state bar association’s lawyers' fund for
client protection. Following the consultation, the Committee presented to the state bar and the
highest court in the jurisdiction a written report. All the recommendations contained in the
report were designed to assist the fund in improving its reputation among the public and the bar,
to fine-tune its day-to-day operations and to better achieve the mission and goals of a lawyers’
fund for client protection.
The Standing Committee on Client Protection conducted a business meeting on February 11,
2006 and agreed that it would research and draft a Model Rule that provides authority for the
provision of pro bono legal services by out-of state lawyers in a jurisdiction that has been
devastated by a catastrophic event. The Model Rule will also address the issue of whether
lawyers whose practices have been disrupted by a catastrophic event can continue their law
practice in a jurisdiction in which they are not admitted to practice law.
Client Protection Counsel spoke on Law Client Protection Devices at the St. Mary’s University
School of Law and the St. Mary’s Law Journal Fifth Symposium on Legal Malpractice and
Professional Responsibility in San Antonio, Texas.
Client Protection Counsel also spoke at the 2006 NCPO National Workshop that was held on
Friday, March 3, 2006 in Philadelphia. The Workshop was a day-long seminar that covered
fourteen different topics affecting lawyers' funds for client protection. The Workshop was cosponsored by the Philadelphia Bar Association.
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Respectfully submitted,
Robert D. Welden, Chair
Standing Committee on Client Protection
August 2006
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