California Client Security Fund
If a California lawyer has cheated you or acted dishonestly, you may be able to get some of your money back.
California in 1972 established a Client Security Fund. In a typical year it pays victims of dishonest California lawyers between $2 million and $ 4 million.
There are important restrictions. You have to show that you were cheated, not just that you were dissatisfied with your lawyer's performance or that the lawyer committed malpractice. It generally has to involve something like actual theft or taking your fees and then doing essentially no work. The money that you are trying to recover must have been received by the lawyer. In addition, you have to file a disciplinary complaint with the State Bar of California before you are eligible for any compensation. if the lawyer is disciplined and also found to have been dishonest, you then may be eligible to receive some money. Awards are limited to $50,000. The California Client Security Fund is in some sense a payor of last resort. Generally speaking the State Bar seeks reimbursement as part of the disciplinary process. The Fund is designed to help victims of attorney fraud and dishonesty where the lawyer lacks the resources to pay back the people he or she has harmed.
The California Client Security Fund, which in other states is sometimes referred to a Client Recovery Fund, is hardly a panacea. It takes approximately a year for eligible people to receive any funds. It is, however, better than nothing. In a typical year about 700-800 people receive some kind of payment from the Fund. In a state with more than 150,000 lawyers, that is a very low number. I suspect that few people know about the Fund. You can find out more information about the California Client Security Fund, including downloading an application for payment, by clicking here.
If you are wondering where the money in the Client Security Fund, comes from, it's not from taxes. California lawyers contribute to the Fund as part of their professional dues. It's one of the things that lawyers do that makes them professionals rather than just business owners. Please keep the Client Security Fund in mind the next time you hear someone bad mouth all lawyers.
The Wrong Way to Fire Your Lawyer
As I’ve mentioned before, clients can generally free to fire their lawyers at any time for any reason, or for no reason at all. In some states, this ability is restrained by the lawyer’s ability to hold on to the client’s file until the lawyer is paid. And in states such as Florida, where lawyers may charge nonrefundable fees, the client’s right to terminate a lawyer may be further restrained by the knowledge that the lawyer can keep the unused portion of the nonrefundable fee. But in states, such as California, where neither of these restraints are in place, the client has essentially an unfettered ability to fire a lawyer.
Sometimes clients abuse that power. Yesterday, I saw that firsthand. A lawyer I know called me to complain that one his clients fired him out of the blue. He found out when a signed substitution-of-attorney form was faxed to his office. He received no notice or explanation and his now former client didn’t return his phone call. This lawyer is a professional, so he did what he is required to do under the circumstances. He arranged to return the client file promptly and he wrote a letter to the new lawyer detailing the status of the case and the upcoming deadline. He lived up to the rules of conduct that govern lawyers in his state, but he did so with a heavy heart, and despite the fact that the client owed him thousands of dollars. I have no doubt that this will prove to be a temporary setback for the lawyer; he will get over it and will continue to work hard for his current and future clients.
But that doesn’t change the fact that the client acted badly--very badly. Just because you have the power to fire someone without suffering negative consequences doesn’t mean you should. If you have a problem with your lawyer, at a minimum let them know what it is. It’s the right thing to do. And who knows, you may even find out that your problem is resolvable or was based on miscommunication. Many lawyers will generally go away quietly when they are fired, no matter how unfair the circumstances. They feel restrained by the ethics rules and won’t confront clients. I don’t have to be so quiet. I won’t confront the client in this particular situation, but please keep in mind that the attorney-client relationship is already fragile and plagued with mistrust and misinformation. The leash is in your hands; you as the client have much of the power. Please use that power wisely and temper it with common decency.
Rehabilitating Impaired Lawyers
What do you do when a lawyer who is being investigated for breaking the rules of professional conduct claims that alcohol, drugs, and/or depression are a major cause of the problem?
Do you ignore these potentially mitigating factors and punish the lawyer to the fullest extent of the law, or do you aim to rehabilitate the lawyer?
California's State Bar Court has since 2002 been trying to do a little bit of both. It set up an Alternate Discipline Program, the first systematic effort to combine attorney discipline and substance abuse and mental health treatment.
The State Bar Court Alternative Discipline Program (ADP) represents the first comprehensive program in the United States for addressing the identification, assessment and treatment of substance abuse and mental health problems of respondents in the discipline process. The ADP is designed to protect the public, the courts and the legal profession, while respondents with substance abuse or mental health problems receive treatment.
The Alternate Discipline Program works in conjunction with the State Bar of California's Lawyers Assistance Program. The Lawyers Assistance Program is in many ways similar to the mental health programs that are made available to employees of large corporations. The employee (or in this the lawyer) can access to treatment services on a confidential basis, without informing his employer. Given the stigma that is too often attached to mental health issues, assistance programs are a smart and necessary way to get people to get the help they need.
The primary difference between the ADP and the Assistance Program is that the ADP applies to lawyers who are facing formal disciplinary charges. According to the State Bar's own statistics, about 90% of those formally charged end up being disciplined in some way. Thus, the ADP program is analagous to providing drug, alcohol, and mental health treatment to people who are being prosecuted for criminal violations.
Moreover, the anecdotal evidence suggests that lawyers who go through the ADP program receive less severe punishments than other lawyers who are facing formal disciplinary charges. In fact, some law firms that help defend lawyers facing discipline charges promote their ability to help lawyers "qualify for the Alternative Discipline Program and assist [them] in lowering your level of discipline." According to the State Bar's 2009 Annual Discipline Report, approximately 50 lawyers were referred that year to the Alternative Discipline Program. That's roughly ten percent of the cases in which the State Bar of California filed formal complaints in 2009. So it's not as if a huge amount of cases are being diverted to the Alternative Discipline Program. But neither the State Bar nor the State Bar Court appear to publish information showing how much more lenient is the Alternate Discipline Program. The odds are good that at least some attorneys who may have otherwise been suspended received a public warning or an even milder form of punishment because they were being rehabilitated. It's also possible, and more problematic, that some lawyers avoided disbarment because of their participation in the Program.
As a client, you generally need lawyers to help you with some important aspect of your life. Thus, if you find out that your California lawyer has been previously disciplined, you should ask them whether they were part of the Alternate Discipline Program or had any connection with it. I don't advocate that you automatically refuse to work with a lawyer who was in the Program. It is, however, a relevant and important factor to consider. You should, therefore, discuss the situation with the lawyer, and assess how they seem to be handling what was at one point a major problem.
What To Do In A Fee Dispute With Your Lawyer
Many aspects of the relationship between lawyers and their clients are counterintuitive. Nowhere is more true than when a client and a lawyer have a disagreement about the lawyer's bill. The conventional wisdom is that lawyers must have a huge advanatge in these disputes. But the truth is much more nuanced; clients have much more leverage and power in these disputes than most of them realize.
Much of the power that clients have stems from specific laws that have been enacted to address fee disputes between lawyers and clients. Most of these laws are intended to protect clients. Some of these rules are so specific that few lawyers know about them. Thus, the first thing you should do when you get into a fee dispute with your lawyer is to find out which specific rules apply in your state. Some states are more protective of clients than others, but almost states provide more protections to the client than appear on the face of the contract between the attroney and the client. In this respect, the contract between the lawyer and client is like the lease agreement between a residential landlord and tenant. The lease may contain specific language, but the law overrides what's in the lease even if both parties have signed it. For example, in many states a landlord may not unreasonably deny a tenant the right to find a sublettor even if the contract says that the tennat is not allowed to sublease the property.
Likewise, some aspects of the contract between lawyers and clients may be overrdden by a state's laws. The most common example of this relates to fee arbitrations. In most states, a separate arbitration process exists to address fee disputes between attorneys and clients. Thus, a client may have the right to force a fee dispute to be decided by an arbitrator even if the contract with the lawyer says that all disputes relating to the contract will be decided by a lawsuit filed in a particular court. Some states also have specific laws that govern how attorneys' fees are paid in fee disputes. In California, for example, if a case goes to a fee arbitration and the lawyer wins that arbitration, the lawyer is not entitled to receive attorney's fees even if the contract between the attorney and client provides that the prevailing party in a fee dispute is entitled to collect reasonbale attorney's fees. The California provision about the collection of attorneys fees is both narrow and rare. It doesn't apply to every fee dispute in California and very few states have enacted a similar law. It is, however, a good example of why you need to find out the specific rules apply to attorney-client fee disputes in your state.
In addition to the laws that may override specific provisons in the fee agreement, clients may raise numerous arguments and objections that can reduce or in some cases eliminate their obligation to pay a fee to their lawyer. These arguments include:
- The lawyer didnt provide the client with a required written fee agreement; the client is therefore entitled to void (i.e. walk away from) the contract;
- The lawyer raised the fees above and beyond what the client agreed to in writing without obtaining the client's prior written agreement to the higher fees;
- The lawyer charged a late fee that exceeded the late fees permitted by law;
- The lawyer wasn't entitled to charge a late fee because the fee agreement doesn't allow for such charges and the client never agreed in writing to pay such fees;
- The lawyer can't collect his or her fees because the fee agreemnt between the lawyer and client wasn't translated into a language that is understood by the client;
- The lawyer charged a kind of fee that is not permitted for the kind of work performed by the lawyer (e.g., you generally can't collect a contingency fee in family law cases);
- The lawyer collected a fee that the lawyer called "a non-refundable retainer," even though the law doesn't recognize the validity of many non-refundable retainers charged by lawyers.
- The amount of the fee charged by the lawyer was unconscionable, and the lawyer should be disciplined for doing so;
- The lawyer double billed certain aspects of the work performed by the lawyer;
- The bill sent to the client contains computational errors;
- The lawyer charges an hourly rate and then bills in quarter-hour increments, even though some judges have ruled that this practice is unfair to clients.
These arguments won't work in every state. In fact, some of these arguments aren't likely to work in most states. Moreover, most lawyers are sufficiently compettent not to make basic mistakes that might impact the validity of the fees they charge. I am, however, regularly surprised by how often lawyers mess up and break some rule regarding their fees. In light of how complex this area of law is, don't assume that your common sense will lead you to the right conclusion when you have a fee dispute with your lawyer. At a minimum, review your fee agreement and contact your state bar to find out what laws govern your fee dispute. You will often find out that you have more rights than you initially realized.
Image courtesy of juli shannon flickr gallery under this creative commons license.
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