What Is Virginia’s Clients’ Protection Fund? by David B. Oakley Rationale and History of Virginia’s Clients’ Protection Fund Board As attorneys, we owe certain duties to our clients, and our clients trust us with some of the most important matters in their lives. The legal profession in the Commonwealth is largely self-governing. This autonomy allows our profession to remain largely free of regulation by the government. However, with this independence and self-regulation comes a heightened responsibility to administer the justice system in the public interest and not in our own self-interests or the interests of our profession. We are not only responsible for our own actions, but as a profession, we must take responsibility for the actions of our fellow attorneys, especially when attorneys abuse their power and the trust of their clients. To further these goals, Virginia lead the way in being one of the first states to establish a client protection fund. Now, every jurisdic-tion in the United States and Canada have client protection funds. Virginia’s Clients’ Protection Fund (the “Fund”) promotes public confidence in the legal industry and upholds the “administration of justice and the honor and integrity of the legal profes-sion.” 1 The Bar Council was given permission to establish the Fund in order to provide a system where clients—or other persons owed a fiduciary duty by an attorney—could be reimbursed for all or part of losses incurred due to the dishonest conduct of a member of the Virginia State Bar. 2 The Fund is evidence of Virginia lawyers’ dedication to holding themselves to the highest ethical standards. Fund Statistics At the close of the 2019 fiscal year, the Fund had reimbursed over $7.1 million to 1,673 petitioners who suffered financial losses due to the dishonest conduct of Virginia licensed attorneys since its inception. In 2019 alone, 25 petitioners were reimbursed $132,303. However, the number and size of claims submitted to and paid by the Fund can vary wildly in any given year. For example, in 2010, 14 VIRGINIA LAWYER | AUGUST 2020 | VOL. 69 | CLIENTS’ PROTECTION FUND 218 petitioners’ claims were approved, and the Fund paid out over $900,000 that year. In other recent years, the Fund has approved as few as 16 claims (2009) and paid out as little as $61,458 (2002). For the partial fiscal year of 2020 (7/1/2019–6/4/2020) the Fund received 58 petitions, 24 of which have been closed. Of the closed petitions, 14 were rejected on a jurisdictional basis, two were withdrawn, five have been paid, and three were denied. The number of claims in any given year can vary greatly based in part that a single attorney can create a large number of claims. Contributions to the Fund come large-ly from an annual assessment to Virginia licensed attorneys. That money is managed by the Fund and invested conservatively. As of April 30, 2020, the Fund’s balance was ap-proximately $10.6 million. In some years, the investment income has been sufficient to pay for all approved claims. Unfortunately, most years it is not. Statutory Information and Management of the Fund Va. Code § 54.1-3913.1, statutorily created the Fund as a special fund of the Virginia State Bar that consists of monies transferred to it from the State Bar Fund and the Virginia State Bar’s Administration and Finance Account. Although the Supreme Court of Virginia is authorized to adopt rules assessing members an annual fee of up to $25 to endow the Fund, the current assessment is only $10 per year. 3 The Fund is restricted to the following types of investments: “1. Interest-bearing deposits, in federally insured banks and savings institutions (including certificates of deposit as au-thorized by Va. Code §§ 2.2-4407, 4509 and 4518); 2. Direct obligations of the Commonwealth of Virginia and the United States Government, and securi-ties of entities created by Congress and authorized to issue such securities; pro-vided that no such obligation or security www.vsb.org
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What Is Virginia’s Clients’ Protection Fund?
David B. Oakley
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