To provide monetary awards to persons who have suffered financial losses as a result of dishonest conduct by a Virginia lawyer.
In establishing the Clients' Protection Fund, the Virginia State Bar did not create or acknowledge any legal responsibility for the acts of individual lawyers in the practice of law. All reimbursements of losses from the fund are a matter of grace in the sole discretion of the board administering the fund and not a matter of right. No client or member of the public has any right in the fund as a third party beneficiary or otherwise. The fund is operated by a 14-member board appointed by the Virginia State Bar Council. One member is chosen from each of the ten disciplinary districts, three are from the state at-large and one person is a lay member. Board members are assigned to review and investigate claims filed by clients. The board discusses each claim at meetings of the board, and acts as appropriate under the rules of the fund.
The fund was established with a portion of the mandatory dues paid by all licensed lawyers practicing in Virginia. Since 1976, $3,077,022 has been transferred from the bar's operating budget or reserves; $1,143,635 has been earned on investments; $209,577 has been reimbursed to the fund; and 465 claims have been paid totaling $1,725,535, leaving a balance in the fund as of March 31, 1998, of $2,704,699.
As stated above the Clients' Protection Fund covers losses associated with the dishonest conduct of a lawyer. Dishonest conduct is defined by the rules to be any wrongful act committed by a lawyer in the nature of theft or embezzlement of money or the wrongful taking or conversion of money, property or other things of value. This includes, but is not limited to, refusal to refund unearned fees received in advance where the lawyer performed no services, or such an insignificant portion of service that the refusal to refund the unearned fees constitutes a wrongful taking or conversion of money. The fund is a remedy of last resort for clients who are unable to obtain reimbursement from other sources, such as a bond, surety agreement, or the lawyer involved.
The sum reimbursed to a client may be the full amount lost or may be only a portion of the amount lost due to limitations set forth in the rules. The maximum per claim limit is $25,000, and the maximum amount that can be paid on account of the misconduct of a single lawyer is 10% of the net worth of the fund at the time the first claim is filed. Reimbursement may be denied to a claimant who has net worth in excess of a million dollars or adjusted gross income in excess of $75,000.
1. The loss must have been caused by the dishonest conduct of a Virginia lawyer and must have arisen out of, and by reason of, a lawyer-client or a fiduciary relationship; and
2. The lawyer must have been disbarred or suspended from the practice of law, voluntarily resigned from the practice of law, died, disappeared or left the state and not be subject to judicial process. Alternatively, the lawyer may be bankrupt or mentally incompetent, or the loss can be certified to the board by one of the State Bar's disciplinary committees as an appropriate case for consideration; and
3. The claim must have been filed within three years from the date of the occurrence giving rise to the claim, or within one year of the discovery of such occurrence if discovery could not reasonably have been made within three years. In no event shall a claim be allowed if made more than five years after the occurrence complained of or one year after the first occurrence of one of the events set forth in Paragraph 2, whichever date is later.
The board meets three times each year to review investigative reports and act on claims. As a result of the availability of these funds provided by the organized bar to assist clients who have been harmed by misconduct on the part of a Virginia attorney, at least some of the damage done to the image of the legal profession by such acts of misconduct is redressed.
CLIENTS' PROTECTION FUND PETITIONS PAID JULY 1, 1997 - MARCH 31, 1998
ATTORNEY/LOCATION AMOUNT PAID TYPE OF CASE Harry W. Zimmerman, Farmville $1,191.00 Unearned retainers Harry W. Zimmerman, Farmville $440.22 Bankruptcy Harry W. Zimmerman, Farmville $791.00 Bankruptcy/Unearned retainer Harry W. Zimmerman, Farmville $600.00 Bankruptcy/Unearned retainer Harry W. Zimmerman, Farmville $1,525.00 Unearned retainer/Custody Harry W. Zimmerman, Farmville $700.00 Bankruptcy Harry W. Zimmerman, Farmville $294.00 Unearned retainer Jay G. Kauffman, Chesterfield $3,177.37 Embezzled insurance proceeds Harry W. Zimmerman, Farmville $591.10 Unearned retainer Harry W. Zimmerman, Farmville $885.28 Bankruptcy Harry W. Zimmerman, Farmville $500.00 Traffic offense/Unearned retainer Harry W. Zimmerman, Farmville $250.00 Unearned retainer Harry W. Zimmerman, Farmville $436.00 Bankruptcy/Unearned retainer Harry W. Zimmerman, Farmville $828.99 Bankruptcy Harry W. Zimmerman, Farmville $400.00 Divorce/Unearned retainer Harry W. Zimmerman, Farmville $888.00 Bankruptcy/Unearned retainer Harry W. Zimmerman, Farmville $500.00 Divorce Harry W. Zimmerman, Farmville $888.00 Bankruptcy Harry W. Zimmerman, Farmville $888.00 Bankruptcy Patrick M. Crowling, Jr., Richmond $3,000.00 Embezzlement/Consumer credit Harry W. Zimmerman, Farmville $600.00 Bankruptcy Jay G. Kauffman, Chesterfield $12,599.67 Embezzled personal injury settlement Harry W. Zimmerman, Farmville $540.00 Unearned retainer Harry W. Zimmerman, Farmville $930.00 Bankruptcy/Unearned retainer Harry W. Zimmerman, Farmville $1,461.42 Personal injury Ronald M. Pearce, Deceased $25,000.00 Termination of employment Michael J. Conroy, Roanoke $4,114.00 Purchase of note Dwane H. Miller, Richmond $545.00 Bankruptcy James Edward Ghee, Martinsville $3,668.40 Estate James Edward Ghee, Martinsville $2,500.00 Estate George W. Warrren, IV, Louisa $900.00 Unearned retainer Dwane H. Miller, Richmond $1,111.79 Real estaate Galen Duane Brooks, Sterling $4,470.00 Criminal conduct John Henry Maclin, IV, Petersburg $1,000.00 Criminal David Barry Schultz, Virginia Beach $4,000.00 Unearned retainer Harry W. Zimmerman, Farmville $812.00 Bankruptcy Patrick M. Crowling, Jr., Richmond $350.00 Unearned retainer/Divorce Harry W. Zimmerman, Farmville $500.00 Bankruptcy David Barry Schultz, Virginia Beach $1,500.00 Employment discharge TOTAL PAID $85,376.24 |
CHAIR - Henry P. Custis, Jr., Accomac
VICE-CHAIR - Robert T. Mitchell, Jr., Winchester
Richard Yorke AtLee, Hampton
Edward Lacey Chambers, Jr., Yorktown
Louanna Ockerman Heuhsen, Yorktown
Peter K. McCrary, Manassas
Kurt Joseph Pomrenke, Bristol
William F. Stone, Jr., Martinsville
Anthony John Trenga, Washington, D.C.
Charles L. Williams, Jr., Roanoke
Francis Bosley Crowther, 3rd, Palmyra
Darragh Jean Davis, Herndon
Edward B. Lowry, Charlottesville
Patricia Werhane, Charlottesville
To oversee and improve the disciplinary process.
This is a brief description of the activities of the Standing Committee on Lawyer Discipline ("COLD") during the 1997-98 fiscal year.
The bylaws of the Virginia State Bar and Council delegate to COLD all powers and duties of Council, not otherwise delegated or reserved, with respect to the operation of the bar's disciplinary system. To carry out its mission, COLD proposed several legislative, rule and policy changes during the last fiscal year.
On the legislative front, COLD proposed revising Va. Code ¶ 54.1-3935 to clarify the rules and procedures available to panels of three circuit court judges appointed by the Virginia Supreme Court to hear disciplinary actions. Council approved an amendment, presented by COLD, that expands the action a three-judge panel may take to include dismissal of a complaint, dismissal of a complaint with terms, imposition of a reprimand or imposition of a reprimand with terms, as well as suspension or revocation of a lawyer's license. The proposed amendment also provides that three-judge panels "may" adopt VSB disciplinary rules and procedures. The legislature approved giving three-judge panels the full panoply of disciplinary powers, but substituted "shall" for "may" in language of the proposed amendment governing applicable rules and procedures, thereby making adoption of the VSB disciplinary rules and procedures mandatory in three-judge panel proceedings. The statutory change will become effective on July 1, 1998.
Several rule changes have occupied COLD's attention during the past year. One of the proposed rule changes would have permitted Bar Counsel to petition the Disciplinary Board to review a district committee decision. The standard for awarding such an appeal would have been that the district committee decision was plainly contrary to the law or evidence. Council approved the proposed rule change in October 1997. A petition to change the rule was filed with the Virginia Supreme Court on November 11, 1997. The court denied the petition without comment on January 27, 1998.
In January 1998, the Virginia Supreme Court approved changes to the Rules of Court, Part 6, § IV, ¶¶ 13.K.(1) and (4). Section 13.K.(1) was amended to give suspended or revoked attorneys 14 days to notify clients, attorneys and presiding judges in pending litigation of the discipline imposed; 45 and 60 days to notify the bar that the requisite notice had been given. Section 13.K.(4) authorizes the Disciplinary Board to impose additional discipline if an attorney fails to fulfill the notice requirements in a timely fashion.
The Virginia Supreme Court also approved a change to ¶ 13.A. Among other things, the rule change requires Bar Counsel to furnish respondents a copy of the investigative report prepared by the VSB investigator or district committee member who conducted the investigation after a subcommittee decides to set the complaint for hearing before the district committee or to certify the complaint to the Disciplinary Board. The rule change does not require Bar Counsel to produce information obtained in confidence from any law enforcement or disciplinary agencies, or any documents that are protected by the attorney-client privilege or work product, unless they are attached to or referenced in the investigative report. Nor does the amended rule require Bar Counsel to reveal other communications between the investigator and Bar Counsel, or between Bar Counsel and the subcommittee.
Section 13.A. was also amended to state that there is no right to discovery in disciplinary proceedings, except issuance of summons and subpoenas.
As part of its continuing effort to expedite the handling of complaints, in January 1998, COLD adopted a policy requiring Bar Counsel to distribute a quarterly report of all investigations open more than 18 months from the date the bar received the complaint. The policy provides that COLD members will meet at least quarterly with the chairs of district committees to discuss any problems that may exist, including open investigations that are more than 18 months old.
In order to assess the propriety of actions taken by Bar Counsel staff, during the past year, the Oversight Subcommittee has randomly reviewed closed disciplinary matter files. Members of COLD have also reviewed case files where procedural complaints were received after the files were closed. These reviews have not revealed any untoward practices, but to ensure that complainants are adequately informed as to how the disciplinary process works, a COLD has overseen the development of explanatory information disseminated to complainants after a case is opened.
Concern that efficiencies gained by having professional investigators conduct complaints, and letting subcommittees handle preliminary matters and agreed dispositions, may have been achieved at the expense of district committee involvement in the disciplinary process, led COLD to form a Task Force on Committee Structure. This task force will consider ways of re-invigorating the district committees, including the elimination of subcommittees.
Whatever path is ultimately chosen, COLD will to continue to explore ways of balancing efficiency with fairness and continued local involvement in the disciplinary process.
CHAIR - J. Edward Betts, Richmond
VICE CHAIR - Paul B. Terpak, Fairfax
Stephen G. Test, Virginia Beach
James R. McKenry, Norfolk
Hunter W. Sims, Jr., Norfolk
C.J. Habenicht, Chester
Dennis W. Dohnal, Richmond
W. Scott Street, III, Richmond
Susan M. Hicks, Fairfax
John C. Johnson, Roanoke
Virginia W. Powell, Richmond
Eleanor L. Lipkin, Norfolk
Laurence E. Richardson, Charlottesville