WASHINGTON, September 8, 2013 — Attorneys, like everyone else occasionally turn out to be bad apples. Every profession seems to have a few. When attorneys take their oath after passing the Bar Exam, they become “officers of the court,” and thus are elevated to the class of people that are sworn to uphold and protect the laws that govern us. But some of them don’t.
At the bottom of the legal apple barrel is the relatively small percentage of attorneys who steal from their clients. It is embarrassing. The number should be zero.
According to the American Bar Association’s July, 2011 “Journal,” the number of attorneys in the U.S. in 2010 stood at 1,200,942. A 2008-2010 ABA study, “Survey of Lawyers’ Funds for Client Protection,” details that in 2010 there were just less than 8,000 claims for compensation to state protection funds. This is less than one percent of the total. The actual percentage is a bit higher because not all victims apply for compensation from state funds.
In addition to filing a lawsuit against an attorney to recover money stolen, and in addition to contacting the police to have the attorney prosecuted, victims of attorney theft can make a claim to their state’s Client Protection Fund. Sometimes referred to as a Client Security Trust Fund, every state has procedures to compensate victims when their attorneys violate their trust and steal from them.
How might an attorney do this?
Virginia attorney Stephen T. Conrad stole from his clients. He pled guilty in 2008 to embezzling millions of dollars from clients he represented in automobile accidents and other personal injury matters. Without his clients’ permission, Conrad settled cases and forged their signatures on the settlement checks received from insurance companies. Beyond stealing their money, Conrad failed to pay their medical bills, leaving many of them heavily in debt.
Conrad was sentenced to eleven years in jail. In partial response, Virginia passed a law requiring insurers to notify claimants when a settlement check was sent to their attorney. Many states do this.
A Virginia Beach, Virginia attorney, Brian Gay, stole almost $400,000 from an account set up to benefit the family of a deceased client. Gay was sentenced to five years in jail.
Troy A. Titus, another Virginia attorney, defrauded clients, friends and investors of over $8 million in a Ponzi scheme. Titus was convicted in 2010 of 33 felonies and sentenced to 30 years in federal prison.
A La Plata, Maryland attorney, Frank P. Jenkins II, pleaded guilty in Federal court in November 2010 to wire and mail fraud charges for taking clients’ money to pay for his personal expenses and for providing clients with fake deeds. In one case, he convinced the family of a dead woman to give him nearly $900,000. He initially placed the money into his escrow account (an account attorneys keep for safeguarding client funds). He later transferred the money into his personal accounts. Jenkins was sentenced to 46 months in prison.
Ranji M. Garrett, an attorney from Rockville, Maryland, took and kept retainer fees from several clients, and without notice to them he abandoned his law practice. Garrett was disbarred.
State Client Protection Funds seek to maintain the integrity and protect the good name of the legal profession by reimbursing losses. Mostly states require attorneys to contribute to these funds to make up for the bad acts of a very few in their profession.
Each state typically sets up a Board of Trustees to oversee the funds and to administer and pay legitimate claims. These are not legal malpractice claims or fee dispute claims. Rather, these are simply theft claims.
Filing a claim in any state is relatively simple. A victim need only contact the state’s bar association, and claim forms are available. An investigator is assigned and once a determination is made, a recommendation for payment is made to the Fund’s administrators.
Most state protection funds were established in the 1960s. The ABA “Survey” referenced above provides the following information about these funds:
The source of the funds comes from licensed attorneys in 33 states, from legislatures in 5 states, and from bar associations in 12 states.
Attorneys pay as little as $2.00 per year (Indiana) up to $110.00 per year (Connecticut) as required contributions to their state fund. Indiana has over 17,000 attorneys and Connecticut has over 33,000 attorneys.
New York has the most attorneys of any state, with almost 263,000. NY attorneys pay $30.00 per year.
Failure to pay the required contribution to a state fund results in the suspension of an attorney’s license, except in Delaware, Florida, Hawaii, Illinois, Indiana, Louisiana, Missouri, Nebraska, Oklahoma, South Dakota, Texas, Vermont, West Virginia and Wyoming.
Funds are invested. New York’s fund investments in 2010 were almost $7.5 million. Minnesota’s investment netted $15,976.00 in 2010. Delaware, Washington, D.C., Indiana, Louisiana, Missouri, Nebraska, New Hampshire, Ohio, Oklahoma, South Carolina, South Dakota, Texas, West Virginia and Wyoming had no investment revenues in the “Survey” period (2008-2010).
Each state has a cap, or limit, on the amount that is available to victims. Wyoming and Vermont pay up to $10,000 for legitimate claims. New York pays up to $300,000.
The September 2, 2013 “Virginia Lawyers Weekly” newspaper reported that Virginia’s legislature is considering doubling its payout cap, from $50,000 to $100,000, noting that the fund balance on June 30, 2013 was $6.4 million.
An article by Ben Mook, in Maryland’s “Daily Record” on September 9, 2012, stated that potential claims facing the Client Protection Fund of the Bar of Maryland exceeded $20 million in fiscal 2012, pointing out that these claims were at their lowest level in six years both in number and amount. The fund paid out $436,885 to clients for the year ending June 30, 2012.
Your legal case may turn out poorly. Incompetence and malpractice are themes for another day. Notwithstanding all of the lawyer jokes, the bottom line, statistically proven, is that the profession is one that emphasizes integrity. So when those few bad apples surface, there is help.
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website. He is also available to speak to your group on numerous legal topics. Paul is the featured legal analyst on the Washington Times Radio, in Washington, D.C., on the Andy Parks show, the featured legal analyst for America’s Radio News Network, heard in 165 markets nationwide, and he is a columnist on the Washington Times Communities.
His book The 8 Critical Things Your Auto Accident Attorney Won’t Tell You is free to Maryland and Virginia residents and can be obtained by ordering it on his website; others can obtain it on Amazon.
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