Protection Fund an Option for Wronged Clients, But Not for Attorney Malpractice

Most professionals carry insurance to protect against claims arising from their negligence. Lawyers are no exception. If you have a valid claim for legal malpractice, you generally can look to the lawyer’s insurance carrier to pay it, just as you would turn to a physician’s medical malpractice insurance carrier if you were harmed by a preventable medical error.

Occasionally, however, a lawyer’s misconduct is not covered by his or her malpractice insurance. Generally, claims for theft, embezzlement and other acts of dishonesty are not covered by insurance. Although you still may sue the lawyer without insurance coverage, clients have an additional remedy under these circumstances.

In 1961, the Arizona Supreme Court enacted a rule that established a client protection fund. The fund is supported by all members of the bar. An annual assessment is made that each member must pay, in addition to his or her normal dues. This fund is intended to compensate clients harmed by the dishonest conduct of their lawyers.

Unlike a malpractice claim, the fund is not available for an ordinary negligence claim. The claims must fall under the category of dishonest acts, including theft or embezzlement, which result in the loss of money or property.

The claim cannot be made until the lawyer involved has been disciplined by the Arizona Supreme Court. Generally, this means suspended for more than six months or disbarred. Claims are limited to $100,000 per claimant, with a maximum of $250,000 for all claims from the conduct of any one lawyer.

Because of all the restrictions, the client protection fund is not a speedy remedy, but at least it provides some relief for clients who otherwise might have no place to turn.

If you believe you have a claim against the client protection fund, you should contact the State Bar of Arizona for information or read the section captioned “Client Protection Fund” on the web site of the State Bar of Arizona.