Client Protection, Lawyer Risk


The Illinois Supreme Court recently amended several Supreme Court Rules relating to the disciplinary system. One such change was to Rules 780 and 759, relating to the administration of the ARDC’s Client Protection Program. Most Illinois lawyers have not encountered these
rules in their careers; the Client Protection Program (established
under Rule 780) had previously served as a way to compensate clients
whose lawyers were found to have engaged in dishonest conduct toward
them, and lawyers fortunate enough to avoid physical or mental-health
disabilities would not have to encounter the mechanisms of disability
inactive status set forth in Rules 758 and 759. But the new
amendments may create risks for lawyers that should not be ignored.

amendment that has received the most publicity has been the change in
Rule 780, which now authorizes the ARDC to use its Client Protection
Program to compensate clients who seek refunds of unearned legal fees
previously paid to lawyers who die or become disabled prior to
completing the work the client paid for. This seems like an innocuous
and just change: why deny clients compensation in these situations,
when no one is at fault? Shouldn’t the clients be made whole?

the concurrent amendment to Rule 759 raises some issues that this new
system may engender:

759. Restoration to Active Status

Petition. An attorney transferred to disability inactive status under
the provisions of Rules 757, 758 or, prior to November 1, 1999,
pursuant to Rule 770 may file a petition with the court for
restoration to active status. The petition must be accompanied by
verification from the Director of MCLE that the attorney has complied
with MCLE requirements as set forth in Rule 790 et seq. and
verification from the Administrator that the attorney has reimbursed
the Client Protection Program for all payments arising from
petitioner’s conduct pursuant to Rule 780(e).

added to highlight the new amendment.

clients of attorneys who transfer to disability inactive status may
now claim reimbursement from the Client Protection Program for
assertedly unearned fees. If those claims are made and granted, the
disabled attorney will have to repay the Program for any amounts
given to those clients before they can resume active status. A number
of problematic questions arise for practitioners who, through no
fault of their own, must assume disability inactive status.

of lawyers who transfer to disability inactive status may claim that
they paid the lawyer a certain amount, and that the lawyer did not
earn some portion of the fees prior to the transfer to disability
inactive status. But how can that claim be appropriately verified if
– as seems inevitable – the lawyer is disabled at the time the
claim is made?

of it this way: if the lawyer’s disability impairs her from
practicing law, then would it not also impair her from participating
in an ARDC proceeding – even an informal, confidential one, like a Client Protection proceeding – designed to elicit information
about clients’ fee claims? Perhaps the lawyer will not be physically
able to gather the appropriate information; or perhaps the lawyer
will be too ill to provide reliable information.

What if the lawyer –
but for the disability – could have demonstrated that the fee was
actually earned, and not due to be refunded? Would there be an
opportunity for the lawyer to so demonstrate in a Rule 759
restoration-to-active-status proceeding? Even if so, it would then be
the lawyer’s burden to show that the fee was earned or was
otherwise not refundable. It seems that no matter what, the payment
of a Client Protection claim by the ARDC will serve as some kind of
barrier to the lawyer’s resumption of practice, and a cause for
additional expenditure of time, effort, and perhaps legal fees on the
part of the lawyer seeking restoration.

in turn, may raise issues not only of fundamental fairness, but of
compliance with the Americans with Disabilities Act. Last year, the
Department of Justice made it clear that state supreme courts, in
their bar admissions procedures, would need to ensure compliance with
the ADA. The Department examined Louisiana’s bar admissions
procedures, and found them unfair and injurious to applicants with
mental health conditions: the bar forced those applicants not only to
disclose those conditions and the nature of any treatment they
received (all divorced from any specific accusations that the
conditions caused any objectionable conduct), but also forced them to
agree to a conditional admission as a matter of course.

DOJ’s focus on Louisiana’s compliance with the ADA in bar admission
matters should also serve as a reminder to attorney disciplinary
agencies of the importance of ADA compliance. According to the DOJ’s
letter to the Louisiana Supreme Court, there are “several
regulatory provisions that govern [state supreme courts’] policies
and practices for attorney licensure.” (DOJ Letter, p. 17) One such
regulation provides that “policies that ‘unnecessarily impose
requirements or burdens on individuals with disabilities that are not
placed on others’ are…prohibited. 28 C.F.R. pt. 35, app. B at 673.”

the case of the amendments of Rules 759 and 780, the application of the ADA might raise a concern that those with disabilities, and who avail
themselves of disability inactive status because of the impairments
their disabilities may impose, may face a barrier – in effect, a
tax – on their return to practice law that is only imposed because
of their disability. A further concern could arise if that barrier
was imposed without the lawyer’s meaningful input, also due solely to
the disability.  

It’s too early to tell how the new rules will function practically.
Hopefully, these issues will arise rarely enough that most lawyers (and clients) will remain unaffected; but if they do arise, they will have been
hard to plan for or to avoid. That means another area of risk for
lawyers, one that’s difficult, at least for now, to ameliorate.

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