Facts About the Lawyers Fund for Client Protection

The New York Lawyers Fund for Client Protection was established by the State Legislature in 1981 at the request of the New York State Bar Association. The fund's purpose is to reimburse the misuse of law client money in the practice of law. There are client protection funds in every state but Maine.

The fund is financed solely by lawyers, not tax dollars. Every practicing attorney is assessed $300 every two years, and the Legislature earmarks $100 of that fee for deposit in a special trust account in the State Treasury to be used for law client reimbursement.

The fund is a New York State agency managed by a Board of Trustees appointed by the State Court of Appeals, New York's high court. There are seven Trustees: five lawyers and two business executives. The Trustees serve without compensation for three-year terms of office.

Eleanor Breitel Alter, a partner in the Manhattan law firm of Kasowitz, Benson, Torres & Friedman, chairs the Board of Trustees. Other Trustees are Bernard F. Ashe of Albany, Theodore D. Hoffmann of Hicksville, Charles J. Hynes of Brooklyn, Ray W. Manuszewski of Cheektowaga, Eric A. Seiff of the Bronx, and Shirley B. Waters of Rome.

The Trustees are authorized to reimburse money and property that is wrongfully taken in the practice of law, provided that the dishonest lawyer cannot make restitution.

Typical client losses covered include the theft of estate and trust assets, down payments in real estate transactions, settlement proceeds in litigation, and money embezzled in investments for clients. The fund does not cover losses resulting from a lawyer's malpractice or neglect, and disputes concerning legal fees.

The Lawyers Fund budgets $8 million annually for client reimbursement. Each client loss is covered up to $200,000. Because the usual client loss is less than $10,000, 99 percent of all eligible law clients in New York State ultimately receive 100 percent reimbursement for their losses.

Since 1981, the fund's Trustees have restored more than $72 million to eligible clients. Those losses involve approximately 578 former lawyers; now dead, disbarred or suspended from practice. There are 177,000 registered lawyers in New York State.

The Trustees' claim procedures are uncomplicated and cost-free for law clients. That includes legal help, which most lawyers in New York State will provide claimants free of charge. The Trustees' reimbursement awards follow promptly after a dishonest lawyer's disbarment or criminal conviction for misusing client funds.

The offices of the New York Lawyers Fund are located at 119 Washington Avenue, Albany, New York 12210. Telephone 800/442-3863.