Lawyer-Paid Client-Compensation Funds

Abstract

In all fifty states and in the District of Columbia, lawyers must make annual or biennial payments into government-mandated client-compensation funds, which are paid for entirely by lawyers. A payment by a lawyer is a condition of maintaining a license to practice law.

The shortcomings of client-compensation funds are that they impose, on all lawyers in a jurisdiction, collective liability for any one lawyer who causes financial harm to a client, and collective payment to the financially-harmed client.

Collective liability and collective payment are alien to the common law. The foundational principle of Western philosophy is that each adult person has personal liability for a harm caused by him, and has a personal obligation to make the harm good.

Keywords: Board of Bar Examiners, Character Committee, client compensation, client protection, Clients’ Security Trust Fund, fidelity fund, In re Reed, Judiciary Law, Lawyers’ Fund, Lawyers’ Funds, Matter of Member of the Bar, Supreme Court, 468-b

JEL Classification: H25, K40