Vol. 70,
No. 3, March
1997
Supreme Court Orders
Clients' Security Fund
In the Matter of the Amendment of Supreme Court Rules, SCR 12.04(2)
and (3) - Clients' Security Fund
Order 96-15
On Dec. 12, 1996, the Board of Governors of the State Bar of Wisconsin
filed a petition requesting the amendment of SCR 12.04(2) and (3) to increase
from $150,000 to $250,000 the balance required to be maintained in the Clients'
Security Fund. The proposed amendment would not increase the maximum amount
of any annual assessment of attorneys.
IT IS ORDERED that a public hearing on the petition be held in the Supreme
Court Room in the State Capitol, Madison, Wis., on April 15, 1997, at 1:30
p.m.
IT IS FURTHER ORDERED that the court's conference in the matter shall
be held promptly following the public hearing.
IT IS FURTHER ORDERED that notice of the hearing be given by a single
publication of a copy of this order and of the petition in the official
state newspaper and in an official publication of the State Bar of Wisconsin
not more than 60 days nor less than 30 days before the date of the hearing.
Dated at Madison, Wis., this 22nd day of January, 1997.
By the court:
Marilyn L. Graves, Clerk
Petition
To the Justices of the Wisconsin Supreme Court:
The Board of Governors of the State Bar of Wisconsin hereby petitions
the Wisconsin Supreme Court to amend SCR 12.04(2) and (3) as follows:
(2)Annual Assessments. Commencing with the state bar's July 1, 1982,
fiscal year, every attorney shall pay to the fund such annual assessments
as are necessary to maintain a balance in the fund of $150,000 250,000,
but in no event shall any annual assessment exceed $15. An attorney whose
annual state bar membership dues are waived for hardship shall be excused
from the payment of the annual assessment for that year. An attorney shall
be excused from the payment of the annual assessment for the fiscal year
during which he or she is admitted to practice law in Wisconsin.
(3)Certificate of Sufficiency. The committee shall determine the net
value of the fund as of May 1 of each year. Whenever the value of the fund
shall equal or exceed $150,000 250,000,
after deducting all claims which
the committee has determined to pay and which are not disposed of at the
date of valuation and all expenses properly chargeable against the fund,
the committee shall file with the supreme court prior to May 31 of that
year a certificate of sufficiency to that effect. When a certificate of
sufficiency is filed with the supreme court, there shall be no annual assessment
for the next fiscal year.
DISCUSSION. 1. Background. The Clients' Security Fund (Fund) was established
in 1981 to financially compensate clients who have lost money or other property
because of the dishonest conduct of their attorneys. Since 1981, the Fund
has made more than $1.2 million in reimbursements to over 170 clients.
The Fund is financed by mandatory annual assessments on all licensed
Wisconsin attorneys. Each year, the State Bar Clients' Security Fund committee
determines the amount of the assessment based upon past and anticipated
future claims experience and the current Fund balance. By rule, the committee
cannot set the annual assessment in excess of $15. SCR 12.04(2). In addition,
if, on May 1 of a given year, the Fund balance equals or exceeds the fund
sufficiency level of $150,000, there may be no assessment for the next fiscal
year. SCR 12.04(3).
In 1992, the committee requested, and the Court approved, an increase
in the fund sufficiency level from $100,000 to $150,000. At that time, the
committee advised that an increase in the fund sufficiency level was required
to offset the effects of inflation as well to counteract the potential for
increased Fund activity due to the rising number of attorneys practicing
law in Wisconsin.
In addition, since 1981 the committee has increased the maximum reimbursement
amount allowed for an individual claim from $25,000 to $45,000 to provide
more complete compensation to clients who have suffered large financial
losses at the hands of their attorneys. In 1996, the Board of Governors,
following the recommendation of the State Bar/BAPR Joint Trust Account committee,
requested the Clients' Security Fund committee to further increase this
maximum reimbursement amount to $75,000 to more fully protect clients who
have suffered extreme financial hardship. The committee has agreed to increase
the maximum reimbursement amount to $75,000 if the fund sufficiency level
is proportionally increased.
2.Current Request to Increase Fund Sufficiency Amount. The Clients'
Security Fund committee advises that an increase in the fund sufficiency
level is necessary to keep pace with the need to increase the maximum reimbursement
amount allowed per claim. Under the current fund sufficiency requirements,
the committee would have to approve three maximum-level claims of $45,000
each before the Fund, carrying a minimum reserve of $150,000, would be nearly
depleted. An increase in the fund sufficiency level to $250,000 would allow
the committee to increase the maximum reimbursement amount to $75,000 while
keeping that amount at 30 percent of the fund sufficiency level. While it
has no realistic way of predicting the number of payable claims that will
exceed the maximum reimbursement amount, the committee feels that the proposed
higher level of reserve will help to avoid surges in assessments in the
future to cover unanticipated high levels of claims activity. Increasing
the fund sufficiency amount should also permit the mandatory attorney assessment
to remain at no more than $15 per year.
The undersigned respectfully submits this petition on behalf of the Board
of Governors and prays for an order accordingly this 9th day of December,
1996.
David A. Saichek, President
State Bar of Wisconsin |