Who We Are

HISTORICAL NOTES
THE INTERNATIONAL CLIENT PROTECTION MOVEMENT

The clients' security movement did not begin in the United States. Like so much in our legal tradition, clients' security committees, boards and funds originated in the British Commonwealth countries. Although the historical details are quite interesting, they can be distracting. To avoid that, we'll focus on the big picture.

During the last few years of the 19th century, continuing through the early 1920's, law societies in England, Australia, and New Zealand held extensive discussions about different varieties of clients' protection programs. Those discussions took place against a backdrop of heavy client losses due to law firm bankruptcies, a stock market crash, and the then-common practice of comingling client and firm accounts. In 1929 New Zealand created the Solicitors' Fidelity Guarantee Fund. Australia followed suit in 1930; as did Alberta (Canada) in 1939 and England in 1941. Scotland joined the ranks in 1949 and Ireland in 1954. In January 1959, Vermont created the first clients' protection fund in the United States.

On June 3, 1974 Justices Tauro (Chief), Reardon, Quirico, Braucher, Hennessey, Kaplan, and Wilkins ordered, effective September 1, 1974, the insertion of Chapter Four into the Rules of the Massachusetts Supreme Judicial Court to deal with Bar Discipline and Clients' Security Protection. It created the Clients' Security Board and Fund "to discharge, as far as practicable and in a reasonable manner, the collective professional responsibility of the members of the Massachusetts bar with respect to losses caused to the public by defalcations of members of the bar ... "

That was seven years before the American Bar Association House of Delegates approved the Model Rules for Clients' Security Funds. It may explain why Supreme Judicial Court Rule 4:04 looks and sounds nothing like the Model Rules and may also help to explain why Rule 4:04 never contained: 1) a statute of limitations on when a claim may be filed; 2) a limit on the amount awarded to an individual claimant; and 3) a limit on the amount awarded for the defalcations of an individual lawyer. Today, all other U.S. clients' security funds contain one or more of those three limitations. Massachusetts, alone, is free from all such restrictions.

Little did those wise and visionary Justices comprehend what they had set in motion. During its first five years, the Board awarded a modest total of $148,768.00 to fifty claimants. As awareness of the Board and Fund spread, the first decade total awards rose to $837,595.00 paid to 215 claimants. Not one of those Justices could have imagined that forty-three years later, the Board would have awarded a total of more than $49 million to 2,246 claimants. In fiscal year 2015, the Board awarded more than $2.9 million, the highest level in its history.

Since the early days of the 20th century, all efforts to establish funds to reimburse law clients whose lawyers had stolen from them encountered resistance from lawyers who claimed that by acknowledging the problem of lawyer theft, lawyers would fatally injure the trust and confidence that clients have in them. Time refuted that warning and proved that clients' protection funds are viewed today as a badge of honor for a profession that acknowledges the universal truth that no human institution or occupation is exempt from the law of equal distribution. The clergy, medical doctors, accountants, lawyers, university professors, and police each has a share of dishonest members who lie, cheat and steal. Only lawyers make a systematic, large-scale effort to reimburse, with their own private funds, the victims of their dishonest colleagues.

We acknowledge with gratitude the pioneering example of the lawyers of New Zealand and the seven visionaries of the 1974 Supreme Judicial Court of Massachusetts, and all their successors, who, to this day, have continued to support vigorously full reimbursement for every dollar misappropriated from law clients.

July 2018