Client Security Fund gets $2 million boost
The State Bar Board of Trustees approved the transfer of $2
million in reserves to the Client Security Fund last month, boosting the
amount available for payouts this year to $8 million.
“The board is committed to ensuring the Client Security Fund has enough money
to reimburse every person who lost money or property due to theft by their
attorney,” State Bar President David Pasternak said. “This program is vital to
achieving the State Bar’s public protection mission. By reallocating these
funds, the State Bar is trying to avoid or minimize the need to raise further
funds from the California attorneys who finance this important restitution
program.”
The fund, established by State Bar-sponsored legislation in 1972, is primarily
financed by an annual assessment paid by California lawyers – currently $40 per
active lawyer and $10 per inactive lawyer.
Applications to the fund have increased in recent years as a result of the loan
modification crisis, during which attorneys were prohibited from collecting
advanced fees for loan modification work. In 2013, the fund paid out a record $11
million to more than 2,000 applicants. Alleged loan modification fraud
still accounts for about half of the new applications being made to the fund.
“I am delighted that careful budgeting has identified the savings needed for
this transfer of funds to a critically important activity,” Executive Director
Elizabeth Rindskopf Parker said. “The State Bar’s new Chief Operating Officer
Leah T. Wilson deserves special credit for this important achievement – an
example of excellent stewardship of mandated member fees.”
The one-time infusion of $2 million translates to as many as 475 additional
applicants being paid this year. In order to seek reimbursement from the fund,
victims must first file a complaint against the attorney with
the bar’s Attorney Discipline System.
See a graphic of
applications paid from 2010-2014.