Abstract
Every year, thousands of individual clients are victimized by overreaching lawyers who overcharge clients, refuse to return unearned fees, or steal client money. Starting in the 1980s, the American Bar Association considered, and often proposed, client protection measures aimed at protecting clients from overreaching lawyers. These measures include requirements that lawyers use written fee agreements in their dealings with clients and Model Rules for Fee Arbitration, Client Protection Funds, Insurance Payee Notification, and Random Audits of Trust Accounts.
This article examines what happened to these ABA recommendations when the states considered them and assesses the current state of client protection in the United States. It reveals that many jurisdictions have declined to adopt these measures or have adopted variations that do not adequately protect vulnerable clients. As a result, most states do not require lawyers to use written fee agreements and in most jurisdictions, ordinary clients have no meaningful recourse when fee disputes arise because lawyers are not required to arbitrate those disputes.
While all states have established client protection funds to help reimburse clients who are victimized by their lawyers, many clients are not sufficiently compensated due to the low caps on recovery placed on some funds. At the same time, most states have declined to adopt other client protection measures that would help deter and detect lawyer defalcations. Why has this failure to protect ordinary clients occurred? The answer appears to be, in part, that state courts have paid insufficient attention to these issues or deferred to the state bars.
The state bars have sometimes opposed these measures or implemented them in ways that inadequately protect the public. States with mandatory state bars—which are sometimes deeply involved in the rulemaking process—appear more likely to adopt fewer client protection measures. The article suggests that if state courts will not act to better protect ordinary clients, then state legislatures can and should do so.