Getting Money from a Legal Malpractice Claim

September 30, 2016

In a previous article, we discussed some reasonable steps you could take if you believe your lawyer was not doing what the lawyer was supposed to do. That could encompass a lot of things: taking money and not doing the work and failing to return an unearned fee; lying about the status of the claim; and missing a statute of limitations, just to name a few. Sometimes your remedy is to sue the lawyer, and if the lawyer has malpractice insurance that may be good enough. But a few lawyers cannot get, or have chosen not to get, malpractice insurance. That may be a sign of future trouble in itself, because any lawyer who does not have malpractice insurance probably has few assets to satisfy your claim – meaning if you win the lawsuit against the attorney, and the court awards you money, the lawyer might not have any money to give you. So, does that mean that you have no recourse of any kind if you are harmed by your lawyer? Maybe not.

The Kentucky Supreme Court and the Kentucky Bar Association have recognized that some actions by dishonest lawyers put the profession in a bad light and offer, under certain limited circumstances, a method by which an aggrieved client of a lawyer may get at least partial compensation for losses suffered by reason of the lawyer’s dishonesty. It is called the Client’s Security Fund, and the details of the program are set out in Supreme Court Rule 3.820. This article will only give a brief summary of the content of the rule.

First, be aware that the money in the fund comes from the lawyers of Kentucky. We pay a fee out of our own pockets to provide at least partial help to qualified persons.

Second, not every loss is covered. Only losses caused by “dishonest conduct” are included. “Dishonest conduct” is defined as theft, embezzlement, other wrongful taking of money property or things, and a refusal to return unearned fees. While the rule provides possible help in cases of extreme hardship or unusual circumstances, usually compensation can be received only for dishonest conduct by the lawyer.

Third, there is no legal right to compensation from the fund. It is a matter of grace.

Fourth, you do not simply write a letter and ask for money. There is a detailed process of application and processing of any claims.

Fifth, do not hesitate to ask another lawyer for help. If he or she agrees to do so, the rule specifically provides that no lawyer may accept any payment for prosecuting a claim.

Lest this article give the impression that dishonesty runs rampant in the profession, please consider the following. During the fiscal year 2015 – 2016, only 7 lawyers were involved in payouts by the fund. For 5 of those lawyers, only one client was reimbursed, in amounts ranging from $466 to $1500. Another lawyer had 6 clients reimbursed in the total sum of $133,778.06, while the last of the 7 lawyers had 11 clients reimbursed in the total sum of $35,123.07. 

Author: Arnold Taylor, Senior Partner at O'Hara, Ruberg, Taylor, Sloan & Sergent