Ordinary Clients, Overreaching Lawyers, and the Failure to Implement Adequate Client Protection Measures

Every year, thousands of individual clients are victimized by overreaching lawyers who overcharge clients, refuse to return unearned fees, or steal their money. For more than forty years, the American Bar Association (ABA) has 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 rules relating to 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 recommendations 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 participate in fee arbitration. 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 some funds\u27 low caps on recovery. 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

The End of Mandatory State Bars?

The country’s thirty-one mandatory state bar associations are facing an existential threat following the U.S. Supreme Court’s decision in Janus v. ACSME, 138 S. Ct. 2448 (2018). In Janus, the Court considered the constitutionality of compelling public employees to pay agency fees to a labor union. In the process, the Court effectively upended the reasoning of earlier Supreme Court precedent that enabled mandatory state bars to compel bar dues payments from objecting lawyers and expend dues to fund traditional bar functions. Mandatory state bars—which function both as regulators and as traditional bar associations—are now defending themselves against claims in several states that compelled bar dues payments violate lawyers’ First Amendment rights. This Essay considers whether these compelled payments are likely to withstand constitutional scrutiny post-Janus. It focuses on the constitutional analysis outlined in Janus, with emphasis on the question of whether the states’ interest in lawyer regulation and improving the quality of legal services can be achieved through alternative means that are significantly less restrictive of lawyers’ associational freedom than compelled bar dues payments. To answer this question, the Essay compares the activities of the country’s mandatory and voluntary state bar associations along several dimensions. The comparison reveals that states with mandatory bars are unlikely to be able to demonstrate that the states’ interests cannot be achieved through significantly less restrictive means. While this result would be a loss for the legal profession, there could be benefits for the public

The Folly of Expecting Evil: Reconsidering the Bar’s Character and Fitness Requirement

The bar\u27s character and fitness requirement is based on the largely untested premise that an applicant\u27s past history helps predict whether that individual possesses the moral character needed to be a trustworthy lawyer. The primary purpose of the character inquiry is to protect the public and the judicial system from potentially problematic lawyers.The inquiry may also signal to the public that lawyers possess good character and deserve to be trusted with their important legal matters, thereby facilitating client representation and the administration of justice. An alternative-and more critical characterization of this purpose is that it is designed to protect the legal profession\u27s reputation in order to promote the profession\u27s autonomy and its monopoly on the provision of legal services

The Politics of Lawyer Regulation: The Case of Malpractice Insurance

This Article examines the politics of lawyer regulation and considers why some states will adopt lawyer regulation that protects the public, when others will not. It uses the debates over how to regulate uninsured lawyers as a lens through which to examine the question. Clients often cannot recover damages from uninsured lawyers who commit malpractice, even when those lawyers cause serious harm. Yet only two states require that lawyers carry malpractice insurance. This Article uses case studies to examine the ways in which six states recently have addressed the issue of uninsured lawyers to understand this regulatory failure. It uses interest group theory and cultural capture to explain why state supreme courts and legislatures rarely initiate efforts to regulate lawyers in this context, and why lawyer regulation is so dependent on the organized bar. The case studies suggest when some state bars will act to regulate lawyers in this context, and factors that affect whether states will ultimately adopt public-regarding laws. The Article concludes that if courts and legislatures will not initiate or support lawyer regulation that is unpopular with the bar, other means are needed to inject the public’s interests into the regulatory process. It suggests two ways to do so