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Client Protection, Lawyer Risk

The Illinois Supreme Court recently amended several Supreme Court Rules relating to the disciplinary system. One such change was to Rules 780 and 759, relating to the administration of the ARDC’s Client Protection Program. Most Illinois lawyers have not encountered these rules in their careers; the Client Protection Program (established under Rule 780) had previously served as a way to compensate clients whose lawyers were found to have engaged in dishonest conduct toward them, and lawyers fortunate enough to avoid physical or mental-health disabilities would not have to encounter the mechanisms of disability inactive status set forth in Rules 758 and 759. But the new amendments may create risks for lawyers that should not be ignored.

The amendment that has received the most publicity has been the change in Rule 780, which now authorizes the ARDC to use its Client Protection Program to compensate clients who seek refunds of unearned legal fees previously paid to lawyers who die or become disabled prior to completing the work the client paid for. This seems like an innocuous and just change: why deny clients compensation in these situations, when no one is at fault? Shouldn’t the clients be made whole?

But the concurrent amendment to Rule 759 raises some issues that this new system may engender:

Rule 759. Restoration to Active Status

(a) Petition. An attorney transferred to disability inactive status under the provisions of Rules 757, 758 or, prior to November 1, 1999, pursuant to Rule 770 may file a petition with the court for restoration to active status. The petition must be accompanied by verification from the Director of MCLE that the attorney has complied with MCLE requirements as set forth in Rule 790 et seq. and verification from the Administrator that the attorney has reimbursed the Client Protection Program for all payments arising from petitioner’s conduct pursuant to Rule 780(e).

Emphasis added to highlight the new amendment.

Thus, clients of attorneys who transfer to disability inactive status may now claim reimbursement from the Client Protection Program for assertedly unearned fees. If those claims are made and granted, the disabled attorney will have to repay the Program for any amounts given to those clients before they can resume active status. A number of problematic questions arise for practitioners who, through no fault of their own, must assume disability inactive status.

Clients of lawyers who transfer to disability inactive status may claim that they paid the lawyer a certain amount, and that the lawyer did not earn some portion of the fees prior to the transfer to disability inactive status. But how can that claim be appropriately verified if – as seems inevitable – the lawyer is disabled at the time the claim is made?

Think of it this way: if the lawyer’s disability impairs her from practicing law, then would it not also impair her from participating in an ARDC proceeding – even an informal, confidential one, like a Client Protection proceeding – designed to elicit information about clients’ fee claims? Perhaps the lawyer will not be physically able to gather the appropriate information; or perhaps the lawyer will be too ill to provide reliable information.

What if the lawyer – but for the disability – could have demonstrated that the fee was actually earned, and not due to be refunded? Would there be an opportunity for the lawyer to so demonstrate in a Rule 759 restoration-to-active-status proceeding? Even if so, it would then be the lawyer’s burden to show that the fee was earned or was otherwise not refundable. It seems that no matter what, the payment of a Client Protection claim by the ARDC will serve as some kind of barrier to the lawyer’s resumption of practice, and a cause for additional expenditure of time, effort, and perhaps legal fees on the part of the lawyer seeking restoration.

This, in turn, may raise issues not only of fundamental fairness, but of compliance with the Americans with Disabilities Act. Last year, the Department of Justice made it clear that state supreme courts, in their bar admissions procedures, would need to ensure compliance with the ADA. The Department examined Louisiana’s bar admissions procedures, and found them unfair and injurious to applicants with mental health conditions: the bar forced those applicants not only to disclose those conditions and the nature of any treatment they received (all divorced from any specific accusations that the conditions caused any objectionable conduct), but also forced them to agree to a conditional admission as a matter of course.

The DOJ’s focus on Louisiana’s compliance with the ADA in bar admission matters should also serve as a reminder to attorney disciplinary agencies of the importance of ADA compliance. According to the DOJ’s letter to the Louisiana Supreme Court, there are “several regulatory provisions that govern [state supreme courts’] policies and practices for attorney licensure.” (DOJ Letter, p. 17) One such regulation provides that “policies that ‘unnecessarily impose requirements or burdens on individuals with disabilities that are not placed on others’ are…prohibited. 28 C.F.R. pt. 35, app. B at 673.” (Id.)

In the case of the amendments of Rules 759 and 780, the application of the ADA might raise a concern that those with disabilities, and who avail themselves of disability inactive status because of the impairments their disabilities may impose, may face a barrier – in effect, a tax – on their return to practice law that is only imposed because of their disability. A further concern could arise if that barrier was imposed without the lawyer’s meaningful input, also due solely to the disability.

It’s too early to tell how the new rules will function practically. Hopefully, these issues will arise rarely enough that most lawyers (and clients) will remain unaffected; but if they do arise, they will have been hard to plan for or to avoid. That means another area of risk for lawyers, one that’s difficult, at least for now, to ameliorate.

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