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March 15, 2014
Clients’ Security Fund works to right wrongs

By Jan Pudlow
Senior Editor

A once respected personal injury lawyer in Ft. Lauderdale was the master of an elaborate ruse, cheating friends and clients by forging signatures on checks and lying about fraudulent settlements. He admitted he stole more than $1 million over 20 years to prop up a lavish lifestyle spinning out of control because of his gambling and sex addictions.

Thank you card Before the 59-year-old lawyer was sent to prison for eight years for organized fraud in 2012, he paid a personal visit to one of his clients, Donna Bauer of Boynton Beach. She had hired him in a slip-and-fall case, and her case had settled for $90,000, yet Bauer had only received $6,000 of her share of the $68,632 settlement.

Sitting in her living room, Bauer said she was shocked to hear her lawyer admit he had stolen the rest of her settlement money, he was being disbarred, and he was broke and couldn’t pay her what he owed.

But he did give Bauer one final piece of good advice: She could apply to be compensated through The Florida Bar Clients’ Security Fund.

“I got hurt by a crooked attorney, and I thank God the Bar has a fund like that,” said Bauer, who once owned a court-reporting business and is familiar with attorneys and the good they can do.

“The fund is a great thing because it helps you see there’s a light at the end of the tunnel,” Bauer said.

She had to wait a year, but Bauer got a check for $48,911.31 from the Clients’ Security Fund, after her loss was pro rated, as claims were paid at about 75 percent of the loss amount at the end of that fiscal year.

Don’t feel too bad if you’ve never heard of the Clients’ Security Fund, even though $25 of your annual Bar fees go to pay claims.

Susan Palmatier, a Coral Gables attorney at Falk Waas Hernandez Cortina Solomon & Bonner, admits she’d never heard of it until she was appointed to serve on the Clients’ Security Fund Committee that she now chairs.

The most recent Florida Bar membership opinion survey released in January revealed that 27 percent of attorneys polled were unaware of the program that is budgeted to pay out $2.3 million in claims in FY 2013-14.

“Our biggest problem is nobody knows we exist,” Palmatier said. “Really, the work speaks for itself.”

That work is a remedy of last resort for frustrated, angry, and sometimes desperate clients who have been ripped off by their Florida attorneys. The fund reimburses clients under two circumstances:

* When an attorney takes an advance fee, but then fails to provide any “useful services,” up to a maximum amount of $5,000.

* When an attorney misappropriates clients’ monies, up to a maximum of $250,000.

Claims are paid only after a lawyer has been disbarred, suspended, or in the event of death. Fee claims are paid promptly after approval. Misappropriation claims are paid on a pro rata basis after the end of the fiscal year.

Even though clients are not made entirely whole — and an estimated 75 percent of claims received are denied because they are related to negligence or malpractice, as opposed to theft — many who receive a check from the Clients’ Security Fund are grateful.

Steve and Loretta Thompson, of Crozet, Va., hired a Florida lawyer to help modify their mortgage payments of $1,400 a month, including taxes and insurance.

“I was barely making it,” said Steve Thompson, who is 50 and disabled, and his wife Loretta works as a hotel housekeeper.

“I was going through cancer. I died one time and they brought me back. My heart stopped and they put me on a pacemaker.”

Besides bad health, Thompson said he was sick with worry that he was going to lose the house that had been in his wife’s family for generations. But the Florida lawyer never returned his calls, even though Thompson had paid him $2,500.

When Thompson called The Florida Bar, he learned the lawyer was being disciplined, and he learned how to file a claim through the Clients’ Security Fund.

One night, at 11:30 p.m., the lawyer called Thompson and said, “I don’t need any more trouble with The Florida Bar. Is there any way to resolve it?”

“I said, ‘Yes, send me my money back.’”

The suspended lawyer never sent his money back, but The Florida Bar Clients’ Security Fund did send him a check for $2,500.

“The first thing I said when I saw the check from The Florida Bar was, ‘Thank you, Jesus! Thank you, God!’ That is exactly what I said. Then I called Ms. Osborne and I thanked her.”

The Thompsons sent a heartfelt thank-you card to P.J. Osborne, coordinator of the Clients’ Security Fund: “Just wanted to thank you for all your help and bless you for helping people like us. I know it’s your job, but God gave you a job to help others like myself. So keep the good work up.”

Osborne keeps the Thompsons’ card on her desk, a daily reminder of why she loves her job: “Just being able to help these victims of unethical attorneys and hopefully restore their faith in the profession on behalf of members of the Bar.

“I would love to sit and write checks all day. That would be the ultimate job satisfaction,” Osborne said. “But since we are limited to that $2.3 million allocation each year, we have to say ‘no,’ and we have to draw lines.”

Board of Governors member Grier Wells, of GrayRobinson in Jacksonville, sees where those lines must be drawn. He is vice chair of the Disciplinary Review Committee, and, in that capacity, chairs a review committee of all Clients’ Security Fund claims.

Before being considered for the fund, the claimant must exhaust all other remedies to collect what’s owed, such as filing a criminal complaint.

“The flip side,” to the happy clients who receive checks from the fund, Wells said, “is that the people who file Clients’ Security Fund claims do so with a bad attitude about lawyers because they got ripped off . . . . Those who have had their claims denied are doubly disappointed.”

Wells gives the example of a family who used an attorney for years, and trusted him to help with the sale of their family business. He persuaded them to take the proceeds of that sale and invest about $700,000 with him.

“Their lifelong business was stolen by this attorney,” Wells said.

But, he explained, because the theft was a bad investment, it is outside the parameters of what can be approved by the Clients’ Security Fund.

“I’m not suggesting the rules should be different,” Wells said, but he wanted to underscore there are limitations to trying to compensate clients cheated by their lawyers.

“One of the greatest debates we have is what qualifies for ‘useful service,’” he added, saying some useful advice may be given at the initial meeting with a lawyer.

“Sometimes, I get discouraged and think that for $2 million a year for 500 or 600 or 700 claims, is it worth all the effort that we go through, when you consider that the vast majority of claims are small? I then think of the image of someone who has really trusted their lawyer with their funds and their hopes, and the lawyer has abused that trust. Then, what we do in the Clients’ Security Fund, even in some small measure, is to salve that trust. . . .

“My personal view is certainly the Clients’ Security Fund is there to help members of the public who have been mistreated by their lawyers, but it’s not a panacea,” Wells said.

Considering that the number of lawyers in Florida totals more than 98,000, claims under the Clients’ Security Fund program are made against less than 0.1 percent of Florida lawyers.

“The 99.9 percent of lawyers who do not misappropriate client funds should be aware that the Clients’ Security Fund, even if in some small way, does help protect their professional reputations against that small percentage of those who are engaged in misappropriations,” Wells said.

“As a result, the Clients’ Security Fund, I suppose, is deserving of the admiration of Bar members.”

[Revised: 04-19-2017]