Tuesday, March 4, 2014

New Limitations On Client Security Payments In Pennsylvania

Last week, we noted an opinion of the Maryland Court of Special Appeals denying client security fund repayment to a company that makes loans to attorney with payment due from any settlement proceeds.

This announcement from the web page of the Pennsylvania Bar Disciplinary Board

The Supreme Court has adopted amendments to the rules governing the Pennsylvania Lawyers Fund for Client Security, setting some limits on claims against the Fund.  In a rule issued January 24, 2014, published at 44 Pa.B. 768 (2/8/14), the Court amended Rule 514 of the Pennsylvania Rules of Disciplinary Enforcement to make two significant changes.

First, the list of entities who may not make a claim set forth in Rule 514(a)(4) was amended to exclude claims by a business organization having twenty or more employees.  In an unusual step, Chief Justice Castille dissented from the per curiam order, writing,

In my view, the purpose of the Fund does not include reimbursing large entities which are sufficiently positioned to insure against losses. I would prefer an amendment that applied to “a business organization having five or more employees.”

Second, a provision was added to Rule 514(b) stating that the maximum amount of claims disbursed on account of any one attorney shall be one million dollars.  The Board may, however, request permission of the Supreme Court to exceed this amount when necessary to adequately compensate all victims of the covered attorney, and exceeding the maximum will not unduly burden the Fund.  The limit that may be paid to any individual claimant remains at $100,000.

(Mike Frisch)


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