Michael Tankersley v. James Almand

Filing

OPINION ATTACHMENTS. [15-1081]

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REGULATIONS OF THE CLIENT PROTECTION FUND
OF THE BAR OF MARYLAND CURRENTLY EFFECTIVE
To carry out the purposes of the Order of the Court of Appeals of Maryland, passed on
March 28, 1966, establishing the Client Protection Fund, the Trustees have adopted the
following regulations pursuant to Md. Rule 16-811 d.(iii).
The Trustees will be guided, but not necessarily bound, by such regulations.
a. Eligibility.
1.

Attorney-client or fiduciary relationship.
No claim will be recognized by the Trustees unless an attorney-client or fiduciary

/16 Maryland when
relationship existed with a member of the Bar of the Court of 25
Appeals of
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the loss was incurred as a result of a defalcation by the said Maryland attorney. The
do
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iew means, for example, a lawyer acting in a
Trustees consider that a "fiduciary relationship"
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108 customary in the practice of law in Maryland, such as a
fiduciary capacity traditional and
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No
court appointed lawyer, a personal representative of a probate estate, a trustee of an
express trust, a guardian, a custodian acting per statute, or an attorney-in-fact by
written appointment.
2.

Businesses with ten or more employees.
Notwithstanding the existence of a fiduciary or client-attorney relationship with

a Maryland attorney and the occurence of defalcation(s) by said Maryland attorney, no
claim by a corporation, limited liability company, proprietorship, partnership, business
trust or similar entity will be recognized by the Trustees unless the claimant proves to

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the satisfaction of the Trustees that at the time of the loss and the filing of the claim it
(i) had fewer than ten (10) employees, (ii) took reasonable steps to discover, limit and
recover its loss, and (iii) had no source of recovery other than this Fund. The Trustees
consider that entities having ten (10) or more employees generally have the ability and
capacity to protect themselves, with insurance, fidelity bonds, etc. and do not need
protection from this Fund.
3.

Profit making businesses.
The Trustees further consider that the fundamental purposes of the Fund do not

include the guaranty of profit-making business such as small loan companies, title

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not act as, a collection agency for all claims against Maryland lawyers.
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4.
Persons in close relationship to e defaulting attorney.
vi the
,
The spouse, law partner of, or conspirator with any defaulting attorney shall not
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have any righto. file claims
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insurance companies, banks and similar enterprises, and that the Fund is not, and will

5.

Investment losses.
With regard to claims for investment losses or investment-type claims, the

Trustees will consider for payment only those claims arising out of an attorney-client or
attorney-fiduciary relationship. Investment advice given by the claimant's attorney is
not, in and of itself, a ground for seeking reimbursement from the Fund, even though
such advice may result in the loss of claimant's money. In considering such claims, the
Trustees will consider, in addition to all other factors, (i) the circumstances under which
the claim arose; and (ii) whether the attorney came into possession of the claimant's

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money by virtue of an attorney-client relationship with the claimant and thereafter
retained the money for investment during the course of which he misappropriated
claimant's money for his own use. Additionally, in evaluating losses resulting from loan
and investment transactions with attorneys, the Trustees will consider any disparity in
bargaining power between the attorney and the claimant; their respective educational
backgrounds and business experiences; whether the attorney became privy to the
client's financial affairs while representing the claimant; whether the attorney initiated
the transaction; and whether the attorney provided the claimant with necessary
financial disclosure and independent counsel. In no event will lost interest or other

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principal or interest received by the claimant, will ben
o deducted from the claimant's
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initial investment in order to determine, for Fund
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loss.
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15.
b. Filing Claims.
No
profit on investments be reimbursed. All payments on the investment, representing

1.

Time.
Claims for losses must be presented to the Trustees within six (6) months after

the discovery by the claimant of the defalcation, or at a later date in the discretion of
the Trustees.
2.

Form.
The Trustees shall require that claims be submitted in writing upon the official

claim form of the Fund. Claim forms may be obtained from any one of the Trustees or
from the office of the Fund.

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3.

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With whom filed.
All claims shall be filed with the Administrator of the Fund whose name and

address shall appear on the claim form.
c. Prerequisites to Consideration
1.

Attorney Grievance Commission.
Prior to consideration, the Trustees shall refer or require the claimant to refer

the matter to the Attorney Grievance Commission of Maryland. As a condition
precedent to the payment of any claim, it shall, whenever practicable, be required
that final action be taken on the grievance by said Commission.

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The Trustees have established, as a general policy, that no claim shall be
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recognized by the Trustees until the claimant
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reasonably available to the08
claimant for payment of part or all of his claim from sources
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15.
other than the Client Protection Fund. Claimants are cautioned, however, that since
No
2.

Civil Remedies

settlements of claims against third parties usually foreclose the Fund's subrogation
rights, the Fund will generally not pay any amounts over and above the amount for
which the claimant has settled.
Notwithstanding the foregoing, the Trustees reserve the right in their sole
and absolute discretion to recognize exceptions to their usual requirement of
exhaustion of other remedies in cases presenting unusual circumstances or extreme
hardship. In exercising such discretion, the Trustees shall consider all relevant facts
including the following: (i) the amount of the claim; (ii) the age, education and

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experience or sophistication of the claimant; (iii) the extent to which the claimant has
or has not acted to help himself; (iv) the probable expense of self-help, relative to the
amount claimed; (v) the likelihood of a monetary recovery from self-efforts; (vi) the
possible application of limitations or laches; and (vii) the self-help experience of other
claimants in like situations.
d. Procedure.
1.

Procedure.
Upon receipt of a claim, the staff will give it a number and docket it. The staff

will then advise the claimant of any additional documents or information required, and

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(hereinafter in this regulation d, the "Attorney") at the Attorney's last known address
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as such address appears from the records of the
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Attorney's comments on the 8
0claim and a warning to the Attorney that any amount
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15must be repaid to the Fund as a condition precedent to
.
awarded to a claimant
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will mail, by regular mail, a copy of the claim to the alleged defalcating attorney

readmission to good standing with the Court of Appeals and a warning that a failure to
respond to the claim constitutes a waiver of any further notice of any development in
the matter. A Trustee will be assigned to review the claim with the assistance of the
administrator and to investigate the statements in the claim and report on it to the
Trustees. When review of the claim is complete, a report will be prepared, complete
with all documentation available and forwarded to each Trustee.
2.

Decision.
The Trustees will decide claims based on the evidence in the claim file, including

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the statements contained in the claim form, any other written statements by the
claimant or other witness (including the Attorney), and any other information obtained.
The Trustees may in their discretion request appearance by any person or the
production of additional information. The Trustees shall promptly notify each claimant
of the decision on the claim and of the right to request reconsideration if such claimant
is dissatisfied with the decision. The decision and notice of right to reconsider must be
mailed, by regular mail, to the claimant and the Attorney unless the Attorney has
waived notice of any development as provided above in (d)(1).
3.

Reconsideration.

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files a request for reconsideration with the Trustees.n request for reconsideration
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must be in writing and postmarked within 30 days
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request for reconsideration shall contain such additional information the claimant
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15consider. A request for hearing may be included with the
.
wants the Trustees to
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The decision of the Trustees on the claim becomes final unless the claimant

request for reconsideration.
Any evidence submitted in connection with the request for reconsideration,
including any sworn statements made at a hearing, shall be considered in addition to
evidence used to make the original decision.
A hearing on reconsideration will take place at a location that the Trustees, in
their discretion, determine. Generally, the claimant may personally appear before the
Trustees at such a hearing, but the Trustees, in their discretion, may determine
otherwise if a claimant is unable to appear or chooses not to appear. By way of

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example, and not limitation, when a claimant cannot (or chooses not to) appear
personally, the Trustees may, in their discretion defer such a hearing and disposition
of the claim until the claimant is able to personally appear, or allow an agent,
designated in writing, to appear for the claimant or resolve the issue in any other
manner. In such a case, the notice of hearing shall require the claimant to elect in
writing, within 30 days of the notice of the hearing, the form of hearing from amongst
the choices offered by the Trustees. If the claimant elects to defer the hearing until the
claimant is able to personally appear, the claimant shall be advised to supply the Fund
with any subsequent change of address and to advise the Fund of the approximate date

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The hearing on reconsideration shall be recorded and the statements of the
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claimant (or anyone appearing on the ie
v claimant's
1,
under oath or affirmation. 08
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15- request for reconsideration results in a final decision and must
.
Disposition of the
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when the claimant will be able to personally appear.

be in writing and contain findings of fact.
4.

Judicial Review.
The final decision must be sent to the claimant by certified mail. If the claim is

denied, in whole or part, a notice of a right to judicial review of the final decision of the
Trustees pursuant to Md.R. 16-811(i) and Md.R. 7-200 et seq. shall be mailed with the
final decision.
A claimant aggrieved by the final decision may petition for judicial review. A
petition for judicial review must be filed within 30 days after the date the final decision

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was sent to the claimant. The petition shall be filed in the circuit court for the county
in which the claimant resides, or, if not a resident of Maryland, the Circuit Court for
Baltimore County.
e. Expedited Procedure.
The Trustees hereby establish the following expedited procedures for
preliminary decision of certain classes of claim, and direct the Chair and Secretary to
implement such expedited in the interval between meetings of the Trustees:
(1) The Chair and Secretary shall act hereunder only by their joint concurrence
and agreement.

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approval of the following two classes of claims: (i) claims for refunds of collected but
on
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unearned retainers and (ii) claims for amounts
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($2,500). Every such recommendation, together with a brief synopsis of the pertinent
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facts, shall be o.
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(2) The Chair and Secretary hereby are authorized to recommend preliminary

ratification, either by mail between meetings or at the next regular Trustees' meeting.
Upon concurrence or ratification by at least five (5) Trustees, including the Chair and
Secretary, such claims may be paid.
(3) The Chair and Secretary hereby are authorized to recommend preliminary
denial of those claims which are, in their joint opinion, either (i) clearly ineligible for
payment from the Fund or (ii) fee disputes as opposed to defalcations. They shall in
every such case promptly notify each claimant of such preliminary denial of his claim,

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and simultaneously shall notify such claimant that he has the right within thirty (30)
days to submit such additional written documents or argument as the claimant desires
to submit. Every such preliminary denial, together with a brief synopsis of the pertinent
facts and copies or summaries of any timely additional information/argument submitted
by the claimant, shall be submitted by them to all the Trustees for their concurrence and
approval, either by mail between meetings or at the next regular Trustees' meeting.
Upon concurrence and approval by at least five (5) Trustees, including the Chair and
Secretary, the denial of such claims shall be final, subject however, to reconsideration
pursuant to Regulation d.3.
f.

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The maximum cumulative amounts which shall be paid in respect to any one
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claim or multiple claims by a single claimant arising
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either a client or fiduciary relationship shall not, at the time of approval, exceed 5% of
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.
the net fund balance, as
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Limits on Payments.

Trustees in which the claim was approved.
If at any time, in the opinion of the Trustees, there are not sufficient funds on
hand to pay all claims (filed with the Fund or reasonably expected to be so filed) in full,
the Trustees may, in their discretion, pay the approved claims pro rata or defer payment
until such time as adequate funds are on hand.
g.

Subrogation.
When a claim is allowed by the Trustees, the Fund shall be subrogated in
writing to the amount paid on such claim. The Fund shall give written notice of

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subrogation to the alleged defalcating attorney (hereinafter in this regulation g,
"Attorney") and the notice shall direct the Attorney to make all future payments to the
Fund instead of the claimant. The Fund shall warn the Attorney that if the Attorney has
been disbarred or suspended, re-payment of all money paid by the Fund to any
claimant of the Attorney is a condition precedent to readmission. If the Attorney is
associated with a law firm, the Fund shall send a copy of the notice to the law firm
and advise the firm that it and any of the Attorney's partners may have liability for
the amount paid to the claimant.
h. Attorneys' Fees.

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made by the Trustees, and any attorney representing a claimant shall be required to
on
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give the Trustees a written statement ie he
v that
,
services rendered in connection with any recovery from the Fund.
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15.
i. Assessments.
No

No attorney's fees shall be paid by a claimant in connection with any allowance

1. A lawyer who holds himself out as a Maryland practicing lawyer is subject to
mandatory payment to the Fund. "Holding out" includes but is not limited to: (i) listing
on a law firm's letterhead as being "of counsel" or "partner emeritus" or the like; (ii)
listing in the telephone directory; (iii) listing in Martindale-Hubbell or any similar
regional or national directory of lawyers, or other media including print or electronic
publications.
2. A lawyer's connection with Maryland requiring such mandatory payment applies
when the lawyer (i) has an out of state practice but relies on Maryland bar admission;

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or (ii) relies on Maryland bar admission as a condition of employment.
3. A lawyer who is a full time employee of a federal or state agency or government is
subject to mandatory contribution to the Fund even though prohibited from private
practice if; (i) admission is a state bar is a condition of employment and (ii) Maryland
is the only bar admission on which the lawyer relies.
4. Lawyers admitted before December 31 of any fiscal year shall be charged the full
fiscal year assessments, but shall not be charged any late fee if payment is received by
March 31; lawyers admitted after January 1 of any fiscal year shall not be charged any
part of the assessment for such fiscal year, but shall be billed assessments beginning

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5. The Fund shall maintain a status of "Inactive/Retired". An affidavit of inactive/
on
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retired status must be completed, notarized and
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restrictions as indicated on08 affidavit form. Those lawyers approved for this status
the
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shall not be charged assessments or late fees for any fiscal year once they are approved.
No
July 1 of the succeeding fiscal year.

6. Any lawyer wishing to resume the active practice of law, may do so upon written
notice to the Fund of their intent, along with payment of the current year's assessment.
7. Any claim for refund of any amount paid to the Fund will not be honored
retroactively, and the honoring of prospective claims for refund shall be in the complete
discretion of the Chair and/or Administrator.
8. A lawyer who seeks reinstatement to good standing, after suspension, disbarment, or
decertification shall pay to the Fund, as a precondition to reinstatement to good
standing, all sums paid out by the Fund as a result of such lawyer's defalcation

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and all sums due the Fund for its current fiscal year and in addition such amount (not
exceeding $50) as the Trustees by resolution fix from time to time as the estimated cost
to the Fund of handling, processing and recording the requested reinstatement.
9. The Trustees may fix in their discretion, from time to time, subject to the approval of
the Court of Appeals, reasonable charges for late payment of mandatory assessments to
the Fund; all disputes concerning late charges or penalties shall be resolved by the Chair
and/or Administrator in their discretion.
10. Payment of mandatory assessments must be received by the Fund on or before the
due date. No late fee will be assessed until after August 31. To avoid an additional late

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billed for the full fiscal year assessments are allowedn due date of March 31 of the
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following year to avoid a late fee.
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The Trustees do not accept any excuses for non-payment of the yearly
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.
mandatory assessments
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fee, any balance due must be received by December 31. December admittees who are

11. The Trustees may fix in their discretion, from time to time, a reasonable penalty
for bad checks tendered to the Fund for payment of any assessments and/or late fees.
This penalty shall be in addition to every other charge or penalty applicable on account
of such bad check.
12. The following lawyers are exempt from payment of the mandatory assessment, but
may voluntarily contribute to the Fund: (i) those performing judicial or quasi-judicial
functions on a full time basis and who are prohibited from private practice such as:

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Federal and Maryland Judges, Maryland Masters in Chancery, Maryland Juvenile
Masters, Maryland Orphan's Court Judges, Administrative Agency Hearing Officers,
Administrative Law Judges with the MD Office of Administrative Hearings and U.S.
Magistrates; (ii) Judicial Law Clerks who provide the Fund with a letter, on their
respective Judge's letterhead, indicating the term of the clerkship.
j. Administration.
1. Fiscal year - The Trustees will operate on a fiscal year beginning July 1 and ending
June 30.
2. Records - The Trustees shall keep accurate records of their actions, which records

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persons designated in writing by the said Court to inspect such records. Nothing set
on
d
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forth in this Regulation shall preclude ie inspection
vthe
,
persons designated as auditors of the Fund. No person other than those heretofore
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15- right to inspect the records of the Trustees, but the Trustees
referred to shall .
No have any
shall be open to inspection at any and all times by any Trustee or by any person or

in their discretion may disclose information from their records to any person employed
by the Trustees for the purpose of seeking restitution of any claim paid by the Fund.
3. Disbursements - No disbursements on account of a claim shall be made by the
Trustees of the Fund unless the same is approved by at least five (5) Trustees.
4. Meetings - Meetings of the Trustees shall be subject to the call of the Chair or the
call of a majority of the Trustees. The Trustees shall meet at least annually for the
consideration of claims.
5. Unavailability of Chair or Secretary - In case either the Chair or Secretary shall be

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unavailable for a protracted period of time, a majority of the Trustees, by informal
action and agreement, may designate another Trustee to act for the unavailable person
during his or her absence.
k. Interpretation.
Use of words such as "he", "his", "himself", "herself" and similar words in these
Regulations is for brevity and clarity only and shall not disqualify any person; all
persons whether male, female or entities (such as corporations or partnerships) shall
be considered equally unless they are entities having ten (10) or more employees.
l. Fees for search, preparation and copying of documents.

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by the Fund pursuant to a subpoena or public information act request. A reasonable fee
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shall be charged for the search and preparation
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cost to the Fund of the Administrator's time spent on such search and preparation as
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15.
measured by the Administrator's annual salary and by the cost to the Fund of
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A twenty-five cent per page charge shall be imposed for documents produced

reasonable counsel fees incurred in relation to such search and preparation.
No search and preparation fee shall be charged for the first two hours of the
Administrator's time nor for the first two hours of counsel's time. The Fund shall
prepare an invoice for the search, preparation, and/or copying fees. The invoice must
be paid by cash, money order, cashier's check or travelers check prior to the release of
the documents by the Administrator.
If the applicant, in a public information act request, asks for a waiver of the fees
described in this Regulation, the Administrator may waive such fees after consideration

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of the ability of such applicant to pay such fees along with any other relevant factors.
m. Amendments.
The foregoing regulations may be amended at any time and from time to time by
the Trustees.

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