Can the Bar do more to stop rogue lawyers from raiding trust accounts?

A committee is looking at whether the Bar can or should do more to prevent lawyers from stealing from their clients.

Board of Governors member Greg Coleman reported to the board last month that the Clients' Security Fund Review Committee II, which he chairs, is looking at ways to prevent losses related to lawyers dipping into their trust funds.

The committee is also working on a definition of "useful services" for CSF claims and whether the fund should consider compensating third parties who didn't have an attorney-client relationship but nonetheless lost money to a defalcating attorney.

Bar President Jesse Diner invited board members to make suggestions about the loss prevention issue to the committee.

"Any idea you have is important," he said. "It may be at the end of the day we're doing all we can do. But we need to figure that out."

Coleman said the committee has been reviewing procedures other states use to prevent trust account losses.

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"What we're looking to determine is whether there are things the Bar can do to more proactively prevent these kinds of things, and if we can't prevent it, maybe detect it a little earlier," he said.

One possibility is having random audits of attorney trust accounts, "where the Bar has the ability through our rules to randomly go into a lawyer's office and conduct an audit of trust accounts," Coleman said. This step is done in some other states.

Potential problems, he said, include the difference between randomly auditing a sole practitioner and randomly auditing a large firm. But a positive outcome could make lawyers think twice before tampering with their trust accounts.

"We've seen cases where a very well-respected lawyer got into financial trouble and the only way he saw out was to take 10 or 15 grand from his trust account," Coleman said.

"This went on for a year, before he yanked the whole thing and he lost his license."

Another option would require lawyers to have surety bonds on their trust accounts, which would insure them against thefts, he said.

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