Over the last five years, Wisconsin lawyers have paid an average of about $16 a year into the Wisconsin Lawyer’s Fund for Client Protection.
The annual assessment has ranged from nothing to a maximum of $25, based on claim payments made in the prior fiscal year. But after being slammed with six-figure claims in Fiscal Year 2010, the fund ended the year in the red and with more than $800,000 in outstanding claims.
To combat this, the State Bar of Wisconsin’s Board of Governors has proposed a $20 annual fee to cover reimbursement costs to people who are victims of lawyer misconduct.
But some governors have concerns that the Wisconsin Supreme Court may decide that isn’t enough. The WLFCP paid more than $500,000 in claims in FY2010, its highest amount in a decade, and board member Nicholas C. Zales and others said that if the proposal is presented to the Supreme Court now, the justices might opt for a $50 assessment.
“They’ll look at this year and last year and say, ‘wow we need a lot more money to pay all these claims in full,'” Zales said. “In the end, members see this on their dues statement and could be very unhappy with the outcome.”
WLFCP committee chair Deborah M. Smith could not guarantee that the court wouldn’t consider a higher assessment and conceded that $20 would “not rack up much in reserves” in the short term. But she didn’t expect the justices to go “hog wild” given the poor economy.
Even if the court opted to up the assessment, Gov. Jeffrey R. Zirgibel questioned whether the bar would put up much of a fight, considering that the board supported the annual $50 Wisconsin Trust Account Foundation (WisTAF) fee to support legal representation for the poor.
“I didn’t agree with that and thought it set a bad precedent,” he said.
During the last five years, the average annual WLFCP assessment was $16, although FY2010 was $25 and Smith expected FY2011 would be the same, given there are more than $800,000 in outstanding claims.
“We didn’t budget to go into the red,” she said in an interview. “But we don’t always know what all the expenses will be at end of the year.”
The fund faced several large claims last year, including a $150,000 payout to Bethany Evangelical Lutheran Church, one of four claims against an attorney that resulted in more than $380,000 in client reimbursements.
Smith also said that that fund recently received its first multi-million dollar claim, which emphasized the need to increase the pool of money available.
But Zirgibel said increasing the size of the fund could also make it an attractive target for a state raid, much like the Wisconsin Injured Patients and Families Compensation Fund, from which $200 million was taken by the Legislature to fill budget holes. Earlier this year, the state was ordered to repay the money.
“If I knew the state couldn’t take this money, great let’s have a surplus,” Zirgibel said. “But if it’s like the patient compensation fund, is it going to be taken?”
Gov. William T. Curran also questioned whether the $20 assessment would ensure that the WLFCP is immune from a lapse in funds.
While the client protection fund is financed by lawyers and not tax money, Smith said there is no guarantee it is protected from an attempted raid by the state.
“I never underestimate the power and cleverness of the DOA (Department of Administration) to seek and obtain funds,” she said. “Any money in our account is no more or less vulnerable than other bar funds.”
Jack Zemlicka can be reached at email@example.com.