IN THE MATTER OF THE ADOPTION OF THE AMENDMENTS TO APR 15-LAWYERS' FUND FOR CLIENT PROTECTION AND APR 15-LAWYERS' FUND FOR CLIENT PROTECTION RULES 1 AND 5

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ORDER NO. 25700-A-918

     The Washington State Bar Association having recommended the adoption of the proposed amendments to APR 15-Lawyers' Fund for Client Protection and APR 15-Lawyers' Fund For Client Protection Rules 1 and 5, and the Court having approved the proposed amendments for publication;

     Now, therefore, it is hereby

     ORDERED:

     (a) That pursuant to the provisions of GR 9(g), the proposed amendment as attached hereto are to be published for comment in the Washington Reports, Washington Register, and on the Washington State Bar Association and Office of the Administrator for the Courts' websites expeditiously.

     (b) The purpose statement as required by GR 9(e), is published solely for the information of the Bench, Bar and other interested parties.

     (c) Comments are to be submitted to the Clerk of the Supreme Court by either U.S. Mail or Internet E-Mail by no later than 60 days from the published date. Comments may be sent to the following addresses: P.O. Box 40929, Olympia, Washington 98504-0929, or Camilla.Faulk@courts.wa.gov. Comments submitted by e-mail message must be limited to 1500 words.

     DATED at Olympia, Washington this 2nd day of April, 2009.

	For the Court
	Gerry L. Alexander
	CHIEF JUSTICE

     (a) Purpose. [No change.]

     (b) Establishment. There is established the Lawyers' Fund for Client Protection (Fund). The Fund may be used for the purpose of relieving or mitigating a pecuniary loss sustained by any client by reason of the dishonesty of, or failure to account for money or property entrusted to, any member of the WSBA in connection with as a result of or directly related to the member's practice of law (as defined in GR 24) or while acting as a fiduciary in a matter directly related to the member's practice of law. The Fund may also be used to relieve or mitigate like loss sustained by persons by reason of similar acts of an individual who was at one time a member of the WSBA but who was, at the time of the act complained of, under court ordered suspension. The Fund shall not be used for the purpose of relieving any pecuniary loss resulting from an attorney's negligent performance of services or for acts performed after a member is disbarred. Payments from the Fund shall be considered gifts to the recipients and shall not be considered entitlements.

     (c) Funding. [No change.]

     (d) Enforcement. [No change.]

     (e) Restitution. [No change.]

     (f) Administration. [No change.]

     (g) Subpoenas. [No change.]

     (h) Reports. [No change.]

     (i) Communications to the Association. [No change.]

     Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.

     Purpose: To more precisely define the purposes of the Fund and the eligibility requirements for payment from the Fund.

     B. Funds accruing and appropriated to the Fund may be used for the purpose of relieving or mitigating a pecuniary loss sustained by any person by reason of the dishonesty of, or failure to account for money or property entrusted to, any member of the WSBA in connection with as a result of or directly related to the member's practice of law (as defined in GR 24), or while acting as a fiduciary in a matter directly related to the member's practice of law. Such funds may also, through the Fund, be used to relieve or mitigate like losses sustained by persons by reason of similar acts of an individual who was at one time a member of the WSBA but who was at the time of the act complained of under a court ordered suspension.

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     A. Eligibility. To be eligible for payment from the Fund, the loss must be caused by the dishonest conduct of a lawyer or the failure to account for money or property entrusted to a lawyer in connection with as a result of or directly related to the lawyer's practice of law or while acting as a fiduciary in a matter related to the lawyer's practice of law (as defined in GR 24). The loss must also have arisen out of and by reason of a client-lawyer relationship or a fiduciary relationship in a matter directly related to the lawyer's practice of law.

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     D. Excluded Losses. Except as provided by Section E of this Rule, the following losses shall not be reimbursable:

     (1) Losses incurred by related persons, law partners and associate attorneys of the lawyer causing the loss. For purposes of these Rules, "related persons" includes a spouse, domestic partner, child, grandchild, parent, grandparent, sibling, or other Relative or individual with whom the lawyer maintains a close, familial relationship;

     (2) Losses covered by any bond, surety agreement, or insurance contract to the extent covered thereby, including any loss to which any bonding agent, surety, or insurer is subrogated, to the extent of that subrogated interest;

     (3) Losses incurred by any financial institution which are recoverable under a "banker's blanket bond" or similar commonly available insurance or surety contract;

     (4) Losses incurred by any business entity controlled by the lawyer or any person or entity described in Rule 5 D (1), (2) or (3);

     (5) Losses incurred by an assignee, lienholder, or creditor of the applicant or lawyer, unless application has been made by the client or beneficiary or the client or beneficiary has authorized such reimbursement;

     (6) Losses incurred by any governmental entity or agency;

     (7) Losses arising from business or personal investments not arising in the course of or arising out of the client-lawyer relationship;

     (7)(8) Consequential damages, such as lost interest, or attorney's fees or other costs incurred in seeking recovery of a loss.

     Reviser's note: The typographical errors in the above material occurred in the copy filed by the State Supreme Court and appear in the Register pursuant to the requirements of RCW 34.08.040.

© Washington State Code Reviser's Office