Client Security Fund At Risk In Connecticut?

When a lawyer takes funds held in trust for a client it is called theft. The lawyer faces disbarment or even criminal prosecution. What happens when the state takes money held in trust? We may be about to find out in Connecticut.

Connecticut is, like every other state in the union, struggling against a rising tide of debt. Lawmakers and the governor are looking everywhere they can for an extra dollar or two to make ends meet. This past weekend, a rumor circulated among members of the state's judiciary that the state had raided the Client Security Fund.

The fund is a creation of the judiciary. Lawyers are required to contribute to this trust fund. Clients who are defrauded by their lawyers can make application for reimbursement to the fund. Proceeds are also used to finance a program for troubled lawyers. The fund is governed by an independent board.

According to one source, the state either announced plans to seize the $2 million held in the fund or actually seized the money sometime late Thursday. I put in a call to a board member late yesterday to see what was going on. He had heard nothing. "It is inconceivable that the state would or could do such a thing," I was told.

Desperate people do desperate things. This much I have learned in the practice of law. Would a state desperate for case resort to what amounts to theft? Would it raid a trust fund held to benefit those victimized by failing lawyers?

Lawmakers are said to be contemplating a new tax on legal services, a bad idea which, in my view, will simply inspire lawyers to raise prices charged to their clients. This increase in fees will, at the margin, force a few more folks to seek the services of public defenders or Legal Aid. Some potential clients will simply elect to proceed pro so. Indirectly, this will yield even greater costs to the state in the form of publicly financed counsel or increased inefficiencies in a system that is already limping. Can it be that a raid on the Client Security Fund is merely a cowardly form of taxing the legal profession?

I find it hard to believe the state actually seized a fund held in trust for others. Rather, I suspect some lawmaker, or the governor herself, has proposed seizure of these monies. At least that would comport with lawful process. Otherwise, I suspect litigation. Stealing money held in trust for others is never right, even if the state is the thief.


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