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Special Commissioner Frequently Asked Questions
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The following questions serve as guidance for a Special Commissioner during the course of closing another attorney’s office without preplanning in place.

 

  1. To whom do I owe a duty/obligation? Does it lie with the clients/former clients of the Affected Attorney, with the Affected Attorney or his/her estate, with the Kentucky Bar Association, or with another party?

    Your obligation lies to the Court from which you were appointed to close out the practice. Read closely the order that appointed you and perform the duties outlined in the order. If you are unclear as to what your duty or obligation in a given situation, ask the Court for clarification. Remember, you are not in privity of contract with the Affected Attorney and have no duty not to disclose potential malpractice, stolen or misappropriated unused fees or settlements. Please also see SCR 3.130-8.3.

  2. Must I notify the former clients of the Affected Attorney if I discover a potential malpractice claim against the Affected Attorney?

    In many cases, it is not your responsibility to unilaterally make a judgment call as to whether the Affected Attorney committed malpractice. You should contact the Office of Bar Counsel (See SCR 3.130-8.3) and the Affected Attorney’s malpractice carrier if one existed for the applicable period, and disclose the information which leads you to believe that malpractice occurred.

  3. If the Affected Attorney’s clients ask questions about the nature of the attorney’s death, abandonment or disability, how much am I am liberty to disclose?

    You are not at liberty to disclose any information to the attorney’s former client regarding circumstances of the attorney’s absence from the practice of law beyond that information which is “public record.” This may include the information that has been published in the local newspaper, i.e., automobile accidents, funeral arrangements, and obituary. For disabled or injured attorneys, you may not disclose the facility where the disabled attorney is receiving medical treatment, unless the disabled attorney’s next of kin/family consents. You may want to inquire of the family where cards, letters flowers and condolences, and get well wishes should be sent. For the abandoning or suspended attorney, you may not disclose the reason for the attorney’s unavailability beyond that which is public record or public reprimand. To do otherwise, could expose you to potential defamation charges or litigation for violating HIPAA or otherwise protected information. In addition, you risk coming across as “gossiping” about your colleague, which will place you in a bad light, and subject you to risk of potential litigation. Be careful not to “hint” at the nature of the disability, as this is dangerous in itself when dealing with the client with a “vivid imagination.”

  4. What protection do I have under the Affected Attorney’s malpractice insurance coverage if I am appointed as Special Commissioner to close and wind up the practice of the Affected Attorney?

    A thorough review of the malpractice policy must be undertaken to check the definition of “Insured.” Most policies define “Insured” as both the firm and the individual lawyers employed by or affiliated with the firm. It typically is broadened to include past employees and “of counsel” attorneys. Additionally, most professional liability policies specifically provide coverage for the “estate, heirs, executors, trustees in bankruptcy and legal representatives” of the Insured as additional parties covered under the policy. However, the best insurance is the Special Commissioner’s own malpractice policy covering such a situation.

  5. What exposure do I have as a Special Commissioner under my own malpractice coverage? What steps should I take if I undertake the role to assist in the closure of an office by death, abandonment or disability?

    A Special Commissioner should immediately review their own policy and contact their carrier to establish the parameters of any exposure from their role as Special Commissioner. Likewise, the Special Commissioner should insure there is no exclusion under their individual policy or additional requirements necessary to invoke coverage under the policy. Additionally, the Special Commissioner should inquire whether there is an appropriate rider available for protection if necessary.

  6. May I undertake the representation of the deceased/disabled/abandoning attorney’s client or clients through my own law firm?

    Generally, yes, but this depends on the authority given to you in the Order Appointing you as Special Commissioner and the nature of your appointment. If permitted to do so by the Court, you may offer to represent the client, assuming doing so does not violate a rule of professional conduct, they execute the appropriate releases and consents and request that you undertake their representation. Be advised, this will expose you to potential liability where none existed previously. Also, you would be advised to obtain a waiver of conflict of dual representation from the client of the law firm for which you have now been appointed as special commissioner, as potential conflicts may arise you cannot anticipate. (See SCR 3.130-1.7) You would be advised to inform the Court that appointed you as Special Commissioner which of the Affected Attorney’s former clients you intend to represent through your own firm. You should not undertake the client’s representation in a potential malpractice case against the deceased attorney’s estate or against the Affected Attorney, as you have been privy to that attorney’s case files and may be the party who brought the attorney’s potential malpractice to light.

  7. What must I do during the process of reviewing the Affected Attorney’s files when I discover there is a conflict between myself or my firm and the Affected Attorney’s client?

    One of the first steps you should take upon accepting the appointment as Special Commissioner is to create a client list of the Affected Attorney’s clients and perform an initial conflicts check before delving in to the substance of the client’s file. Do this in much the same manner that you would perform such a conflicts check in your own firm. Make a list of those files where a conflict or potential conflict exists, do not review those files for content, and do not review the billing to the clients. For those conflicted clients, you may still contact them to inform of the death/disability or absence from the practice of law of their attorney, and offer to arrange for those clients to retrieve their files. When you are able to reach a client and he/she wants to retrieve his/her file, it may be prudent to have a staff member, or someone other than yourself meet the client for the purpose of delivering his/her file to the client. In this way, there can be no question as to whether you have looked at their case files. You will want to inform those conflicted clients that you were unable to review their files for pending or missed deadlines, and for unused fees or billing account balances. For those conflicted clients that do not retrieve their files immediately, make a list, then petition the court that appointed you Special Commissioner for guidance and the discussion of deadlines, fee balances and the disposal and disbursement of all necessary documents regarding each individual file.

  8. What should I do with the files that I have not been able to return to clients? Am I required to preserve or store them for a specified period of time?

    You are responsible for preserving those files for a period of time. (Please see Ethics Opinion KBA E-436.) Make a list of those you are unable to return to the clients/former clients. If you have space at your own storage facility, store the files there. Otherwise, rent storage space in which to store those files, even if you have to do so at your own expense. A good rule of thumb is to plan on retaining the files for at least 5 years. There is one line of thought that delineates the length of time in which you are required to retain a file, depending on the kind of action or nature of the case. Since complex actions involve more than one cause of action or could be classified from a number of perspectives, and because it is more difficult to manage preservation of files if you have a different rule for files of different types, determine the longest period of time you would be required to protect and preserve a file and then keep all files for that period of time. Inform the Kentucky Bar Association where the files will be stored and the name, address, and phone number of the contact person for retrieving those files by completing the KBA’s online form located at www.kybar.org/filestorage.

    For your own protection, prior to disposing of any files, seek an order from the court permitting you to do so. Once you have an order from the court listing the files that you may dispose of, you still must do so in a responsible manner. Do not simply place the files in the trash or on the curb on trash day. Make arrangements to have the files burned or shred by a responsible party.

  9. What procedures should I follow for distributing the funds that remain in the trust account of the Affected Attorney?

    If your review or an authorized signer’s review of the Affected Attorney’s trust account indicates there may be conflicting claims to funds in the account, you should initiate a procedure for distributing the existing funds, such as an interpleader action in the appropriate venue. If there is a clear shortfall in the available funds, it may be wise to contact the Kentucky Bar Association and instill their services.

  10. During the process of auditing the trust account and comparing it with the amount that is should be in the client’s fee accounts, I have discovered the Affected Attorney potentially stole or misappropriated the client’s unused fees. Am I obligated to inform either the client/former client, the Court, or the Kentucky Bar Association?

    If you are also responsible for reviewing the Affected Attorney’s client files, do that first, before determining whether or not there are funds missing. It could be work was performed by the attorney for which time tickets still need to be posted to the client’s billing account. Conversely, the complete file review should also disclose whether the Affected Attorney had received a settlement or judgment that should have been deposited in the trust/escrow account and distributed to the client, but for whatever reason it was not. Once you have completely reviewed the trust/escrow account, client billing accounts and client files, you should make a complete accounting to the court that appointed you of the trust/escrow account(s) identifying discrepancies in client fee accounts on a client-by-client basis.

  11. During the process of conducting an initial file review, I discover that a deadline is about to run. Am I required to take action to file the pleading on behalf of the client before the deadlines runs?

    To the extent of filing a substantive pleading on the merits of the case, the answer is “no,” unless the Affected Attorney’s former client has retained you and your firm for representation in the matter. To do so otherwise would be tantamount to attempting to practice each of the Affected Attorney’s cases as if you were attorney of record and could expose you to liability for which you may not otherwise be exposed. You should make every attempt to return the client’s file before the deadline runs and impress upon the client the deadline and significance of missing the deadline, encouraging the client to immediately retain counsel before the deadline has run. If there is insufficient time to return the file to the client before the expiration of a pending deadline, while you are not under an obligation to file substantive pleadings on behalf of the Affected Attorney’s client, you should enter your limited appearance as trustee for the Affected Attorney’s law practice for the purpose of seeking enlargement of time on behalf of the client if their deadline has not run, or in the alternative if the deadline has already run, leave of the Court to permit the client to file a belated pleading, once substitute counsel is retained. Further, you may want to contact the opposing party or their counsel and request a tolling agreement.

  12. If I become aware of an ethical violation must I inform the Affected Attorney’s clients or other entities?

    Again, this depends largely on the relationships established between all parties by the charging order of the court that appointed you. You obligation as Special Commissioner lies with the court that appoints you to close out the practice. You should carefully read the order and perform only those duties outlined in the order. If you are unclear or need guidance, you should ask the court for clarification. You are not in privity of contract with the Affected Attorney and have no duty not to disclose potential ethical violations.

  13. Do I have authority to access/distribute/refund funds from the Affected Attorney’s trust/escrow account(s)?

    Assuming the order that appoints you grants you that authority, then yes, but only after a complete accounting has been performed, and all discrepancies and deficiencies are brought to the court’s attention. It is not for you to reimburse the Affected Attorney’s clients upon demand by the client, or in a first-come/first-serve basis. You should perform a complete audit of the account, taking into consideration settlements and judgments, as well as work which had been performed by the Affected Attorney but which had not been posted against the client’s fee account. Only after giving the court a detailed accounting, on a client-by-client basis, and seeking an order from the court with regard to specific amounts of disbursements from the client’s trust/escrow account should you then proceed. Further, when there are insufficient funds available, you should seek an order from the court with regard to pro rata distribution to the clients.

  14. What is the source of funds necessary to pay the rent, utilities, telephone, and support staff for the time necessary to conduct an inventory, file review/return and to close out
    the Affected Attorney’s practice?

    This will largely be determined by the court that appointed you. It could be possible for you as Special Commissioner to make a request of the Affected Attorney’s estate if available. Regardless of the available funds, you should account for all your unpaid account balances and expenses and report to the court that appointed you. The court should then authorize or otherwise order where the necessary funds shall be obtained.

  15. Naturally I will be required to sacrifice time away from my own practice during the time I spend closing out the Affected Attorney’s practice. Will I be compensated for my services, and if so, how much and from what source?

    You should again look for guidance on this issue to the court that appointed you. You should keep a detailed accounting of your time and out of pocket expenses. It might be prudent and wise to file a claim against the Affected Attorney’s estate, if available, and not otherwise compensated by the court.

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