Clients’ Security Fund & FAQs

The Kentucky Supreme Court (SCR 3.820) established a Clients' Security Fund (CSF) "to promote public confidence in the administration of justice and the integrity of the legal profession” by providing some measure of restitution to clients who have lost money because of the dishonest, fraudulent acts, or other unethical conduct of a member of the KBA.  The Court has opined that every lawyer has an obligation to the public to participate in the collective effort of the bar to reimburse persons who have lost money or property as a result of the dishonest conduct of another lawyer. "To fund CSF, a portion of each Kentucky attorney’s dues, as determined by the Supreme Court, is allocated to the CSF each year." No tax dollars support the CSF.

How Does the Clients’ Security Fund Work?

Eligibility

• Eligible claims are described in SCR 3.820(10).  
• Your loss must have occurred within the attorney client‐relationship and have resulted from dishonesty, fraud, or other unethical conduct. Dishonesty and fraud denote wrongful conduct in the nature of theft, embezzlement and conversion of money, property or other things of value.
• Losses from legal malpractice are NOT recoverable.
• Claims must be filed no later than two years after you knew or should have known of the dishonesty or fraud by the lawyer who is admitted and licensed to practice law in the courts of this State.

How to Submit

• Submit a claim form or contact the Office of Bar Counsel to request a form. 
• Fill out the form completely. Be as detailed as possible.
• Provide documentation or proof to support your claim (i.e., receipts, letters, checks, bank records). If there is insufficient proof of a claim, it will be denied.

Review Process

• The Trustees, appointed by the Board of Governors, will review your claim and determine whether any money is awarded. Three of the members are attorneys; two members are non‐attorneys. The Trustees typically meet twice a year to review claims.
• If a claim is received and opened, and there is also a pending disciplinary case about the same conduct, the Trustees will not review the claim until the disciplinary case is over. A claim could be opened as a disciplinary matter if the lawyer named is living, not disbarred, and there is no disciplinary case yet opened on the matter.

Payment of claim

• Payment of a claim, in whole or in part, is a "matter of grace," as no person shall have the legal right to reimbursement from the CSF as a claimant, third‐party beneficiary or otherwise. Claimants may be required to exhaust other remedies prior to reimbursement by the CSF.
• At present there are caps on recovery. There is a cap of $50,000 per claim, with a total cap per attorney of $150,000. If there are so many claims against an attorney that the cap is reached, awards may be reduced on a pro rata basis.
• Reimbursement is limited to actual pecuniary losses (the money the attorney wrongfully took). The Trustees will not entertain a claim of consequential damages arising from the wrongful act of an attorney.
• Clients' Security Fund proceedings and records are confidential until reimbursement is made. After payment of a claim the Trustees may publicize the nature of the claim, the amount of payment and the name of the lawyer. The identity of claimants is not disclosed absent specific permission. Law enforcement agencies, disciplinary authorities (separate from the CSF) and other entities may be granted access to relevant information gathered in the proceedings.

How Much Does it Cost?

No charge or fee is required of any claimant.  You do not need a lawyer to file a claim. In addition, no lawyer shall accept any payment for prosecuting a claim on behalf of a claimant.  The Trustees receive no salary and are only reimbursed their travel expenses.

Questions?

Information concerning the Clients' Security Fund and claim forms may be obtained from the Office of Bar Counsel, which provides administrative support to the Trustees and investigates claims.

Contact our Legal Assistant
(502) 564-3795 ext. 288

The following questions serve as guidance for a clients/former clients in the event of a closing of their former attorney's office either through death, disbarment, abandonment, or disability. This information has been prepared by the Closed and Abandoned Taskforce.

1. Will another attorney be automatically appointed by the court or the Kentucky Bar Association to represent me and to take over my case upon the death or disability of my attorney?

No. The Circuit Court in the judicial circuit where your attorney’s primary office was located will appoint a “special commissioner” or “assisting attorney” to coordinate closing your attorney’s law practice. If your attorney has passed, the appointment may be made through the District Probate Court. The appointed attorney will assist you in the return of your file. It is your responsibility to retain substitute counsel to practice your case.

2. Am I entitled to the return of my unused fee, paid to my attorney during representation of me?

Yes, but please be patient. You may not receive your refund immediately at the time you initially contact the appointed attorney. You should collect all of your billing records, fee agreement, and receipts for payment of fees that you received from your attorney during representation of you. Request a meeting with the individual who has been appointed to close out your attorney’s law practice, and take all billing documents with you. Once a review of your former attorney’s trust/escrow account has been performed, and the court has authorized a trustee access to your former attorney’s trust account, you are entitled to a refund of your unused fee.

3. Am I entitled to my file? What do I need to do to obtain my file?

Yes, you are. The Court will appoint an attorney called a “special commissioner” or an “assisting attorney” whom has a previous agreement with your former attorney to close out the practice. That attorney should contact you if he/she has not done so already. That attorney will provide you with information as to when your file will be available to you, and will provide you with a form for you to complete authorizing the release of your file, either directly to you or to your new attorney, if you have retained one. If you have not been contacted, then take the initiative. Call your former attorney’s office. If there is no answer, make a trip to the office to determine if there is anyone present or instructions posted on the door stating when your file will be available. If you are still unsuccessful in contacting anyone about the return of your file, then contact the Circuit Court Clerk’s office in the county where your former attorney’s principal office was located and ask for the name of the attorney who has been appointed by the Court as the “special commissioner” responsible for closing out your attorney’s law practice.  If you need immediate access to the official record containing pleadings, you may be able to obtain that even before contacting the individual who is responsible for closing out your former attorney’s office. You may obtain those records by making a trip to the District/Circuit Court Clerk’s office where your case was filed, or if you have retained substitute counsel, your new attorney will be able to obtain from the District/Circuit Court Clerk a copy of all pleadings that have been filed in your case.

4. What if I know that there is a pending deadline in my case, and no special commissioner or assisting attorney has been appointed? Will I be penalized for missing the deadline?

You could be. It depends on the nature of the deadline, the court where the deadline is pending, and the willingness of opposing counsel to accommodate you and your efforts to avoid missing the deadline. Try to retain substitute counsel as soon as possible to make sure that your deadline does not run. If you do not have the time to do that before the expiration of your deadline, then make your best effort to draft your own motion seeking the Court’s permission for enlargement of time, or to toll the statute, due to the death or disability of your attorney. File it with the appropriate clerk, and send a copy to the opposing party or their attorney if they have one. You may also want to contact the opposing party’s counsel and request a tolling agreement or agreed order for enlargement of time.

5. What if I learn that my former attorney potentially committed malpractice, missed filing deadlines, or misappropriated or stole my fee? What should I do? To whom should I notify?

You should report this to the Kentucky Bar Association. You may file a complaint against your former attorney by going to the www.kybar.org website and downloading the Complaint Form. You may also call the Kentucky Bar Association, explain your situation, and ask to speak to Office of Bar Counsel. You may also consider consulting with a private attorney for the purpose of filing a legal malpractice case against your former attorney or his/her estate. In addition, a private attorney may be able to assist you in determining whether your former attorney carried legal malpractice insurance.