(Albany, NY ) Reimbursement claims to the New York Lawyers Fund for Client Protection jumped by 55 percent in 1997. The new claims, by law clients and escrow beneficiaries, alleged losses of $41 million resulting from the dishonest conduct of attorneys licensed to practice in New York State. Nearly half of the reported losses in 1997 ($20 million) alleged fraud in private investment transactions with lawyers.

According to the fund's Fifteenth Annual Report, the fund's Board of Trustees approved 625 awards of reimbursement last year. They totaled $7 million. Since the fund's establishment in 1982, the Trustees have restored more than $67 million to 4300 victims of lawyer dishonesty.

The New York Lawyers Fund is a special trust created by the State Legislature. The fund is financed by the legal profession through a registration fee required of all practicing attorneys. The fee raises $8.25 million annually for the Lawyers Fund, which is used to reimburse losses resulting from dishonest conduct in the practice of law. The fee also finances the administrative operations of the fund. No taxpayer money is used for awards or administrative costs.

The Lawyers Fund is administered by a panel of prominent lawyers and community leaders appointed by the State Court of Appeals, New York's high court. Typical losses reimbursed by the fund include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, unearned legal fees that were paid in advance to attorneys, and money embezzled in investment transactions. The fund has no authority in disputes over legal fees, or claims of lawyer malpractice or neglect.

Consistent with prior experience, losses reimbursed in 1997 were concentra- ted in the practice areas of estates and trusts, and real property. The Lawyers Fund reimbursed 54 claimants a total of $2.5 million for thefts occurring in the administration of estates and trusts; and 95 claimants a total of $1.9 million for thefts in real estate purchases, typically down payments.

There are client protection funds in 49 states. According to the Trustees' Fifteenth Annual Report, the $100,000 maximum limit on awards of reimbursement from the New York fund ranks it among the highest in the United States. The typical client loss in New York is less than $10,000. As a result, 97 percent of all eligible claimants last year received full reimbursement for their losses.

The Lawyers Fund is chaired by Eleanor Breitel Alter, a partner in the Man- hattan law firm of Kasowitz, Benson & Torres. Mrs. Alter said that reim- bursement awards each year involve, on the average, dishonest conduct by 40 former members of the bar. There are 165,000 licensed lawyers in New York State.

Reimbursement awards are approved following a lawyer's disbarment and when the lawyer is financially unable to make restitution to his or her victims. When an award is made, the dishonest lawyer becomes legally obligated to reimburse the Lawyers Fund.

"The misuse of law client money rarely happens," Mrs. Alter said, "but the lawyers of New York consider them to be debts of honor. No other profession protects its clients this way. It's difficult to find better proof of the profession's basic integrity, its concern for clients, and how much it values its reputation for honesty in handling client money and property."

Since 1982, the Trustees have reimbursed losses caused by 549 former lawyers. Those losses total $98 million. The Trustees have reimbursed 4300 eligible vic- tims. The bulk of the awards (81 percent) were paid to victims in New York City, on Long Island, and residents in the counties of the lower Hudson Valley. The remaining 19 percent of the fund's awards (826) went to residents of upstate and western New York.

In addition to reimbursing client losses, the Trustees' annual report high- lights the fund's pioneering efforts in consumer education projects for law clients. Publications include plain-English pamphlets on New York laws invol- ving escrow deposits, new state laws governing Powers of Attorney, and the banking and record keeping duties of lawyers. In June, 1998, the Lawyers Fund will publish a practical guide for legal consumers called "Avoiding Grief With A Lawyer." The informative 18-page pamphlet points out common pitfalls that can, and should be, be avoided in lawyer-client relation- ships.

The Lawyers Fund has posted its publications, including its Annual Reports, on the Internet, together with numerous legal directories and links to attorney grievance committees, law libraries, bar associations, client protection funds throughout the United States, and bar associations. The fund's Internet address is www.nylawfund.org.

The Trustees's annual report includes recommendations for court rules and statutes to protect legal consumers from dishonest conduct in the practice of law. Proposals include a uniform statewide policy of disbarment in lawyer theft cases; lifting the veil of confidentiality in lawyer discipline proceed- ings involving the misuse of client funds; the compulsory arbitration of fee disputes; and tighter banking procedures to reduce thefts from the checking accounts of estates and trusts.

The fund's Board of Trustees consists of five lawyers and two community leaders who are not lawyers. They serve without compensation. In addition to Mrs. Alter, the Trustees are Bernard F. Ashe of Albany, former General Counsel to New York State United Teachers (NYSUT); Theodore D. Hoffmann of Hicksville, Of Counsel to the Garden City law firm of Albanese, Albanese & Fiore.

Also, Charles "Joe" Hynes, District Attorney of Brooklyn; Ray W. Manuszewski of Cheektowaga, Erie County, former President of the Manufacturers Hanover Trust Company N.A.; and Shirley B. Waters of Rome, Oneida County, Vice Presi- dent of the Daily Sentinel newspaper.

The offices of the New York Lawyers Fund are located at 119 Washington Avenue, Albany, NY 12210. Telephone: 800-442-3863.

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