News Center

Client Security Fund receives $3 million fund transfer

Contact: Laura Ernde

415-538-2283

barcomm@calbar.ca.gov

SAN FRANCISCO, March 15, 2016 — The State Bar Board of Trustees has approved the transfer of $2 million in reserves to the Client Security Fund, boosting the amount available for payouts this year to $8 million.

“The board is committed to ensuring the Client Security Fund has enough money to reimburse every person who lost money or property due to theft by their attorney,” State Bar President David Pasternak said. “This program is vital to achieving the State Bar’s public protection mission. By reallocating these funds, the State Bar is trying to avoid or minimize the need to raise further funds from the California attorneys who finance this important restitution program.” 

The fund, established by State Bar-sponsored legislation in 1972, is primarily financed by an annual assessment paid by California lawyers which is currently $40 per active lawyer and $10 per inactive lawyer. 

Applications to the fund have increased in recent years as a result of the loan modification crisis, during which attorneys were prohibited from collecting advanced fees for loan modification work. In 2013, the fund paid out a record $11 million to more than 2,000 applicants. Alleged loan modification fraud still accounts for about half of the new applications being made to the fund.

“I am delighted that careful budgeting has identified the savings needed for this transfer of funds to a critically important activity,” Executive Director Elizabeth Rindskopf Parker said. “The State Bar’s new Chief Operating Officer Leah T. Wilson deserves special credit for this important achievement – an example of excellent stewardship of mandated member fees.”  

The one-time infusion of $2 million translates to as many as 475 additional applicants being paid this year. In order to seek reimbursement from the fund, victims must first file a complaint against the attorney with the bar’s Attorney Discipline System.