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money coinsEvery two years, all lawyers registered to practice in New York state file with the Office of Court Administration. From each registration fee, $30 are annually directed to the Lawyers’ Fund for Client Protection (the Fund), which in turn has generated the astronomical sum of $226,000,000 in payouts to law clients who were victimized by a small fraction of thieving attorneys. The Fund, which was a creation of the State Legislature in 1981, and overseen by the seven judges of New York’s Court of Appeals, uses not one dollar of taxpayer money, nor are we affiliated in any way with more widely known IOLA program.

Columbia Law alumnus William R. Nojay, a single practitioner in Monroe County, had a career of accomplishments. A former appointee of Governor Pataki, a director of a not-for-profit foundation, and state assemblyman, he nonetheless found the time to steal over $1 million from a trusting client. The theft came from an escrow fund that Nojay established for his client during the course of an international dispute. Nojay returned $700,000, leaving his client with a $337,000 loss, which was refunded in full by the Fund.

While the Fund has a finite budget, it has over the years been able to raise its reimbursement ceiling from a low of $25,000 in the 1980s to its present maximum of $400,000 per victim. Thus, while Mr. Nojay’s octogenarian client was devastated by the lies and breach of trust he suffered, he had no direct loss of money. The Fund has been able to achieve this level of recompense through three principal sources. The most significant funding is, as noted at the outset, from the annual $30 fee provided by the 332,000 lawyers presently registered to practice law in New York state. A second resource has been occasional financial sanctions, judicially imposed on lawyers arising from an attorney engaging in frivolous motion practice or failing to make a court appearance, which over the years has totaled $3.7 million. From time to time, more often when attorneys retire or die, money held in escrow accounts cannot be distributed to the rightful owners, either because the clients can no longer be found or the contact information accompanying the escrow account is inadequate. As a result, that money is forwarded to the Fund for safekeeping, and our own follow-up efforts to identify the rightful owner. Since given this responsibility in 1994, the Fund has indemnified more than 664 escrowees, to whom their money was returned. After five years, if no further identification can be obtained, the Fund uses that money to assist in the reimbursement of law client victims. As a result, for the past 38 years, the Fund has reimbursed, in full, over 94% of law client victims.

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