Fitzgerald announces task force after HOD debate

Issue May 2006

A spirited debate at the March 23 House of Delegates meeting centered around a proposal by the Massachusetts Clients' Security Board to create a "payee notification rule," which would require insurance companies to notify claimants when checks in certain settlements are issued to their lawyers.

Although the problem of stolen settlement proceeds involves only a handful of the commonwealth's 48,000 attorneys, the resulting damage to public trust in the profession is a serious concern. The payee notification, the CSB argued, would deter attorney theft. But some delegates worried that the change only addressed a small segment of the profession, would be costly to the public and result in other problems.

The issue was raised at the HOD meeting held on the first day of the Annual Conference, but questions about the proposal ended up postponing a vote. In response to the debate, MBA President Warren Fitzgerald is appointing a task force to examine ways in which ethical and other rules governing legal practice practice may be improved to deter misappropriation of client funds.

At the March 23 meeting, Peter G. DeGelleke, vice-chairman of the Clients' Security Board, introduced the proposal, saying, "It's a very positive thing for the profession to do. I really believe this is a positive thing."

Steven L. Wollman, the Region Six delegate, agreed that the initiative could only help the profession safeguard clients.

"It does no harm to lawyers and can only help," he said.

MBA past President Kathleen M. O'Donnell (2004-05) disagreed, however. She argued that it would not offer much deterrence to attorney theft, but would besmirch the legal profession by calling more attention to a handful of dishonest attorneys.

"I do think this sends a bad message. Paint it however you want, but this is basically suggesting you can't trust your lawyer," she said. "I'm not comfortable with the Bar Association supporting this."

O'Donnell made a motion to postpone the vote, send the proposal to the section councils for review and research why some states have rejected similar proposals.

Delegates were sharply divided. Law Practice Management Section Council chair Denise M. Guerin said when she read the proposal, it struck her as a no-brainer.

"This is a terrific consumer protection move," she said, adding that she once represented an educated business executive who was "fleeced" by a lawyer.

"If the bank had been sending him notification (of the payments), this would not have happened," she said.

MBA Vice President Valerie A. Yarashus suggested delaying a vote until the May HOD meeting so members could consider the issue more fully. The motion to postpone was approved, though a number of people voted against it.

It now appears the issue will be settled at a later date, after the task force has had the time to review reforms which might be made to deter attorney theft, including the Clients Security Board proposal on payee notification.

Fitzgerald said because there is unanimous agreement that attorney misappropriation of client funds cannot be tolerated, that the proposal appeared initially appealing.

However, the serious questions about the proposal raised at the March meeting need to be answered. The best way to do that, he said, would be a thorough review by a committee of experienced and respected attorneys.

The task force will be charged with evaluating what would have the most significant impact, what other states have done and what has worked best.

Fitzgerald said he also wants the task force to look at the cost to the public of introducing and operating a payee notification system and whether those passed-on costs make sense compared with the amounts of compensation which are presently paid by the CSB and borne by the profession.

The hour-long debate dominated the meeting, but there was also substantive discussion about endorsing principles related to Criminal Offender Record Information (C.O.R.I.) system reform and a vote opposing prepaid legal service legislation.

Criminal Justice Section Council chair and Region Seven delegate Lee J. Gartenberg won near unanimous support for general guidelines relating to C.O.R.I. system reforms despite objections by Judicial Administration Section Council chair and past president Marylin A. Beck. HOD voted overwhelmingly to support the guidelines.

HOD then voted unanimously to oppose pending legislation that would change jurisdiction over prepaid legal services from the state's insurance division to consumer affairs.

The March 23 meeting also featured a comprehensive presentation from Chief Justice for Administration and Management of the Trial Court Robert A. Mulligan on the state of court reform and construction.

Mulligan requested the MBA's support in convincing the Legislature to give him the authority to transfer funds between court departments, which he said is essential to creating a fair and reasonably staffed court.

For example, he is seeking $4.2 million this year for 130 positions to bring all trial courts into compliance with an 85 percent staffing requirement.

He explained goals that have been set in the Trial Court to reduce case backlogs, time to case disposition and trial date certainty. "I look forward to, next year, reporting to you on each of these goals," he said.

Mulligan also asked the MBA to take the lead in forming a commission to recommend how the state should name courthouses to avoid arbitrary decisions from Beacon Hill.

"I think it should be a more deliberative, thorough process in naming courthouses," he said.