Cheated clients paid $502,730 but lawyer discipline is rare in New Jersey

During the third quarter of 2022, the New Jersey Lawyers’ Fund for Client Protection, funded by the state’s lawyers and judges, paid $502,730.34 to clients for losses caused by eight lawyers, according to the Board of Trustees, but only rarely do members of the legal profession face formal complaints and disciplinary action is even more uncommon.

The purpose of the fund is to pay on behalf of the honest majority of lawyers for the wrongdoing of the few who are suspended or disbarred for misappropriation.

There are 98,582 lawyers licensed in New Jersey but in its entire 53-year history, the fund has paid claims only against a total of 876 attorneys.

In 2021, the Disciplinary Review Board and Office of Board Counsel transmitted to the Supreme Court only 159 formal decisions recommending discipline against any of those 98,582 lawyers, but the proposed 2023 budget for the agency is more than $15 million.

The disciplinary board and client protection fund operate under the authority of the Supreme Court, which appoints members who apparently see no evil, hear no evil, and speak no evil when it comes to the majority of complaints.

The Lawyers’ Fund for Client Protection has seven trustees—five attorneys and two public members— who serve staggered five-year terms without compensation.

Nine members are appointed the Disciplinary Review Board to serve without compensation for a maximum of twelve years including three nonlawyer, public members; one retired judge of the Appellate Division or the Superior Court; and five attorneys.

The next Disciplinary Review Board meeting will be held on Thursday, October 20, 2022 in the Supreme Court courtroom at the Richard J. Hughes Justice Complex. Non-participants may livestream the proceedings by clicking here, and selecting Disciplinary Review Board under Administrative Office of the Courts.

The trustees consider clients’ claims and make awards when it is determined that the loss was caused by dishonest lawyer conduct, under the fund’s rules.

Cases involving legal malpractices and negligence are handled through civil court actions and fee disputes through the district fee arbitration committees established by the Supreme Court.

For a claim to be compensable, the attorney against whom it is filed must have been a member of the bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred or suspended from the bar, or convicted of embezzlement or other misappropriation of property.

A claimant can receive up to $400,000 if the claim is approved, and the fund can pay up to $1.5 million in claims against any one lawyer.

Special permission can be granted by the Supreme Court to exceed the aggregate limit.

To receive a claim form, write to the New Jersey Lawyers’ Fund for Client Protection, Richard J. Hughes Justice Complex, P.O. Box 961, Trenton, NJ 08625-0961, or call 855-533-FUND (3863).

The form must be completed, signed, and returned with copies of any proof of the transaction. There is no filing fee. Claimants assisted in their claims by practicing attorneys receive their representation free of charge.

Fund Director Michael T. McCormick welcomes inquiries about the fund’s purpose and operation.

One client received $5,000 for money misappropriated from Thomas W. Alexander, a lawyer in Union who died.

The fund paid $8,000 to the victim of a disbarred lawyer, Yohan Choi, of Bayside NY, who swindled at least 50 clients out more than $1.8 million from their personal injury lawsuit settlements between 2015 and 2020. Choi was disbarred in 2017, and sentenced to 1½ to 4½ years in prison on April 6, 2022.

A list of the third-quarter claim awards and the status of each attorney under the Supreme Court discipline system can be viewed online.

In 2019, 2,308 lawyers were publicly disciplined for misconduct in 43 states and the District of Columbia, according to the American Bar Association’s Center for Professional Responsibility. New Jersey did not provide data fot that survey.

That represents roughly one-fifth of 1% (0.2%) of all practicing lawyers with active licenses in those states.

Based on the states that have participated each year since 1998, the percentage of lawyers publicly disciplined has remained relatively constant, fluctuating between 0.20% and 0.38% of all lawyers.

The percentage of lawyers disbarred is generally trending downward. From 1998 to 2004, roughly 0.07% to 0.08% of all active lawyers were disbarred each year. That was down in 2012 to 2019, when 0.05% to 0.06% of all lawyers were disbarred each year.

The ABA reported that out of 75,207 lawyers with active licenses in New Jersey during 2018, 3,500 complaints were received by a disciplinary agency. It was from those 3,500 complaints that the 159 decisions recommending discipline resulted, or fewer than five percent of all formal accusations.

A cursory review of public cases shows that only about half dozen referrals are made to the Advisory Committee on Judicial Conduct, which investigates allegations of unethical judicial behavior.