A vote regarding the Client Security Fund has been noticed for the Mid-Year Meeting on Friday, March 25, 2022. Following is background information regarding the vote:
The Vermont Bar Association established a Client Security Fund in 1958 to reimburse claimants for losses caused by the dishonest conduct of a lawyer. The Fund was the first of its kind in the United States. In 1961 the VBA membership authorized the Board of Bar Managers to oversee the Fund, and to set up rules governing its operation. The current rules are linked HERE .
Over the years small per member dues surcharges totaling approximately $386,718 were contributed to the Fund. Claims paid out since 1987 totaled $231,481. The last claim made was in 2013. The $10 per member surcharge was discontinued in 2017. A history of the Fund, amounts contributed and claims paid out are linked HERE. The VBA has invested member contributions to the Fund in conservative index-based mutual funds. The balance as of 3/4/2022 is $1,536,854.35.
A summary of client security funds in the other New England states, including links to details about the funds, annual fee amounts, the size of the funds, and claims amounts, is linked HERE.
Because the Fund had grown to over $1.5 million and no claims had been made since 2013, the VBA Board began discussing whether a portion of the Fund should be devoted to other VBA uses. After much discussion, and with varying opinions, the Board voted to put before the members the issue of setting a reserve cap on the Fund and allowing amounts over that cap to be devoted to other purposes consistent with the VBA Mission . The question posed is:
“Shall a reserve cap of $1,000,000 be placed on the VBA Client Security Fund and shall the VBA Board have the authority to use any excess over the reserve cap for any purposes consistent with the VBA mission.”
We hope that this background information is helpful in advance of the vote. Any questions can be directed to info@vtbar.org with “Client Security Fund Vote” in the subject line.
