Bar News - September 14, 2012
PPF: Setting Things Right for Wronged Clients
By: Kristen Senz
When a lawyer acts unethically and harms clients financially, the rest of the legal profession rallies to provide a measure of relief to the victims and help restore faith in the legal system through the Public Protection Fund.
"There is no other profession that I am aware of anywhere… that has anything like this," says Kevin Collimore of CullenCollimore, who recently stepped down as chair of the NHBA’s Public Protection Fund Committee. "When one steals from somebody, all
of the others get together and compensate them." The Public Protection Fund, established in 1998 by Supreme Court Rule 55, is supported by a mandatory court fee. The PPF is administered by a nine-member Bar Association committee, under the oversight of the Supreme Court.
The PPF recently experienced its biggest influx of claims against one attorney in its history, following the suspension in December 2010 of former Exeter bankruptcy attorney Brian McCaffrey, an attorney in NH since 1978.
By many accounts, McCaffrey was seen as an upstanding and friendly local guy. But after a complaint was filed, the New Hampshire Attorney Discipline Office launched an investigation that revealed that in scores of cases, fees for bankruptcy filings had been collected, but little or no legal work had been done, according to the ADO. It alleges that funds placed in client trust funds were mishandled. McCaffrey was suspended on an emergency basis.
The ADO turned over files for approximately 300 clients to attorney Philip Pettis, of the Boynton and Waldron firm in Portsmouth, who was appointed by the court to review the files and notify clients about McCaffrey’s suspension.
"I was just in a position to answer their questions and help them either transition to a new attorney or help them understand how to handle their case on their own," Pettis said. "In many cases, I had to assure the client that I, the ADO, and other lawyers would do everything we could to help them address any pending issues with their cases or transition to a new attorney." (See related story about how attorneys rallied to help many of McCaffrey’s former clients.)
Pettis also informed the affected clients about the Public Protection Fund and the opportunity to recoup the money they had paid to McCaffrey. The clients couldn’t claim against McCaffrey’s professional liability insurance, because he stopped paying on the policy around the time of his suspension. While some chose not to file claims with the PPF or didn’t meet the statutory deadline, 94 clients filed claims that averaged about $1,500 each. Many of the claimants were particularly vulnerable, relying on Social Security income, some suffering with disabilities or in the midst of a divorce. Members of the PPF committee, which included Kevin Collimore, Thomas Irwin, Keith Diaz, and Thomas Quarles, who recently moved from vice chair to chair, investigated and/or voted on each claim. Also, the late Roland Morneau, a longtime member of the committee, assisted in reviewing many claims before his retirement from the committee last year. The committee also includes public members Jay Haines and Sandra Keans, a longtime member of the NH House of Representatives, who voted on the claims. Because of the extraordinary workload, the committee sometimes operated remotely using a secure online spreadsheet, via technology supported by the NHBA, to track the progress of the many claims.
Some of the claims were rejected, because there was no proof of wrongdoing, but the majority of them were approved. In all, 81 claims totaling $120,000 were paid to former clients of McCaffrey. Most of the claims were investigated, approved and paid within six months.
This was only possible because of a new claims process for PPF claims of less than $2,500 that the New Hampshire Supreme Court approved not long before McCaffrey’s suspension.
The Supreme Court rule that established the PPF in 1998 made the fund subject to payout caps that required the committee to wait until the end of each fund year before paying out for approved claims, to ensure the caps weren’t exceeded. The recently approved expedited process excluded small claims from the cap and was designed to allow for quick payouts of multiple claims against one attorney.
"Lo and behold, it’s unbelievable that [the McCaffrey claims] turned out to be exactly that," said Tom Quarles, current PPF chair.
McCaffrey has cooperated in the ongoing investigation by the attorney discipline office, but he has not been involved with efforts to provide restitution to his former clients, according to Jim Kruse, assistant disciplinary counsel at the ADO.
Investigators at the ADO are still auditing McCaffrey’s financial records. "When it’s done, we will notify the hearing committee that we’re ready to go forward [on potential discipline]," Kruse said.
McCaffrey has not been charged criminally for his conduct, but the results of the audit may result in prosecution by the New Hampshire Attorney General’s Office.
"We will often refer matters over to the attorney general’s office, if we think there is possibly a law enforcement issue involved," Kruse said.
McCaffrey could not be reached for comment. His attorney, Patrick Bedard of Bedard & Bobrow in Eliot, Maine, said McCaffrey was trying to finish work on his clients’ cases when he was suspended.
The success of the PPF in providing restitution to McCaffrey’s clients represents a collective effort by members of the NH legal community to not only restore the clients’ faith in the legal system, but also to maintain the integrity of the legal profession in the eyes of the public.
"It was a wonderful coming together of the bar, as far as I’m concerned, and it was a great note on which to end my chairmanship (of the PPF committee)," Collimore said.
51 Years of Client Protection
1961 – NH Bar Association creates Client Indemnity Fund, supported by mandatory assessments or allocations from bar dues.
1961-1985 – During this period, 38 claims are paid totaling $74,712, and a reserve of $123,000 is accumulated.
1985 – Given low level of claims and size of reserve, annual contributions are ceased.
1989 – John Fairbanks, an attorney for 40 years and part-time district court judge, is indicted by Sullivan County grand jury for converting $1.8 million in client funds, and estates and trusts he administered, to his personal accounts. He disappears from the state following his indictment. Two years later, he is found dead in Las Vegas.
1992 – Due to numerous claims, principally arising from Fairbanks’ actions, the Client Indemnity Fund’s balance is almost completely depleted.
1996 – Legislation is proposed, and the NH Supreme Court Advisory Committee on Rules advocates, that requires attorneys to obtain bonds to protect clients from potential attorney thefts. NH Bar Association opposes mandatory bonding, principally arguing that to do so would put the insurance industry in the position of deciding who can practice law.
1998 – NHBA succeeds in petitioning the Court to adopt a proposal to create the Public Protection Fund mechanism, requiring all licensed attorneys, including judges, to contribute. Supreme Court adopts Rule 55 establishing the Public Protection Fund. Legislature subsequently requires annual reporting to the Legislature by the Court on the status of the PPF.
2010 – The Supreme Court approves the creation of a small-claims process to expedite payment of claims $2,500 or less.
2011 – PPF balance at fiscal year-end of May 31, 2011 was $2.27 million. The Court suspended the assessment for the current fiscal year.
2012 – Public Protection uses small claims process to speedily review claims and reimburse 81 bankruptcy clients of one attorney for fees for legal work that was never performed. Most of the claims are paid within 6 months of their filing.