Client Security and Attorney Disciplinary Commission

Client Security Commission

Client Security Commission

Judicial Branch Building

1111 East Court Avenue

Des Moines, Iowa 50319

(515) 725-8029

The Client Security Commission manages a fund, generated from contributions from lawyers and judges, that reimburses clients of lawyers who have misappropriated or lost a client's money The purpose of the fund is to prevent defalcations by members of the lowa bar, and insofar as practicable, to provide for the indemnification by the profession for losses caused to the public by the dishonest conduct of members of the bar of this state. The fund also covers the cost of administering the lawyer disciplinary system and other programs which impact the disciplinary system. The commission advises the court on policies involving the administration of the fund. For more information contact client.security@iowacourts.gov

New Rule Changes!

The Court recently adopted several changes in Division III of the Iowa Court Rules, pertaining to various matters within the scope of professional regulation. One key change was the adoption of the substance of a recommendation made by the Client Security Commission last year regarding limited coverage of client security claims arising after a lawyer is suspended. Rule 39.9 is affected by that change. Another key change is adoption of specific trust account record keeping requirements, based on the ABA model rules. Rule 45.2 is affected by this change. As explained in the summary published with the rule change:

Iowa Court Rule 39.9 is amended to adopt the ABA model rule approach to coverage of client security claims arising after a lawyer's license has been suspended. Claims arising from conduct after entry of a suspension order will be covered, but only if the client's reliance on the state of the lawyer's license is reasonable. However, the amendment also adopts the Michigan qualification that if the conduct giving rise to the claim occurs more than six months after a lawyer's suspension, that reliance would be presumed unreasonable. In any event, revocation would constitute a bright-line date beyond which no claim could arise and be honored.

Iowa Court Rule 45.2 is amended to incorporate the general record keeping and electronic records provisions of the ABA Model Rules for Client Trust Account Records, adopted by the ABA on August 9, 2010. The amendment also reflects informal guidance the Iowa Client Security Commission has provided lawyers during audits and seminars for several years regarding their record keeping obligation. Until now, however, specific guidance regarding required record keeping has not been included in the Iowa rules. The amendment leaves intact the provisions of Iowa Court Rules 45.7 through 45.10, which generally incorporate the court's guidance regarding advances for fees and costs first set out in Board of Professional Ethics & Conduct v. Apland, 577 N.W.2d 50 (Iowa 1998).

A copy of the rule changes, adopting order, and a short summary are available here: Rule Changes

Succession Planning by Sole Practitioners

"To prevent neglect of client matters in the event of a sole practitioner's death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer's death or disability, and determine whether there is a need for immediate protective action. " Iowa Rule of Professional Conduct 32:1.3, comment 5. The Client Security Commission encourages every sole practitioner to prepare a contingency plan for administration of his or her practice upon death or disability.

An informational flyer regarding the duty to plan is available here: Flyer

An outline regarding succession planning for sole practitioners is available here: Outline

A Powerpoint slide set to accompany the outline is available here: Slide Set

NEW! A succession planning handbook is available here: Handbook

NEW! Forms from the succession planning handbook are available here: Forms

Rule 31.16, Registration of House Counsel

The Iowa Supreme Court adopted rule 31.16 effective July 1, 2005. Rule 31.16 provides for registration of persons who are not admitted to practice in Iowa, but who are admitted in another jurisdiction in the United States and maintain an office or other systematic and continuous presence in Iowa to practice as house counsel for a corporation or other entity. A copy of the rule is available at this link: Rule 31.16.

Persons subject to registration should examine rule 31.16 and prepare the registration packet contemplated by the rule for submission to the Office of Professional Regulation, Judicial Branch Building, 1111 East Court Avenue, Des Moines, Iowa 50319. The packet should include the affidavit specified in rule 31.16(2) and the attachments listed in rule 31.16(3). Applicants also must include in the registration packet the $200 registration fee specified in rule 31.16(3)(a). The check or money order for this fee should be made payable to "Client Security Commission."

After the applicant's registration has been approved, he or she will receive an annual report form by personal delivery or mail from the Client Security Commission. The form must be completed, signed and returned to the Client Security Commission within thirty (30) days of registration to avoid a late filing penalty. The annual disciplinary fee prescribed by rule 31.16(9) and rule 39.5, which currently is $175.00, will be payable with this report form. Registered lawyers will receive an annual report form from the Client Security Commission each year thereafter during their maximum five years of registered status, and will be required to timely file the report form and pay the annual disciplinary fee each year.

General Forms

An Iowa lawyer who does NOT in fact practice law in Iowa may apply for a Certificate of Exemption from filing the annual client security report and paying associated fees, pursuant to Rule 39.7. Rule 39.7 should be carefully examined regarding eligibility and reinstatement requirements before applying for exemption. The application form may be downloaded here: In Rich Text Format

Claim Procedures and Form

The claim form to be used to apply for compensation from the Commission may be downloaded here: In Rich Text Format In PDF Format

The Commission shall consider for payment all claims resulting from the dishonest conduct of a lawyer licensed to practice law in Iowa acting as an attorney or a fiduciary, provided that;

The claim arises out of the practice of law.
The alleged defalcation occurred after January 1, 1974.
The claim is made within one year after the client's discovery of the 1oss. However, in unusual circumstances this time limitation may be extended by the commission for good cause.
The claim is made directly by or on behalf of the client or the client's personal representative or, if a corporation, by or on behalf of itself or its successors in interest.
The commission is satisfied there is no other source or collateral source for the reimbursement of the loss.
Claims shall not be made that arise out of employer-employee relationship as distinguished from a lawyer-client relationship or a fiduciary relationship.

The commission has full authority to determine whether the claim merits reimbursement from the fund and if so, the amount of such reimbursement and any conditions attached to reimbursement. When determining the amount of the reimbursement the commission must consider many factors such as the amount of money available in the fund, the degree of hardship suffered by the claimant, the losses of other claimants and the degree of negligence, if any, which may have contributed to the loss. No claimant or any other person or organization shall have any right in the fund as a third party beneficiary or otherwise. The claimant does not need to be represented by counsel before the commission.

Applications shall be addressed to the Client Security Commission, Care of the Assistant Administrator, Judicial Branch Building, 1111 East Court Avenue, Des Moines, Iowa 50319.

Trust Account Audits and Procedures

The Commission employs auditors who are responsible for conducting periodic unannounced audits of the trust accounts established by Iowa lawyers under the provisions of Chapter 39 and Chapter 45 of the Iowa Court Rules.

An outline regarding trust account procedures has been published by Commission staff and is available here: In PDF format

The viewgraph slides associated with the outline are available here: In PowerPoint format

NEW! Other Available Outlines

Succession Planning for Sole Practitioners, in PDF Format
Succession Planning for Sole Practitioners, Powerpoint Slide Presentation
Protecting Yourself from Fraud by Law Firm Employees, in Rich Text Format
Protecting Yourself from Fraud by Law Firm Employees, Powerpoint Slide Presentation

Commission Members

The commission is composed of seven members - five lowa lawyers and two lowa residents who are not lawyers. Members shall be appointed for a term of five years unless appointed to fill a vacancy in an unexpired term. Members shall not serve more than two complete four-year terms. The following persons currently serve on the commission:

The Honorable Martha Mertz-LaFollette, Chair, Knoxville
The Honorable David Christensen, Vice-Chair, Ellston
Lance D. Ehmcke, Treasurer, Sioux City
Jennifer A. Clemens-Conlon, Dubuque
Sondra Holmstrom, Fort Dodge
Kenneth Boeke, West Des Moines
JoAnn Barten, Ames