The Clients’ Security Board (CSB) of the Massachusetts Supreme Judicial Court awarded $2.3 million to 35 claimants defrauded by their lawyers in fiscal year 2019, representing a more than $1 million increase in total reimbursements over FY18.
As shown in the CSB’s newly released Annual Report, client reimbursements made between Sept. 1, 2018, and June 30, 2019, climbed to their highest level since 2015, when a record $2.9 million was awarded to victims of attorney theft. The final numbers for 2019 continue an upward trend that began after CSB reimbursements declined to a 24-year low of $846,000 in 2016 and a 28-year low of $500,000 in 2017. While the $1.29 million awarded in 2018 amounted to a twofold increase over the previous year, FY19 reimbursements rose well above the CSB’s annual average of $2 million, new CSB Chair W. Lee H. Dunham noted in introducing the report.
“This period was an especially productive one in carrying out the CSB’s mission to discharge the collective professional responsibility of the members of the bar regarding thefts of client funds,” Dunham wrote. In Massachusetts, the CSB is funded entirely by annual registration fees for the Board of Bar Overseers (BBO) and reimburses clients for 100% of their actual losses, with no statute of limitation on claims.
As in past years, the CSB’s Annual Report underscores the widespread commitment to professional ethics among attorneys who practice in the commonwealth. Seventeen of the state’s 59,341 lawyers (.03%) accounted for all $2.3 million in reimbursements, nearly 90% of which was attributable to two attorneys, Arthur J. McCabe ($1.29 million) and Kirk Y. Griffin ($776,493). After McCabe and Griffin, the next highest offenders were deceased lawyers Christopher McHallam with $92,000 and William J. Clary with $49,589.
Including 2019, when he totaled one awarded claim for stealing investment funds from a family partnership, McCabe has now accumulated $2.7 million in overall defalcations, more than any other attorney in the CSB’s 45-year history. The CSB has likewise provided $890,000 in total reimbursements to clients defrauded by Griffin, most recently for his theft of escrow funds from a nonprofit institution.
“Helping to restore the good name of the bar in these two cases was rewarding but no more so than making a $2,000 award to an undocumented client of an unscrupulous immigration lawyer,” Dunham said.
Broken down by category, the results show that attorney misconduct involving trusts and estates made up the largest monetary portion of defalcations in 2019, totaling $1.4 million or 61% of the final amount awarded. The unearned retainer category produced by far the greatest number of awards (26 out of 35), led by deceased attorney James P. Hentz with 10, but accounted for only 3% of the overall total ($75,633 out of $2.3 million).
On a broader level, the report characterizes 2019 as a period of change for the CSB, beginning with its transition to a 10-month fiscal year that runs concurrently with that of the SJC. In another notable development during FY19, the SJC adopted a series of amendments to the rules governing the CSB, capping a yearslong project undertaken by CSB board members and staff. According to the CSB, the amended rules mark a shift to gender-neutral and standardized language, contain updated investment requirements for the Clients’ Security Fund and reflect the multi-jurisdictional nature of law practice, among other changes.
The CSB also underwent a major transition in leadership during FY19, with General Counsel and Executive Director Karen D. O’Toole announcing her intention to retire after 30 years with the organization. Before assuming her current role, O’Toole served from 1989-2017 as associate general counsel to the BBO and assistant general counsel to the CSB. The board has begun its search for a candidate to succeed O’Toole when she officially leaves her position at year’s end.
“As its Annual Report illustrates, the Clients’ Security Board continues to uphold the integrity of the legal profession and protect the interests of the public in those exceedingly rare instances when attorneys take advantage of their clients,” said Massachusetts Bar Association Chief Legal Counsel and Chief Operating Officer Martin W. Healy. “This is thanks in no small part to the efforts of Karen O’Toole, who has worked throughout her distinguished career to establish the CSB as a model organization for client-protection agencies across the country.”