Rule 7-2.5 - CLAIMS ORDINARILY DENIED(a) Claims by Relatives, Partners, or Other Close Associates. Claims by relatives, partners, or other close associates of the lawyer will ordinarily be denied.(b) Lawyer-Client Relationship. The committee will consider for payment only those claims arising out of a lawyer-client relationship, except as provided elsewhere in this chapter. The claim will be denied where the lawyer, unrelated to a lawyer-client relationship, is a personal representative, testamentary trustee, guardian, or escrow agent for the claimant, and the lawyer's status as the personal representative, testamentary trustee, guardian, or escrow agent is not due to or the result of an existing lawyer-client relationship with the claimant.(c) Claims by Entities. The committee and the board ordinarily will not consider claims by government agencies, institutional lenders, insurance companies, publicly owned entities including their subsidiaries and affiliates, entities that fail to disclose to the committee the names and addresses of their direct and indirect beneficial and record owners, and subrogees, brought on their behalf and not as representatives.(d) Payment from Other Sources. No claim will be approved where the defalcating lawyer was bonded in any capacity that protected the rights of the claimant, where the defalcating lawyer was insured under a lawyers' professional liability policy or a policy of a similar nature that protected the rights of the claimant, or where the claim is payable from any other source. However, the committee, may recommend payment of the difference of what the claimant received from the bond, insurance policy, or other source and the amount of the loss if the monies from the bond, insurance policy, or other source were exhausted and additional recovery cannot be sought from the bond, insurance policy, or other source.(e) Useful Services. The claim may be denied if services were performed that were useful to the claimant.(1) A lawyer may be deemed to have provided useful services to a claimant when, after accepting a fee from the client, the lawyer:(A) files a pleading or other document on behalf of the claimant that moves the claimant 's case or matter forward or protects the claimant 's interests, regardless of the quality of the pleading or other document; (B) engages in substantive communication about the matter for which the lawyer was hired;(C) attends a court proceeding or proceedings that advance the case or cause of the claimant or protects the claimant 's interests;(D) engages in investigation or discovery;(E) attends a mediation or arbitration or other alternative dispute resolution proceeding;(F) prepares a document or documents minimally suitable for use by the claimant in a legal proceeding or transactional matter; or(G) provides legal advice and counsel to the claimant.(2) The lawyer will not be deemed to have provided useful services when the services were rendered for a claimant who hired the lawyer:(A) after the entry of an order of suspension; or(B) before the entry of an order of suspension if the services were on a new matter accepted or begun after the entry of the order of suspension.(f) Investment Advice. Investment advice given by the claimant's lawyer, in and of itself, is not a ground for seeking reimbursement from the fund regardless of whether the advice results in a loss to the claimant. The board or committee may consider a claim for reimbursement when a lawyer accepts money or property from a claimant to be used for investment purposes when the lawyer does not actually invest the money, the lawyer steals the money or property, or the lawyer engages in fraud to obtain the money or property. The loss due to lawyer theft or fraud under these circumstances must be the result of a direct and current lawyer-client relationship to be considered for reimbursement.(g) Unclean Hands. A claim may be denied if the committee finds that the claimant entered into the lawyer-client relationship for a wrongful purpose; acted in bad faith in putting the money or other property in possession or control of the lawyer; used the lawyer-client relationship or knowingly permitted the lawyer to use the lawyer-client relationship to commit fraud, deception, theft, or other misconduct; or if the claimant's conduct reflects acts or omissions amounting to unclean hands on the part of the claimant in connection with the claimed loss or the underlying lawyer-client relationship. Added and effective 3/29/2019 by the Board of Governors of The Florida Bar; amended March 3, 2022, effective 5/2/2022 (SC20-1467).Comment
The existence of a lawyer-client relationship is central to the issue of whether a loss is reimbursable. If the lawyer is not acting in the capacity of a lawyer, the loss is not reimbursable. Therefore, the loss will be denied if an individual is acting in a capacity unrelated to a lawyer-client relationship where the status as a lawyer is not material to the claim.
The rules allow the committee to recommend payment of the difference between what the claimant received and the loss when payment is available from specific other sources. However, the claim will be denied for failure to exhaust remedies if the claimant does not participate in the process to receive payment available from other sources.
Claims based on investment advice ordinarily are not reimbursable. Failure of an investment to perform as represented to or anticipated by the claimant is not a reimbursable loss. Theft or misappropriation of money or property by a lawyer where the lawyer represented to the claimant that the money or property would be used for an investment when no investment was made may be considered a reimbursable loss. In those circumstances the funds were obtained by fraud or a ruse for the purpose of being misappropriated by the lawyer. No investment existed, nor was it the intent of the lawyer to invest the funds. As with all other claims, all claim prerequisites must be met, including that the loss was the result of a direct and current lawyer-client relationship. Factors to consider in determining whether the loss was due to a direct and current lawyer-client relationship include the number, nature, and timing of prior transactions between the claimant and the lawyer.