The Supreme Court of South Carolina

In re: Amendments to the South Carolina Appellate Court Rules

O R D E R

The South Carolina Bar has proposed amending Rule 2 of Rule 416, SCACR, to clarify that the Resolution of Fee Disputes Board retains jurisdiction over a fee dispute if an attorney is suspended from the practice of law after the fee dispute is filed.  In conjunction with that proposal, the Bar also requests the Court amend Rule 411(c)(1), SCACR, to provide the definition of dishonest conduct in matters pending before the Lawyers' Fund for Client Protection Committee includes the failure of a lawyer to return an unearned fee after the Resolution of Fee Disputes Board determines the lawyer is not entitled to retain the fee.  The amendments further state a fee dispute which is timely filed before the Resolution of Fee Disputes Board shall be considered timely filed before the Lawyers' Fund for Client Protection Committee if an unearned fee is not repaid by the lawyer.

Pursuant to Article V, § 4, of the South Carolina Constitution, we grant the Bar's request to amend Rule 2 of Rule 416, SCACR, and Rule 411(c)(1), SCACR, as set forth in the attachment to this Order.  The amendments are effective immediately.

IT IS SO ORDERED.

Columbia, South Carolina
June 28, 2010

RULE 416
Resolution of Fee Disputes Board

RULE 2. JURISDICTION

The purpose of the Board is to establish procedures whereby a dispute concerning fees, costs or disbursements between a client and an attorney who is a member of the South Carolina Bar (the Bar) may be resolved expeditiously, fairly and professionally, thereby furthering the administration of justice, encouraging the highest standards of ethical and professional conduct, assisting in upholding the integrity and honor of the legal profession, and applying the knowledge, experience and ability of the legal profession to the promotion of the public good. As used in these Rules, fee is deemed to include a legal fee, costs of litigation and disbursements associated with a legal cause, claim or matter and client is defined as a person on whose behalf professional legal services have been rendered by an attorney who is a member of the South Carolina Bar.

Under no circumstances will the Board participate in: (1) a fee dispute involving an amount in dispute of $50,000 or more; or (2) disputes over which, in the first instance, a court, commission, judge, or other tribunal has jurisdiction to fix the fee. When an allegation of attorney misconduct arises out of a fee dispute other than as to the reasonableness of the fee, the Board, in its discretion, may refer the matter to the Commission on Lawyer Conduct. If the alleged misconduct does not arise out of a fee dispute, it shall be referred to the Commission on Lawyer Conduct.

If an attorney is suspended from the practice of law after a fee dispute has been filed with the Board, the Board shall retain jurisdiction over the dispute until the conclusion of the fee dispute process. This shall include all applicable appeals under Rule 20.

No fee dispute may be filed with the Board more than three (3) years after the dispute arose.

Jurisdictional issues shall be determined by the circuit chair.

RULE 411

LAWYERS' FUND FOR CLIENT PROTECTION

. . .

(c) Duties of Lawyers' Fund Committee for Client Protection Committee.

(1) The Committee shall be authorized, commencing on January 1, 1980, to consider applications for reimbursement of losses which arise after the effective date of this Rule and which are caused by the dishonest conduct of a member of the South Carolina Bar who was acting either as a lawyer or in a fiduciary capacity customary to the practice of law in the matter in which the loss arose, but only to the extent to which these losses are not bonded or to the extent these losses are not otherwise covered; and provided the Bar member has died, has been adjudicated a bankrupt, has been adjudicated mentally incompetent, has been disbarred or suspended from the practice of law, has voluntarily resigned from the practice of law, has left the jurisdiction of this state or cannot be found, or has become a judgment debtor of the applicant based upon his dishonest conduct as a lawyer; or provided that the application has been certified to the Committee by the Commission on Lawyer Conduct of the Supreme Court or the Board of Governors of the South Carolina Bar as an appropriate case for consideration because the loss was caused by the dishonest conduct of a member of the South Carolina Bar. For the purposes of this rule, dishonest conduct of a member of the South Carolina Bar shall include not only dishonest conduct committed by the member, but also dishonest conduct of any person who is not a member of the Bar employed by a member or the firm of a member to assist the member or firm in providing legal services. Reimbursement for losses caused by dishonest conduct of an employee of a member or firm shall only be allowed if the acts giving rise to the loss occurred during the course of that employment. Additionally, for purposes of this rule, dishonest conduct shall include the failure of a lawyer to return an unearned fee after the Resolution of Fee Disputes Board determines the lawyer is not entitled to retain the fee.

The Committee shall investigate applications, which are brought to its attention. The Committee shall be authorized and empowered to reject or allow applications in whole or in part to the extent that funds are available to it. The Committee shall have complete discretion in determining the order, extent, and manner of payments of applications. The payment to any applicant shall not exceed the sum of $40,000 per claim; provided, however, that the aggregate total of claims paid per attorney shall not exceed $200,000. In operating the Lawyers' Fund for Client Protection pursuant to this Rule, the South Carolina Bar does not create or acknowledge any legal responsibility for the acts of individual lawyers in the practice of law. All reimbursements of losses from the Lawyers' Fund for Client Protection shall be a matter of grace in the sole discretion of the Committee and not as a matter of right. No client or member of the public shall have any right in the Lawyers' Fund for Client Protection as a third party beneficiary or otherwise. No attorney shall be compensated for representing an applicant except as authorized by the Committee.

In order for an application to be considered by the Committee, the application must be received by the South Carolina Bar within three (3) years of the date the applicant discovered or reasonably ought to have discovered the dishonest conduct. No application may be considered after the expiration of six (6) years from the date of the dishonest conduct. An application for resolution of a fee dispute which is timely filed under Rule 416, SCACR, shall be considered timely filed for purposes of consideration under this rule in the event an unearned fee is not repaid.

The Committee is further authorized to disburse funds as ordered by the Supreme Court pursuant to Rule 31(f) contained in Rule 413, SCACR. Unless otherwise provided by the order of the Supreme Court, the Committee shall be entitled to reimbursement from the suspended, disbarred, disappeared, or deceased attorney or his estate.