Md. Admin. Order of 2023-03-03 (Revising Operating Procedures for the Attorney Grievance ...)

IN THE SUPREME COURT OF MARYLAND

ADMINISTRATIVE ORDER REVISING OPERATING PROCEDURES FOR THE

ATTORNEY GRIEVANCE DISCIPLINARY FUND AND THE CLIENT PROTECTION FUND

Whereas, Maryland Rule 19-705(a) provides that the Attorney Grievance

Disciplinary Fund (the “Disciplinary Fund”) is created and administered pursuant to the

Constitutional authority of the Supreme Court of Maryland to regulate the practice of law

in the State of Maryland and that the Disciplinary Fund consists of contributi ons by

attorneys, income from those contributions, and costs recovered pursuant to law or court

order, and that the Disciplinary Fund is dedicated entirely to purposes established by the

Rules in Title 19; and

Whereas, the Attorney Grievance Commission (th e “Commission”) and the Client

Protection Fund of the Bar of Maryland both serve critical functions in connection with the

regulation of the legal profession and the protection of the public in Maryland; and

Whereas, it is essential that the Commission and the Client Protection Fund receive

funding that is adequate to perform their respective missions, including access to sufficient

reserve funds to address future needs; and

Whereas, the Commission and the Client Protection Fund are both funded largely

through the annual assessment collected by the Client Protection Fund from each Maryland

attorney; and

Whereas, it is appropriate for this Court to review the status of the funding of the

Commission and the Client Protection Fund to ensure that they each have sufficient funds

to perform their respective missions, including access to sufficient reserve funds to address

future needs; that the funds raised through the annual assessment fee are being distributed

and maintained appropriately; and that the annual assessment fee imposed on each

Maryland attorney is reasonable; and

Whereas, by administrative order dated March 14, 2014, this Court required that the

Commission maintain an annual carryover balance in the Disciplinary Fund consisting of

an operati onal float and an emergency reserve totaling 75% of its prior fiscal year

expenditures; and

Whereas, in the March 14, 2014 administrative order, this Court required that within

30 days after accounting for its operational float and emergency reserve requi rements, the

Commission transfer annually any available end of fiscal year balance in the Disciplinary

Fund in excess of the 75% threshold to the Client Protection Fund; and

Whereas, the Commission did not satisfy the 75% threshold requirement at the end

of fiscal year 2022, requiring the Court to authorize a waiver of that requirement; and

Whereas, based on projections and increasing expenses, the Commission does not

expect to be able to satisfy the 75% threshold requirement at the end of fiscal year 2023;

and

Whereas, the Court, after reviewing historical data and after consultation with the

Commission, has determined that the Commission does not require an operational float and

emergency reserve totaling 75% of its prior fiscal year expenditures, and that an operational

float and emergency reserve totaling between 25% and 50% of prior fiscal year

expenditures is more appropriate, provided the Commission has access to additional funds

if necessary to fund its future operations; and

Whereas, the Court, after reviewing historical data and after consultation with the

Client Protection Fund, has determined that the Client Protection Fund has sufficient funds

to both provide for its current and anticipated future needs and, if necessary, return a

portion of the funds the Commission has transferred to it to fund future operations of the

Commission, without risk to the mission of the Client Protection Fund.

Now, therefore, it is this 3rd day of March 2023, effective immediately, ordered

that:

1. The Commission shall maintain an annual carryover balance in the Disciplinary

Fund consisting of an operational float and an emergency reserve totaling at least

25% but no more than 50% of its prior fiscal year expen ditures, as documented by

an independent audit, as of the end of each fiscal year.

2. Within 30 days after receiving a final accounting for each fiscal year beginning with

fiscal year 2023,

a. If at the end of that fiscal year, the Disciplinary Fund contained more than

50% of the Commission’s expen ditures during that fiscal year, the

Commission shall transfer the amount in excess of the 50% threshold to the

Client Protection Fund;

b. If at the end of that fiscal year, the Disciplinary Fund contained less than 25%

of the Commission’s expen ditures during that fiscal year, the Commission

shall certify to the Client Protection Fund the amount by which it fell short

of the 25% threshold. Within 30 days of receiving the certification, the Client

Protection Fund shall transfer to the Commission the amount nec essary for

the Commission to meet the 25% threshold, subject to paragraph 3 below.

c. If at the end of that fiscal year, the Disciplinary Fund contained more than

25% but less than 50% of the Commission’s expenses during that fiscal year,

the Commission shall neither transfer any funds to, nor certify a need for any

funds from, the Client Protection Fund.

3. The aggregate amount of all transfers from the Client Protection Fund made

pursuant to paragraph 2.b. may never exceed the amount of funds the Commission

transferred to the Client Protection Fund before the date of this administrative order

plus any transfers made hereafter pursuant to paragraph 2.a.

4. Each year following the first year in which the Commission receives funds from the

Client Protection Fund pursuant to paragraph 2.b., the Commission shall furnish the

Court, the Client Protection Fund, and the State Court Administrator with a

statement identifying (1) the aggregate amount of funds previously transferred by

the Commission to the Client Protectio n Fund, and (2) the aggregate amount of

funds received from the Client Protection Fund pursuant to paragraph 2.b. The

statement shall be provided within 10 days of the later of any transfer of funds

pursuant to paragraph 2.a., the receipt of funds pursuant to paragraph 2.b., or a final

accounting pursuant to which no funds will be transferred as per paragraph 2.c.

5. The Commission and the Client Protection Fund shall cooperate in all matters with

respect to the requirements of this order, including by the Commission providing

the Client Protection Fund with updates, as appropriate and reasonable, concerning

projections of its year-end expenses and fund balances.

6. If the Client Protection Fund concludes that its likely or potential future transfer

obligations pursuant to paragraph 2.b. will place at risk its ability to fulfill its

mission, it shall promptly inform the Court of its concern and the basis underlying

it.

7. The March 14, 2014 Administrative Order Disbursing Funds from the Attorney

Grievance Discipl inary Fund and Establishing Additional Fund Operating

Procedures is hereby rescinded.

/s/ Matthew J. Fader

Matthew J. Fader, Chief Justice

/s/ Shirley M. Watts

Shirley M. Watts, Justice

/s/ Michele D. Hotten

Michele D. Hotten, Justice

/s/ Brynja M. Booth

Brynja M. Booth, Justice

/s/ Jonathan Biran

Jonathan Biran, Justice

/s/ Steven B. Gould

Steven B. Gould, Justice

/s/ Angela M. Eaves

Angela M. Eaves, Justice

Filed: March 3, 2023

/s/ Gregory Hilton

Gregory Hilton

Clerk

Supreme Court of Maryland

Pursuant to the Maryland Uniform Electronic Legal Materials

Act (§§ 10-1601 et seq. of the State Government Article) this

document is authentic.

2023-03-03 15:08-05:00

Gregory Hilton, Clerk