2006 Code of Virginia § 54.1-3900.01 - Protection of client interests; appointment of receiver for practice of a disabled, impaired, absen...

54.1-3900.01. Protection of client interests; appointment of receiver forpractice of a disabled, impaired, absent, deceased, suspended or disbarredattorney.

A. Upon a showing that an attorney is unable to properly dischargeresponsibilities to clients by reason of the attorney's disability,impairment, absence or death or that a suspended or disbarred attorney hasnot complied with Part Six, Section IV, Paragraph 13 M of the Rules of theVirginia Supreme Court, and that no responsible party capable of properlydischarging the attorney's responsibilities to clients is known to exist, thecircuit court of any city or county wherein the attorney resides, or in thecase of a deceased attorney resided, or maintained an office, upon the exparte petition of Bar Counsel may issue an order appointing one or moreattorneys to serve as receiver with the powers and duties specified in thissection. The court, in its discretion, may require a receiver appointedpursuant to this section to post bond, with or without surety. The court mayissue such order if the petition, supported by affidavit of the petitionerand such other evidence as the court may require, shows reasonable cause tobelieve that by reason of the subject attorney's disability, impairment,absence, or death, the subject attorney is unable to properly discharge hisresponsibilities to clients; or that the subject attorney's law license hasbeen suspended or revoked and the subject attorney has not complied with PartSix, Section IV, Paragraph 13 M of the Rules of Supreme Court; and that noresponsible party capable of properly discharging the subject attorney'sresponsibilities to clients is known to exist. The Virginia State Bar shalluse its best efforts to provide a copy of the petition, affidavits, andnotice of the time and place of any hearing to the subject attorney and anyknown duly appointed personal representative of the subject attorney or thesubject attorney's estate.

B. Any receiver so appointed shall be bound by the attorney-client privilegeand confidentiality under the Virginia Rules of Professional Conduct withrespect to client matters and shall not disclose any privileged orconfidential client information without client consent, or as required bycourt order, or to respond to a Virginia State Bar disciplinary investigationor an investigation by the Virginia State Bar Clients' Protection Fundinvolving the subject attorney.

C. Any receiver so appointed shall, unless otherwise ordered by the court,(i) prepare and file with the Virginia State Bar an inventory of all casefiles under the subject attorney's control; (ii) notify in writing all of thesubject attorney's clients of the appointment and take whatever action thereceiver deems appropriate to protect the interests of the clients until suchtime as the clients have had an opportunity to obtain successor counsel, andin the case of a deceased attorney, notify in writing the personalrepresentative, if any, of the deceased attorney's estate and thecommissioner of accounts of the circuit court in which the deceasedattorney's estate is being administered that the receiver may have a claimagainst the deceased attorney's estate for fees and costs of thereceivership; (iii) identify and take control of all bank accounts, includingwithout limitation trust and operating accounts, over which the subjectattorney had signatory authority in connection with his law practice; (iv)prepare and submit an accounting of receipts and disbursements and accountbalances of all funds under the receiver's control for submission to thecourt within four months of the appointment and annually thereafter until thereceivership is terminated by the court; (v) attempt to collect any accountsreceivable related to the subject attorney's law practice; (vi) identify andattempt to recover any assets wrongfully diverted from the subject attorney'slaw practice, or assets acquired with funds wrongfully diverted from thesubject attorney's law practice; (vii) terminate the subject attorney's lawpractice; (viii) reduce to cash all of the assets of the subject attorney'slaw practice, and in the case of a deceased attorney notify in writing thepersonal representative, if any, of the deceased attorney's estate, and thecommissioner of accounts of the circuit court in which the deceasedattorney's estate is being administered of any proposed liquidations ofassets; (ix) determine the nature and amount of all claims of creditors,including clients, of the subject attorney's law practice; and (x) prepareand file with the court a report of such assets and claims proposing adistribution to such creditors and, in the case of a deceased attorney,notify in writing the personal representative, if any, of the deceasedattorney's estate and the commissioner of accounts of the circuit court inwhich the deceased attorney's estate is being administered of the proposeddistribution of the receivership funds. Upon the court's approval of thereceiver's report, at a hearing after such notice as the court may require tocreditors, the personal representative of the subject attorney's estate andthe commissioner of accounts of the circuit court in which the deceasedattorney's estate is being administered, the receiver shall distribute thefunds in the receiver's control, including funds produced by the liquidationof the subject attorney's law practice, first to clients whose funds were orought to have been held in trust by the subject attorney, then to thereceiver for fees, costs and expenses awarded pursuant to subsection E below,and thereafter to the general creditors of the subject attorney's lawpractice, including clients whose funds were not required to have been heldin trust by the subject attorney, and then to the subject attorney or thesubject attorney's personal representative.

D. The court may determine whether any assets under the receiver's controlshould be returned to the subject attorney or the subject attorney's personalrepresentative during the receivership.

E. Any receiver so appointed shall be entitled, upon proper application tothe court in which the appointment was made, to recover an award ofreasonable fees, costs and expenses. If there are not sufficient nontrustfunds to pay the award, then the shortfall shall be paid by the VirginiaState Bar, to the extent that the Virginia State Bar has funds available. TheVirginia State Bar shall have a claim against the subject attorney or theattorney's estate for the amount paid.

F. This statute is declared to be remedial. Its purpose is to protect theinterests of clients adversely affected by attorneys who have either engagedin misconduct or because of disability, impairment, absence, or death areunable to provide legal services for their clients. It is to be liberallyadministered in order to protect those interests and thereby the public'sinterest in the quality of legal services provided by Virginia attorneys.

(1988, c. 425, 54-42.01; 1997, c. 239; 2005, cc. 184, 212.)

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