BOARD OF GOVERNORS
3$256,000 in claims paid out to date;
3December meeting: $350,000 in potential
claims to be determined.
32014 total possible payments of $690,000
(vs. $300,000 in 2013)
3Discussion regarding the Fund’s investments; the Trust limits the Trustees’
discretion to the State Bar’s investment
policy. The Finance & Audit Committee
is currently scheduled in December
2014 and January 2015 to develop an
Investment Policy for board review and
3Annual Report: Mr. Wirken reviewed the
history of the Client Protection Fund,
which was created in 1960 and funded in
1961. The Fund is administered by five
Trustees who meet quarterly to review
3 The Fund comes from assessments of $10
per year per member.
32014 is the first year to meet the
$250,000 cap for pay outs for claims
against one lawyer.
3Revenues and restitution: Last year
approximately $54,000 was reimbursed.
3 The Fund pays its own way, and expenses
include Administrator Karen Weigand’s
3Maintaining $3 million reserve.
3Modification of Trust Agreement:
During the review of the CPF by the
auditor (Eide Bailly) and outside legal
counsel (Ellis Carter), it was noted that
the Declaration of Trust does not provide what would happen to Trust assets
if the Trust were revoked. It was recommended that the Declaration be amended
to so provide.
3 The CPF Board of Trustees recommends
that the Declaration of Trust be amended to provide that, on revocation of the
Trust, the Arizona Foundation for Legal
Services & Education receive any
remaining Trust assets.
3 The CPF was created to “promote pub-
lic confidence in the administration of
justice and the integrity of the legal pro-
fession by reimbursing losses caused by
the dishonest conduct of lawyers admit-
ted and licensed or otherwise allowed
to practice in Arizona, occurring in the
course of the client-lawyer of fiduciary
relationship between the lawyer and the
claimant.” CPF Declaration of Trust,
Rule 1( A). The Foundation is a logical
recipient because of two substantive
purposes for which it is allowed to use
IOLTA interest and dividends
(ARIZ.R.S.CT. 43(f)( 6)):
(a) support programs designed to assist
in the delivery of legal services to
the poor and law-related education
programs designed to teach young
people, educators and other adults
about the law, the legal process and
(b) fund studies or programs designed
to improve the administration of
3 The Foundation also is allowed to use
IOLTA interest and dividends to “
maintain a reasonable reserve” and “pay the
actual costs of administering this rule
and the activities [in ( A) and (B)],” but
those purposes would not be permitted
uses of any remaining trust assets.
3 When the Trustees considered amending
the Declaration to address the transfer
of assets on revocation, they also noted
that the requirement of member
approval of revocation is no longer
practical. Therefore, the Trustees
recommend that revocation instead
be approved by the Arizona Supreme
3 MO TION: Patrick Greene moved, John
Sullivan seconded and the motion carried
unanimously to approve the recommended
changes to the Client Protection Fund
Declaration of Trust.
3Finance and Audit Committee—Geoffrey
Trachtenberg, Vice-Chair, reported that
the Finance and Audit Committee recommended approval of the draft annual budget
3Consistent with the five-year financial
projections provided to the Court.
3Personnel costs do not exceed three
percent increase over the 2014 budget.
3In 2015 added back meals for Standing
State Bar Committees only; the $34,000
does not include Board of Governors
32015 Budget vs. Court Projection:
Operating Surplus (Deficit) $127,000
Court Projection vs. 2015 Budget of
3Personnel restructuring; office service
cost reductions and miscellaneous
32014 107.5 Full-time employees; 2015
103 FTE including two new positions
3Merit Pool recommendation from
Human Resources Committee = 2. 5
3Health insurance increase is lower than
anticipated originally budgeted 15
percent increase, actual increase HSA (602) 640-9000 • OMLAW.COM • 2929 N CENTRAL AVE, 21ST FL, PHOENIX, AZ 85012
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