This is a stickup!

you so cute...now gimme your money!

Times are tough. Everyone is going through an economic crunch and we all need money. The State needs money, you need money and I most certainly need money (what, you think this blog comes for free?).

So it was surprising when almost $2 million was stolen a few weeks ago, without many batting as much as a single eyelid. To make it worse, the money was stolen from victims! Victims of theft and fraud, I might add.

So who is this criminal with such audacity? Who is this person or entity that engaged in such a daring daylight heist? Why, the State of CT of course.

Last week, the CT legislature, as part of the Governor’s budget bill, passed legislation co-opting $2million from the Client Security Fund. The client security fund is a fund into which all 36,000 lawyers are required to pay $110 per year. There’s also a proposal to alter the Attorney Occupation Tax to remove the exemption for state employees. More after the jump.The Client Security Fund money is held in a trust to reimburse victims of lawyer fraud and embezzlement. The fund has $7.8million currently, but approximately $5.8million of that is currently tied up in claims. That leaves the $2million that the State just “took”.

I’ll let minds greater than I explain. Associate Justice of the CT Supreme Court wrote an op-ed on this a few weeks ago, but apparently no one in the legislature gave a damn:

The transfer also will leave the fund with no cushion against pending claims. At the end of 2008, the fund had a balance of about $7.8 million available against $5.8 million in pending claims. The actions of the governor and legislature place the fund at risk of being unable to fully pay claims if there is a large scale defalcation or an appreciable number of defalcations in the future.

In addition to reducing reserves, the governor and legislature have also violated the trust of members of the bar, who have paid the annual fee with the expectation that it would be used, as noted in the Superior Court rules, “to promote public confidence in the judicial system and the integrity of the legal profession” by reimbursing clients in rare instances when an attorney has violated the trust established within the attorney-client relationship.

The fact that a theft or embezzlement of funds by an attorney is, however, a rare event is of little comfort to a client who learns that he has been the victim of such an act. It will be even less comfort for the client to learn that his losses may not be reimbursed fully because the governor and legislature have seen fit to use those funds for purposes that were never intended.

Norm Pattis (who apparently thinks this blog isn’t good enough to link to) wrote about this weeks ago, and recently made a call to arms:

I am told that heads are spinning in the judiciary. They ought to be. But we need more than spinning heads. How about litigation designed to challenge whether the executive and legislative branches really have the power to steal? I understand lawmakers have the power to tax. But this is something new, and something dangerous.

It looks like Norm’s plea has been heard…by lawyers. The Connecticut Bar Association and a bunch of who’s who of CT lawyers sued the Governor on Monday seeking a return of that money.

The lawyers claim that it’s illegal to take the $2 million because it is generated by fees for the specific purpose of aiding clients — and was not collected via general taxation for use in the overall budget.

As worded in the suit, the plaintiffs claim that taking the $2 million violates the “constitutional separation of powers” among the three branches of government. “The payments made to the fund by [lawyers] were not levied or collected by the Legislative Department, were not assessed, paid or collected as a tax, and cannot retroactively be expropriated as tax revenues for deposit in the general fund,” the suit claims.

“We think it’s absolutely unconscionable” to take money from “this segregated fund for people who are victimized by that small minority of lawyers,” said Ernest F. Teitell, a favorite of Scott Greenfield.

The outrage has been sufficiently expressed elsewhere, so I’ll spare you the anger. But, for those in CT, there’s more. A little prosecutor birdie told me yesterday that the legislature is now considering increasing the Attorney Occupation Tax to $640 and removing the exemption for State employees. Until now, people like me and those on the other side of the courtroom were exempt from paying this silly tax (I mean, is there a neurosurgeon’s tax? A dentist’s tax? C’mon people..) because we don’t get hired by clients.

Now the plan is to exempt us from the exemption and make us all pay it. There is no way to defray this cost or to pass it on to our hundreds of clients. There’s no offsetting for us in the public sector. I know that people in the private sector have been complaining about this tax for years. But don’t some (if not most) firms pay the tax on their associates’ behalf? I certainly can’t go to my supervisor and ask him/her to pay it for me.

This certainly seems like kicking a group when it’s down. I fully expect that the prosecutor’s union will make several concessions when it renogotiates its contract in the coming year (and that applies to all public defenders pursuant to the parity statute). Maybe we’ll go back to 35 hours; maybe we will be forgoing raises for the next 3 years. Whatever it is, I know there will be a loss that we will have to absorb. On top of that you’re going to make me pay $640 per year?

Maybe we should start collecting that $25 per indigent client and use it to pay for our Attorney Occupation Tax. Unless the legislature gets to that first.

[Note that I received this tip on April Fool's Day, so it might be an elaborate joke by some prosecutor, but it does sound plausible.]