2023 Code of Virginia › Title 54.1 - Professions and Occupations › Chapter 39 - Attorneys › § 54.1-3900.01. Protection of client interests; appointment of receiver for practice of a disabled, impaired, absent, deceased, suspended or disbarred attorney

A. Upon a showing that an attorney is unable to properly discharge responsibilities to clients by reason of the attorney's disability, impairment, absence or death or that a suspended or disbarred attorney has not complied with Part Six, Section IV, Paragraph 13 M of the Rules of the Virginia Supreme Court, and that no responsible party capable of properly discharging the attorney's responsibilities to clients is known to exist, the circuit court of any city or county wherein the attorney resides, or in the case of a deceased attorney resided, or maintained an office, upon the ex parte petition of Bar Counsel may issue an order appointing one or more attorneys to serve as receiver with the powers and duties specified in this section. The court, in its discretion, may require a receiver appointed pursuant to this section to post bond, with or without surety. The court may issue such order if the petition, supported by affidavit of the petitioner and such other evidence as the court may require, shows reasonable cause to believe that by reason of the subject attorney's disability, impairment, absence, or death, the subject attorney is unable to properly discharge his responsibilities to clients; or that the subject attorney's law license has been suspended or revoked and the subject attorney has not complied with Part Six, Section IV, Paragraph 13 M of the Rules of Supreme Court; and that no responsible party capable of properly discharging the subject attorney's responsibilities to clients is known to exist. The Virginia State Bar shall use its best efforts to provide a copy of the petition, affidavits, and notice of the time and place of any hearing to the subject attorney and any known duly appointed personal representative of the subject attorney or the subject attorney's estate.
B. Any receiver so appointed shall be bound by the attorney-client privilege and confidentiality under the Virginia Rules of Professional Conduct with respect to client matters and shall not disclose any privileged or confidential client information without client consent, or as required by court order, or to respond to a Virginia State Bar disciplinary investigation or an investigation by the Virginia State Bar Clients' Protection Fund involving 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 case files under the subject attorney's control; (ii) notify in writing all of the subject attorney's clients of the appointment and take whatever action the receiver deems appropriate to protect the interests of the clients until such time as the clients have had an opportunity to obtain successor counsel, and in the case of a deceased attorney, notify in writing the personal representative, if any, of the deceased attorney's estate and the commissioner of accounts of the circuit court in which the deceased attorney's estate is being administered that the receiver may have a claim against the deceased attorney's estate for fees and costs of the receivership; (iii) identify and take control of all bank accounts, including without limitation trust and operating accounts, over which the subject attorney had signatory authority in connection with his law practice; (iv) prepare and submit an accounting of receipts and disbursements and account balances of all funds under the receiver's control for submission to the court within four months of the appointment and annually thereafter until the receivership is terminated by the court; (v) attempt to collect any accounts receivable related to the subject attorney's law practice; (vi) identify and attempt to recover any assets wrongfully diverted from the subject attorney's law practice, or assets acquired with funds wrongfully diverted from the subject attorney's law practice; (vii) terminate the subject attorney's law practice; (viii) reduce to cash all of the assets of the subject attorney's law practice, and in the case of a deceased attorney notify in writing the personal representative, if any, of the deceased attorney's estate, and the commissioner of accounts of the circuit court in which the deceased attorney's estate is being administered of any proposed liquidations of assets; (ix) determine the nature and amount of all claims of creditors, including clients, of the subject attorney's law practice; and (x) prepare and file with the court a report of such assets and claims proposing a distribution to such creditors and, in the case of a deceased attorney, notify in writing the personal representative, if any, of the deceased attorney's estate and the commissioner of accounts of the circuit court in which the deceased attorney's estate is being administered of the proposed distribution of the receivership funds. Upon the court's approval of the receiver's report, at a hearing after such notice as the court may require to creditors, the personal representative of the subject attorney's estate and the commissioner of accounts of the circuit court in which the deceased attorney's estate is being administered, the receiver shall distribute the funds in the receiver's control, including funds produced by the liquidation of the subject attorney's law practice, first to clients whose funds were or ought to have been held in trust by the subject attorney, then to the receiver for fees, costs and expenses awarded pursuant to subsection E below, and thereafter to the general creditors of the subject attorney's law practice, including clients whose funds were not required to have been held in trust by the subject attorney, and then to the subject attorney or the subject attorney's personal representative.
D. The court may determine whether any assets under the receiver's control should be returned to the subject attorney or the subject attorney's personal representative during the receivership.
E. Any receiver so appointed shall be entitled, upon proper application to the court in which the appointment was made, to recover an award of reasonable fees, costs and expenses. If there are not sufficient nontrust funds to pay the award, then the shortfall shall be paid by the Virginia State Bar, to the extent that the Virginia State Bar has funds available. The Virginia State Bar shall have a claim against the subject attorney or the attorney's estate for the amount paid.
F. This statute is declared to be remedial. Its purpose is to protect the interests of clients adversely affected by attorneys who have either engaged in misconduct or because of disability, impairment, absence, or death are unable to provide legal services for their clients. It is to be liberally administered in order to protect those interests and thereby the public's interest in the quality of legal services provided by Virginia attorneys.
1988, c. 425, § 54-42.01; 1997, c. 239; 2005, cc. 184, 212.