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Tuesday, April 12, 2011

The Cost of Legal Corruption Matters Little to Lippman and Pfau

Cost of Cleaning Up After Bad NY Lawyers Spikes
The New York Law Journal by Joel Stashenko  -  April 11, 2011

ALBANY, NY - Claims by clients whose attorneys stole from them surged in 2010, as did the size of payouts from the Lawyers' Fund for Client Protection. There were 820 claims to the fund last year, 67 percent more than in 2009, according to its annual report released Friday.
The $8.5 million paid out last year to the clients of 47 attorneys was 42 percent higher than the $5.6 million paid out in 2009. Individual awards in 2010 ranged from $179 to $300,000, the maximum under the program. The median award was $12,962 and the median claim made to the fund was $109,000.

Timothy J. O'Sullivan, the counsel and executive director of the fund, called last year's increased activity "dramatic" and said administrators believe it is related in some way to the sputtering economy. While the economy appeared to make a slow recovery in 2010 in parts of New York, Mr. O'Sullivan said that many of the awards made last year reflected attorney conduct in 2008 or 2009, when the state was more deeply mired in recession. Mr. O'Sullivan said the desperation levels of the 47 offending lawyers seemed to be reflected in the far higher overall payout in 2010. 

"When the economy slows down and there are problems, a lawyer who may have a problem of some kind, those losses tend to surface more," Mr. O'Sullivan said in an interview Friday. The fund ended the year with 852 claims pending, the highest year-end total in its existence. Those claims allege losses of $82.3 million, though only a fraction of claims tend to result in awards once they are examined by the fund. Former Manhattan attorney Marc A. Bernstein was responsible for the largest overall fund expenditure—$1.5 million to 25 former clients. Mr. Bernstein , formerly of Bernstein & Bernstein, stole money he had won on behalf of medical malpractice clients. He was disbarred and sentenced to three years in state prison. The most claims, 36, were paid out against former Manhattan attorney Marc A. Zirogiannis for his role in a mortgage scam. His former clients received $770,782 from the fund last year. Attorney misconduct for which the fund reimburses clients includes the theft of funds held in escrow, the theft of funds from court awards or debt collections, the embezzlement of investments placed with lawyers on clients' behalf and the nonperformance of agreed upon services for which fees have been taken. 

Fund administrators said the mishandling of clients' real property escrow accounts made up the largest share of reimbursable awards in 2010, totalling $3.5 million. Over the fund's 28-year history, most thefts have involved solo practitioners, the majority male and mi ddle-aged. The most typical causes of attorney theft are substance abuse, economic pressures, mental illness and marital difficulties. Sixty dollars is assigned to the fund out of the $375 biennial attorney registration fee paid by New York attorneys. There are 262,000 registered lawyers in the state. Joel Stashenko can be contacted at


disgusted said...

As long as Lippman is Chief Judge, he will only care about the money that he puts in his pocket, and the accounts of his family and friends. Why isn't Lippman quoted in this article? Maybe because is so busy picking out the curtains for the $23million dollar Albany hotel used by judges who are only in session 60 days a year.

Anonymous said...

One word describes the actions by these lawyers- CRIMINAL.

Why aren't more of these lawyers being prosecuted?

Anonymous said...

Call in the Feds!!

Anonymous said...

Judge Lippman has been heard more than once to say 'let them (the little people) eat cake!' He and his 'friends' want their Ritz digs in Albany!


As the victim of an attorney, disbarred not so much for mine and others complaints, but for his ignoring the 9thJD/Casella clan correspondence/demand to respond. For his failure, he was disbarred. I received the balance of my retainer upon demand. I was then left to deal with obtaining reimbursement for the funds not reimbursed, luckily being under $3000, in small claims. Having won this decision I was instructed to make a claim to the 'fund' to obtain this uncollected portion. This turned out to be a battle itself. All told, I ended up spending about $20k in opportunity cost dealing with this cacophony of characters; a system inherently designed to reap repetitious profits for (matrimonial) attorneys and wreak havoc on families in transition. The lawyer, having caused these damages AND to other parties, reapplies the Bar and gets his license to-screw-up reinstated. Overall, I'm glad the fund was there. However, JL,Esq of New City,your an embarrassment to the Bar to have knowingly caused such damage to your defendant-client and never make any attempt to make amends to this damage above and beyond the responsibility of what the Lawyers Fund can possibly accomplish for your misbehavior. Attorneys all too aware that this fund will 'make-good' their 'bad' and all history will simply go away. The 9th Judicial District Grievance Committee is there to 'keep the machine running' and, as witness to an Ethics CLE presented by this Committee, stresses to attorneys to NOT IGNORE their correspondence otherwise, "we can't help you." FACT. You think you were hearing a UNION REP speak.

Anonymous said...

I work for OCA. I am waiting for my pick slip. I am hoping that His Highness Jonathan Lippman uses the letterhead that includes: State of New York, Unified Court System, $23Million Dollar Judge Hotel, Albany, New York. Lippman and Pfau, and their crew, have ruined a court system and ruined many peoples' lives. Everyone I know is ready to speak out against the corruption that has been written about- it's all true.

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