Hello everyone and welcome to this JACPA Ethics Alert blog which will discuss the recent report of the Louisiana Disciplinary Board which recommended that a Louisiana lawyer who failed to properly supervise a lawyer in his office receive a deferred sixty (60) day suspension, attend Ethics School and/or CLE “geared toward solo practitioners, and pay investigative costs.
According to the Board’s report, the lawyer failed to supervise a lawyer that he employed in his high-volume real estate practice who engaged in a house-flipping scheme. The scheme allegedly involved sellers who intended to sell their properties directly to the buyers; however, their homes were actually sold to a financial services company without their knowledge. The financial services company in turn sold the properties to the buyers at an inflated price.
The report also found that the lawyer who allegedly perpetuated the scheme was apparently hired to help with the accused lawyer’s “exploding” real estate practice and he was essentially unsupervised. The accused lawyer also failed to properly supervise his daughter, who acted as the office manager, and another employee who worked on real closings. The lawyer who allegedly perpetuated the scheme blamed the document preparer and closing agent; however the report was skeptical of those explanations, to say the least. The report found that the lawyer who allegedly perpetuated the scheme “lacked credibility in all aspects of his testimony, except maybe when he stated his name,” the report said.
In addition, the report also found that the accused lawyer had an “extremely loose ship” and his non-lawyer daughter essentially ran his practice but he was a “sympathetic, but credible witness.” Further, the lawyer “was a trusting man, to his detriment, and the detriment of the victim buyers”; however, he “could have and should have seen the problems…”
Bottom line: We’ll see whether the Louisiana Supreme Court agrees with the Board’s recommendation of a deferred suspension; however, lawyers in all jurisdictions are responsible for properly supervising subordinate lawyers and non-lawyers and this appears to be an example of what could happen if the supervision is lax (or non-existent). The Rules Regulating The Florida Bar set forth the specific requirements for supervising lawyers, specifically Rules 4-5.1 and 4-5.3.
…be careful out there!
As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.
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