Lawyers Fraud Leads to $2.8 Million in Claims

In Massachusetts, clients who are defrauded by their attorneys can apply the Massachusetts Clients’ Security Board for compensation.  This is different from legal negligence, otherwise known as legal malpractice claims.

2013 was a record year for awards to victims of attorney fraud for the self funded MCSB which received over one hundred claims.

Massachusetts Clients’ Security Board

The Massachusetts Clients’ Security Board was started in 1974 by the Supreme Judicial Court.  It is funded from the interest on client accounts, called IOLTA (Interest on Lawyer’s Trust Accounts).  Its goal is to compensate clients whose lawyers misappropriated their fees.

In 2013, the Clients’ Security Board received 108 claims and made 69 monetary awards, with 5 attorneys responsible for 78% of the fraud.  Those five attorneys accounted for $2,194,086 in damages, with two responsible for more than $750,000.  Of note is that only 14 claims did not result in awards.

The latent function of the MCSB is to help restore faith in the Massachusetts legal system.  While only 0.07% of attorneys were responsible for defalcations in 2013, restoring trust among the folks affected, is the critical part of the MCSB’s job.

According to the MCSB, real estate led the list of fraud, with over $1.27 million in awards.  Trusts and estates claims were second.

The MCSB Trend

It is hard to try not to be a statistician when looking at the numbers, so here it goes.  The number of attorneys found responsible by the MSCB has gone from 46 in 2010 down to 33 in 2011, up to 43 in 2012 and 40 in 2013.  There does not seem to be any trend here.

The total awards given have ranged from $2.8 million this year to $2.06 million in 2011.  While $650,000 seems like a big difference, it may only be caused by a very small number of claims, and not one single claim.

Legal Malpractice in Massachusetts

What is the difference between a fraud claim and a legal malpractice claim?  The MCSB claims tend to be much simpler:  did the lawyer take your money?  If so, there is a valid claim with the MCSB.  For example, if there is a real estate transaction and the proceeds of your sale ended up in the hands of your lawyer, you would have a valid MCSB claim.

Legal malpractice, on the other hand, asks the question:  did your lawyer perform his or her duties in a negligent or harmful way, causing you damages.  Thus, if your lawyer misses the statute of limitation for filing a valid claim, you may have damages because of the negligence.  And you may have a legal malpractice claim.  The MCSB would not likely look at your claim.

Contact the Massachusetts Clients’ Security Board

Folks who believe that they were the victims of attorney fraud should contact the MCSB.  Victims of legal malpractice should contact an experienced malpractice attorney.

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