“Don’t steal from your clients” seems an obvious principle for lawyers that shouldn’t need deep explanation in professional conduct rules, though it does in multiple places. However, theft within the legal profession unfortunately persists. One recent, high-profile example is the conviction of Thomas Girardi for stealing $15 million from victims and other frauds. This case is part of a pattern that includes notable former attorneys such as Michael Avenatti and F. Lee Bailey. These cases raise questions about the systemic nature of embezzlement within the legal field and the characteristics that allow such behavior to go unnoticed.
The potential for such fraud may be higher in smaller firms where one partner’s personality dominates and accounting practices are easier to obscure and comingle. Yet, mid-sized and large law firms are not immune, as even the most robust internal controls can be subverted by determined individuals. Oversight mechanisms such as internal reviews, financial controls, and communication standards are necessary but not always sufficient on their own.
Miriam Baer, vice dean and professor of law at Brooklyn Law School, discusses the phenomenon of “powerful person syndrome” in smaller firms. Clients, particularly in contingency fee cases, seek personalized attention and rapport. However, this can lead to misplaced trust, making them vulnerable to exploitation. Art Burger, of counsel and chair of Jackson & Campbell’s professional responsibility practice, explains that certain charismatic personalities can manipulate clients and colleagues, believing they are exempt from ethical rules.
To address this issue, law firms must build a culture of transparency and accountability. This includes pooling diverse backgrounds, encouraging mentorship, and enhancing internal checks beyond legal requirements. Increasing focus on cultural improvements through DEI initiatives, targeted training, and careful onboarding can bolster firms against such fraud. As Art Burger notes, successful ethical behavior in law firms depends significantly on a shared culture where ethical conduct is the norm and outliers stand out.
For more information on this topic, you can read the full article on Bloomberg Law here.