With the law firm of Dreier LLP on the brink of collapse as the result of founder and sole equity partner Marc Dreier’s multi-million dollar criminal fraud, the firm’s lawyers are learning first hand that if a work situation sounds too good to be true, then it probably is. Not only will many Dreier lawyers find themselves out of a job but they also face considerable personal liability exposure if Dreier’s victims sue the firm, because Dreier allowed the firm’s malpractice insurance to lapse, reports the New York Times.
So how did some of New York’s “best and brightest” wind up in this precarious situation? Because Dreier sold them a bill of goods, convincing lawyers to let him handle the business end of the firm so that they could focus on the practice of law. From the Times story:
Dreier was the only equity partner in the firm, and deals were structured so that only he knew all the specifics and had access to all accounts, people with the firm said in court papers. Dreier persuaded lawyers that such an arrangement was best by stressing that it would allow them to concentrate on their first love, the law, while he worried about running the firm. There would be no executive committee. No partners meetings. Dreier would handle all administrative chores.
I’m not sure why this proposed arrangement didn’t set off any alarm bells among firm partners. Surely they must have realized that as partners in a firm, they could face malpractice liability for their partners’ mistakes. But instead of thinking rationally, these lawyers buried their concerns, allowing themselves to buy into the illusion that one can simply practice law without any regard to the messy business of running a firm.
In starting a practice, many new solos may find themselves faced with all kinds of too good to be true propositions from unscrupulous lawyers. Some may offer to provide office space in exchange for a few hours of work a week, then turn around and expect you to work 25 hours a week to meet your rental obligation. Or a lawyer might invite you to rent space in his suite saying, “Oh, we could use a family lawyer here for referrals,” and then six months later, when your business picks up, the lawyer may open his own family law practice and compete for your clients. In another situation, a lawyer rented space to an acquaintance of mine, and started asking him to sign the pleadings. Turned out the lawyer had been suspended from practice, and was using the acquaintance as a temporary front to allow him to continue to practice.
Bottom line: analyze every proposal that you receive with the same due diligence that you’d extend to a client. Get references on the lawyers involved and ask for an unbiased opinion from the bar’s law practice management advisor, a trusted colleague or even your spouse or a friend. As the Dreier situation shows, too good to be true can quickly morph into worse than you ever imagined.
Readers – please share your own horror stories below.