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The Florida Flood in Housing Crisis-Related Attorney Misconduct Cases

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The recent flood of attorney misconduct cases in Florida serves as an ideal example of a situation where changes in law pushes both lawyers and clients into unfamiliar territory and triggering of suspicions and allegations. This does not mean that all of 1400 attorney misconduct cases related to the housing crisis in Florida are results of misunderstandings. However it is safe to assume that lack of process familiarity and lack of knowledge over mutual responsibilities led to a large number of those attorney misconduct complaints.

At least 208 of the housing related cases have already affected attorneys with penalties ranging from disbarment to public reprimand. Out of the 793 loan modification cases filed since 2010 there have been three disbarments and 137 cases of disciplinary action.



A situation like this is truly unthinkable in the centuries of legal profession in the state and the country, so what went wrong is worthy of investigation. Attorneys committing wholesale misconduct are difficult to find in history, and as one lawyer put it “Everybody pushes the fraud button, that’s everyone’s first reaction. You may find sloppy processing, but not necessarily fraud.”

In the cases of foreclosure fraud, which is the highest kind of fraud in the housing sector, out of the 54 attorney misconduct cases which have been disposed so far, there has not been a single conviction.

The situation was brought about by change in laws. A 2010 law that required loan-modification businesses to be state licensed, coupled with a 2008 law banning companies from collecting upfront fees, left attorneys as the only professionals outside the ambit of restrictions.

Suddenly, loan modification firms found that employing attorneys to ‘front’ their activities was one of the few ways left to continue viable business. Attorneys started receiving hundreds of phone calls from such companies. While most declined from professional caution, others accepted the offers and drifted into unfamiliar territory.

An exemplary case of the situation would be that of Boca Raton attorney William O’Toole. O’Toole’s Summit Legal Group worked with as many as 3,000 clients across the nation and according to a deposition O’Toole gave in his misconduct case; he had to allow almost exclusive control of his office to non-lawyers who handled contact with all clients. In August, O’Toole was put under emergency suspension with the Florida Supreme Court opining that his foreclosure defense business was causing “great public harm.”

This kind of situation is exactly what professional lawyers like to avoid, and the reason why the ABA recently stepped back from considering the extension of non-lawyer ownership of law firms to regions outside the District of Columbia. When a lawyer is no more than the ‘front’ of a business and clients are contacted, acquired, and handled by non-lawyers, the lawyer has ‘stake,’ but little ‘control.’ This is hardly a situation where a professional lawyer would like to find himself or herself. However, the socioeconomic influence of the recession also left its scars on every segment of the society, lawyers included. And seeking an easy, but doubtful way out has taken its costs.

The fact that the unprecedented number of attorney misconduct cases before the Florida bar are almost all related to the housing sector is sufficient to indicate that it was the lack of caution rather than misconduct that is to blame. Attorneys moving into a new sector can make mistakes, but suddenly attorneys practicing in a particular sector, and only that sector, do not start misconduct en masse. That is hard to digest.

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Legal Profession      Attorney Misconduct     

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