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When Is an Attorney Liable for Fraud Committed by Client?

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published October 23, 2012

By CEO and Founder - BCG Attorney Search left

The case of former Mayer Brown partner Joseph Collins unfolding in USA v. Collins, U.S. District Court for the Southern District of New York, No. 07-cr-1170 is of great importance to attorneys. This is one of those rare instances where a corporate attorney has been held liable for legal work done in connection with a client's fraud. It is curious, but true, so there is something to be learnt from following the case, as these cases seem to be increasing in numbers and in-house counsels, as well as outside counsels, are being targeted by law enforcement. Such cases also call to question the limits of attorney-client privilege.
 
Is an attorney liable for fraud committed by client?

Last year, the charges against a lawyer accused of hindering an investigation into the marketing practices of GlaxoSmithKline was dismissed by a federal judge in Maryland. In the instant case, Collins, who was an external legal consultant for Refco is charged with helping the executives of the company conceal a $2.4 billion fraud.

To begin with, Collins has always maintained that his actions were part of a good-faith legal representation of his client, commodities broker Refco, and he was not involved in any conspiracy to commit fraud. Collins was convicted in 2009 and sentenced to a seven-year prison term. Subsequently, an appeals court dismissed the verdict earlier this year, and he is back before the U.S. District Court in Manhattan for a retrial of the matter.

Earlier this month, after his retrial began, Collins submitted that he was misled by top executives of his clients and he is being targeted to “answer for their crimes.” Defense attorney Jonathan Bach, representing Collins said his client had never been informed of or was aware of the fraud being committed by Refco, and that Collins had no possible way to know that Refco executives were concealing illegal accounting practices.

Summing up the situation for any attorney in a similar situation, Bach said, “This man was lied to and used by his clients, and now he has to sit here and answer for their crimes.”

So, how far can an attorney trust his/her clients to tell the truth? Is the attorney liable if he/she were misinformed and acted upon such knowledge?

However, the prosecutors on behalf of the federal government disagree with Collins' view. The U.S. Attorney on the matter, Harry Chernoff had told the jury that Collins' legal work allowed the fraud scheme to continue undetected, even after Refco agreed to sell itself to another private equity firm, and went through an IPO.

The U.S. prosecutor is of the opinion, “The defendant, Joseph Collins, used his law license to earn millions of dollars in fees for legal work to help his client Refco commit one of the biggest frauds Wall Street has ever seen.”

The case thoroughly calls into question the troubles as well as extent to which an attorney requires to exercise discretion while dealing with clients. The prosecutors allege that Collins had failed to disclose to T.H. Lee, the firm that bought Refoco, about the existence of a deal, which gave an Australian bank significant stakes in Refco.

However, Collins argues that he exercised his legal judgment regarding his obligation to disclose information to an intending purchaser of his client. Even if the decision is held erroneous, it does not rise to the level of a crime.

Collins' case has become all the more difficult as the former chief financial officer Robert Trosten pleaded guilty in the case and agreed to testify in the trials of others including in that of Collins. What he says under oath and for motives of self-preservation can hugely affect Collins' fate.

If convicted on the ten counts of wire fraud, bank fraud and conspiracy charges against him, Collins can face up to 20 years in prison.

Whatever happens to be the outcome, Collins' case would remain a benchmark of caution for practicing attorneys, and the extent to which they can trust clients, or exercise their decisions about their knowledge of client activities.

About Harrison Barnes

No legal recruiter in the United States has placed more attorneys at top law firms across every practice area than Harrison Barnes. His unmatched expertise, industry connections, and proven placement strategies have made him the most influential legal career advisor for attorneys seeking success in Big Law, elite boutiques, mid-sized firms, small firms, firms in the largest and smallest markets, and in over 350 separate practice areas.

A Reach Unlike Any Other Legal Recruiter

Most legal recruiters focus only on placing attorneys in large markets or specific practice areas, but Harrison places attorneys at all levels, in all practice areas, and in all locations—from the most prestigious firms in New York, Los Angeles, and Washington, D.C., to small and mid-sized firms in rural markets. Every week, he successfully places attorneys not only in high-demand practice areas like corporate and litigation but also in niche and less commonly recruited areas such as:

  • Immigration law
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This breadth of placements is unheard of in the legal recruiting industry and is a testament to his extraordinary ability to connect attorneys with the right firms, regardless of market size or practice area.

Proven Success at All Levels

With over 25 years of experience, Harrison has successfully placed attorneys at over 1,000 law firms, including:

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He has also placed hundreds of law firm partners and has worked on firm and practice area mergers, helping law firms strategically grow their teams.

Unmatched Commitment to Attorney Success – The Story of BCG Attorney Search

Harrison Barnes is not just the most effective legal recruiter in the country, he is also the founder of BCG Attorney Search, a recruiting powerhouse that has helped thousands of attorneys transform their careers. His vision for BCG goes beyond just job placement; it is built on a mission to provide attorneys with opportunities they would never have access to otherwise. Unlike traditional recruiting firms, BCG Attorney Search operates as a career partner, not just a placement service. The firm’s unparalleled resources, including a team of over 150 employees, enable it to offer customized job searches, direct outreach to firms, and market intelligence that no other legal recruiting service provides. Attorneys working with Harrison and BCG gain access to hidden opportunities, real-time insights on firm hiring trends, and guidance from a team that truly understands the legal market. You can read more about how BCG Attorney Search revolutionizes legal recruiting here: The Story of BCG Attorney Search and What We Do for You.

The Most Trusted Career Advisor for Attorneys

Harrison’s legal career insights are the most widely followed in the profession.

Submit Your Resume to Work with Harrison Barnes

If you are serious about advancing your legal career and want access to the most sought-after law firm opportunities, Harrison Barnes is the most powerful recruiter to have on your side.

Submit your resume today to start working with him: Submit Resume Here.

With an unmatched track record of success, a vast team of over 150 dedicated employees, and a reach into every market and practice area, Harrison Barnes is the recruiter who makes career transformations happen and has the talent and resources behind him to make this happen.

A Relentless Commitment to Attorney Success

Unlike most recruiters who work with only a narrow subset of attorneys, Harrison Barnes works with lawyers at all stages of their careers, from junior associates to senior partners, in every practice area imaginable. His placements are not limited to only those with "elite" credentials—he has helped thousands of attorneys, including those who thought it was impossible to move firms, find their next great opportunity.

Harrison’s work is backed by a team of over 150 professionals who work around the clock to uncover hidden job opportunities at law firms across the country. His team:

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This level of dedicated support is unmatched in the legal recruiting industry.

A Legal Recruiter Who Changes Lives

Harrison believes that every attorney—no matter their background, law school, or previous experience—has the potential to find success in the right law firm environment. Many attorneys come to him feeling stuck in their careers, underpaid, or unsure of their next steps. Through his unique ability to identify the right opportunities, he helps attorneys transform their careers in ways they never thought possible.

He has worked with:

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  • Attorneys in small or remote markets who assumed they had no options—only to be placed at strong firms they never knew existed.
  • Partners looking for a better platform or more autonomy who successfully transitioned to firms where they could grow their practice.

For attorneys who think their options are limited, Harrison Barnes has proven time and time again that opportunities exist—often in places they never expected.

Submit Your Resume Today – Start Your Career Transformation

If you want to explore new career opportunities, Harrison Barnes and BCG Attorney Search are your best resources. Whether you are looking for a BigLaw position, a boutique firm, or a move to a better work environment, Harrison’s expertise will help you take control of your future.

? Submit Your Resume Here to get started with Harrison Barnes today.

Alternative Summary

Harrison is the founder of BCG Attorney Search and several companies in the legal employment space that collectively gets thousands of attorneys jobs each year. Harrison’s writings about attorney careers and placement attract millions of reads each year. Harrison is widely considered the most successful recruiter in the United States and personally places multiple attorneys most weeks. His articles on legal search and placement are read by attorneys, law students and others millions of times per year.

More about Harrison

About LawCrossing

LawCrossing has received tens of thousands of attorneys jobs and has been the leading legal job board in the United States for almost two decades. LawCrossing helps attorneys dramatically improve their careers by locating every legal job opening in the market. Unlike other job sites, LawCrossing consolidates every job in the legal market and posts jobs regardless of whether or not an employer is paying. LawCrossing takes your legal career seriously and understands the legal profession. For more information, please visit www.LawCrossing.com.
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