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When Is an Attorney Liable for Fraud Committed by Client?

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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.

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