Another Issue for Dreier Lawyers: Lapsed Malpractice Coverage
A scary law firm financial situation that already posed possible liability risks to non-equity partners at Dreier has gotten even more frightening.
Initially, with Marc Dreier, the firm’s only equity partner, as the sole person in charge of the 250-attorney partnership’s finances, it seemed that other attorneys there were benefited by having more time to focus on their law practices, according to the New York Times.
But news earlier this month that Dreier, 58, allegedly had bilked sophisticated investors out of $380 million by selling them fraudulent debt instruments hit his law firm like a neutron bomb. A spotlight suddenly shone on its finances, and a receiver was appointed. “For lawyers there now,” the article states, “the delegation of responsibility means that they are just now figuring out that Mr. Dreier had let their malpractice insurance lapse, exposing them to enormous risk if they are sued by Mr. Dreier’s growing list of potential victims,” according to attorneys.
As discussed in earlier ABAJournal.com posts, nonequity partners face potential liability, depending on their contracts with the law firm and their roles in handling client matters. Meanwhile, law firm bills haven’t been paid, and remaining employees were told by the receiver not to expect paychecks today.
The Times article also provides additional details of the debacle, including news that the firm’s comptroller, while refusing to transfer funds from client escrow accounts to his boss, “did agree, though, to Mr. Dreier’s request to be connected to the bank that handled the law firm’s accounts,” assistant United States attorney Jonathan Streeter said last week in a bail hearing. (Bond was denied.)
Allegedly, Dreier then transferred the money himself, as he sat in a Canadian jail awaiting a bail hearing, according to Forbes.
A Harvard Law School graduate, Dreier was initially arrested in Toronto on a criminal impersonation charge early this month. He was then arrested by U.S. authorities, in a related case, when he returned to New York after being released on $100,000 bail in Canada.
Related coverage:
New York Personal Injury Law Blog: “Will Dreier Partners Be Liable for Stolen Money?”
