Big Law Firms Face Legal Malpractice Suits Over Unraveling Ponzi Schemes
Securities work is one of the riskiest areas of law, as some large law firms are learning.
Among the firms hit with legal malpractice suits brought by victims of alleged Ponzi schemes or court-appointed receivers are Holland & Knight, sued over alleged wrongdoing by disbarred lawyer Arthur Nadel, and Proskauer Rose, sued over its work for billionaire R. Allen Stanford. Both law firms say the suits have no merit.
Securities work can be lucrative, but it is considered so risky that malpractice insurers ask whether lawyers practice in the area, “and then charge a considerable extra sum if they do,” the Miami Herald reports. Deductibles can be as high as $1 million.
“I wouldn’t do any securities cases because it’s a highly specialized area, and that’s how you can get yourself in trouble,” Florida lawyer Glen Waldman told the newspaper.
Bruce Katzen, a partner at Kluger Kaplan Silverman Katzen and Levine in Miami, said plaintiffs in the suits are looking for deep-pocketed defendants, since the alleged perpetrator of the fraud won’t be able to repay the victims. The fact that a firm such as Holland & Knight is a defendant “suggests that no one is immune,” he told the Miami Herald. “It’s a sign of the times. People are looking to go after professionals.”
