A recent issue of Massachusetts Lawyers Weekly features Stephen Riden in an article titled “Cost of lawyer’s fraud falls on client, not third party.”
The article covers a decision by the Massachusetts Superior Court in Middlesex County concerning the impact of fraudulent conduct by an attorney, and which party must shoulder the burden of the attorney’s misdeeds. The decision was entered in the case titled Artin Service Station, Inc. v. Mitri, Lawyers Weekly No. 12-088-17.
In the decision, the Middlesex Superior Court explained that attorney for the plaintiff Artin Service Station pocketed settlement proceeds that were supposed to be paid to a third party. The court ruled that, even though both Artin Service Station and the third party were victims of the lawyer’s misconduct, Artin Service Station had to bear the loss.
The court reasoned that “[t]his result is plainly unsatisfying to Artin, which is a victim of its agent attorney. There is likely little comfort in the fact that Artin’s claims against the disbarred wrongdoer, Levintoff, are compelling. But where neither the principal nor the third person did anything wrong, and both are victims of Levintoff’s wrongdoing, the law requires the principal to bear the risk.”
In the article, Steve Riden is quoted as follows:
Boston attorney Stephen D. Riden said that the message from the decision is that companies and individuals shopping for legal representation need to do their homework and then monitor their lawyer’s activities.
He added that the cautionary tale extends to employers who use “agents,” i.e., their employees, whose wrongful conduct could bind and harm them.
The decision went the right way from a practical perspective, Riden said. If the decision had imposed a duty to investigate possible fraudulent conduct by an agent, it would “inject a huge amount of uncertainty into every business transaction,” potentially bringing those dealings to a halt.
The article is by Massachusetts Lawyers Weekly’s reporter, Kris Olson.
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