Friday, October 7, 2022

Failure To Pay Litigation Funder Lien Draws Disbarment

The New York Appellate Division for the First Judicial Department has disbarred an attorney who failed to honor the liens of a litigation funder

In 2017, Global Financial Credit, LLC (Global), a litigation financing company which gave cash advances to several of respondent's clients based on their potential recoveries, filed a complaint with the Attorney Grievance Committee (AGC) alleging that respondent had failed to honor liens in several personal injury matters. The complaint claimed that respondent converted the cash advances and his clients' settlements to his personal use, and provided false and misleading information to Global about the nature and status of his clients' claims, some of which had been settled. The AGC's investigation, which included a review of respondent's bookkeeping records for his attorney escrow account and business account, and three depositions of respondent, led to allegations that respondent had commingled, misappropriated and converted more than $63,000 in client and third-party funds to his own benefit.

On March 5, 2020, this Court immediately suspended respondent from the practice of law pursuant to the Rules for Attorney Disciplinary Matters (22 NYCRR) ยง 1240.9(a)(2) and (5), based upon the bank records and admissions he made during a deposition before the AGC which evidenced that he misappropriated and/or converted client and third-party funds in three separate matters and used said funds for his own personal purposes without permission (183 AD3d 32 [1st Dept 2020]).


Respondent failed to interpose an answer or otherwise respond to the charges. By unpublished order entered March 5, 2021, this Court deemed the charges admitted based on respondent's default and appointed a referee to conduct a hearing to consider evidence in mitigation and aggravation, if any, and recommend such disciplinary action as might be appropriate. The AGC introduced exhibits consisting of respondent's escrow account records, Excel spreadsheets, loan documents and security agreements regarding liens, transcripts of respondent's EUO and court filings, and also summarized the charges sustained against him by the Court.

The Referee found that respondent had received sufficient notice of the sanction hearing but had chosen not to appear. The Referee agreed with the AGC that the misconduct at issue, the aggravation, including respondent's failure to answer the charges or to appear at the sanction hearing, and the absence of mitigation, warranted the sanction of disbarment.

(Mike Frisch)

Bar Discipline & Process | Permalink


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