Category: ABA

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Starting a Law Firm No-Nos | Minnesota Law Firm scammed to tune of $400,000

As reported by the ABA Journal, the Minnesota law firm of Milavetz, Gallop & Milavetz (MGM) has sued Wells Fargo Bank for cashing a fraudulent check in the amount of nearly $400,000 from MGM’s IOLTA account.  Click here for a copy of the complaint.  Bad news.

According to reports in the Minnesota Star Tribune, MGM was the victim of a scam, three-years-ago, involving someone who said she was a 40-year-old Korean woman who was hurt in Minnesota.  The woman apparently told the firm that she needed help securing a $400,000 legal settlement.  Believing her, the firm received a settlement check for the amount, deposited in the bank, and received assurances it had cleared from Wells Fargo.  The forwarded amount of the check was $396,500 and it went to a Hong Kong bank.

Reading the complaint filed by MGM is not entirely helpful.  As would be expected, the complaint is largely one-sided.  I will report on this more when Wells Fargo files its answer.

This story has been all over the news in Minnesota and is being discussed by bloggers (like me) and has been on multiple listservs which I belong to.  The general reaction?  Disbelief.

No, it isn’t disbelief that this could happen – this has apparently happened to over 70 lawyers in the United States and has cost an estimated $29 million dollars in damages.  The disbelief is related more to the fact that a law firm would fall for this kind of scam.

I don’t have all the facts, so I am not going to speculate on what happened.  My two cents is that I have been contacted on numerous occassions by scammers with very similar stories.  In fact, one of my former bosses came up to me in the halway about a year-ago and was giddy with news that he would be handling a very lucrative settlement.  He told me all about it and that it would be very little work.  He contacted the firm’s bank and they did a little investigation. Guess what, it was a scam.  He was almost duped.  My boss was a judge and lawyer for nearly 40-years.  It can happen to anybody.

Let this case be a warning to anybody out there who is running a law practice or starting a law firm that scammers exist, they are sophisticated, and you better watch your ass.

Luckily, as a small-fry solo practitioner who doesn’t deal in the hundreds-of-thousands of dollars, I don’t have to worry about scams quite as much.  If my bank was asked to clear a $400,000 check from my trust account, they would probably just laugh.  I guess that is one of the advantages of being a solo – less money for scammers to steal.

 

-This post was written by Joseph M. Flanders, an Apple Valley, MN attorney.

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Starting a Law Firm | The Law School Bubble

I recently began receiving the ABA Journal as a card carrying member of the ABA.  I find this mildly amusing given that I didn’t begin receiving anything from the ABA – outside of CLE advertisements – until I started my own law practice.  If I get one thing out of being a solo lawyer, at least the ABA thinks I’m worthy of receiving a free copy of their magazine.

In the March, 2012 issue, the journal had some very interesting letters to the editor.  The letters were in regard to the so-called “law school bubble.”  For those who don’t know, the law school bubble refers to the notion that there are too many law school, too many lawyers, and too high tuition.  In essence, the argument that is taking place goes something like this:  because there are not enough lawyer jobs, law schools who charge high tuition are not creating a viable return on investment for the students attending the schools.

One letter in particular really grabbed my attention:

The ABA is a major contributing cause to the continually shrinking job market for attorneys.  It makes me sick every time I read that there has been a new admission of 300 attorneys in Kentucky in the past six months.  Not only is there no place for these new attorneys to work but the are driving down the salaries of more experienced attorneys who have to compete with them . . .

Good points, all.  However, I wonder, is it true that law school tuition has raised at such an exorbitant rate in comparison to national salaries, or is the recent recession to blame?

So I did a little research. Check out law school tuition statistics from 1985 to 2009 at private and public law schools as reported by the ABA. If you look at the statistics (and, no, I am not vouching for the source) the raise in tuition appears to be steady from a year-to-year basis for both public and private law schools.

In fact, since the recession began in or around 2007, private and public law school tuition has not risen significantly in terms of percentage from the previous year.  From the ABA’s date, it would appear that law school administrators are in fact aware of the recession and are considering tuition increases appropriately.

Now, you can certainly argue that just because tuition is not being raised doesn’t mean that there is no “law school bubble”.  However, it doesn’t appear that law schools have been entirely blind to the recession and the problems that it has created for law school graduates.

Students also have the opportunity to do a little research of their own before deciding whether their investment in law school is going to be a good decision for them.  Employment statistics are out there for people willing to look.  However, at lot has been made out of the fact that some law schools have allegedly skewed their post-graduation employment data.  Heck, even Congress is looking into it.  It is a big deal:

The ABA Section of Legal Education and Admissions to the Bar has also been criticized for releasing post-law school statistics that are vague in terms of whether or not the employment is in the legal field, or if it is full or part-time. The ABA Section alleges that their future statistics will be more precise.

I will be the first to recognize that the allegations are alarming.  I would also like to be the first to posit:  maybe it’s not the law school, but, instead, society’s misconception about the value of a law degree?  Lying about employment statistics is one thing, failing to be aware of real job prospects is another.

I chose to go to a law school (University of North Dakota School of Law) that didn’t charge high tuition and who wasn’t hiding the fact that the legal job market wasn’t so good when I graduated.  Oddly, UND is not a “tier 1” law school according to the US News.   I didn’t pay a lot and I made a good salary when I graduated.  I felt like the investment was a good one.  My employers did not care at all where I went to law school – they looked at my grades, my employment record, and other standard “getting a job” related information.

My point here is that I made a choice to go to a less “prestigious” law school that charged a reasonable tuition.  The “ranking” of my law school has absolutely no affect on when I received a job and how much I was paid.  My employers didn’t care.  Why?  I would argue that it was because where I graduated from wasn’t important.  What was important is the person I was and my attitude about being a good lawyer.

In sum, I would argue that the recession has created a lot of problems for all kinds of people in all kinds of professions.  Lawyers are not alone in this.  I don’t feel sorry for myself that I’m a lawyer in a bad job market, instead, I do what I did in law school – I put my nose to the grindstone and start being proactive.  I certainly don’t blame the ABA or the law school system writ large when things go badly for me.