“Golden receivers”

by Walter Olson on August 10, 2009

Fees for receivers, administrators and other professionals are eating up too much of the remaining assets of Madoff and other collapsed investment ventures, critics charge: “in one recent $6.6 million fraud, the receiver distributed 43 percent of the assets to the victim — the rest went to professionals.” [NY Post]

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Golden receivers, cont’d
08.17.09 at 12:21 am

{ 6 comments }

1 PhilG 08.10.09 at 1:10 pm

While the items in Overlawyered are primarily on abuse of the tort system, this shows once again that abuse by some lawyers to line their own pockets goes well beyond the tort system and permeates the practice of law. So reform of the legal system needs to go much further than just tort reform. It is sad that the victims of Ponzi schemes are being victimized twice, once by the Ponzi schemers themselves, then a second time by the lawyers appointed as receivers.

2 VMS 08.10.09 at 1:29 pm

This is disgusting! Legalized theft. The receivers and trustees should receive the statutory schedule of comissions for an executor (or trustee) handling an estate or a trust created by will.
For executors:
(a) For receiving and paying out all sums of money not exceeding
$100,000 at the rate of 5 percent.
(b) For receiving and paying out any additional sums not exceeding
$200,000 at the rate of 4 percent.
(c) For receiving and paying out any additional sums not exceeding
$700,000 at the rate of 3 percent.
(d) For receiving and paying out any additional sums not exceeding
$4,000,000 at the rate of 2 1/2 percent.
(e) For receiving and paying out all sums above $5,000,000 at the rate
of 2 percent.

For Trustees:
1. On the settlement of the account of any trustee under the will of a
person dying after August 31, 1956, or under a lifetime inter trust
established after August 31, 1956, the court must allow to him his
reasonable and necessary expenses actually paid by him and if he be an
attorney of this state and shall have rendered legal services in
connection with his official duties, such compensation for his legal
services as shall appear to the court to be just and reasonable and in
addition thereto it must allow to the trustee for his services as
trustee a commission from principal for paying out all sums of money
constituting principal at the rate of 1 per cent.
2. In addition to the commission allowed by subdivision 1 hereof a
trustee shall be entitled to annual commissions at the following rates:
(a) $10.50 per $1,000 or major fraction thereof on the first $400,000
of principal.
(b) $4.50 per $1,000 or major fraction thereof on the next $600,000 of
principal.
(c) $3.00 per $1,000 or major fraction thereof on all additional
principal.

The NY Surrogate’s Court Procedure Act commission schedule is very fair. It gives the Executor or Trustee just compensation without fleecing the estate. It should be adopted for the Ponzi scheme restitution trustees with a proviso that should the retitution poll be HUGE, the trustee should get paid comensurate with the work involved since I cannot see the non-clerical work for a $6,000,000,000 restitution pool being significantly greater than for a $6,000,000 restitution pool.

3 Doug 08.10.09 at 1:29 pm

I take issue with the wording “and permeates the practice of law.” It sounds, perhaps unintentionally, that all lawyers abuse the system to their own favor. It was not clear to me if only some lawyers or it is all lawyers. I now of many lawyers that toil away day after day with little or no compensation and without recognition.

4 PhilG 08.10.09 at 2:14 pm

Sorry Doug; if you read again what I said above, you will see that I referred to “the abuse by some lawyers” with the emphasis on “some”. What I meant by abuse permeating the practice of law is that abuse of the legal system for the inordinate financial gain of some lawyers at their clients’ expense is found in every legal specialty, so that reform of the legal system really needs to go well beyond just reform of the tort system. And this abuse by lawyers acting as receivers is just another example of that.

5 John Burgess 08.10.09 at 4:21 pm

Permeate

Whether something is spread throughout law (or maybe just lawyering) is a question of both fact and perception. The facts may argue that it is limited in its pervasiveness; the perception is that it is near unto total.

6 Doug 08.10.09 at 6:16 pm

PhilG: I apologize. I reread and understand your thoughts. There are plenty of greedy lawyers out there.

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