According to Manhattan D.A. Robert Morgenthau, New York lawyer Marc Bernstein “settled these cases pretty cheap, then took the money and ran.” [NY Daily News, press release] Meanwhile: “Prominent Arkansas plaintiffs securities lawyer Gene Cauley is expected to plead guilty for failing to pay clients $9.3 million in settlement funds he was supposed to be holding as their escrow agent.” [ABA Journal, earlier] According to a report dated February (PDF) from the ABA’s Center for Professional Responsibility, New York is among the states that have adopted payee notification reforms intended to catch this category of fraud at an early stage; Arkansas has not. For more on payee notification, see my 2006 paper with Peter Morin.
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ABA Journal: “After stealing more than $1.6 million from at least 46 clients over a six-year period, then-personal injury attorney Steven Bearman reportedly kept working as a Houston lawyer while awaiting trial after his 2006 arrest.” Among other defalcations, “Bearman settled clients’ cases without telling them”, exactly the sort of misconduct that payee notification (having insurers give notice directly to claimants of the timing and amount of settlements) is meant to stop. Texas unfortunately is not one of the dozen states that have enacted the reform (per an ABA compilation, they are California, Connecticut, Delaware, Georgia, Hawaii, Kansas, Massachusetts, Nevada, New Jersey, New York, Pennsylvania, and Rhode Island).
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