What Can I Do If My Attorney Cheated Me or Stole my Money

By Michael Joseph on April 13, 2019

A lot of lawyers shy away from bringing lawsuits against their fellow attorneys, but our New York City commercial lawyers know that there is both good and bad in every profession, including our own. While mere dissatisfaction with the result isn’t. a reason to sue a Lawyer, where a lawyer has cheated or swindled their client or taken an unfair advantage of a client, the attorney shouldn’t be held accountable. A brief but non-exhaustive list of some common scenarios and remedies are as follows.

Judiciary Law 487 applies to situations where a lawyer engages in dishonesty and deceives a party or comes into possession of another’s money which they are not entitled to. Under Judiciary Law 487 an attorney who violates 487 forfeits to the party injured treble damages, to be recovered in a civil action. Rule 1.8 (f) of the Rules of Professional Conduct, (22 NYCRR 1200.0) states in pertinent part that a lawyer shall not accept compensation for representing a client, or anything of value unless: the client gives informed consent and there is no interference with the lawyer's independent professional judgment or with the client-lawyer relationship.

Another common problem occurs where lawyers represent parties in a matter where the have an interest which may not coincide with the client’s interest. Rule 1.7 states that a lawyer shall not represent a client if a reasonable lawyer would conclude that either the representation will involve the lawyer in representing differing interests or there is a significant risk that the lawyer's professional judgment on behalf of a client would be adversely affected by the lawyer's own financial, business, property or other personal interests.

Of course when an attorney has an interest which is not aligned with the client’s, they have to disclose their interests to their client. When a fiduciary, in furtherance of its individual interests, deals with the beneficiary, the fiduciary is strictly obligated to make "full disclosure of all material facts"

When a lawyer acts against his client’s best interest they can be sued for breach of fiduciary duty. To prove a case of breach of fiduciary duty, the Plaintiff has to prove (1) the existence of a fiduciary duty between the parties, (2) the breach of that duty, and (3) damages suffered by the Plaintiff as a result of the breach. When a lawyer handles a litigation or transaction for a client,  in which the lawyer has an interest,  the lawyer is strictly obligated to make "full disclosure of all material facts". In fact, where a fiduciary relationship exists between the parties, there must be clear proof of the integrity and fairness of a transaction between them, or any benefit obtained by the lawyer  will be set aside or held as invalid. An attorney cannot contractually relieve him or herself of the fiduciary obligation of full disclosure by withholding the  information the beneficiary needs in order to make a reasoned judgment whether to agree to the proposed contract. The duty to deal fairly, honestly and with undivided loyalty superimposes onto the attorney-client relationship a set of special and unique duties, including the duty to safeguard a client's property and honoring the clients' interests over the lawyer's. The legal profession  always recognized as a basic principle that a lawyer may not exploit his own client through a lack of disclosure and pursue affirmative steps to benefit himself at the expense of that client. Where a client loses funds or property because an attorney took unfair advantage of their client, our New York City commercial litigation attorneys are willing to go after a dishonest lawyer and try to make things right.

Another avenue to pursue against an attorney who has engaged in dishonesty is a fraud lawsuit. Fraud involves a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury. A false statement of intention is sufficient to support an action for fraud, even where that statement relates to an agreement between the parties.  To prove a fraud case l, the plaintiff must establish that the attorney made  a representation of material fact, falsity, scienter, reliance and injury.  In general, fraud occurs where there has been a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury. A fraud case can be based on acts of concealment where the defendant had a duty to disclose material information.  Where there is an attorney-client relationship, the lawyer’s failure to disclose facts, which one is required to disclose, may constitute actual fraud, provided the fiduciary possesses the requisite intent to deceive. Constructive fraud is similar to fraudulent concealment except that the element of scienter, i.e., intent to deceive, need not be proven. The element of scienter is dropped and is replaced by a requirement that the plaintiff prove the existence of a fiduciary or confidential relationship. Thus, constructive fraud refers to an act done or omitted, not with actual design to perpetrate positive fraud or injury upon other persons, but which, nevertheless, amounts to positive fraud, or is construed as a fraud by the court because of its detrimental effect upon public interests and public or private confidence.

 

Another issue arises where attorney charge excessive fees or taking interests in property which far exceed the value of the services they render. Rule 1.5(a) states that a lawyer shall not make an agreement for, charge, or collect an excessive fee. (22 NYCRR 1200.0). A fee is excessive when, a reasonable lawyer would be left with a definite and firm conviction that the fee is excessive. Jurisprudence places the burden on attorneys who have drafted the retainer agreements to show that the contracts are fair, reasonable and fully known and understood by their clients. Even in the absence of fraud or undue influence, the attorney must show that the client executed the contract with full knowledge of all the material circumstances known to the attorney and that the contract was one free from fraud on the attorney's part or misconception on the part of the client.Since the inception of our modern legal system, the Courts have long held the traditional authority to "supervise" the charging of legal fees under the court's inherent statutory power to regulate the practice of law. Courts give particular scrutiny to fee arrangements between attorneys and clients, placing the burden on attorneys to show the retainer agreement is "fair, reasonable, and fully known and understood by their clients". Courts pay particular attention to revised fee agreements which are entered into after the lawyer is already handling a matter. A revised fee agreement, which is entered into after the attorney has already begun to provide legal services is reviewed with heightened scrutiny, because a confidential relationship has been established and the opportunity for exploitation of the client is enhanced.

The law requires that an agreement between the client and the attorney  be construed most favorably to the client. In some cases, the amount of the fee, standing alone, may be sufficient to show that an unfair advantage was taken of the client or, in other words, that a legal fraud was perpetrated upon him. Where there is an issue as to the reasonableness of the attorney's fee, the burden is on the attorney to establish the reasonableness of the fees charged, and it is the court's ultimate responsibility to ascertain the relationship between the amount agreed upon by the parties and the legal services actually performed by the attorney. Stated differently, the ultimate determination by the court will center on whether the fees in question are reasonable and the attorney's fees directly relate to the necessary work performed by counsel in litigating the underlying matter. The fee may be disallowed by the Court where the amount becomes large enough to be out of all proportion to the value of the professional services rendered.

Our New York commercial litigation lawyers in Midtown Manhattan will continue to fight for the rights of those victimized by other members of our profession.

 

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