What Law Firms Should Be Doing to Stop Their Own Would-Be Crooks

“Don’t steal from your clients” seems an obvious principle for lawyers that shouldn’t need deep explanation in professional conduct rules (though it does in multiple places).

But theft keeps happening. Toxic tort king Thomas Girardi’s conviction for stealing $15 million from victims, among other fraud, is just the latest in a sordid history of attorneys helping themselves to settlement funds and bilking clients.

Former celebrity attorneys Michael Avenatti and F. Lee Bailey join this club of fraudsters who’ve drained millions from people and companies and hidden their crimes until the money is gone. And these are just some better-known offenders. A quick search pulls up dozens of stories of smaller-time lawyers who manipulate the books and collude with colleagues for personal profit.

Is systemic embezzlement a symptom of smaller firms where one partner’s personality dominates, and accounting is easier to obscure and comingle? Or does it happen in Big Law too?

A certain personality type is common among these fallen lawyers—high charisma and demeanor of authority, the ability to lie and use persuasive tactics to gain trust with clients, and to influence teammates to act unethically too.

Today’s multilayered regulations of banking transactions, tax filings, financial accounting, and board governance would seem to make such crimes much harder to get away with. Most midsize and large law firms are well-equipped with internal review, overlapping departments, robust financial controls, and multiple attorneys across matters. But no matter how large or complex a firm, if one or more employees intend to act illegally, they can often find a way.

We’ve seen celebrity lawyer cases take a particularly seedy turn, going beyond the usual workaday transactional law and veering into illicit profiteering—preying on people at low points in their lives and capitalizing on disputes while victims receive little to nothing. It’s the opposite of justice. It’s coercion, and coercion is power.

It’s nerve-wracking for the average person to search up a local firm, meet an attorney briefly during intake, then proceed with a complaint of malpractice, theft, personal injury. Maybe it’s the first time in their lives they ever worked with a lawyer.

They are in a vulnerable spot, in no position to jump through hoops and see what’s behind every transaction. When plaintiffs lack resources and the capability to defend themselves and complain about their lawyer’s conduct (or even be aware anything is happening), the possibility of theft is even more attractive, especially in class actions.

Individuals, particularly in contingency fee cases, “purposely choose smaller firms and charismatic attorneys because they wish to build a specific rapport,” Miriam Baer, Brooklyn Law School vice dean and professor of law, told me. “The personalized attention, the outsized personality, the feeling that the attorney will fight for the client—can also be the source of a client’s misplaced trust.”

Art Burger, of counsel and chair of Jackson & Campbell’s professional responsibility practice in Washington, calls it “powerful person syndrome": a narcissism that professional and ethical rules don’t apply to them. “You can go pretty far as a charismatic, psychopathic, terrific liar in this world,” he said.

Powerful lawyers are a given in many practices, and aggression and tenacity are useful during trial. But power must be ethically deployed, including by those on the firm letterhead.

Every firm is on the hook to maintain its fiduciary duty of loyalty to clients and compliantly manage trust accounts and communications according to banking laws, state bar rules, and all bricks in the legal-ethical infrastructure. Disclosure to clients is a basic requirement in the attorney code of conduct, and should be automatic.

Firms should elevate lawyers of different backgrounds, encourage mentorship, prioritize transparent practice, and deepen internal checks and balances beyond what’s legally required. The good news is more firms are now laser-focused on improving culture—through DEI initiatives, cross-level training, and investments up front when onboarding associates and recent graduates.

No matter how airtight a firm’s financial and ethical procedures, “it all falls apart if there isn’t a basic culture where everybody buys in with longstanding pride and expectation,” Burger said. In this ideal scenario, “it would be odd for somebody to lobby for some huge exception.”

That too should be obvious. If only it were.