The recession has driven an increasing number of California lawyers to cheat and steal, say State Bar officials, who expect to discipline or expel hundreds of them.
Financial pressures are behind the increase in lawyer wrongdoing, they say. Clients say their lawyers illegally withheld settlement money or charged them for work they didn't do, especially those who promised help modifying mortgages.
This recession has been especially hard on lawyers, said Carol Langford, a San Francisco lawyer who defends lawyers before the California State Bar Court.
In past downturns, lawyers were among the last professionals affected because clients usually put a priority on paying legal bills, Langford said. Now everyone is "waiting until the very last minute to pay a lawyer," she said.
The State Bar is investigating more than 300 California lawyers involved in loan-modification rip-offs. Typically, homeowners facing foreclosure complain they paid attorneys who then did nothing to help them keep their homes.
In 2008, before the flood of loan-modification cases, the state disciplined 469 of the state's 206,165 lawyers. Of those, 245 were suspended from practicing law and 57 were disbarred. The disciplinary figures for last year have not been released, but "we anticipate seeing very different numbers in 2009," said Etzel Berrio, special assistant to the bar's chief trial counsel.
The State Bar is investigating 1,200 loan-modification cases.
Langford said she has seen an uptick in lawyers mishandling client trust funds.
Lawyers are required to keep funds in separate accounts for clients. They're supposed to turn over money to a client if a case settles.
Attorneys who steal from clients often start off by "borrowing" money from their clients' trust accounts. They put a little bit of the money back, but not all. After a while, they end up being unable to repay, said Andrew Kaufman, a professor of legal ethics at Harvard Law School.