Panel explores attorney fraud, lack of repercussions

By John O'Brien | Oct 21, 2014


WASHINGTON (Legal Newsline) – Though judges have so far mostly declined to do so, they play a major role in disciplining attorneys who game the asbestos compensation system, a panel told those in attendance at the 2014 Legal Reform Summit.

The first panel at the summit, which was held Tuesday by the U.S. Chamber Institute for Legal Reform, included Georgia-Pacific chief counsel Melissa Brown, former Georgia Attorney General Thurbert Baker and former U.S. Attorney Neil H. MacBride.

The panel’s discussion was titled “A Cracked Looking Glass: Attorney Fraud and the Lack of Accountability.”

Brown began with examples of judges in five states who were upset with asbestos plaintiffs attorneys and the way they handled their clients’ trust claim submissions. Included was a Maryland judge who, in 2011, asked a plaintiffs attorney about exposure claims submitted to asbestos bankruptcy trusts, “So everybody lies and nobody cares?”

Brown asked what if the judge had asked that of a corporate defendant.

“The assumption would be there would be some sort of enforcement against them,” Brown said.

Instead, of the five examples, only one has resulted in sanctions. That occurred in September in Delaware, when Judge Paul Wallace sanctioned Napoli, Bern, Ripka & Shkolnik.

The Napoli firm allegedly failed to timely produce bankruptcy trust claim forms in the case. The firm eventually filed the documents before the claimant’s deposition but did not disclose the claims for more than a year.

As a result, the defendants filed a motion to compel in July. The claimants responded by producing the trust claim forms, including affidavits executed by the plaintiff.

The claimant died before the defendants had an opportunity to depose her on the various claims filed with the bankruptcy trusts.

A motion for sanctions followed.

Brown noted that the amount of the sanction did not cover the cost of a motion to compel and its hearing. Baker added that judges are not aggressive monitoring lawyer conduct and making sure sanctions are appropriate.

“Judges are lawyers,” he said.

So if judges aren’t punishing lawyers appropriately, who will?

Baker said the American Bar Association is a voluntary organization with no disciplinary powers, but has crafted rules of professional conduct that have been adopted in 49 states.

One of those rules requires a lawyer who sees another lawyer acting inappropriately to report it. However, there is no self-reporting requirement.

“That’s a problem,” Baker said.

Baker proposed making self-reporting mandatory. He also believes court reporters should report everytime a lawyer is sanctioned, as should malpractice insurers.

MacBride spoke to a recent trend that has seen corporate defendants use the civil Racketeer Influenced and Corrupt Organizations Act statute to attack plaintiffs attorneys.

As previously reported, CSX Transportation has filed such a case against a former Pittsburgh asbestos firm; Chevron is arguing in its RICO case that a $19 billion judgment against it in Ecuador was the product of a racketeering scheme created by plaintiffs attorney Steven Donziger; and Garlock Sealing has filed a handful of sealed RICO suits against asbestos attorneys it claims manipulated their clients’ asbestos exposure evidence.

“I think a lot of companies and their counsel are paying attention to this,” MacBride said.

He added that he’s found more instances of companies filing RICO suits in these situations than the Department of Justice, which used the criminal RICO statute to prosecute the mafia.

“It’s a maturing area of the law,” he said.

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