Credit: David Smart/Shutterstock.com Court Rightly Absolved Law Firm in Case of Client Fraud
Liability should attach only if the "attorney misdirects or misappropriates funds, or when an attorney has acted contrary to a known, competing claim—or a competing claim that reasonably should have been known." No further duty should be imposed upon counsel.
September 27, 2020 at 10:00 AM
5 minute read
A wirer of funds to an attorney trust account sued a law firm for breach of fiduciary duty and conversion when the firm's client defrauded the transferor. There is no liability, however, according to the New Jersey Supreme Court, where the law firm had no knowledge of the transferor's existence or any agreement of the transferor and its client, had no contact with the transferor, and made no representations to the transferor.
In Moshe Meisels v. Fox Rothschild LLP, an intermediary entity on behalf of Moshe Meisels, a London real estate investor, wired in two stages almost $2.5 million to the attorney trust account of Fox Rothschild, which represented Eliyahu Weinstein. Meisels and Weinstein were involved in a deal to purchase real estate in Irvington, New Jersey. The wire transfers did not identify Meisels as the owner of the funds and communicated no limiting instructions or explanation from Meisels or the intermediary. Indeed, prior to the onset of the litigation, the firm had no knowledge of Meisels' existence. Meisels had had no communication with the transactional lawyer in charge of the file or anyone else at the law firm.
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