Clients’ Security Board awards record amount in FY 2013

Issue December 2013 By Joshua Crawford

The Massachusetts Clients' Security Board awarded a record $2.8 million last year to compensate clients whose lawyers defrauded them. It is the largest collective award distributed by the board since the Supreme Judicial Court established it in 1974 for the purpose of awarding full restitution to clients whose in-state attorneys misappropriated their money or property.

During fiscal year 2013, which ran from Sept. 1, 2012, until Aug. 31, 2013, the board adjudicated 83 of the 108 claims it received, resulting in 69 awards issued.

"The Massachusetts legal community is a leader in the area of client protection. The commonwealth is unique in that attorneys self-fund a system to fully compensate all victims for those rare but unfortunate cases of attorney theft," said Massachusetts Bar Association Chief Legal Counsel Martin W. Healy. "Overall, the vast majority of practitioners are dedicated professionals interested in fully safeguarding their clients' interests."

Forty attorneys were disciplined in 2013, down from 43 in 2012 and 46 in 2010. Those 40 represent just .07 percent of the 57,168 members of the Massachusetts bar.

Of the total award in terms of dollars, just more than 78 percent of defalcations were the result of five attorneys: Phillip M. Thompson of Lowell, $775,564.60; Michael J. Conley of Marblehead, $770,000.00; Daniel S. Braese of North Andover, $269,647.56; Martin J. Gately of Malden, $227,874.24; and Patrick J. McDonough of Waltham, $151,000.00. Together, these attorneys were responsible for $2,194,086.41, which is more than $135,000 greater than all the awards in 2011 combined.

For the first time ever, two lawyers were responsible for awards greater than $750,000. This surpassed the previous high in 2005 when two lawyers accounted for more than $500,000. The smallest claim awarded was $750.

Assistant Clients' Security Board Counsel Karen D. O'Toole said the amount of money, and the money itself, isn't all that matters. For the victims, peace of mind and restored faith in the legal system often accompany the monetary award.

"I received a call the other day from a woman who is receiving $3,000, and she is just so thankful and so happy to have some money to go into winter with," O'Toole said.

She said victims often have long-term attorney-client relationships with the lawyers who defraud them, so "in addition to being shocked, angry and devastated … they lose faith in lawyers. But when they come to us, they find themselves again dealing with lawyers, but are much happier with the experience."

Real estate tops list

The record total award in 2013 coincided with real estate leaping ahead of trusts and estates as the category most responsible for awards given. Real estate transactions accounted for more than $1.27 million in awards, just under half of the total amount dispersed.

While concerns about abuses as a result of mortgage foreclosures exist, the recent jump seemed to be the result of the bad acts of just a few attorneys, said Clients' Security Board Chair Michelle Porter.

Porter also addressed the relatively consistent number of attorneys that are responsible for defalcations. "Year after year we find ourselves dealing with around the same number of attorneys, and around the same amount awarded," she said. This makes it difficult to try to assess trends from year to year, or predict what the next year or five years down the road will look like.

One constant however is the board's ability to make victims whole - both financially and sometimes emotionally.

"The board goes a long way in terms of restoring faith in the profession in those who have been wronged," said Porter. Because while a miniscule fraction of attorneys can fundamentally alter someone's life for the worse, the good work of attorneys at the board help these victims get what they deserve and help the image of lawyers along the way.