Expensive Lesson? Despite Court Order, NY Divorce Lawyer Hands Out $61K
A New York lawyer has been disqualified from a matrimonial case and will have to pay as much as $42,500 for depositing into his escrow account and then evenly splitting between the divorcing spouses a two-party $61,570 auction house check from the sale of their art work.
A stipulation prepared by other counsel earlier in the case and a court order both prohibited the distribution of the funds without the signature of lawyers for both sides or court approval, reports the New York Law Journal in an article reprinted in New York Lawyer (reg. req.). But attorney Peter Mollo says he was unaware of this requirement as he sought to help his client stave off a pending eviction by depositing the auction house check and distributing the money.
When he did so, however, opposing counsel refused the distribution, asked Mollo to tender the full amount and sought his disqualification. In a 27-page ruling earlier this month, Brooklyn Supreme Court Justice Rachel Adams removed Mollo from the case and ordered him to pay a $2,500 fine and an as-yet-undetermined portion of $40,000 in legal fees that will be split between him and his client, the legal publication recounts. By not promptly refunding the money, Mollo has prolonged the divorce litigation, the judge says in her opinion.
Attorney Robert G. Smith, who represents the other spouse, says he felt the distribution of the funds violated legal ethics rules and required him to bring the situation to the court’s attention, which he did. He also says that marital property is normally distributed in a court order, unless both sides consent to an earlier division of assets.
Mollo, however, says the financial issue will be resolved in the final distribution of assets, by a credit from his client to her husband, and plans to appeal Adams’ ruling.
“I’ve been embarrassed by this whole thing and I don’t deserve it. I did nothing wrong,” he tells the New York Law Journal. “All I did was help my client not get evicted, and everybody got their money. I think it’s outrageous.”
