Some Madoff Investors Complain Their Lawyers Were to Blame
Some law firms could face liability for advising clients who lost money with Bernard Madoff, according to a Massachusetts state official.
Secretary of State William Galvin, who regulates securities brokers in Massachusetts, told the Boston Globe that he is hearing complaints from Madoff clients who may be blaming lawyers for losses.
“I am aware that there are some investors who made it their personal practice to have attorneys review their investments, especially if they were charities,” Galvin told the Globe. The law firms could face liability in such situtations, he said, depending on what the lawyers agreed to do.
Boston lawyer Robert Muldoon Jr., who defends other lawyers, thinks liability is unlikely. He told the newspaper that clients may be mistaken if they think their lawyers agreed to give them investment advice. “In many instances, that is not the case,” he told the Globe. Client engagement letters often spell out what services a lawyer is offering, and may shield lawyers from liability.
For example, a lawyer doing trusts and estate work generally does not review assets or how they are invested, he said. A lawyer would not be liable unless he or she was a trustee and had agreed to review investments for appropriateness.
Galvin didn’t say which law firms are targets of investor complaints. But the newspaper lists some lawyers and firms whose clients appear on a list of Madoff investors.
One lawyer on the list is Gordon “Bud” Ehrlich of Bingham McCutchen, a tax and estate-planning attorney who represented at least two Madoff clients, the story says. A third client on the list was advised by Bingham Legg Advisors, a Bingham business sold in July 2007.
Ehrlich didn’t talk to the Globe, but law firm spokesman Hank Shafran said Ehrlich was not an investment adviser.
Another law firm, Mintz, Levin, represented the wealthy Goldberg family, heirs to the Stop & Shop supermarket fortune, and its foundation. The law firm and its investment group, Mintz Levin Financial Advisers, did not comment to the paper.
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