Mo’ Money, Mo’ Problems
Chicago lawyer Michael Cogan still remembers the unsettling call he received from his client, just months after settling a multimillion-dollar wrongful death case on the client’s behalf.
Cogan had pleaded with the young man to get professional money management advice, even enlisting the client’s mother to talk some fiscal sense into her son. But to no avail. And four months later, the call: The client had burned through some $2 million and had become indebted to some rather unsavory types. “We try to become little learning centers and teach clients as much as we can,” Cogan says. “But we all have clients who, no matter how long we’ve worked with them, say, ‘No, I know what to do with my money.’
Cogan is far from the only lawyer who, after working hard to resolve a case, finds that a client has blown—or been conned out of—the money intended to help him care for himself or a relative.
“You can be a college-educated, trained corporate kind of guy and still have no background in any of this,” says Darrell Stewart, a San Antonio solo. “If you have not had to deal with [managing large sums of money] before, then you do not do a good job with it.”
Stewart, a former bank president, often sees clients post-award who want his advice on how to handle their money. His tack is different with each client. Some are too emotional to make any decisions. Others need to understand that getting a large verdict or settlement does not suddenly increase their odds at casinos or lotteries.
He also counsels clients not to feel like the money is tainted because of their grief or guilt. Instead, he suggests they look at it as an opportunity to improve their lives and think carefully about their goals. If that means putting it in a money market account for a year until they can think more clearly, he encourages them to do so.
Similarly, San Francisco lawyer Arturo Gonzalez tells many of his clients that they should look at their money awards as an opportunity to secure their future. Gonzalez often takes on high-profile pro bono matters in civil rights cases, and, like Cogan, he often arranges meetings for his clients with bankers and financial planners to work out the basics of money management.
Knowing When To Say No
Because these cases tend to get wide media coverage, Gonzalez says, he often has to warn his clients that many people will know about their awards—meaning relatives, friends and neighbors will likely come to them with sob stories, asking for hand-outs. “It’s hard for them to say no,” he adds. “But you have to prepare them. They can be well-intentioned and too charitable, but before they know it they’ve given all their money away.”
No matter how well-intentioned lawyers may be, they must keep ethical considerations in mind when offering this kind of counsel. Peter Geraghty, Ethicsearch director of the ABA’s Center for Professional Responsibility, says that comments to Rule 2.1 of the Model Rules of Professional Conduct encourage lawyers to recommend that their clients consult with other professionals, including financial specialists, when appropriate. But lawyers also need to take care to avoid any conflicts of interest and disclose any relationship that they may have with the other professionals.
Treating clients with the respect they deserve also is critical in getting them to heed your financial counsel, Stewart says.
“If you’ve treated your clients like idiots the whole time, then why would they listen to you after they get their money? But if you’ve treated them with respect and intelligence, then they’ll give you respect back.”