Consumer Law

Struggling Lawyers Turn to Crime?

The recent economic recession has hit all levels of society and even professionals previously protected to such downturns. In the past, lawyers were among the last professionals hit by a recession. Clients promptly paid their legal bills and lawsuits are abundant.

However, this recession has been especially hard on lawyers. Clients wait until the last possible minute to pay their lawyer bills. A growing number of lawyers, increasing debt, and job insecurity, have taken their toll on the legal profession. And more lawyers are turning to unethical behavior.

The Complaints

Bar organizations in many states are receiving more complaints than ever and expect to discipline or disbar hundreds of lawyers in the next few months. Complaints allege a variety of wrongdoings. Most come from clients claiming their lawyers illegally withheld settlement money or charged for work they didn't do, especially involving loan modification mortgages.

Loan Modification Mortgages

The real estate downfall resulted in many shady refinancing programs, and some lawyers saw an easy way to make money. Homeowners facing foreclosure hired lawyers complaining they paid the lawyers but did nothing to help keep their homes.

The California State Bar is investigating 1,200 loan-modification cases. Its president said it's one of the most disturbing things he's ever seen.

Complaints continue in spite of a new bill Governor Arnold Schwarzenegger signed prohibiting lawyers from taking advance payments from homeowners.

Mishandling Funds

Lawyers must keep funds in separate accounts for clients. Once a case settles, they turn the money over to the client. However, the recession has brought about an increase in the number of lawyers mishandling these trust funds.

Lawyers start by simply "borrowing" money from their clients' trust accounts. After a while, they end up unable to repay the money.

What's the Cause?

The legal profession, formerly revered and respected, is highly criticized. There are several reasons for its recent demise in the media:

Oversupply of Lawyers

Law schools continue to advertise the success to get more applicants and raise their tuition, there are now too many lawyers and not enough clients. After graduating, many lawyers can't make a living, leading to criminal activities such as taking money out of trust accounts. Sometimes, just to keep their office running.

Huge Debts and Financial Pressure

In this recession, along with losing deals and clients, lawyers also lost money in the stock market and value in their homes. This combined with law school debt cause them to have a hard time paying their bills and loans on time.

Job Insecurity

As many of the big law firms have been laying off associates, lawyers and law students have been unable to get jobs. Most of the lawyers had been in practice only a few years or were retired. Most affected by the recession are real estate lawyers, and many say this period has been the worst they remember.

The Future

The president of the California State Bar promised that his office is aggressively pursuing the claims. But when it comes to the actions of lawyers who prey on clients, Miller said there is no excuse.

Tips for Finding a Lawyer

If you need to hire a lawyer, find out more about the people you're interested in talking to. provides detailed information about lawyers and law firms, including, size, specialty, videos, web sites, client reviews and more. Interview at least two lawyers before deciding.

Once you select a lawyer, request monthly billing statements that give as much detail of the work done as possible. If you suspect any abuse or illegal activity, call your state bar's attorney complaint hotline.

Questions for Your Attorney

  • Can I sue an attorney, or do I always have to go through the bar association?
  • My recent loan modification didn't go as well as planned. Is my lawyer at fault?
  • If I have a complaint, how do I get started, and can you help me?
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