Lawyers who profited from the housing industry bubble may be finding themselves under increasing scrutiny for the mortgage fraud crisis of the past few years.
Although the case against the lawyers of the big banks responsible for the crisis have long been untold, it was inevitable that the lawyers would get targeted because every bank relies on large teams of high priced lawyers to give approval to every major decision the bank makes.
Two large firms are now feeling this pressure. Greenberg Taurig and Quarles & Brady, are looking at $88 million and $26 million dollars lawsuits due to charges of aiding and abetting a multi-million dollar Ponzi scheme involving mortgage loans. The lawsuits allege that the firms helped in forging documents or turning a blind eye to documents. Both firms deny any wrongdoing.
Normally only a client can sue a lawyer for bad advice or wrongdoing, however some securities laws allow lawyers and law firms to be sued to collect from their assistance in fraudulent schemes.
These lawsuits may mark a change in the tide of third party lawsuits to collect from disreputable lawyers who act unethically. This may signal that a lawyer’s duty will begin to extend out past their client.
The lawyers at Greenberg and Quarles are accused of covering up their clients wrongdoing or turning a at least blind eye to it. Attorneys take an oath to support the U.S. Constitution and the laws of the state in which they practice. Engaging in fraudulent conduct is enough to get attorneys disbarred.