Lawyer Firms Swindled–BIG TIME

Lawyer Firms Swindled–BIG TIME

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A man named Emmanuel Ekhator pleaded guilty a short time ago in federal court for heading up a con-ring  no doubt among other charges.  The screw-job ended up doing $70m in damages.  They were caught by the cooperative efforts of  various Canadian and United States law enforcement agencies, of which the Royal Canadian Mounted Police is the most intriguing.

The scheme was very simple; it went something iike this:.  A foreign person would call or contact a law firm asking for help in something, usually collecting a debt.  The law firm would think it had done so.  There would be a check.  The law firm was to take out its fees, and forward the money some how, presumably by means of another check–this time off the law firm or from an entity to which the law firm would be liable.   The check the firm had received would be confirmed by calling what the firm took to be an overseas bank, and the amount would be authorized or the first check would be declared to be satisfactory by one of the crooks.  Of course, the check was counterfeit. And so forth.

Of course, this is a tragic event, and many lives were set back a good distance, and a few were ruined in an economic sense, with there being horrifying side-consequences for many decent, well-meaning people.  Maybe some money will be recovered–maybe a lot if he controls the money and property; or course, Mr. Ekhaton pleaded to give up all he still had.  Mr. Ekhator (and it makes me sick to call him “Mr.” at all, rather than “Pig-Shit-Ruination-Villain) will do time, but I doubt enough.

One wonders if any of these firms will go into bankruptcy.  After all, Dewey through “sins” of its own has provided the high publicity exit so as to make the plunge less the “end of the world.”  (Besides, the Portland plaintiff’s firm of Williams Love O’Leary & Powers went under financially in 2011 but recently came out again, having settled a giant case against Pfizer.)

Setting that matter aside.  There are several other dimensions to this fiasco.  First, the law firms were sloppy.  They seem to have forgotten a fundamental rule of business commitment: check empirical statements empirically.  The starting hypothesis should be:

First, try to falsify the propositions presented and do so  based on reliable empirical evidence. Moving on:

Second, keep checking as the very odd cases evolves.  Committing the firm’s money to projects of any kind is an investment.  Ask this question:  Is this move prudent?  Remember vividly how easy self-deception can be, especially if you are a being in need. 

Third, mistakes like this derive from avarice, and the villains know its pervasive reach.  The spirit of greed frequently reeks out. 

Fourth, “idiot” decisions  also result from inexperience, ambition, alcohol., drugs, bitter already existing litigation, e,g., divorces, and so forth. 

Fifth, make sure several people are involved in the decision.  Consider having someone from the outside who knows about international financial dealings.  If nothing else, call some of you friends.  If it doesn’t feel right to at least one of them, back off or out. 

Sixth, the more complex, the more unusual, the less the parties are known in the financial press, and/or the less they are to be found of financial indices, the further distance a firm should keep. 

Seventh, do not try to cheat the cheater.  They are better than you are at this game.  They will fade off into the gloom, or they will beat you.  Under ground work is a different matter.

(On wonders how many cold “calls, emails,  something similar these wretched crooks tried.  (I’d say men, but there is a woman in Canada now under indictment schemes like this one are well-known.  There may be variations, but their fundamental structures are alike and the advance announcement all resemble each either. (Virtually all of them with which I have any familiarity, come from somewhere in Africa.) 

Now for the comical side of this whole thing.  One lawyer–maybe a victim–has stated publicly that this was a complicated scheme.  Alas, that is false.  It was anything but.  The opposite is true, even if it is made to look complex. And that has been known for a long time.  How could one go to law school and not realize this? 

Oh yes, and by the way.  Do not send these folks on to people you care about.  This is true for obvious reasons.  At the same time, do not send them to people  you despise.  Revenge can be a great joy, but this one may get you (1) murdered, (2) taken before the bar (3) or hauled into the conspiracy accusation against the Pig-Shit Gang so far as the U. S. Attorney is concerned, not to mention the Royal Canadian Mounted Police. 

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Insurance Law Expert Witness–Preface

Insurance Law Expert Witness–Preface

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I have worked as an expert witness for some years, some years more actively than others.  I have lectured on this topic and related matters several times.  In addition, I also have encountered a number of people who have acted in this capacity more than once–sometimes many times more than that.  As a result, I may have observations, remarks, etc., which might be helpful–or at least interesting. 

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The Prudent Expert Witness: Agreements and Performances, #1

The Prudent Expert Witness: Agreements and Performances, #1

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I do some expert witness work, so this blog entry contains some experience-based remarks about retainer agreements and some aspects of expert witness performance.

I have not used formal retainer agreements much.  Usually, they have been in the “back of the envelope” form, or they have been oral.  Part of the reason for this is that a good deal of my work has come from, or through, people I know; lots of it comes from lawyers and clients (sometimes theirs and sometimes mine). From time to time, I dictate what I want and have them send me an email, and that seems to work well, but it leaves out important matters, I will set forth presently. A few times my informality has been a bad idea. As a result, I have repented (more or less). So, I will discuss here what belongs in a form agreement for expert services, as I see it. I will also discuss some of what I regard as, features of sound performance. Sometimes, at least, matters of sound performance can be included in the retainer agreement. The following are lessons based on issues I have had to learn the hard way.

Lesson One:  Get a clear description of the scope of the assignment and then change the scope, both outwardly and inwardly, if and when it changes, appears to be changing, or someone relevant thinks it should change.

Lesson Two:  Find out what experienced experts are charging in “your” area and start there. Warn of probable changes which should be expected over time. Often lawyers resist paying you more than they are billing. This is probably a reasonable idea with which to cooperate, at least most of the time, but only if their fees are reasonably high.  Charitable expert witnessing is to be avoided, although one may have expert witness duties arising out of justice itself.

Lesson Three: Make sure the retainer is both reasonable and sufficient. Consider making the retainer amount stay ahead of the payment of bills. (My retainer is $X; it must stay at $X at all times.” This agreement is frequently not possible—or at least too difficult–to arrange. 

Lesson Four:  Insist that the bills be paid on time. A way to do this is:  “If I have not received a check within 30 days of my billing you, I will perform no further work until paid In full up to that point.”  Often, I cannot make this happen.  Sometimes I try to get paid on a quicker temporal schedule.  That seldom works.

Lesson Five: Try to get their client or the lawyers themselves to pay all out-of-town expenses.  Sometimes one can get this and sometimes not.

Lesson Six: Try to get people to come and see you.  They will want to do this anyway if your office is in an attractive city.Exception:  You really want to go there.  Sometimes the taking of a spouse is a good thing for mostly non-professional reasons.

Lesson Seven: Expect corporations to pay you faster than people and people faster than insurance companies.

Lesson Eight: Consult with the lawyers about the contents of your reports, etc.  Do not let them assist you with prose, except with problems of prose: spelling, grammar, etc.   Let the lawyer assist you by stating facts you have missed, not understood, and/or not appreciated.  Don’t always believe them.  Confirm everything yourself.  Do not accept the lawyer’s intense use of colorful language even if you believe it.  You are a reporter and a historian, not an advocate.  This one has been very hard for me and I was kicked out of a case by the judge once for making this mistake.

Lesson Nine: Always remember that experts’ opinions take an “If-then” form.  It should never take a “This is ‘It'” form.  Undisputed facts are exceptions.  Obvious and undeniable facts are another.

Lesson Ten:  It is law-school-level truth that expert witnesses are not permitted to testify about the law.  Don’t bet on it.  For one thing, if you are testifying about some industry practices, you may have to refer to the law by talking about what is generally understood to be the law.

Virtually all of these “Lessons” have, not only practical implications but can—in various ways—be set forth, to some extent, in retainer letters. On this matter, tact and restraint are required.             

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Creations and Insertions into Existing Contracts Part II

Creations and Insertions into Existing Contracts Part II

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In my last post on insurance law, I discussed the idea that it is not possible to create formerly non-existing clauses or coverages in an already existing policy, i.e., insurance contracts.  I wrote on only what is all, or virtually all, the problem, namely, when the insured criticized for having tried to (or having blundered into) perform such a creation. Here in Part II, I turn to the insurer. The other day, in a deposition, I was asked whether I had ever heard of the axiom that “Insurers cannot create coverage in their policies.”  I said that I had never heard of that axiom applied to insurers and that, in any case, the axiom would depend on what the word “creation” meant and what the invoked idea was.  She, the taker of the deposition, looked at me with a combination of astonishment and contempt.  In and of itself, that combination was not a matter of concern–of any consequence, really. 

One cannot have real new or unrecognized ideas without the rigid-minded or the uninformed to hold you in contempt, and it does not matter when I am right or when I am wrong. Those who do not believe in the value of innovation are pretty much all like that, and this is especially true in the law. Besides, very few cases consider insurers and their “power” to create new provisions in their own contracts of insurance.—MSQ

Of course, an insurer may not create new coverage in an already existing policy if it is injurious to the insured.  The paradigm is simple.  Suppose an insurer provides coverage A, B, and C to its insured in a given contract.  Now suppose that absent any dispute over coverage, the insurer decided for some reason that it “really” only offered coverage A and B.  In other words, it deleted coverage C from the policy. This would actually be creating new coverage, namely: A & B & ~C.  Of course, these combinations are groups–sets, as it were–but that makes no difference.  There is such a thing as creation by elimination.  In a painting, the deletion of a figure creates a new painting, and–in any case–it is a creation.  Just as the real objection to creation-by-insurer is based on the fact that the insurer gets hurt, the objection to this anti-creationism is that the insured gets hurt.  Now, consider the opposite.  What if the insurer created coverage that was to the benefit of the insured?  It is doubtful that the insured would object.   Of course, an Anti-Creationist could still say that these things cannot be done according to the fundamental principles.  Of course, this proposition is false.  Parties can agree to changes in contracts, and the benefited party may be considered cooperating–and almost certainly would be–or that party might have waived any objection s/he might have. Now, why might an insurer do this?  There are lots of reasons, some questionable and some not.  I shall mention only one reason, and that one is not subtle and perfectly acceptable.  Consider an insurer, that noticed another insurer using the same policy, was excluding something, and that insurer researched the case law on the subject and found that there were two cases supporting the actions of the other insurers.  Suppose the insurer in question looked at the language of the contract and said to itself, we are not sure what to do here. We did not intend not to insure this; we intended to insure it. We “the underwriting department,” together with senior executives, do not care that this is a standard policy used elsewhere in the industry. Hence, straight forward we will consider it covered. We should go back and get the six (6) cases we “fouled up,” and make them conform to our view.  It seems to me that this is a paradigm of policy coverage creation.

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Semantic Creations for Existing Contracts. Part I.

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The Possibility of Creation by Insureds for Already Existing Contracts

Michael Sean Quinn*
It is sometimes said that new components of an already existing insurance policy–a contract of insurance–cannot be “created.”  It is worth thinking about this pithy but obscure proposition.  It is also worth dividing the discussion between insureds and carriers.  This one will be about insureds, and the next one on this topic will concern carriers.

The word “creation” has more than one meaning:

No one thinks that insureds cannot be involved in creating new contracts or alternations in existing contracts, when it has the consent of the insurer.
This obvious truth pertains to modifying creations, as well. 
A more interesting issue involves whether an insured can create new coverage if the insurer does not oppose it, after it has already been tried.  This blog will focus on more interesting problems.

Here they begin:

One can create new works of art, new architectural designs, ideas, words, and so forth.  The point about contracts is that a party cannot create anything new.  Everything that exists, is already there. So the idea might go. 
There is a problem with that argument. There is such a thing as a triptych.  The original artist  may have finished only two parts, so a third artist–or maybe more–does the remaining part(s). The last creation may improve the whole.rror may improve the whole creation.
The same idea can be applied to art forgeries, though this idea is less attractive.  
Of course, the anti-creation “rule”, if it is one, does not mean that a party to a contract cannot realize and discover new dimensions to an already existing contract.  This is obviously true with respect to individually created, thoroughly negotiated, nonstandard contracts, or at least with respect to their nonstandard portions, if any.
In a way, a new meaning is created and exported into the already existing contract, and a new whole is created.  Everyone may be happy about this. In the alternative, only the creator is happy, but the other party may admit a helpful contribution with that the creator. . . . 

Maybe the creation of a new life is a bit like this. 
Usually insurance contracts are not of this sort; usually they are at east “95% standard.”  Nevertheless,  insureds discover–often by considering the meanings of various different words and phrases–unintended and unexpected meanings.  With regard to this matter, there is a sense in which the “inventive” insured, or the insured oriented to “innovation,” may be said to have created a new component in a contract of insurance.  Arguments against such conclusions invariably proceed on the basis of the no-creation principle.
This type of creation can happen are a result of focusing on ambiguities, vagueness, inconsistencies, or propositions that are very difficult to understand.  Ignorance or ill-informativeness–on the part of adjusters–may help with this.  So may the poor education of adjusters as to the contents of a policy.
There is a difference between actual creation, and an alleged creator winning a so-called “Argument Regarding Creation.” 
The most likely analogy if God in Genesis.  He is said to have created the heavens and the earth, etc.  At least the first two of these involve creating something out of nothing.  Of course, this analogy, while neat looking, won’t work. God was dealing with nothing–nothing at all. This fact–to the extent that it is a fact–is that which makes what happens truly miraculous, and breathtakingly so.  The anti-creation “axiom,” as I heard it in a deposition last week, is not anywhere in the same catagory as God’s accomplishment. 
That fact is obvious enough.  Nonetheless, one of the rhetorical undertones of the “You cannot create arguments” is that you are not God.”  Or, “Who do you think you are?”  It’s as though you think you can create new beings and fit them into the already created.”  “You are an arrogant SoS.”
Another version of the anti-creation “axiom” is like some of the others, but it also stands for the proposition that the meanings of existing terms cannot be changed.  This view is simply the idea that no new meanings can be inserted into–or on to–the words in a contract.  This is really an idea of “original fixedness.”  Some contract wording has lasted over 100 years.  Maybe there should be some changes every 50 years.

The actual idea seems to go something like this.  An insured cannot create a new idea and then place it into an existing contract, where the creation is actually inconsistent with the real fundamentals of the existing contract.  Inconsistency may come from out-and-out explicit contradictions, and, it  may include contract silences.  Of course, creation regards expansions of the insurance contract.  It does not involve contractions, as an empirical matter, though such a thing is theoretically possible. 

One of the things wrong with this “Anti-Creation Proposition,” is that it  has been recognized that some conditions, for example, can be changed by courts in significant ways.  After all, some already have.  The stringent requirement of timely notice has been pushed aside for almost all insurance policies is an example.

It is significant to the “axiom” “Insureds cannot create new coverages in aready existing contracts to which they are parties”–and this is a better formulation than others–is virtually always challeged to this of which I have heard are formulated, argued for, and “pushed,” by insurers that are parties to the contract at issue.  The challenges always, so far as I know, increase the insurer’s liabiality.

It must be admitted that others can raise “You cannot create new coverage” arguments.  The only ones I can think of now are reinsurers, excess insurers up the stack, and regulators of various sorts.  This context is not a direct application of the principle. It is a complaint to and then about the insurer having failed to apply the “Anti-Creation Rulee” with sufficiently good arguments or with enough vigor.  There will be a cause of action here–maybe for tegligence  and/or maybe for breach of contract.

Michael Sean Quinn, Ph.D., J.D., C.P.C.U. . . .

The Law Firms of Michael Sean Quinn et

Quinn and Quinn

                                 1300 West Lynn Street, Suite 208

                                             Austin, Texas 78703

                                                 (512) 296-2594

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                                E-mail:  mquinn@msquinnlaw.com

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In different situations, even propositions which appear undeniable may not be true in all situations.~Michael Sean Quinn, PhD, JD, CPCU, Etc.Tweet

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