Native News
Halloween Legal Ethics
Guest Opinion
All lawyers who have passed the bar examination and are members of their respective state bar associations are bound by their states’ ethical regulations. These regulations are based on the American Bar Association’s Model Rules of Professional Conduct.
The very first rule, literally, concerns competence and the client-lawyer relationship:
Client-Lawyer Relationship
Rule 1.1 Competence
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
During the mortgage foreclosure crisis, law firms representing banks and lending institutions may have been tempted to engage in “robo-signing,” or signing mortgage foreclosure documents without properly verifying the facts. This practice is considered a violation of legal ethics.
The Steven J. Baum, P.C. law firm in suburban Buffalo was one of the largest foreclosure firms in New York in terms of the volume of mortgages foreclosed, according to the New York Law Journal in February 2010.
In keeping with the principle that Halloween parties may be places where people do things they would not otherwise do during the rest of the year, the Steven J. Baum firm provides a scary example of this principle. But should that be a defense?
The firm’s 2010 Halloween party centered on the theme of foreclosure, with staff members and attorneys dressing as homeless people whose properties had been foreclosed upon by the firm. Besides demonstrating insensitivity and poor judgment, the firm’s business practices raised questions about potential violations of state ethics laws in its conduct throughout the rest of the year.
New York Attorney General Eric Schneiderman investigated the firm’s practices and, in March 2012, reached a $4 million settlement with the firm. According to the New York Law Journal, a March 22, 2012, press release from the attorney general’s office stated that the Baum firm had “repeatedly” filed legal papers in foreclosure and bankruptcy proceedings “without taking appropriate steps to verify the accuracy of” allegations, the lender’s right to foreclose, or its right to file a bankruptcy proof of claim.
The settlement resolved allegations that the Baum firm, Pillar, Steven J. Baum, and Kumiega had violated New York Executive Law § 63(12) and General Business Law § 349, although they continued to deny any wrongdoing.
In an ironic twist, the firm closed its doors in 2011 after news of the controversy broke.
None of this might have come to light had a former employee not sent photographs of the Halloween party to Joe Nocera, a reporter for The New York Times. Nocera published an article about the photographs on October 28, 2011. The article sparked widespread outrage against the firm, preceding its eventual closure.
The firm’s employees have a right to freedom of expression under the First Amendment, which protects their ability to wear such costumes and hold signs with the text shown in the photographs. However, we are not protected from bad taste or stupidity. It was precisely this behavior that attracted unwanted attention from the state attorney general and led to the investigation that followed.
So, just to review . . .
Quiz on Halloween Legal Ethics
1. Why did Steven J. Baum have to pay $4 million in a settlement with the state of New York?
A. He violated the New York Business Code.
B. He was insensitive to the people he evicted.
C. He bought a big house with his profits.
D. He violated the New York Legal Ethics Code.
ANSWER
Quiz: Halloween Legal Ethics
1. The answer is A.
While all of these answers may be true, only A is the correct answer as to why Baum had to pay $4 million.
B is certainly true in the sense that he was insensitive to the people whose homes were foreclosed upon. C may also be true, as he bought a big house. However, neither insensitivity nor buying an expensive house, by itself, constitutes an ethical violation.
It is unclear whether any formal finding was made that the firm violated legal ethics rules. The attorney general’s settlement agreement required Baum and his partner to suspend their representation of mortgage clients for two years.
That meant Baum and his partner could open another type of practice, such as a personal injury practice representing people injured by Halloween costumes.
He has some personal experience with that one, too.
To read more articles by Professor Sutton go to: https://profvictoria.substack.com/
Professor Victoria Sutton (Lumbee) is a law professor on the faculty of Texas Tech University. In 2005, Sutton became a founding member of the National Congress of American Indians, Policy Advisory Board to the NCAI Policy Center, positioning the Native American community to act and lead on policy issues affecting Indigenous communities in the United States.
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