Busman’s Holiday Leads To Cruel Twist Of Fate

A disbarment order and opinion from the Maryland Court of Appeals

A law license authorizes an attorney to invoke the coercive powers of a court in furtherance of the interests of the attorney’s client with consequences that can be devastating, even if fair, to the adverse party. Under the ethical rules governing attorneys, that authority must be exercised competently, diligently, and honestly, with adequate supervision of subordinate employees who assist the attorney, and in compliance with the attorney’s fiduciary responsibilities to the client.

By the account in the record before us, Respondent Stuart R. Blatt was for many years a respected member of the bar and a leader in the field of creditors rights and debt collection. However, during the past decade his practice fell on hard times and, in what must have seemed a cruel twist of fate, he became one of those he sued and otherwise pursued for a living – a defaulting debtor. As a result, he made unfortunate choices that violated the ethical rules governing attorneys – for example, using legal process to collect a debt on behalf of a client by garnishing wages earned by the debtor, but diverting the proceeds to pay his firm what it had not earned. There is no indication in the record before us that these violations were the product of a grand fraud scheme, as opposed to an effort to find a path out of a confluence of unhappy events, both personal and professional. Nevertheless, in carrying out our charge to protect the public from errant lawyers, we must disbar Mr. Blatt from the practice of law in Maryland.

The court traced his career since his 1972 admission

Over the course of his career, Mr. Blatt focused his practice on creditors rights and debt collection. He is a founder of the National Creditors Bar Association and served as its president. He was also involved in other organizations related to creditors rights and debt collection.

He had merged his practice with a firm and thrived for a decade but

The firm began a downward spiral when Citibank, Mr. Blatt’s largest client for many years, decided to reduce the number of law firms to which it referred collection matters and stopped referring business to the Margolis firm. Other clients made similar decisions. In an attempt to shore up its finances, the firm cut staff dramatically and moved its banking relationship from Wells Fargo to a smaller bank – Revere Bank. Nonetheless, the firm proved unable to pay its bills and, during the summer of 2014, was evicted from its offices at 110 West Road in Towson. The firm obtained new office space in Towson.

In November 2014, Mr. Pritzker left the firm and opened a solo practice at a different location. The remnant of the firm devoted to the creditors rights practice remained in the new Towson office until January 2015 when the electricity was shut off due to unpaid utility bills. The Virginia office of the firm closed the following month.

Both cases and entrusted funds were mishandled

Mishandling of client funds and dishonest conduct are at the heart of this case. Mr. Blatt directed client funds into the General Collections Account, then used money from that account to pay the firm’s expenses, and ultimately transferred some of those funds to an account at another bank in his own name to evade one of the firm’s primary creditors –Revere Bank. All four of the clients spotlighted at the hearing of this case were victims of this practice. Mr. Blatt has apparently not reimbursed any of those clients for the funds that belonged to them.

… the appropriate sanction in this case is disbarment.

(Mike Frisch)