Dormant Stage Detected By Random Audit

The New Jersey Supreme Court has reprimanded an attorney as a result of irregularities detected in a random audit of his trust account.

As found by the Disciplinary Review Board

Respondent admittedly left small balances in the law firm trust account, representing undisbursed settlement proceeds from eighty old, closed personal injury matters. The OAE detected these balances during a random audit.

The funds were held on account either for clients who never claimed their share of settlement proceeds or for third party medical providers whose bills respondent intended to negotiate downward for his clients. Of the eighty cases, the OAE highlighted five client matters.

Respondent admitted that the balances existed, that they had remained in the trust account for  claimed that problems locating “transient” clients and clients with “immigration status” issues led  locate clients, and that some of them had surfaced years later looking for their funds, he produced no evidence that the law firm had made continuing efforts to find clients after the first few years that their matters had been closed. In three of the five matters highlighted at the DEC hearing, respondent’s office easily located the clients and returned their funds, after the OAE directed respondent to make such an effort. Those funds lay dormant in respondent’s trust account for fourteen years in Thomas; thirteen years in Hunter; and seven years in Jimenez. Respondent explained that he left the balances in the trust account for the benefit of his clients, claiming that many times, the funds at issue were escrowed pending negotiations instances, the funds belonged to clients who could not be located. Respondent’s office tried to locate clients for the first few years after their matters settled, but did nothing thereafter. As seen above, balances languished for more than a decade in some instances.

Lamentably, New Jersey has made it harder for unsophisticated bloggers such as yours truly to link to its bar decisions.

The case is In re Agrapidis. (Mike Frisch)