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The Non-Legal Side of Practicing 'Madoff Law'

A few weeks back, I noted the the proliferation of law firm practice groups dedicated to assisting the victims of Bernard Madoff's Ponzi scheme, as did Bruce Carton of the Securities Docket, who's keeping count. Most of the firms that formed specialized practice areas are large, and presumably are attempting to attract the big fish: the large, institutional investors or banks who put money in Madoff funds and now face liability for failing to exercise due diligence. 

But as the South Florida Business Journal reports, some of the smaller law firms representing individuals or small groups of Madoff victims are finding that legal issues are really the least of their clients' problems.  A large number of Madoff investors were retirees, living in Florida, who are now on the verge of financial ruin and must make substantial changes at a time in their lives when they didn't expect it. As such,  most of the small law firms representing these clients have found themselves playing the role of  social workers and job placement professionals for clients.

For example, Guy Fronstin, a solo practitioner quoted in the article who is helping 50 groups of investors explained: “One client has to go back to work ... This guy’s money is going to run out in 30 days. I think we’ve found him some work.” Fronstin is also helping his clients deal with the psychological impacts of the Madoff fiasco. One Fronstin client, 85-year-old Adele Fox, invested $50,000 with Madoff because a relative of hers was Madoff's accountant. Fox received distributions from Madoff every three months, and now she's terrified that she may have to disgorge that money if Madoff is brought to justice. Another client has been forced to make a substantial life change, selling an expensive condo and moving into publicly-subsidized housing. 

Large firms may deal with incredibly complicated issues related to the Madoff scandal, unraveling complex transactions or developing viable defenses to liability or theories of recovery, but solos must address the personal carnage of what Madoff's actions have wrought. And to me, that's a far, far tougher job.

Posted by Carolyn Elefant on January 9, 2009 at 02:48 PM | Permalink | Comments (2)


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