Where Is That Ethics Class When Ya Need It?

Here’s a twist:  While many paralegals aggressively seek to expand their assignments, a New York lawyer gets disbarred for overusing his paralegals and running afoul of ethics violations.

According to The New York Law Journal, real estate lawyer Keith G. Rubenstein, eager to bolster his shaky finances, signed an unusual arrangement to serve as a front for a Queens personal injury practice owned by a non-lawyer entrepreneur who made his fortune in taxicab medallions.

The deal, which netted Rubenstein a mere $21,000, resulted in his disbarment. (Don’t get out those violins just yet. Last year, he outbid Madonna on a $35 million Upper East Side townhouse).  He owes his fortune to his current job as principal of Somerset Partners, an investment firm that bought a Park Ave. office building for $509 million, a record price on a per-square-foot basis.

In May 2002, Rubenstein agreed to practice personal injury law as an employee of a Long Island City-based company owned by Mr. Garber called Gem & R Management Corp.

Under this agreement, Rubenstein served as attorney of record on scores of personal injury cases that were in actuality handled almost entirely by paralegals employed by Gem & R. The agreement gave Gem & R the right to accept or reject clients for Rubenstein, as well as establish fees. The client files would also be owned by Gem & R. For his part, Rubenstein received 10% of the fees.

Rubenstein testified that court documents were often filed without his review and that Gem & R paralegals generally dealt with clients and insurance companies. Because of the arrangement, Mr. Rubenstein said it was possible he was the attorney of record on personal injury cases of which he was unaware.  Apparently, the paralegals handled simply everything.

While the attorney is ultimately responsible for ethics violations, why didn’t the paralegals know that they too were in violation?  Did they take classes?  Did they think that a code of ethics did not apply?  Were they caught up in a false sense of empowerment?  Were they afraid if they didn’t participate, they would lose their jobs?  Or worse, did they simply not know that they could not sign pleadings, practice law or set fees?

Who’s watching the pot?