My dad, an attorney in York County, PA, informed me that today was a sad day for attorneys in the area. Today, it hit the media that a now disbarred attorney and his son were accused of stealing almost $1.1 million from their clients.

Mark Frankel was a widely known attorney in the area. Using the back of the yellow pages as a prominent way of advertising, he trademarked the phrase “Turn the book over” which later the firm shortened to “TTBO.” If you lived in York, you couldn’t miss seeing one of his billboards.

Last year, Frankel was disbarred for inappropriately touching his younger male clients. He denied the accusations and claimed the judge was anti-Semitic, thus persecuting him for being a Jew. Today, the big picture story of how the firm did business broke. It appears that Frankel and his son, Stephen, (who has been arrested twice in the past year for cocaine possession) were using the funds in their escrow account to pay the firm’s IRS payroll taxes. Stephen also allegedly withdrew $40,000 to buy himself a new Hummer.

Now, clients are mad. They’ve been lied to and their trust is shattered. As one client put it “After something like this happens, how can you trust another attorney again?” It’s like Enron all over again, though on a much more local scale. Unfortunately, these few rotten apples continue to reinforce the public’s negative perception of lawyers.

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2 comments

  1. Anonymous
    September 21, 2005

    Beyond the alleged indiscretion of one bad apple in a system, this case highlights a structural weakness caused by the use of attorney escrow accounts. I’m not an attorney, nor am I a banker, but it seems that a more secure financial risk management system would involve some type of tri-party structure. In the current structure, a lawyer has a seemingly unaccountable discretion (or indiscretion) to do with the funds as he pleases, (in a bank account that is really not much more than any other personal checking account, save for some ersatz assurance). On the other hand, some type of tri-party account, say, one where a bank officer and/or third party would require notification before funds could be moved. Lastly, I’m not sure what type of Federal and/or State regulatory oversight and FASB requirements govern these types of accounts, but it seems like a good time to re-examine the risk management structure relating to these types of accounts and transactions. A good financial risk management system might prevent both accidental and intentional expropriatory activities. Again, I’m no expert in these things, but relying on a financial risk management system that’s primarily dependent upon the ‘good faith’ of some of the participants seems silly.

  2. Krista
    September 21, 2005

    In an ideal world, relying on ethics would be enough. While, I don’t think I’m qualified to comment on governance, I did ask my father, who is an attorney, what he thought. He mentioned that the easiest way to make sure this doesn’t happen is to ask the insurance company to cut 2 checks, one to the law firm for attorney’s fees and the other directly to the client. Then, it’s the insurance company, not the law firm, which is responsible for payment.

    The way the news article presented the case left me with a lot of questions – like how the bank accepted checks that were several years old, how clients didn’t know about their settlements (from what I understand, clients must sign release forms before the insurance company sends a check), and why the clients in question seemed so patient in waiting for checks. Most attorneys I talk to tell me one of the first questions everyone asks in a personal injury case is ‘when do I get paid?’ That the clients in the story seemed to wait upwards of 4-5 years to receive their settlement checks sounds pretty amazing to me.

    But I’m not an attorney nor do I know the full story. Who knows how accurate the media has been in reporting the details of what happened. It will be interesting to see what comes out when this goes to trial.

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