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IPFS News Link • Housing

Foreclosure-Gate: Foreclosure Mill Accountants & Attorneys Beyond Law

Legislators also need to restore secondary liability. Attentive readers may recall that a Supreme Court decision in 1994 disallowed suits against advisors like accountants and lawyers for aiding and abetting frauds. In other words, a plaintiff could only file a claim against the party that had fleeced him; he could not seek recourse against those who had made the fraud possible, say, accounting firms that prepared misleading financial statements. That 1994 decision flew in the face of sixty years of court decisions, practices in criminal law (the guy who drives the car for a bank robber is an accessory), and common sense. Reinstituting secondary liability would make it more difficult to engage in shoddy practices. The net effect is that if the clients themselves don’t sue (and they have plenty of reasons not to, starting with not wanting to air dirty linen and potentially open up privileged communications), the only recourse is sanctions by bar associations or prosecution. But state bar associations typically focus their policing efforts on solo practitioners. Bigger firms are often active in the bar association, and not surprisingly, the officialdom is seldom inclined to act against social acquaintances, particularly ones at concerns that also pay a lot in the way of dues.