Lawyer Not Liable For $80K Deposited Into Client Trust Account Without His Knowledge, Then Subsequently Embezzled By Legal Secretary In Soured Foreclosure Avoidance Deal

In Mobile, Alabama, Alabama Live reports:

• A judge [...] determined that a Saraland lawyer had no legal obligation to safeguard money that his secretary had deposited into a client trust account. The judge ruled in the defendant’s favor.
  
  Mobile County Circuit Judge Michael Youngpeter’s ruling meant that Johnny Lane, who also is a part-time municipal judge in Chickasaw, did not have to put on a defense in the civil trial. “The judge made the right ruling,” defense lawyer Walter Honeycutt said.
  
  Robert Stankoski, who represented plaintiff Daniel Burrage, said he would discuss an appeal with his client. “I think Judge Youngpeter is a great and thoughtful judge,” Stankoski said. “But I completely disagree with his finding in this one.”
  
  The dispute centered on an $80,000 check that Burrage wrote in January 2010. According to testimony, he had agreed to pay off the mortgage of Lane’s secretary, Susan Pack, to stave off foreclosure of her home. The plan called for Pack renovating the house, selling it and splitting the profit with Burrage. The mortgage company would not halt the foreclosure unless the money was safe in an escrow account.
  
  Witnesses gave conflicting accounts of what happened next. Burrage maintained that Lane suggested the money be deposited in his client trust account, telling him it was the safest place the money could go.
  
  Lane testified that he never agreed to that. Pack testified that Lane expressed misgivings but ultimately allowed her to deposit the money.
  
  The deal went south later in the year after Lane fired Pack for failing to address her drug problem. Burrage testified that he went to Lane and asked for his investment back. It was gone, along with a bunch of other money. Pack ultimately pleaded guilty to embezzling some $195,000 form the law firm.
  
  Burrage already has won a civil judgment against Pack, but it is unlikely she ever will be able to pay the money back. Stankoski argued that Lane should be held liable because he was so detached from the day-to-day operation of his office that he allowed Pack to have unsupervised access to the law firm’s finances despite her drug problem.
  
  Lane testified that he did not realize his longtime employee was abusing drugs until shortly before he fired her. Honeycutt argued that his client had no legal obligation to protect the money that Burrage had put up because Lane had nothing to do with that transaction. “It was a private deal between Ms. Pack and Mr. Burrage,” Honeycutt said. Youngpeter agreed.
  
  During the trial, Honeycutt argued that Lane was a victim. It was his account that Pack stole from. It is Lane to whom a judge in the criminal case ordered Pack to pay restitution.
  
  Stankoski noted that Lane did not even bother to look at bank records from the time his law partner died in 2008 until he fired Pack in 2010. “You can’t stick your head in the sand like an ostrich and say you’re a victim,” he said.
  
  Honeycutt acknowledged that his client could have done a better job overseeing the financial affairs of his practice. He said Lane has not reason to suspect a trusted employee who had worked for him for 27 years. “Most lawyers are terrible businessmen,” he said.
  
  Lane’s legal headaches are not over. He still has a pending lawsuit against him by families of asbestos victims who alleged that she forged the litigants’ signatures on settlement checks that she then stole. Honeycutt said banks have paid most of those clients back.

Source: Judge rules Saraland lawyer had no legal obligation to safeguard Baldwin man's money.