The sudden collapse of the Lexington law firm of Richard J. Breibart has spawned an FBI investigation and two civil lawsuits alleging Breibart took more than $500,000 in clients funds.
But so much money that Breibart had control over may be missing that a South Carolina Bar fund set up to pay out losses on clients assets may not be able to pay all the claims that eventually could be filed. That fund has a $200,000 cap on money to pay for losses caused by any one lawyers actions, no matter how many claims are filed.
Due to the anticipated volume of claims, you are encouraged to file quickly with the fund, court-appointed trustee Mark Barrow wrote hundreds of Breibarts former clients last month in a letter obtained by The State newspaper.
So many clients suddenly have been left without representation at least temporarily, until they arrange for another lawyer that other attorneys are wondering how much of a black eye this may turn out to be for South Carolinas legal profession.
After all, its rare for something of this severity and magnitude to happen to an S.C. law firm an FBI investigation, civil lawsuits, hundreds of clients cast adrift and some two dozen former Breibart lawyers and support staff suddenly jobless, say people familiar with the situation.
What a tragedy this has been, said Mike Hemlepp, executive director of the S.C. Association for Justice, a group of 1,200 trial lawyers around the state. He said his group is getting lawyers to take on some of Breibarts former clients for free. Many of those clients already have paid fees to Breibart, since lawyers typically collect fees before taking many kinds of cases.
If we can get assistance to clients, well at least do our part to relieve some of the burden of this disaster, Hemlepp said.
Breibart was supended by S.C. Supreme Court in June, and his offices were closed. He could not be reached for comment for this story. His offices website, which only last month advertised that clients could contact a lawyer 24 hours a day, has disappeared.
Its an unusual, off-the-radar stance for a lawyer who for many years threw Christmas parties attended by hundreds of people and specialized in high-profile criminal and civil cases that made headlines.
A longtime friend, Columbia attorney Leigh Leventis, said Breibart had been suffering health problems and had been in intensive care in a local hospital. Breibart left the hospital last month, but horrific health problems sent him back late last week, Leventis said.
Desa Ballard, a Columbia attorney and an authority on lawyers ethics, said that while lawyers occasionally can get into trouble for questionable handling of clients money, its usually because the lawyer made a mistake, was negligent or that his staff mishandled the money.
No legal authority in the Breibert case has made a public determination about what happened to the missing money.
Ballard said she had no specific knowledge of the case.
Its very rare that a lawyer intentionally takes money, she said. Ballard, who teaches an advanced legal ethics course at the University of South Carolina School of Law and has for 25 years represented lawyers in ethical dilemmas.
But taking money intentionally is exactly what two lawsuits recently filed in the Lexington County Court of Common Pleas allege Breibart did.
One lawsuit, filed July 3 by Molly Spearman, alleges Breibart received $222,456 from her last December. Spearman is the executive director of the S.C. Association of School Administrators.
Breibart informed Plaintiff that he deposited the Client Trust Funds into the Practices trust account and would only distribute the Client Funds in accordance with Plaintiffs intentions, Spearmans lawsuit said.
Breibart and his law firm subsequently expended the Client Trust Funds on an unauthorized purpose and for Defendants purposes without Plaintiffs knowledge or consent, the lawsuit alleges.
Spearmans father, Rudolph Mitchell, 86, also has filed a lawsuit against Breibart and his firm, alleging that Breibart and his firm had taken $298,915 of his money.
Lexington attorney Cliff Moore, who filed the suits, declined comment.
Although the FBI wont say whether an investigation is underway, numerous people who have talked with the FBI about Breibart confirmed a probe is taking place.
The Bureau has an active investigation into missing money at Breibarts firm, said Reggie Lloyd, a lawyer who is a former SLED director and a former U.S. Attorney for South Carolina.
Lloyd said he put a former Breibart client in touch with FBI agents investigating the case. They were very interested.
Breibarts woes came as a surprise to his two dozen now-ex-employees. They included 10 lawyers on salary as well as paralegals and secretaries, former employees told The State.
Up until the end of May, those employees worked in a 14,000-square-foot office bedecked with oil paintings, framed prints, wainscotting, six large conference rooms with long wooden tables and six saltwater aquariums with tropical and African fish. The office, at 201 W. Main St. in Lexington, had an upscale look, with bay windows and a brick and stone exterior.
On the 5th of every month, Breibarts employees received paychecks for work done the previous month.
In late May, Breibarts staff was informed by email that they would not be getting their usual paychecks.
The finances of the firm are such that we will not be able to cover payroll at this time, said the email, obtained by The State newspaper.
On June 1, the S.C. Supreme Court placed Breibart on an indefinite suspension. The court also appointed Barrow as trustee, directing him to assume responsibility for all of Breibarts files and bank accounts. The order also banned Breibart from making any withdrawals from the accounts.
Lesley Coggiola, the executive director of the courts Office of Disciplinary Counsel, confirmed last week there is an ongoing investigation into Breibarts situation. She declined to comment on the allegations but said her office only launches an investigation of a lawyer after vetting allegations.
This is not something we do lightly, she said. Possible outcomes include exoneration, suspension or disbarment.
Meanwhile, the S.C. Bar, which oversees the Fund for Client Protection, is aware that the $200,000 per-lawyer cap on payouts may not cover all the claims that could be filed against Breibart.
Bob Wells, S.C. Bar executive director, said it is too early to tell whether the Bar needs to consider increasing the money available to cover client losses. He said court rules prevent him from disclosing how many claims have been filed against any individual lawyer.
Last week, Ben Compton, a retired Lexington architect who owns the West Main Street building, showed a reporter around Breibarts now-empty law offices, reminiscing about Breibarts ex-employees.
They come to work one day, and the next day, they dont have a job, Compton said. A lot of them are young. They have children. They now have issues with bills to pay and health insurance and finding another job in this economy.
Compton, who said Breibart had about 12 years to go on a 15-year lease when the firm collapsed last month, said hes seeking new renters for the space.
Reach Monk at (803) 771-8344.