GVK Spearheads An Alternative Approach Regarding The Fraud In The New York State Court System

GVK has recently filed several motions across the New York State Court System regarding a certain plaintiff’s law firm that has admitted that it helped bring 200-300 fraudulent cases into our Courts.

That firm has told the courts and the defense bar that it can walk away from these potentially fraudulent cases (they have not identified which cases are fraudulent on the record) without saying a word regarding whether portions of those cases or the entirety of those cases are fraudulent. Up until now, the Courts have either allowed that law firm to walk away without explanation, or allowed the firm to file a consent to change attorney without explanation – and all without an attorney charging lien (which would have entitled to them to proceeds on any settlement).  In some instances, the Courts have allowed the defendants to amend their answers to assert fraud defenses, allowing the possibility of the defendants to prove fraud if discovery turns up such unlikely evidence.

We disagree.  We believe that the idea that the courts might allow additional discovery to take place down the road to identify potential fraud is inadequate, and will likely never be successful. Instead, we have argued – an idea supported by a highly regarded ethics attorney – that: the burden is on the plaintiff and the law firm and the referral source to immediately disclose any information, evidence, or communications regarding any and all fraud of any kind to the Court and the defendants immediately; and that the Court have their own independent responsibility and obligation to investigate the fraud.  We believe that it is not the defendants’ burden to try and find evidence of fraud during the discovery process, because the defendants did not bring the fraud into the Courts in the first place.

More specifically, based on a major collaboration here at our firm, and our retention of a well-credentialed and highly respected ethics expert, our research and collaboration found that that law firm must: (1) correct any prior false statements made to the Court (pleadings, affirmations, testimony, etc.), even if inadvertently made; (2) that any information regarding prior, ongoing, or future fraud must be disclosed immediately; (3) that a “noisy withdrawal” (implying that the action is tainted by fraud without saying it) is no longer an option in New York anymore; (4) that the crime-fraud exception to the attorney-client privilege does not protect fraudulent communications and actions; and (5) that no attorney-client privilege attaches if the fraud involves a referral source that helped bring a fraudulent action into the Court.  We have also found that the Court also has an independent obligation to investigate the fraud and to rid such fraud from the Courts.

This is an alternative approach, and another option for all defense firms out there who are working together to eliminate the fraud from the Courts. We believe that this is a more effective path to actually uncover the fraud, and to not allow potential fraudulent suits to continue in the courts.

If you have any questions regarding our approach, please reach out to C. Briggs Johnson and Howard Klar.