Sunday, November 8, 2009

Stuart Rosenfeldt: The Beginning Of The End?

I do not know Stuart Rosenfeldt. He is probably a fine attorney and I hope he survives this tsunami of a crisis in his professional life. However, I cannot help but be skeptical of his public pronouncements about his ignorance of his partner's crimes or what appears to be thievery on a monumental scale. To paraphrase Shakespeare, perhaps Mr. Rosenfeldt doth protest too much. Let us look at what is known or at least a set of facts that are highly likely to be true:
1. Rothstein and Rosenfeldt met some 8 to 10 years ago when each was an attorney no different from other attorneys in South Florida. That is, they led an American middle class lifestyle with all of the accoutrements that such a status brings with it. Life was good but you worried every night about paying bills and sending your kids to college. And if one of your kids needed braces or the a/c broke in your house, you felt the pain when you wrote the check. I read in the Herald this morning that Rothstein had modest assets when he was divorced ten years ago. They worked together at Dennis Eisenger's firm in Hollywood. That firm is known for its expertise in condominium law. Eisenger is a fine lawyer and the lawyers there work hard and represent clients well.
2. The two future partners decide to form their own firm, specializing in labor and employment law. For a fledgling firm, this practice means representing plaintiffs in federal wage and hour disputes, ADA cases, age/sex/race discrimination matters, and generic employment type disputes. I doubt they represented large companies who are often the target of such suits. These entities use the mega firms that handle their other business or have insurance companies represent them through one of the large insurance defense firms in town. Again, their situation is no different than any other small firm starting a new practice. You start small and build your way up by developing a client base and serving it well.
3. According to Rosenfeldt, he was a 50% partner in the firm. Rothstein handled all of the financial issues and he, presumably, handled the legal matters.
4. The firm grew from 7 lawyers to over 70 in about six years. The firm went from an average small shop to one where the name partner became a celebrity mover and shaker, political contributor, philanthropist, and a veritable Jay Gatsby about town almost overnight. He hired ex judges, ex cons, and posted the kind of security around his office that is normally reserved for heads of state or mafia dons. He purchased five or six properties in Florida, one in Rhode Island, and one in NY. He amassed a collection of luxury cars that cost hundreds of thousands of dollars each. His lifestyle was not only ostentatious but he went out of his way to make sure everyone in town knew he was living that way. Which is fine so long as it is your money. If your name is Warren Buffett or George Soros or Rush Limbaugh or Bill Gates, you can live this way. Everyone knows you earned it the old fashioned way: hard work and luck.
5. In order for Rosenfeldt and other partners to believe that Rothstein's lifestyle was financed legitimately, they had to assume that the firm was generating sufficient revenue to support it. Accepting Rosenfeldt's statement that he was ignorant of the firm's finances, the bigger question is what was he not ignorant of? Presumably, the firm generated revenue from its legal practice. Rosenfeldt, as 50% partner, must have had intimate knowledge of all of the pending lawsuits the firm was handling and how much money each file was generating in fees. But let us delve into this a little deeper. If you are a lawyer reading this post, put yourself in Rosenfeldt's position. You are presumably drawing a salary. You work every day on client matters. You bill for your time. You know how much money you are generating for the firm. You also have a pretty good idea about what everyone else is doing. The firm must have had some type of internal review process where litigation matters and the like were settled. Rosenfeldt had to have been privy to this procedure. He cannot claim to be an associate who was called a partner, i.e., a mere employee who collected a paycheck, billed his hours, and kept to himself. He was at the firm from its inception. He knew Rothstein was no jet setter when they started the practice and he had to have known the firm's caseload and billable hours that were coming in every month. From what I have read, Rothstein was no legal genius or even a rainmaker type who had a large book of business to support a staff of 70 lawyers. With this as a backdrop, it is simply inconceivable that Rosenfeldt could look around him for the past few years and not think something was seriously amiss. If you are an attorney, how would you react if the following happened at the firm you worked? Consider:
a. Your 50/50 partner is living like a king and you are not;
b. his lifestyle is 1000 times beyond what the firm's caseload and client base could possibly support;
c. your 50/50 partner holes himself in his office in a fortress like environment; and
d. when you try to question him about the firm's finances, he brushes you off like you are a junior associate.
99% of lawyers I know would resign. It would be intriguing to know what Rosenfeldt's draw was at the firm. If he made more money than he was bringing in or even billing for, he had to have wondered why he was being rewarded so generously. Most partners at law firms know what type of business the other partners have and if they pull their weight or not. And what about his wife? You had better believe that if he was not making good money, his wife would be nagging him like white on rice. Imagine seeing the opulence thrown in your face, and knowing your husband is this man's 50/50 partner, and you "only" have one house and two cars and are wondering what you will do in retirement. I am sure she thought to herself and mentioned to him something to the effect that “hey, what is wrong here. Your partner spends a million dollars like we do dimes. Where is your share?” Rest assured, he did not tell his wife that he was ignorant of Rothstein's shenanigans. The more likely scenario was "honey, as long as the money is rolling in and we are doing way better than we would do otherwise, I am not going to say anything. If the shit hits the fan, I can claim I did not know anything. So please be quiet." And didn't the other partners talk to one another about their cases or clients? One would think they shared small talk about the giant elephant in the room: “Hey, how can it be that we have clients that justify $X amount a year in salaries and the senior partner is living as if we do 1000 times that?” Even if all of the clients went to Rothstein and he farmed the work to the other attorneys, one could easily do the math and figure out that 70 attorneys billing 100 hours a week would not put a dent in his monthly budget. This analysis is based on reasonable inferences drawn from facts that are probably true. Rothstein may very well confirm what Rosenfeldt has stated publicly but I doubt it.
The Daily Business Review and some blogs reported this week that attorney Craig Raymond at Broad & Cassel has a client who says that Rosenfeldt was present at a meeting in Rothstein's office where structured settlements were discussed. Rosenfeldt denies it. It is highly unlikely a potential investor would make this up. I wonder what Rothstein will say about this meeting? I am sure he will be asked about it. If it happened, Rosenfeldt's defense crumbles. In the next few weeks, many more witnesses will come forward with evidence. A lot is going to be learned about who knew what. Any public statements that Rosenfeldt has made that are not true and are seen as an attempt to separate him from Rothstein will only further embolden Rothstein to cooperate with the government. There is nothing that gets a suspect to rat out his friends than watching them lie about what they know and shifting the blame onto others.
I find Kendall Coffey's strategy brilliant as a short-term stopgap measure to save the firm but counter productive in the long run as far as Rosenfeldt's personal liability is concerned. Rosenfeldt's public posturing and statements will come back to haunt him. Watching Kendall on video giving a public tour of Rothstein's office made me think that it could have been a dress rehearsal for some Florida Bar attorney arguing that Rosenfeldt should be disciplined for negligently allowing himself to be part of this crime even if he did not know the details. Kendall went out of his way to separate Rothstein's office and persona from the actual practice of law that went on in the rest of the offices. Nice try and it sounded convincing for a week. But it will not withstand scrutiny. If the trappings of the office were foreign to the day-to-day operations of a normal law firm, why did the partners tolerate it? Judge Streitfeld made a comment at one of the initial court hearings where he was skeptical of Rosenfeldt's claims of ignorance. In a few weeks from now, when more information becomes known, Rosenfeldt's expensive legal strategy will come back to bite him hard.
Stay tuned.

4 comments:

  1. Don’t forget about all the other business Scott owned… With those, employees could have allowed themselves to think “I guess he could have that much money”…

    Just Sayn'

    ReplyDelete
  2. Nice blog you got here. I'll throw up a link and good luck!

    ReplyDelete
  3. This is a blog where I can get beautiful experiences, thoughts and different points of view, that's why I love what you write, continue with this it's an excellent work.m10m

    ReplyDelete
  4. Where is Stuart Rosenfeldt today, still practicing?. Curious - I worked about 9 months for Rothstein, Rosenfeldt, et al. back in 02, before all this started, knew Villagras, at that time she was a Para-Legal. I am curious as to what happen to the employees, the office manager, who was very tight and close friend to Villagras. I was good friends with Kathy Brown, who was secretary to Rosenfeldt for years. I am retired from working with attorneys, thank God, I know I'm going to heaven for doing this for 30 years. I am living in Northern FLorida now and had not heard of all of this and I have been reading intently, and then with great sadness of hearing about Melissa's death.

    ReplyDelete