Nat Hardwick convicted on 23 counts

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Nat HardwickMany South Carolina real estate lawyers know the name Nat Hardwick.

Nathan E. Hardwick IV, 53, described himself as the face of Morris Hardwick Schneider, an Atlanta residential real estate and foreclosure firm that grew into sixteen states, including South Carolina. The firm once had more than 800 employees and boasted of offices in Charleston, Hilton Head, Columbia and Greenville.

On October 12, Hardwick was convicted in federal court in Atlanta of 21 counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of making false statements to a federally insured financial institution. In federal court, sentencing is typically delayed, and the convicted person is released and allowed to get his affairs in order. In this case, however, Hardwick had been released pending trial on bond. After his conviction, he was described by the U.S. Attorney who prosecuted him as a flight risk and was handcuffed and taken to jail immediately.

This story hits close to home. My company was one of the victims of the crimes.

The prosecutor described an extravagant lifestyle that Hardwick enjoyed at the expense of others. The case was said to be particularly troubling because the illegal activity was orchestrated by a lawyer who swore an oath to uphold the law and represent his clients with integrity. The U.S. Attorney said he hoped the case sent the message that the FBI and the U.S. Attorney’s office will not tolerate this type of white-collar crime.

According to the evidence, from January 2011 through August 2014, Hardwick stole more than $26 million from his law firm’s accounts, including its trust accounts, to pay his personal debts and expenses. The firm’s audited financial statements showed that the firm’s net income from 2011 through 2013 was approximately $10 million. During that time, according to the evidence, Hardwick took more than $20 million from firm accounts.

Asha Maurya, who managed the firm’s accounting operations, was also charged. She reached an agreement in May with the U.S. Attorney’s office and pled guilty. She was expected to testify at the trial, but was unexpectedly not called as a witness.

Hardwick did take the stand in his defense and attempted to blame Maurya with the theft. He said that he trusted her to his detriment, that he was entitled to the funds, and that he was unaware that the funds were wired from trust accounts. Hardwick testified for more than a day and explained that he believed Maurya followed proper law firm procedures.

On the stand, Hardwick, described as the consummate salesman, said that he gave his cellphone number to almost everyone. He said he returned calls and messages within a few hours and instructed his employees to do the same. He apparently believed himself to be a master in marketing and customer service and prided himself in focusing on the firm’s expansion strategy. He hoped to expand to all fifty states and make money through a public stock offering.

With his ill-gotten gains, Hardwick bought expensive property, made a $186,000 deposit for a party on a private island, spent $635,000 to take his golfing friends to attend the British Open in 2014, paid off bookies, alimony obligations, and sent more than $5.9 million to various casinos, all according to trial evidence. Hardwick’s activities lead to the loss of his law license and the bankruptcy of his firm.

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Dirt lawyers: here’s a book you need to read!

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A lot of time has passed since I’ve written book reports, but I felt compelled to write this one after just completing the 2018 ABA Law Practice Division book, The Lean Law Firm, How to run your firm like the world’s most efficient and profitable businesses.

I learned about this book from, of all places, Facebook, when my friend and very techy Columbia lawyer, Jack Pringle, expressed anger that he hadn’t written this book himself. And I was thrilled to learn that one of the authors is also a very techy Columbia lawyer, Dave Maxfield. I don’t know Dave, but I’ve told his sister-in-law, my co-worker Dorothy Boudreaux, to warn Dave that I will be reaching out to him at some point to pick his brain, to ask him to speak at a seminar, and to otherwise figure out how I can relay his very creative and valuable ideas to the dirt lawyers in South Carolina who need the advice this book sets out so well.

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What is a lean law firm?  In the words of Larry Port, the other author, from the book’s foreword, being lean is not about cost cutting. “It’s more about creating systems and then finding the constraints and inefficiencies that impede them. Lean lawyers believe in measurement, reducing waste, and producing as much value as they can for their clients. And more than anything else, Lean is about experimentation and continuous improvement.” Would you like to increase your income and, at the same time, reduce your stress? The processes set out in this book are intended to teach you how to accomplish those goals simultaneously.

Unfortunately, most lawyers have little or no awareness of the value of creating systems. We are not taught to run businesses in law school. The lawyers I know and love are so busy practicing law that they don’t take the time to modernize, to focus on processes, and to create the systems that will allow them to run their firms like efficient and profitable businesses.

This book explains in detail how the science of management can be translated to law firms.

Does this sound like very dry reading to you? It is not that at all. In fact, it is the first book published by the ABA to employ the graphic novel approach. It is written in the form of a story about Gray Law Firm, a small struggling firm, it’s newly-hired, former big law lawyer, Carson Wright, who wants to help  “fix” the law firm, and Carson’s friend, Guy Chaplin, who runs an extremely successful racing bicycle manufacturing and distribution company.  Guy slowly teaches Carson the business principles that make his company successful. And Guy helps Carson figure out how to apply those principles to his law firm.

I have to warn you that the book contains a lot of math. But I am not a math scholar by any stretch of the imagination, and I was able to follow the formulas and to see how they would work well in a law firm that handles real estate, especially residential real estate. In fact, my only complaint about this book is that it is not geared specifically to real estate practitioners. Thus, my need to pick Dave Maxfield’s brain.

The book gives very specific advice about the basics of management, standardization, written procedures, checklists, marketing, goal setting and technology. A South Carolina real estate lawyer might find that some of the advice doesn’t apply, but I’m betting that most of it does apply, and I am encouraging everyone to order a copy of this book at www.ShopABA.org and to take its advice to heart.

Marketing tips for dirt lawyers

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bookLast week, this blog discussed technology and marketing issues, and I warned readers to expect more on those topics. I read another great book! This one, The Power of a System, by John H. Fisher, a medical malpractice lawyer, is basically about how to build a successful plaintiff’s practice. Why, you ask, should a real estate lawyer care?

A real estate lawyer should care because Mr. Fisher included some great marketing tips for real estate lawyers. He believes, for example, in identifying the “ideal client” and marketing relentlessly to that person. Here is his quote about the “ideal client” of a real estate lawyer:

“If you are a real estate lawyer, are your ideal clients the homeowners buying a new house? No! The homeowners will use your services one time for a fee of $750, and you will likely never hear from them again…You will be broke by the time the homeowners need you again. The ideal clients for a real estate lawyer are real estate agents who refer a steady stream of new homeowners. The goal is not to make money on a single transaction. Rather, your goal should be to develop relationships with your ideal client that will generate new clients and a steady stream of income for the rest of your career. The lifetime value of your ideal client is far greater than the value of a single transaction.”

This makes perfect sense, doesn’t it? Real estate lawyers in South Carolina should devote their marketing dollars and time to courting the individuals who are in a position to send them business. In addition to real estate agents, local lenders and builders are prime targets. Analyze your market, your community, and determine who will be in a position to direct business to your practice. Call those individuals your “ideal clients” and go after them!

Mr. Fisher has developed three simple marketing tools that he says will make all the difference in a law practice:

  1. Create an information-powerhouse website that provides killer content on a daily basis;
  2. Publish a monthly newsletter targeted to your ideal client;
  3. Host regular seminars and workshops that provide valuable content to your ideal client.

As to the information-powerhouse website, you will need assistance.  There are experts who can assist you with setting up the website as well as providing content. You will, of course, have to comply with the Rules of Professional Responsibility, so you cannot let your website expert work alone. Stay tuned for later blogs about websites.

As to the monthly newsletter, Mr. Fisher was very specific. He believes newsletters are “marketing gold”, but they must be written by the attorney to show personality as well as expertise, and they must be mailed consistently on a monthly basis. He believes that mass-mailing pieces will not do the job.

He said he is always thinking and taking notes about possible articles. (I get this idea because I am always thinking about blog ideas.) He said, with collecting ideas all month, he is able to devote only two hours per month to actually writing. He writes a main article or two on law related topics. Then he answers a legal question or two. After that, he throws in a brief article about his marketing events (“What’s John up to?”). And he adds a goofy picture or two of him and his kids to humanize himself.

He hires a graphic designer to make the newsletter “pretty” and uses a “fulfillment provider” for printing and mailing.

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He wants his newsletter to be so good that his ideal clients (the lawyers who refer medical malpractice plaintiffs to him) will save them and post them on their bulletin boards. Can you write a newsletter that good to promote your practice? I believe you can!

As to event marketing, Mr. Fisher says events should be educational, informational and fun and they should give away secrets! He has seminars for lawyers (his referral partners) to explain his systems, how he treats his clients, etc. He says to promote the heck out of these events to your ideal clients. Mail invitations. Follow with postcards, emails and handwritten notes. He recommends using testimonials from others who have attended successful events. Keep building momentum. Obtain sponsors and vendors to assist. Make sure the events are fun! And then follow them with handwritten notes.

Our office is in the business of consulting with real estate lawyers on marketing and other issues. We can help!  And here’s a further warning about more of these topics in future blogs.

Happy marketing!

Use technology and make more money!

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Grow your business, dirt lawyers!

This blog is supposed to be about South Carolina dirt law, but I saw this great article entitled “Twelve Steps to a Profitable Law Practice” that I thought would benefit most South Carolina dirt lawyers. The author is Ernest Svenson (also known as “Ernie the Attorney” if you are interested in Googling his interesting blogs about technology, marketing and other topics vital for law firms but often overlooked by busy lawyers).

Mr. Svenson is the founder of Law Firm Autopilot, the stated mission of which is to help small firm lawyers transform their practices to improve their quality of life. Check out Law Firm Autopilot’s online courses and coaching services here.

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The article is adapted from a chapter in a book I’m reading, The Secrets to Marketing and Automating Your Law Practice: A Lawyer’s Guide to Creating Systems, Getting Clients and Becoming a Legal Rainmaker by David M. Pitton (Practice Panther, 2018). You can download a free copy of the book at the end of the article linked above. This book is good. Chapter 1, entitled “The Ultimate Checklist for Starting Your Own Firm” blew my mind with its very specific, detailed advice about the technology a lawyer establishing a new practice needs. Most of what the author advised was extremely practical and extremely economical because he understands the financial pressures of a new practice. Example:  design a logo for only $99!

Why am I bothering Dirt Law readers with this topic? I know most of you are not thinking about opening your own practices. I’m troubling you with this because I believe marketing and technology may be two of the most vital components required to maintain healthy and growing practices in 2018. Real estate practitioners are always competing and are always trying to stay ahead of the quickly changing technology landscape. The lawyers who master technology and marketing are the lawyers who will thrive in the future.

Mr. Svenson does not suggest that you must master technology yourself. He believes in hiring experts to push the buttons for you. He says, “If you can follow a clear ‘process roadmap’—such as the rules of civil procedure—then you are capable of radically improving your practice with common technology, most of which you already own.” He believes that digitizing will allow you to simplify your practice and lower your overhead. He believes automation will exponentially increase efficiencies and result in cost savings. And he believes that you can learn to work virtually from anywhere with an internet connection.

Many of you know our staff was displaced in 2012 when our office building was involved in a fire. Thankfully, no one got hurt, and much of our furniture and equipment was eventually saved, despite the layer of soot that settled on everything. But we were displaced for a whole year! We rented a small suite in an executive space downtown, but most of us worked remotely (from home) for an entire year. And we didn’t miss a beat. As far as we were able to tell, we didn’t lose a dollar. The day after the fire, several of us were camped out in my kitchen at home disbursing funds for a large commercial transaction. If I was not a believer in being “paperless” before that catastrophe, I definitely am today. I call myself the poster child for business continuity.

(By the way, I am working in said kitchen as I write. I recently hired a new lawyer despite not having space for him, so I displaced myself instead of our new underwriter until we are able to move to a larger space later this year. Again, I am not missing a beat!)

This article says, “If you want to streamline your practice and reduce clutter and chaos, you need to stop managing information in paper form. Digital information is cheaper to store, easier to transmit, and can be automated more easily.”

And, of course, the author points out, and I want to emphasize, that the more we rely on digital information and automation, the more we have to pay attention to security. There are experts that are available to help with this issue. Use them!

Don’t be surprised if you see more blogs from me on related topics in the future. I’m on a roll, trying to read everything on these topics I can, so that my office and I will be in a position to assist our attorney agents as they grow and thrive. Grow and thrive with us!

SC Supreme Court holds email provides sufficient written notice

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….for at least one purpose

This blog is about dirt, but from time to time, dirt lawyers should review the rules our brother and sister litigators follow. Why? Sometimes those rules bleed over into our world, and sometimes, unfortunately, the transactions we handle are subject to litigation. And in this “ever changing world in which we live in”*, we should pay particular attention to changing rules involving technology. This is one of those changes.

The South Carolina Supreme Court held on February 28 that an email that provides written notice of entry of an order or judgment, if sent from the court, an attorney or record, or a party, triggers the time to serve a notice of appeal under Rule 203(b)(1) of the South Carolina Appellate Court Rules (SCACR)*.  And the Court held that this is such a novel question of law that its holding applies only prospectively, and not to the case at hand.

Here’s the background. On December 15, 2014, the master-in-equity denied the foreclosure defendants’ petition for an order of appraisal. That same day, the master’s administrative assistant emailed a signed and stamped copy of the order and Form 4 to the bank and the defendants. Three days later, the defendants received a copy of both documents in the mail.

Believing the time to appeal began on the day they received the documents in the mail, the defendants served notice of appeal on January 15, 2015, which was thirty-one days after the email and twenty-eight days after they received the documents in the mail.

The Court of Appeals held that the email triggered the time to serve notice of appeal. On appeal to the Supreme Court, the petitioners did not dispute that the email constituted written notice of entry of the order or judgment. But they argued that the time to serve notice of an intent to appeal is only triggered when written notice is received by mail or hand delivery according to Rule 5 of the South Carolina Rules of Civil Procedure (SCRCP). The Supreme Court held that the SCRCP do not apply to appellate procedure.

The Supreme Court examined Rule 203(b)(1), SCACR, which requires that a notice of appeal must be served within thirty days after receiving written notice of entry of the order or judgment and held that there is no requirement of service. All that is required, according to the Court, is that the parties receive notice. Further, there is nothing in the appellate court rules suggesting that the manner in which a party may receive notice is limited to the methods used to effectuate service.

Got it, dirt lawyers?  It’s technical, but this holding suggests that our Court is gradually accepting the technology we use every day as sufficient for notice purposes. One lesson for us is that we should be careful what we say in our emails as we handle our transactional practices! Another lesson for us is that we should all check our spam and junk email files to make sure we receive all communications that may create responsibility or liability for us.

*…with sincere apologies to Sir Paul McCartney.

**Wells Fargo Bank, N.A. v. Fallon Properties South Carolina, LLC, South Carolina Supreme Court Opinion 27773, February 28, 2018.

SC dirt lawyers sued for email funds diversion by a third-party criminal

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This is the first suit of this type I’ve seen. I’m confident it won’t be the last!

A dirt lawyer friend sent a copy to me of a hot-off-presses lawsuit filed in a circuit court in South Carolina against a closing law firm because the purchaser’s $50,000 in closing funds were diverted by a third-party criminal posing in an email exchange as the transaction’s real estate agent. My friend said he sent the case for my information. I think he sent it so I wouldn’t sleep!

Here are the facts as recited in the complaint. The names are being changed to protect all parties.

Paul and Penny Purchaser signed an Attorney Preference Form on March 28, 2017, selecting Ready and Able, LLC as their legal counsel for the purchase of a residential home and the closing of a purchase money mortgage with Remedy Mortgage, LLC.

On April 10, Paul and Penny Purchaser received Ready and Able, LLC’s “Purchaser’s Information Sheet” which required Paul and Penny to pay all closing funds over $500 to Ready and Able, LLC by wire transfer. The complaint states that these were silent as to the security of wire transfers, the security of private information to be conveyed between the purchasers and the law firm, and the security or lack of security of the use of email for closing information.

Also on April 10, Penny Purchaser telephoned the law firm and spoke with paralegal, Candy Competent, providing her with the purchasers’ Social Security numbers. The complaint states that Ms. Competent accepted the information and provided no wiring information or warnings.

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The complaint states that on April 14, Paul Purchaser received what purported and reasonably appeared to be an email from Regina Realtor, their real estate agent for the transaction, asking Mr. and Mrs. Purchaser to wire closing funds in the amount of $48,490.31 that day so that the closing scheduled for April 21 would not be delayed. Penny Purchaser replied to the email requesting wiring instructions. An attachment purporting to be wiring instructions for Ready and Able, LLC. was sent via reply email.  The complaint states that the wiring instructions reasonably appeared to be the correct wiring instructions for the law firm and appeared to be printed on law firm letterhead. This email exchange was actually with a third-party criminal.

Later on April 14, Penny Purchaser telephoned Candy Competent and requested the amount needed to close. Ms. Competent discussed the amount needed to close despite the fact, according to the complaint, that she knew or should have known that the law firm had not sent wiring instructions to the purchasers or the real estate agent.

On April 17, Ms. Competent sent an email to Mrs. Purchaser advising her to add $550 to the funds due to close to cover a survey bill that came in on April 14. No mention was made of wiring instructions in that email. The email also did not discuss the fact that the law firm had not yet provided an amount to close to the purchasers or to the real estate agent. Mrs. Purchaser wired $49,015.31 using the wiring instructions provided by the third-party criminal.

On April 21, Paul and Penny Purchaser learned for the first time that the wiring instructions were the work of a criminal third party, who received the funds and has failed to return the funds.

The complaint states two causes of action, negligence and legal malpractice, and lists the following breaches of duty committed by the law firm:

  • Requiring the plaintiffs to use wire closing funds to defendant, without counseling the plaintiffs about the methods by which the secure delivery of such funds could be compromised;
  • Failing to counsel the plaintiffs about the risks and insecurity of email communications, particularly of private, sensitive, or financial closing information; and
  • Failing to be alerted by the circumstances of Mrs. Purchaser’s telephone call on April 14, and therefore to warn her that no communication had been sent by the law firm.

Is this, in fact, negligence or legal malpractice?  We will have to wait to see.  Would the processes established by your law firm for the protection of your clients’ funds prevent this type of crime? That is the question of the day. Please discuss among yourselves!