Locke Liddell & Sapp’s agreement to pay $22 million to settle a suit alleging it aided a client in defrauding investors is expected to serve as a warning to other firms that they must take action when they learn a client’s alleged wrongdoing may be harming third parties. The Dallas-based firm agreed April 14 to settle a suit stemming from its representation of Russell Erxleben, a former University of Texas star football kicker whose foreign currency trading company was allegedly a Ponzi scheme. Erxleben pleaded guilty last November to federal conspiracy and securities-fraud charges and is to be sentenced in May.
Locke Liddell’s settlement comes on the heels of an $8.5 million settlement by Houston’s Sheinfeld, Maley & Kay and attorney Lee Polson. The two settlements, minus attorneys’ fees and expenses, are expected to bring investors a recovery of more than 60 cents on the dollar.