William Gallagher ()
The financial records of deceased New Haven lawyer William Gallagher are being investigated by a court-appointed trustee and the Office of the Chief Disciplinary Counsel, after officials were informed there may be money missing from his client accounts.
Beth Baldwin, an attorney with the Disciplinary Counsel’s office, said a trustee has been appointed to review how much remained in Gallagher’s client fund accounts when he died in December, and how much is owed to his former clients.
The IOLTA fund accounts are created by lawyers to pay clients or parties after a civil case is resolved.
“There is an audit of the IOLTA accounts being done,” Baldwin said. “At this point, there may be a shortfall in the account.” She would not confirm how much could be missing. But according to published reports, that amount could be as much as $1 million, much of it owed to clients in personal injury matters that Gallagher handled.
A hearing on the missing funds was held March 14 before Superior Court Judge Brian Fisher. During the hearing, trustee William Sweeney, a New Britain attorney, was ordered to notify 60 former clients of Gallagher’s that they may be owed money.
“The court has started the claims process,” Baldwin said, adding, “it’s very early in the process.”
More than 45 boxes from Gallagher’s office were delivered to Sweeney, including client files and financial records. According to probate court records, Gallagher had $9,061 in his firm’s bank account when he died.
At this time, Gallagher’s clients and parties who had money in escrow or IOLTA trust accounts with him are being asked to come forward to make claims. Sweeney is reviewing the trust accounts that were held by Gallagher, along with those claims.
If the suspected shortfall is confirmed, the parties would have to pursue civil claims against Gallagher’s estate, either in court or through the trustee. The parties have until June 9 to make those claims. A hearing to follow-up on the audit will likely be held in July.
Gallagher died after a long illness. In a Law Tribune article after his death, he was described by those who knew him as a tireless worker, a lawyer with a “huge heart, despite a sometimes gruff demeanor.”
Throughout the state, Gallagher was highly acclaimed as an appellate lawyer. He was active in the Connecticut Trial Lawyer’s Association, and was a past president of the Connecticut Bar Association.
Even though an audit is underway, there is no investigation of any rules violations being brought by the Chief Disciplinary Counsel’s office, Baldwin said, even though the case was filed as Office of The Chief Disciplinary Counsel v. William Gallagher.
“That’s the only way it can be captioned,” she said. “It looks more sinister than it is.”
At this point, Baldwin said, the audit of Gallagher’s accounts is identical to any that occurs when a lawyer dies with client accounts open. Any time a solo lawyer dies, and there is no other signatory on the client trust accounts, an investigation is launched to determine if there are any shortfalls. In this case, at least for now, there appears that there are.
If the audit reveals there is missing money, Baldwin said, the law does not provide for grievance complaints to be brought against deceased lawyers.
The part of the investigation that is likely to take the most time relates to questions over whether Gallagher paid liens that some of his clients owed for Medicare, Medicaid or worker’s compensation reimbursements. Those liens were supposed to be paid before money was distributed as a result of settlements.
Court records show several liens have been filed against Gallagher’s estate, although only one appears to be connected to the investigation. That lien is being pursued by the state Department of Administrative Services, which has claimed it is owed “an undisclosed amount of money” from Gallagher.
Douglas Mahoney, president of the CTLA, said the members of the association “only knew Bill Gallagher as a talented, dedicated and gifted lawyer.” The recent court proceedings “have raised troubling allegations,” Mahoney said, “which, if they prove to be true, would shock and sadden our members.”
Mahoney said it is fortunate that every Connecticut lawyer contributes a portion of their professional license fee into a security fund, administered by the Judicial Branch, that is designed specifically to protect client funds. “While we do not wish to prejudge this matter,” he said, “if any of Mr. Gallagher’s former clients were harmed, we trust that they will have their valid claims satisfied.”