Nevada Supreme Court’s Fraudulent Transfer Ruling

The Supreme Court of Nevada recently held that the law firm, Woods & Erickson, LLP, was not liable for the fraudulent transfer of assets belonging to a debtor who was dodging a creditor judgment.  The court opinion noted that a “majority of jurisdictions do not recognize accessory liability for fraudulent transfers.”  The rationale is to protect attorneys who are not parties to the transfer but are instead acting as a “mere scrivener,” which contrasts with someone who knowingly assists with a fraudulent transfer and could be held liable. 

Attorneys should follow the principle of KYC (know your client), because litigating these types of cases can be costly and time consuming.  Even if not held liable, attorneys cannot recoup attorney fees for fighting these actions and malpractice insurers do not cover these types of cases.  Because clients often lie about themselves, attorneys should diligently research a potential client to avoid any problems that could arise. 

See Jay Adkisson, Nevada Supreme Court’s Fraudulent Transfer Ruling Keeps Innocent Law Firm Out Of The Woods, Forbes, April 02, 2015.