Mitch Darling: Cellino and Barnes Collapses

Cellino and Barnes, perhaps New York’s largest personal injury firm, collapsed yesterday. Ross M. Cellino Jr. brought an Order to Show Cause asking why the firm should not be dissolved. The Buffalo based firm – fueled by a massive multi-million dollar advertising and marketing budget — expanded in recent years to open offices around New York and now in California.

Cellino’s partner, Stephen Barnes, is scheduled to respond in court on May 19th. Details of the reason for the collapse will most surely come out in the lawsuit, along with accusations of some kind as between the two.

At stake in the suit are potentially thousands (tens of thousands?) of injured clients, whose cases now face the prospects of chaos, delay and disarray. It could be years before the entanglements of the two are sorted out, as issues involving its very expensive phone number (all 8s), marketing campaign and leases are sorted out while the lawyers jockey over how to manage the clients.

The dissolution will also have to deal with potential future business — notwithstanding the disarray — and that such business was generated by the years-long marketing campaign.

Most assuredly, lawyers at the firm are now contacting high-value individual clients in efforts to persuade them to stay at one of the new firms bound to be birthed from the tumult and pandemonium that is likely taking place.

But it isn’t as if the lawyers can simply divvy up the clients — for it is the clients that get to choose the lawyers. If clients do not believe they’ve been treated well with personal attention in the past, they may flee the firm altogether.

Both Cellino and Barnes have a checkered history, notwithstanding their success in building their mega-firm. In 2005 Cellino was suspended from the practice of law for six months while Barnes was censured. (In re Cellino)

The two of them had, in violation of the Rules of Professional Conduct, advanced loans to numerous clients. Part of this was having a relative set up a high interest funding company for clients, and then directing clients to that funding company without informing them of the relationship.

Barnes was also cited for ambulance chasing (“Barnes sent a letter to a hospitalized surgical patient and concluded that such conduct was an impermissible solicitation of legal employment in violation of Code of Professional Responsibility.”)

This story is one to follow given the inevitable problems that will result in the dissolution of a firm with thousands of clients.