EP 67 – Kirk Smith – How Lawyers Can Add Value and Enhance Experiences for Clients That Have Been Taken Advantage Of

Kirk Smith is a Managing Partner at Shepherd, Smith, Edwards & Kantas, LLP. He has been practicing law for over 21 years and was also a former stock broker. Kirk’s firm largely represents consumers against brokerage firms or investment advisors and they look to help consumers that may have been taken advantage of either in their portfolio or retirement savings. Often what went wrong inside a person’s portfolio could be due to the broker or brokerage firm’s negligence and Kirk looks to help those consumers and file cases on their behalf in what is called finra arbitration. If you are interested in getting in contact with Kirk, visit his website at https://www.investorlawyers.com or you can call his office at 800-259-9010. 

Red Flags That You Can Look For When Speaking to Your Clients

The first thing a lawyer could look for or field a question on is if there is a huge loss (mostly for those in retirement or nearing retirement). It will often be brought up to the lawyer because they are seen as such confidants and in a few other situations, you may just have access to that information. In many instances, the client trusting the attorney will broach the subject and that is how a lot of their business comes in. If you are not as common with their finances, you can simply ask them how things are going. Something as simple as that and you would be surprised about what it would yield – you will be surprised at what people open up and tell you. 

If that lawyer has a personal financial advisor that they trust, they can always bounce some ideas off of them or seek out an attorney. If you don’t know yourself, speaking with someone who does is very helpful. Other easy things to uncover aside from concentration are the use of margin or a credit line attached to the portfolio which can really decimate the account. Margin is the means by which you can borrow money from the firm to go and buy more bonds or stocks or other products. It certainly should not be used by anyone that is close to retiring or in retirement, only by those that know what they are doing. There are also lines of credit that are collateralized against the account. So other obvious ones are the use of margin and the use of credit lines collateralized to securities – just unusual products, if it is not a stock, bond, or mutual fund then people should not be in it. People do not understand what is going on because they were not given the full disclosure but they may have signed off on something. 

Why Are the Elderly Targeted and More Susceptible?

Kirk tries not to advise clients too much on who to use. As a rule, the larger firms have smart people that work there and trustworthy people, but there are always going to be bad apples wherever you go. He tries not to give too much direction to any one brokerage firm after they are done with his firm. Older people tend to be the ones that are targeted or more susceptible because they are more trustworthy of a person in an apparent power of authority or knowledge, but they also have larger amounts of money after working a lifetime. As far as making the claim goes, they should be treated differently in a more conservative fashion. Obviously fraud is looked upon a little more aggressively and they will view the brokerage firm in a different light. Either way, it is recoverable but you might get a larger reward or potentially get some costs / interests. It is still actionable – malpractice is malpractice and negligence is negligence. People who have suffered shouldnt bear the financial loss for the mistake, the mistake should be borne by the professional. A lot of times, older adults do not want to discuss their finances with their children, especially if they have several and there may be some issues there. You would be surprised.

Misrepresented Products and Topics to Stay Away From

He has spoken at a few different associations and some younger attorneys will attend classes for CLE and he will speak there about different topics and products to keep an eye out for and the process for how to present a case as well. People were investing or recommended to invest in Master Limited Partnerships or MLP which is tied to oil and gas and always recommended as a safe and secure product (as an alternative to a fixed income like a bond fund), but in reality it can fluctuate greatly. The price of oil does have a negative effect on it and many people were invested in these and suffered huge losses. Another thing are REIT’s which are real estate investment trusts. These are almost a mutual fund composed of real estate and people get stuck in them, especially these days. A lot of things are misrepresented to people or they are sold risky products. Each person is different and each situation is different. You can certainly expect to get more money back than if you did nothing. But there are so many different variables – what was said, if there are any emails, whether you are or were a blue collar worker, a professional, or a widow, and what type of concentration it was. They would not be doing it if they were not getting good returns for the clients, but it is hard to quantify. 

Your clients look up to you regardless of what service you are performing and when they need help, they want to turn to someone that they can trust even if it is a little outside of what that person does.

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