The recent news indicating that many EB-5 attorneys were illegally accepting finder fees from regional centers has led many investors to ask “How can I know whether the lawyer I am thinking about hiring is ethical or not.” There is a one simple way to do this – ask the attorney whether he or she can give you help with EB-5 project selection. If the lawyer says “no, I am neither trained nor licensed to provide financial advice. You have to get help with that elsewhere,” it means your lawyer is ethical! Ironically, many investors get upset when their attorney refuses to give financial advice, thinking the lawyer knows more about the regional center projects than they do and is being unhelpful. But it’s not the lawyer’s place to give advice here. Attorney ethical rules require that the lawyer give advise only in areas where “competent.” There are very, very few attorneys who have the background and training in finance to evaluate EB-5 projects; and even if they did, they wouldn’t have time to research the 100+ EB-5 projects on the market at any given time. In our firm, EB-5 Analytics, our financial analyses are done primarily by a person who has an advanced degree in finance from the London School of Economics as well as an MBA in the Mathematics of Finance from Columbia Business School. Even more important, he has over 20 years of experience in performing financial due diligence. Our other financial analyst has an MBA from the University of Buffalo, is a Charted Financial Analyst, and also has over 20 years of experience in due diligence analysis. They typically need three weeks or more to conclude one of these analyses.
Another problem is that lawyers tend to give bad advice to their investor clients. They often say to clients – “pick a regional center that has a history of I-829 approvals.” Since the lawyer understands the very legal concept of petition approval, he overemphasizes it to the exclusion of other factors that can be more important. I’ve discussed the weaknesses of this approach at length in my blog post “Are Regional Centers with I-829 Approvals the Best?”
Some lawyers give clients a “list” of regional centers they are familiar with, but this list doesn’t likely represent the best in the market, it just represents the regional centers the attorney is familiar with, which may or may not be above average. This form of advice can be relatively benign. The lawyer may simply be trying to give the client a head start in selecting among established regional centers. But be very careful here. The lawyer could be directing you to regional centers with whom the lawyer has other business connections. If the lawyer is suggesting projects where the attorney is also the immigration counsel for the regional center, he or she may be directing investors to the regional center is a way to enhance his or her value with the regional center. There are other attorneys who insist that the regional center send them other kinds of legal work (like new I-526 petitions) in exchange for placing an investor with the regional center.
By the way, our firm has received referrals from to date from about 25 different EB-5 attorneys. You can be very confident that these lawyers are ethical because by sending a case to us the attorney removes himself from any opportunity to profit from the investor’s project selection. If anyone reading this post wants to know who’s on the list, just give us a call and we will gladly share this information with you.