As widely reported on Jackson Jambalaya and elsewhere, multiple metro area homeowners associations are accusing Ridgway Lane of embezzlement. Most of these homeowners associations have filed suit against Ridgway Lane. I wish them luck.

There is a good rule of thumb when it comes to lawsuits involving embezzlement. The rule is: you can’t recover from the thief.

Think about it. If the thief had money, he wouldn’t be stealing. The thief starts broke. That’s why he’s stealing. He steals some money and spends it. Wash, rinse and repeat.

The challenge for victims and their lawyers is to find someone other than the thief to blame. Someone who has money.

Consider the ongoing receiver lawsuits in the Madison Timber ponzi scheme. The receiver is not suing Lamar Adams. He forfeited his assets and went to jail. Instead, the receiver is suing various other parties who, allegedly, share in the blame for the scheme. Getting a judgment against these defendants will be much harder than against Adams. But unlike with Adams, recovery is possible.

This rule doesn’t only apply to embezzlers. It applies to all variations of crooks and incompetents. For most of us, it’s a lesson learned the hard way.

Rarely, victims can recover from someone other than the thief or person who ripped you off. Usually, you’re just screwed. You can’t get blood out of a turnip. Attorneys have to find a viable defendant for recovery–not just liability.

So getting back to the homeowners association lawsuits, sure they will ‘win’ the case, but how are they going to recover? Are they just litigating for bragging rights?

As with any rule of thumb, there will be exceptions. But not many.

There are other rules of thumbs for lawyers. One of my favorites is: you never want to be the client’s third (or more) lawyer on a case. It’s never worth it. And I’m not aware of this rule ever having an exception.