Tuesday, October 16, 2007

A Private Matter?

An Illinois Hearing Board majority sustained some, but not all, ethics charges brought by the Administrator alleging that an attorney had diverted fees due to his law firm to an outside lawyer, kept referral fees that were due to the firm, handled cases in a manner contrary to firm policy and used firm funds to pay filing fees for those cases. Eleven counts charged conversion of firm funds.

The majority held that the conversion charges were not proven, but that the lawyer had breached fiduciary duties to the firm and engaged in dishonest conduct. However, "[f]or the most part, this controversy involved a private dispute between a law firm and one of its shareholders. No harm resulted to any client nor was any court proceeding negatively impacted by [the lawyer's] conduct." The majority recommends a one-year suspension with six months stayed subject to probationary conditions and "highly recommend[s] that [the attorney] complete a class in partnership obligations."

The hearing board chair issued an impassioned dissent that would find no misconduct: "I believe the larger, and more significant, issue in this case is whether this action should have been brought in the first place...I saw nothing more than a private dispute between an attorney and his employer/firm over the appropriate amount of the attorney's compensation. This type of dispute is properly resolved in a civil proceeding...For the Administrator to become involved in this dispute and scrutinize an employment relationship merely because Respondent is an attorney is, in my view, an inappropriate extension of that office...the particular Complaint fashioned by the Administrator in the instant matter amounts to heavy-handed overreaching...I find the prosecution of attorneys who are involved in private financial disputes with their law firms, which disputes have no bearing on the quality of services provided to clients, is not only an injudicious use of resources but, in my mind, an abuse of prosecutorial power and resources."

Strong words indeed. I checked the web page of the author of this dissent and, so far as I can determine, he has no partners. I would be distressed if an attorney entrusted with decision making authority in bar discipline cases seriously believed that a lawyer should be exempt from discipline for violating fiduciary duties to law partners. I also think that the job of disciplinary counsel is thankless and difficult enough without being subjected to attacks of this nature.

In my view, the idea that dishonesty between law partners is an exclusively private or civil matter is a dangerously slippery slope. The D.C. Court of Appeals rejected this suggestion in a case I prosecuted several years ago (the D.C. court remanded the case in 2003 and the issue of final discipline remains unresolved). This case is worth watching to see how it is decided by the Review Board. We will keep you posted. (Mike Frisch)

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