Saturday, July 7, 2007
I commented last week about a D.C. BPR recommendation in the case of In re Godette in the You Can Lead A Horse to Water post. Here is the link the the board's report. It is unlike a fine wine in that it has not improved with age.
In an unrelated matter, the board showed common sense in a report involving an attorney who had been indefinitely suspended in South Carolina as a result of a criminal conviction for hitting his son with a truck. The attorney was sentenced to a suspended prison term and placed on probation with anger management counseling. The board noted that, while a hearing on whether the crime was one of moral turpitude on the facts (which would mandate disbarment) might be appropriate, a hearing would be a waste of limited bar discipline resources. The attorney had been administratively suspended in D.C. for 20 years and had no apparent intention to practice there. The board recommends a lengthy reciprocal suspension with fitness, which would have the functional effect of disbarment without a hearing. A few years ago, the board had ordered a hearing in similar circumstances. The attorney had been convicted in Georgia of false imprisonment and assault of a vulnerable client. It took over seven years to complete the process.
A hopeful sign for the board that I have often criticized on this blog? Hope springs eternal. (Mike Frisch)
Friday, July 6, 2007
The D.C. Board on Professional Responsibility has filed a report recommending that Scooter Libby be summarily disbarred for conviction of a crime involving moral turpitude if his conviction is affirmed on appeal. Presumably the commutation of sentence will not affect the recommendation. If Libby is pardoned, he will still be subject to discipline but will be entitled to a hearing before discipline can be imposed. (Mike Frisch)
The District of Columbia established a strict rule against intentional or reckless misappropriation of entrusted funds. Disbarment is imposed absent "extraordinary circumstances." Since the adoption of the rule by the Court Of Appeals in the early 1990s, the only such circumstances have been where the misconduct was caused by alcoholism, drug addiction or mental health problems and the attorney has been substantially rehabilitated.
In a recent recommendation, the Board on Professional Responsibility has found that the misappropriation was negligent, but if the court disagrees, would find extraordinary circumstances. There are concurring opinions that acknowledge that the misconduct was intentional, but would find extraordinary circumstances that warrant a lesser sanction. The board's chair dissents, recognizing that disbarment is required by precedent.
I search this recommendation in vain for circumstances that make this case any different from past cases where disbarment was ordered. The attorney took a fee in a conservatorship matter without obtaining court approval as required by statute. His explanations for doing so did not make sense: he claimed that he was motivated by a desire to maintain the ward's eligibility for medicaid benefits but took far more than necessary to achieve that objective. He was clearly aware that court approval was a precondition to his paying fees to himself.
When I was at Bar Counsel, we fought hard to persuade the court to adopt the strict rule (the attorney who won the case en banc was my friend Sam McLendon). The board has long pushed back against the precedent. This decision is latest attempt to create an exception that will swallow the rule.
I posted an analysis of the hearing committee report in this case on October 19, 2006 under the title "An Altruistic Theft." (Mike Frisch)
In 1991, a "rainmaker" attorney became a partner in a law firm. His book of business included General Electric. The firm and the attorney entered into a special compensation agreement for the years 1994 to 2000 that was modified by written agreement in 2001. The 2001 agreement included a provision that delayed a "decompression" of income from age 65 to age 67. The partner sued the firm after he was denied a bonus in 2003 and 2004. The New York Supreme Court granted summary judgment to the firm.
The First Department reversed, holding that the 2001 agreement was susceptible to differing interpretations and that summary judgment was thus improper. The court held that, if the award of bonuses is found to be at the firm's discretion under the 2001 agreement, the firm had acted in good faith in denying bonuses as a matter of law. GE had retained another firm in the principal matter for which the partner was responsible and his fee generating ability was significantly reduced. The fact that other firm partners resented the special compensation deal or questioned the wisdom of the extended agreement after CEO Jack Welsh ("with whom the partner had a relationship") had retired did not establish the firm's bad faith.
The New York Law Journal has a article about the case linked here.(Mike Frisch)
Thursday, July 5, 2007
The Idaho State Bar website has a summary of a recent disciplinary case involving a lawyer who had represented his stepfather in seeking a divorce from his mother. The stepfather had seriously wounded himself by a self-inflicted gunshot. Medical bills threatened the family's financial future. The divorce was designed to transfer assets to the mother in order to shield them from the stepfather's creditors. A stayed 180 suspension was imposed for the attorney's failure to adequately consult with the stepfather, as well as the conflict of interest in undertaking a divorce action against his mother. (Mike Frisch)
The Illinois ARDC recently filed an disciplinary complaint against an attorney who was arrested as a result of "threatening and disruptive behavior towards the flight crew" on a flight from Orlando to D.C. The attorney pled guilty to assaulting and intimidating a flight attendant. After he was released from prison and assigned to a federal halfway house, it is alleged that he failed to return after work and had used cocaine. (Mike Frisch)
In an appeal of a legal malpractice case arising from the mishandling of an attempted mortgage foreclosure, the Florida Supreme Court held that the assignment of the mortgage and note did not create standing to sue the attorney for malpractice. The acts of alleged malpractice had occured prior to the attorney's representation of the assignee. The court affirmed that legal malpractice claims are generally not assignable. The policy concerns against such assignments are protecting client confidences and preventing a market for legal malpractice claims. There are a series of dissenting opinions, one noting that the legal services at issue were not personal in nature and thus there is no policy concern about protecting confidential information. Another dissenter states: "it would be difficult for an outside observer not to conclude [that the holding] serves only to protect a clearly negligent attorney at the expense of the mortgage holders, who were engaged in legitimate commercial transactions." (Mike Frisch)
The ABA has recently proposed a model rule on conditional admission to practice that would encourage admission of applicants who have had mental health or substance abuse issues. The National Organization of Bar Counsel has declined to take a position on the proposed rule. (Mike Frisch)
The New York Appellate Division, Fourth Judicial Department recently decided an attorney discipline case that raised some interesting issues. The attorney had, through intermediaries, funded loans to clients over an eight year period in amounts that totaled over $700,000. He also was found to have facilitated concealment of a loan arrangement in a bankruptcy matter. He posted a "best lawyer" profile on his web page that suggested he qualified for "best lawyer" status. He also posted information on his web page concerning a confidential disciplinary complaint against a rival law firm.
The court found that the lawyer had made improper loans to clients with knowledge of the ethical impropriety. The "best lawyer" language was not an ethical violation as it contained no demonstrably false information and could be characterized as "constitutionally protected hyperbole." The disclosure of the ethical complaint violated New York rules. The court found a "shocking lack of remorse" and suspended the lawyer for 18 months and until further notice.
The link takes you to the court's web page. The case is Matter of Moran, P-06-008, decided June 8, 2007. (Mike Frisch).
The New York Court of Appeals ordered the removal from office of a justice who had "engaged in improper ex parte communications with the defendants in several building code cases and then dismissed the cases in advance of the adjournment dates without providing the prosecutor notice or an opportunity to be heard." The justice also repeatedly testified falsely concerning the matter, using white-out to conceal the date for the court appearance written in her calender. The court was "not persuaded...that this was merely a routine alteration" rather than attempt to conceal deception. (Mike Frisch)
Wednesday, July 4, 2007
A Justice of the Peace was suspended for 15 days without pay for issuing two arrest warrants for purported Mardi Gras parade float violations and setting high bonds to retaliate for attempting to enter a float that bore signs critical of the mayor of Simmesport, Louisiana. Mayor Fontenot is known as Boo and the signs said "Recall Boo" and "No More Boo." The JOP is not a lawyer and had stipulated to the violation. A dissent suggests that the penalty is too lenient in light of a recent comparable case. (Mike Frisch)
The New York Times has a reproduction of the Declaration of Independence on the back page of the Business section today. It has been a long time (maybe never?) since I tried to read the script itself. I was admiring, among other things, the calligraphy, and thinking about how the calligrapher would have dealt with errors. To my delight, I discovered that there are two insertion carets in this draft, one in the sixteenth line from the top (an "en" was missing from "Representative") and one eleven lines up from the bottom (the word "only" is inserted in front of "by repeated injury").
A lawyer was retained to represent a seller of real property located in Maine. The buyers believed that they were purchasing 39 acres; the documents presented at closing showed the purchase of 10 acres. The buyers asked the seller's attorney if they were getting 39 acres and whether they should obtain title insurance. There was conflicting evidence at the ensuing malpractice trial as to what the lawyer said, but it appears that he assured the buyers that the title was "clear" and that they would receive additional deeds for the remaining 29 acres. A few days later, the lawyer sent the buyers a letter saying it had "been a pleasure to serve them." The buyers received additional documents but did not closely inspect them.
The sellers discovered the problem when they attempted to subdivide. They sued the lawyer for malpractice. A jury found an attorney-client relationship and awarded damages. On appeal, the lawyer contended that the case was brought after the statute of limitations had run. The Maine Supreme Court agreed and reversed. The lawyer had not given a "real estate title opinion" for which the statute would commence on discovery. Rather, it was a case of malpractice that had expired six years after the closing. The court did not question the existence of an attorney-client relationship between the buyers and the lawyer. (Mike Frisch)
Tuesday, July 3, 2007
There's a neat online symposium going on over at Conglomerate. The current entrant in the Conglomerate Junior Scholars Workshop is a paper by Trey Drury (Loyola - New Orleans, left) on Section 102(b)(7) of the Delaware General Corporation Law, and its equivalents in the other jurisdictions, which limit directors' liability for money damages (but not a limit on injunctive relief or the finding of a breach of duty) with respect to the duty of care.
As anyone who has followed my ramblings (here and at PrawfsBlawg) knows, I am hardly an empiricist. (When I want my dose of philosophical empiricism, I turn to my friend David McGowan at San Diego, who does as good a job channeling Hume as anybody I know!) I have said before that one of the great benefits of being a law professor is the wide brief to be a social philosopher. I think that brief comes with an obligation to be clear about the descriptive, the normative, and the prescriptive, even if it is just to be clear that the descriptive and the normative are difficult to separate. But I do wonder from time to time whether we jump to the prescriptive too quickly (noting that I am sure I have done the same thing).
Professor Drury is far more sympathetic to the "20-20 hindsight" problem in assessing directors' decisions than many commentators. Nevertheless, I wondered whether Professor Drury's very interesting and readable paper was a solution in search of a problem, and commented:
I'd be the last person to excoriate exercises in pure reason, but I'd still like to see some empirical work showing that most of the current bubble of corporate governance work is something other than the availability heuristic at work. There are 9,000 publicly traded companies in the U.S. - is it really the case that 102(b)(7) and its ilk are a problem for them worth the intellectual energy?
The only empirical work cited in the article (I think) is the Bradley and Schipani study, which I have not read. I'm skeptical it supports the claim that directors are "incentivized" to bad behavior, because just on the description, it sounds to be a macro look at share prices (and I'd want to dig through the methodology). Assuming it is methodologically sound, I would think about giving it more airplay at the outset as the basis for thinking there is a problem, rather than merely inferring, as a deductive exercise, that 102(b)(7) causes a problem. The sense otherwise, at least to me, is the hammer in search of a nail problem.
Of course, it's also possible that I am a spineless, passion-less wimp.
*Cross-posted at PrawfsBlawg
Monday, July 2, 2007
I recently commented on a case decided this April by the D.C. Court of Appeals. The court concluded that the Board on Professional Responsibility had failed to consider that a lawyer accused of misconduct had deliberately avoided service of bar counsel's charges. The court directed the board to reconsider its earlier decision to permit reinstatement without proof that the lawyer was fit to practice law.
Well, the board has reconsidered. If nothing else, the response to the remand was prompt. Unfortunately, nothing else can be said in praise of the decision. The board majority picks at the word "indifference" as if it were a scab, taking its penchant for hypertechnicality to new lows. I am reminded of Elaine Benes' comment about Jerry Seinfeld: "Just when I think you are the shallowest man alive, you manage to drain a little more out of the pool." While the electronic version of the report is not yet available, here's the key passage:
too many explanations [for not responding for over six years], other than indifference, could account for [the lawyer's] failure to respond and evasion of service for us confidently to attribute that conduct to indifference toward the disciplinary process. Hopelessness and perhaps despair are far more likely motivators in this case than indifference. [The attorney] was facing a proceeding that could result in destroying his career in the law...unfamiliarity with the procedures and customs that operate in the disciplinary system, coupled with an inhibition, because of financial considerations or embarrassment, or both, to consult a lawyer familiar with those matters might have led [him] to freeze in fear of what he might get into if he wrote a response to the ethical complaint or opened the door to the process server. To choose indifference...over these and other plausible motivations...would...be engaging in speculation...
Heaven forbid that the board majority would engage in speculation while it speculates to beat the band.
The board majority still thinks fitness is not required, unless the lawyer does not respond in the 90 days after the court enters its order. A dissent of the board's chair, joined by two members, is brief: "I do not understand the majority opinion of the remanding court to give the Board the latitude taken by the majority. My reading of the order of remand requires the Board to add a fitness requirement to [the] sanction."
I take little pleasure in constant criticism of the D.C. Board. Perhaps this response to remand provides insight into the basis of my concerns.
Serenity Now! (Mike Frisch)
An Illinois public defender who was permitted to take private cases was reprimanded by a hearing board. The attorney had been appointed to a case where the defendant was charged with aggravated criminal sexual abuse. He told the client's grandmother "that he could spend more time on the case if she paid him $3,000 in attorney fees." He received a check in that amount and negotiated a plea that led to a probation sentence. He did not enter an appearance as retained counsel. The grandmother stopped payment on the check. The lawyer tried to get the grandmother arrested when she declined to replace the check. No criminal charges were brought.
The hearing board found that the lawyer did not take necessary steps to explain alternatives so that the client could make an informed decision about retaining him as counsel. The failure to enter an appearence as retained counsel violated Illinois Rule 3.3(a)(8)(attorney must disclose identity of client and persons who employ counsel unless information is privileged or irrelevant). A dissent would find the lawyer credible and impose no discipline. (Mike Frisch)
Sunday, July 1, 2007
Effective today, Wisconsin has amended its ethical rules regulating the handling of funds that are or should be escrowed. A recent article in the Wisconsin Lawyer by State Bar ethics counsel Timothy J. Pierce explains the changes. There is a dissent from the adoption of a new rule that allows the lawyer to treat advanced fees and expenses as earned on receipt. Judge Ann Walsh Bradley considers the change to be "fundamentally wrong...we need do no more than apply fourth grade playground ethics, it is wrong to spend money that is not yours. Some call that stealing."
To a disciplinary prosecutor, this rule (Rule 1.15) is the most important from an enforcement standpoint, as it is relatively straighforward to prove the violation and the consequences can be severe. I have not studied the Wisconsin rule in detail, but Judge Bradley's point is well taken. In D.C., the rule was changed in the reverse manner from in Wisconsin. It was a change for the better. In a D.C. case where "the lawyer owns on receipt" former rule applied, a lawyer who had engaged in theft-like behavior avoided a well deserved disbarment. (Mike Frisch)
I will be guest blogging for the month of July over at PrawfsBlawg, and doing a lot of cross-posting and cross-linking. I posted something additional today on the AALS New Law Professors Workshop, just completed at the Marriott Wardman Park Hotel in Washington, D.C.