Wednesday, December 19, 2007
The Illinois ARDC filed an amended complaint charging that the lawyer hired a former lawyer who had been struck from the roll of attorneys as a result of a criminal conviction. It is alleged that he paid the former lawyer on an hourly basis with the provisio that he "would only receive payment once a case had settled" and that the arrangement aided the unauthorized practice of law. In another matter, it is alleged that the lawyer improperly offered to share legal fees with non-lawyers. That offer is alleged to have been an attempt to bribe a witness in a matter that involved the International Brotherhood of Teamsters president James Hoffa's knowledge of a local union's ties to organized crime. (Mike Frisch)
An opinion of the Appellate Court of Illinois, First District, First Division, addresses some of the most significant issues that law firms face in the conflict of interest consequences of hiring lateral lawyers. The incoming lawyer had brought two cases to the firm in which condominium owers sued their property developer and associated persons for "unrepaired common elements and inadequate capital reserves." The defendants sought and were granted disqualification as another attorney in the firm "was already representing corporations that were or are managed by the individual defendants" and that the representation thus violated Rule 1.7. The plaintiffs appealed the disqualification order.
The court held that the trial court did not abuse its discretion. The trial court found that the law firm "was in a long-term, significant relationship with the [individual defendant's] corporations and was actively representing some of those corporations concurrently or after [the law firm] substituted as counsel in the [present] action." Screening, which the firm had employed, did not solve the problem. The court further rejected the plaintiffs' suggestion that the representation had ceased and that the defendant's had waived their objection by not raising it in a timely manner.
The court concluded:
"The particular circumstances of this case indicate [the law firm] was engaged by and reports to a management group that runs parent, subsidiary, and affiliated corporations that own, manage, and develop residential condominium properties in Chicago. The particular circumstances of this case would lead the management group and the...corporations to reasonably believe that they were [the law firm's] existing clients... Significantly, there is no indication that [the law firm] took any affirmative actionto inform the [defendant] management group that it was ending their long-term attorney-client relationship..."
The case also discusses the impact of bar ethics opinions on how courts analyze conflicts issues and strikes from the record the plaintiff's statement of facts in its petition for appeal as "argumentative and confusing... the plaintiffs never provide reasoned argument, citation to supporting legal authority, or citation to the pages in the record on appeal indicating they were presenting actual argument in the trial court and thus preserved an issue for appeal."
The chair of the law firm's professional responsibility committee, who had ordered the screen as a solution to the conflicts problem, also served as counsel in this appeal. (Mike Frisch)
Tuesday, December 18, 2007
A corporation sued the law firm for its representation, through its partly owned subsidiary, in its attempt to obtain a long-term lease for property on Staten Island "to develop an entertainment complex including a motion picture studio, marina and hotel." The firm allegedly had advised the sub's chairman of the board that his son (who had a criminal securities conviction and had been permanently barred from the securities industry) could be involved in the project. It was alleged that this advice was improper and led to the termination of the project.
The motion court dismissed the action, concluding that the plaintiff could not prove "but for" causation as the inability to raise financing had contributed to the failure. The New York Appellate Division for the First Judicial Department reversed and reinstated the complaint: "The evidence that other factors contributed to the loss raises an issue of fact that may not be determined at the pleading stage." (Mike Frisch)
An attorney in Arkansas agreed to a reprimand as a result of information provided by the Department of the Army. The attorney made false statements in a report to U.S. and Qatari authorities concerning his injuries as a result of his being stabbed "to avoid disclosing that [a] female friend had stabbed him." He claimed that he had been the victim of a burglary, "which caused great concern because of the possibility that security at the Qatari housing compound might have been compromised." Both stabber and stabbee were married to other people at the time of the incident. (Mike Frisch)
The North Carolina Court of Appeals affirmed the conclusions of the Disciplinary Hearing Committee that, in effect, revoked the probation of a lawyer for unethical conduct in the course of representing a client in a probation violation proceeding. The attorney was suspended for 90 days.
The lawyer represented the client in two matters. At a hearing, a third charge was served on the client. The lawyer agreed to handle the third matter for $200. The client and lawyer appeared on the hearing date, but the client did not have the fee payment. The lawyer released his witness from a subpoena, told the witness he had not been "fully retained" and left to attend a conference at his daughter's school. When the judge's clerk tracked him down, he was told that the judge might issue a show cause or bench warrant, and stated that "he didn't give a s__ what the judge did." Following a hearing, orders of criminal contempt and attorney discipline were entered. The lawyer appealed.
The court affirmed the findings of misconduct. As to the charge of improper withdrawal:
"An attorney not only is an employee of his client but also is an officer of the court. This dual relation imposes a dual obligation. To the client who refuses to pay a fee the attorney must give specific and reasonable notice so that the client may have adequate time to secure other counsel and so that he may be heard if he disputes the charge of nonpayment. To the court, which cannot cope with the ever-increasing volume of litigation unless lawyers are as concerned as is a conscientious judge to utilize completely the time of the term, the lawyer owes the duty to perfect his withdrawal in time to prevent the necessity of a continuance of the case."
It would have been far less trouble to just stay for the hearing. The lawyer may well have never have been paid, but a uncompensated legal service is preferable to a suspension from practice. (Mike Frisch)
Monday, December 17, 2007
The web page of the California State Bar reports that the bar has declined to provide information concerning the race of applicants for the bar to researchers who wish to study the impact of affirmative action on bar admission. The request was opposed by a number of students and former students, as well as from law schools on grounds that FERPA mandates that such information be treated as confidential. From the report:
"Alan Yochelson, chair of the bar examiners panel, said the committee’s decision was 'not based on the merits of affirmative action but on a consensus that applicants did not provide their data . . . for study by a third party not related to the bar.' While the committee has a history of doing research related to the exam and continually evaluates the exam for fairness, it cannot make public applicant information without individual signed releases, he said."
The UCLA law professor who made the request stated that he is considering his legal options. (Mike Frisch)
The Louisiana Supreme Court ordered permanent disbarment in two matters. One case involved an attorney who was found to have engaged in 42 violations of the ethics rules; the other had practiced law in violation of an earlier disbarment. (Mike Frisch)
A single justice of the Supreme Judicial Court of Maine denied the bar admission of a licensed family physician whose "interest in and involvement with child pornography was grossly immoral." The physician was caught in a sting operation purchasing videos portraying 10 and 11 year old children engaging in explicit sexual acts. He had pleaded guilty to a misdemeanor and entered into a consent agreement with the Board of Licensure in Medicine that precluded his treatment of patients under the age of 18.
He "had completed his criminal probation without incident and...attended and graduated from law school." However, he had made a false statement to postal inspectors, failed to reveal on his law school application that he was under investigation, delayed reporting his conviction and consent agreement to the law school "even though he pleaded guilty and was convicted only fourteen days after submitting his law school application" and demonstrated lack of candor in the admissions process. He also had failed to follow through on a 12-step program with Sex and Love Addicts Anonymous.
The single justice gave substantial weight to lack of candor and resistance to treatment in denying admission. Also problematic was the fact that the applicant's character witnesses were not familiar with the information relating to character and fitness. (Mike Frisch)
A South Carolina lawyer hired an non-lawyer to assist with the preparation and closing of real estate transactions. The lawyer then suffered a serious heart ailment and decided, in order to reduce his stress, to have the assistant manage his trust account. The assistant embezzled over $238,000 by forging the attorney's signature to checks.
When the lawyer learned that a check was dishonored, he initiated an audit and promptly notified the Office of Disciplinary Counsel ("ODC"). Further, according to the South Carolina Supreme Court:
"...with the best interests of his clients in mind, respondent had the foresight to: 1) obtain fidelity insurance coverage in the amount of $100,000 (which has been paid in full towards the amounts embezzled); 2) deposit $43,000 of his personal funds into the trust account to cover the shortages caused by Knowles’ embezzlement; and 3) obtain through errors and omissions coverage and insured closing arrangements with his title company ample funds available to compensate all victims of Knowles’ embezzlement, except for possibly himself."
The court imposed public reprimand, which had been proposed by the attorney and the ODC. (MIke Frisch)