Saturday, December 20, 2008
Posted by Alan Childress
A belated welcome to the newest member of the Law Professor Blogs Network: Constitutional Law Prof Blog. It's edited by Steven Schwinn (John Marshall--Chicago), Ruthann Robson (CUNY), and Nareissa Smith (Fla. Coastal), and I noticed they post regularly. Keep it up!
The California Bar Journal reports that an attorney was disbarred for creating an escrow account in his nephew's name in order to shield assets from creditors:
The State Bar Court found that Winrow commingled personal funds in his client trust account and committed an act of moral turpitude by creating a client trust account for the purpose of concealing personal assets from creditors.
He opened a trust account in 2004 in the name of his adult nephew, but admitted it never held any client funds and was meant to be used as his personal and business bank account. He regularly deposited and withdrew personal funds from the account, issued checks to pay for stamps, utilities, auto expenses, the cleaners, phone bills and books. In addition, the account often was overdrawn.
The court rejected Winrow's contention that because he was a banker before becoming an attorney, he believes he had the right to call the account a client trust account but use it as a personal account to protect his assets and to prevent creditors from filing a lien. He also argued that because no client funds were on deposit, no commingling occurred. He told the bar court the account was a different kind of trust account for his nephew's benefit and that he was acting as a trustee for the trust.
Winrow was disciplined three times previously. In 2001, he was suspended for failing to perform services competently, return client files, refund client fees and communicate with clients in two matters and for the unauthorized practice of law. He was later admitted and terminated from the Alternative Discipline Program for lawyers with substance abuse or mental health problems and was disciplined again in 2006 for misconduct in three client matters.
After a conviction in Santa Clara County for unauthorized legal practice, Winrow was disciplined again in 2007.
In recommending his disbarment, Judge Lucy Armendariz said that Winrow "has engaged in a continuous course of misconduct in the past nine years involving more than five client matters, probation violations, conviction for unauthorized practice of law and trust accounting violations. In fact, he has been on probation for a period of seven years during his 17 years as an attorney."
She added that disbarment is appropriate when an attorney "repeatedly demonstrates indifference to successive disciplinary orders of the Supreme Court."
The legal question as to whether it is commingling when there are no client funds in an account is interesting. Based on the other misconduct found and the prior discipline, the resolution of the commingling issue would likely have no impact on the sanction. (Mike Frisch)
Friday, December 19, 2008
A District of Columbia hearing committee has concluded that an attorney did not violate Rule 8.4(c) (prohibiting conduct involving dishonesty, fraud, deceit or misrepresentation) in answering a written question on an application for temporary legal employment that asked:
Have you ever been disbarred, or been the subject of disciplinary action by any State or local bar association or committee? If yes, please specify circumstances and dates...
At the time, the attorney was the subject of a recommendation by the Board on Professional Responsibility of disbarment with all but 30 days stayed. Shortly after the answer was given, the court imposed the recommended sanction.
The hearing committee found that the attorney had answered "in subjective good faith" with "no intent to deceive" because she had interpreted the question to only address final discipline imposed. Her "subjective interpretation of the application question was objectively reasonable." (Italics in original.) Further, the committee accepted her testimony that she had told the interviewer of the proposed discipline, which the interviewer had denied: "we find the [interviewer's] testimony unpersuasive and unworthy of belief...[the testimony] was speculative and self-serving. [The attorney's] version of the conversation...rings more true."
Nice for the hearing committee to find, in aid of its conclusion, that a disinterested witness who was trying to help the bar deal with an allegation of misconduct was a liar. And, I guess, the attorney's testimony as to the supposed disclosure of the impended discipline wasn't "self-serving."
Oh, the original misconduct involved misappropriation of entrusted funds and false statements to Bar Counsel. Those inconvenient facts go unmentioned in the report. (Mike Frisch)
An attorney who had been convicted of fraud was reinstated by the New York Appellate Division for the Second Judicial Department when the conviction was reversed for lack of evidence. The court, which had imposed automatic disbarment for the felony conviction, had reversed the judgment of conviction in October of this year. (Mike Frisch)
An order granting summary judgment in a legal malpractice case was affirmed by the New York appellate Division for the First Judicial Department. The law firm had represented the client in an arbitration and the client (plaintiff here) was unhappy with the amount of the award:
In this action for legal malpractice, plaintiff claims that his attorneys' failure to offer sufficient expert testimony concerning the valuation of his damages resulted in an inadequate arbitration award. However, plaintiff fails to offer any viable legal basis upon which the arbitration panel could have reached a substantially different result. Thus, plaintiff cannot establish that the outcome of the proceedings would have been more favorable but for defendants' asserted failure to present evidence, and the complaint must be dismissed.
The underlying case had involved claims of breach of contract and specific performance in connection with an IPO. (Mike Frisch)
The New York Appellate Division for the First Judicial Department has entered an order disbarring Milberg Weiss partner Melvin Weiss.
...respondent admitted that beginning around the 1970's and continuing at least into 2005, he and other individuals at Milberg Weiss, entered into secret, illegal kickbacks with a cohort of persons who were essentially on call to act as lead plaintiffs in class actions. The Milberg Weiss partners who agreed to this secret pay arrangement to certain named plaintiffs included, among others, William Lerach, David Bershad, and Steven Schulman ("the conspiring partners"). The individuals, who received the secret kickbacks to serve as lead plaintiffs in the class actions ("paid plaintiffs") included Howard Vogel, Seymour Lazar, Steven Cooperman and three individuals who resided in Florida. This arrangement permitted Milberg Weiss to file lawsuits faster and to gain the position as lead counsel to receive higher legal fees.
Respondent further admitted that he agreed to the secret payment agreement between Milberg Weiss and Lazar; he was aware of the payment arrangements between Milberg Weiss and the Florida plaintiffs, and personally made a cash payment to one of those plaintiffs in the late 1980's; and he was aware of the payment arrangement between Milberg Weiss and Cooperman, to whom he personally made at least one payment by check. In addition, respondent and others caused Milberg Weiss to issue checks to intermediary law firms, lawyers and other professionals with the intent and understanding that the money would be distributed to the paid plaintiffs. Respondent and others' also knew that although these payments were falsely described [*3]as, among other things, "referral fees" or "professional fees" owed by Milberg Weiss to the intermediaries, they were actually disguised kickbacks to the paid plaintiffs.
Additionally, respondent and others knew they had to conceal their payment scheme with the paid plaintiffs from the federal and state courts presiding over the class actions by making and causing to be made false and/or misleading statements in documents filed in class actions (including complaints, motions and certifications) and in testimony and discovery documents. Absent such concealment, there was a risk of disqualification because the kickbacks created an apparent conflict of interest between the paid plaintiffs and the class members they purported to represent. Respondent admitted that he knew the secret arrangement was improper. Among the false and/or misleading statements one or more of the conspiring partners caused to be submitted to the court in connection with four class actions were certifications by Cooperman, Lazar, and Vogel that they would not accept any payment for serving as a representative party beyond their pro rata shares of any recovery. These certifications falsely represented the true nature of Milberg Weiss' payment arrangement with the paid plaintiffs and constituted four racketeering acts that formed a "pattern of racketeering activity" under 18 USC § 1961(1) and (5).
The predicate for the disbarment was the underlying criminal conviction. Because the federal crimes were "essentially similar" to New York felonies, automatic disbarment was imposed. (Mike Frisch)
As I have previously noted, recent revisions to the rules governing bar discipline in the District of Columbia pretty much take the Board on Professional Responsibility out of the reciprocal discipline business. The wisdom of those changes is underscored by a board report filed on December 9. The attorney had been disbarred in Maryland for filing under oath a perjurious application for pro hac vice admission to an Illinois federal court, approving a false press release designed to defraud investors and unauthorized practice of law. The board recommends disbarment, but only after eleven pages of hand wringing agony.
The main issue? Maryland is less tolerent of serious dishonesty than the board, which seems to find that such conduct is par for the course for D.C. lawyers. Finding that the dishonesty here "does not approach the gravity" of D.C. disbarment for dishonesty cases, the board only recommends identical discipline because the lawyer did not object to disbarment or otherwise participate in the proceedings.
Perjury and defrauding investors? Not a big deal. (Mike Frisch)
Thursday, December 18, 2008
Pennsylvania is considering amendments to its bar discipline rules that would, among other things, create a new catagory of administrative suspension for non-disciplinary reasons such as failure to fulfill continuing legal education obligations and non-payment of bar dues. Reinstatement will be less cumbersome for such suspensions. Also, there will be streamlined reinstatement rules in some other matters, modified procedures for criminal convictions and a broadened definition of "discipline" for reciprocal discipline matters. (Mike Frisch)
A criminal defendant who had pled guilty sought to vacate the plea on the grounds that it had not been knowingly and intelligently entered. The South Dakota Supreme Court agreed and vacated the plea. The defendant's name is Duane Apple. (Mike Frisch)
It seems to be a day for adopting new codes of judicial conduct: linked here is the effort of the Montana Supreme Court. The new rules are made effective on January 1, 2009.
As in Minnesota, there are number of opinions attached to the new rules.
Justice Leaphart concurs but points out an "internal inconsistency" in the rule relating to membership in organizations that discriminate:
If... affiliation with entities that engage in discriminatory conduct is abhorrent, the Code should be consistent in its prohibition and not carve out an exception for organizations that practice invidious discrimination under the name of religion.
Justice Rice, joined by Justice Warner, concurs and dissents on several points. He would not restrict attending partisan political events:
I believe that such practices reflect the reality of Montana culture... I recall attending a Republican dinner in a rural county which was attended by a large contingent of local Democrats. Everyone was grinning from ear to ear, because it was more about community than anything else. Further, events such as campaign visits by presidential candidates are often historical events which judges should be able to observe without fear of sanction.(Mike Frisch)
A New York attorney who had been found not guilty by reason of mental disease or defect on charges that he had fired a shotgun twice at a passing motorist and broken into his ex-wife's home was suspended on an indefinite basis due to his incapacity by the Appellate Division for the Third Judicial Department. He was committed as a result of the verdict for up to 20 years of psychiatric treatment. The attorney had been suspended on an interim basis after committing the conduct that led to the criminal charges. (Mike Frisch)
The Minnesota Supreme Court has substantially revised its Code of Judicial Conduct effective July 1, 2009. The new rules as attached: "Because the vast majority of the provisions of the existing Code of Judicial Conduct are either delated, amended, or reorganized, the existing Code is aborgated but is not reproduced ib this order in strikethrough format."
Two justices took no part in consideration of the effective date or the revised provisions relating to judicial elections. Justice Anderson, joined by Justice Meyer, dissent from the rules establishing contribution limits on judicial casmpaigns:
I have both practical and philosophical objections...As a practical matter, I fear we have asked the underfunded Board on Judicial Standards, which enforces the [code] , to undertake a task for which it is ill-equipped and without experience.
As to the philosophical:
The unstated assumption underlying candidate contribution limits is that it is somehow less unseemly to accept ten contributions in $500.00 amounts from those professing a particular viewpoint or having a particular background, than to have a single contributpr of $5,000.00. It is not at all clear to me that this assumption is correct.
Finally, because the problems that bedevil the byzantine, complicated, and ever expanding command and control campaign finance regulatory structure crated for other elections, both in Minnesota and elsewhere, will eventually affect judicial elections, we might want to consider the wisdom of returning to first principles. What goals do we seek to fulfill with campaign finance regulation? What have been the unintended consequences of past reforms? Would a system focusing more on disclosure and less on rigid prohibitions be more successful? Answers to these questions might be illuminating and might lead to different, and perhaps better, approach to public policy in regulating campaign finance.
The Massachusetts Supreme Judicial Court has reprimanded a judge for sending letters to the publisher of the Boston Herald concerning ongoing litigation between the judge and the paper:
In sending the letters, Judge Murphy failed to uphold high standards of conduct so that the integrity of the judiciary may be preserved; failed to avoid impropriety and the appearance of impropriety; failed to act in a manner that promoted public confidence in the integrity and impartiality of the judiciary; and lent the prestige of judicial office for the advancement of the private interests of the judge, in violation of the canons just referenced.
It is beyond serious dispute that the letters sent by Judge Murphy do not promote public confidence in the judiciary. Judge Murphy concedes that he should not have used judicial letterhead. But more than stationery is at issue here. Although a judge is not prohibited from communications related to personal litigation, including those in pursuit of settlement, permissible communications must reflect the standards required to be followed by a judge both on and off the bench.
"That the standards imposed on judges are high goes without saying. Because of the great power and responsibility judges have in passing judgment on their fellow citizens, such standards are desirable and necessary and there should be strict adherence to them. Failure on the part of even a few judges to comply with these standards serves to degrade and demean the entire judiciary and to erode public confidence in the judicial process." Matter of Morrissey, 366 Mass. 11, 16-17 (1974). In sending the letters at issue, Judge Murphy did not meet the high standards required of judges.
The case is In the Matter of Murphy, decided today. The judge is no longer sitting due to disability. (Mike Frisch)
The District of Columbia Court of Appeals affirmed the judgment dismissing the claims brought by former administrative law judge Roy Pearson. The case involves the well-reported lawsuit over a pair of pants:
Appellant failed to establish either that the [defendant's]...signs constituted false or misleading statements, or that they lost the pants.
Wednesday, December 17, 2008
In a rare reversal of an order imposing discipline by the Attorney Discipline Board, the Michigan Supreme Court reinstated a hearing panel order of dismissal in a case involving a nonrefundable fee. The court concluded that there was no misconduct: "As written, the [fee] agreement clearly and unambigously provided that the [attorney] was retained to represent the client and that the minimum fee was incurred upon execution of the agreement, regardless of whether the representation was terminated by the client before billings at the stated hourly rate exceeded the minimum. So understood, neither the agreement nor the [attorney's] retention of the minimum fee after the client terminated the representation violated [the charged ethics rules]."
A concurring opinion advises that lawyers would be wise to follow a recommendation "that the [fee]agreement explicitly designate the fee the attorney charges for being hired and state that the fee is nonrefundable under any circumstances."
The board had recommended no discipline "under the circumstances" with restitution to the client. The board's thoughtful and carefully researched analysis is worth a read. The board distinguishes between a general "availability " retainer and an advanced fee and concludes that the failure to return an unearned fee violates ethics rules. In contrast, the court offers virtually no analysis but a great deal of comfort to lawyers. It is worthy of note when a court rejects the interpretation of its regulatory arm that favors the protection of the client, as opposed to parochial self-interest of the profession. (Mike Frisch)
Posted by Alan Childress
Over at Legal Ethics Forum, Andy Perlman reports (and helpfully links) that the NY bar will join the great majority of states in using the ABA's Model Rules as the general basis, structure, and numbering of its operative ethical rules, starting April 1, 2009. Previously those of us teaching the course would use California and NY as examples: two of the eight or so states that retain their origins and numbering from the old Model Code of the early 1970s. Of course, the substance in both states had over time evolved to a notable extent, but this is a wholesale change especially in the organization.
My first glance tells me that the version adopted is the ABA's newer post-2003 rules, often called "Ethics 2000" after the committee charged with promulgating them. But there are some notable variations. NY retains MC language (here in 1.7), for concurrent conflicts, of "lawyer's professional judgment" and "differing interests"; the latter seems stricter than "directly adverse interests" as most states use as one trigger. The new 1.6 exceptions for confidentiality in NY are narrower than the ABA's proposals over the last eight years; in NY, there is no general disclosure for past acts of financial harm. (On the other hand, the permission to reveal information to prevent a "crime," though limited to the future apparently, is broader and cleaner than how the ABA words it.) These may well work out much the same in practice in many situations, but it is clear that NY is not adopting wholesale the post-Enron ABA view of exceptions to confidentiality for past facts and acts having financial consequences.
These new rules also do not provide such a sweeping prohibition of sexual relations with a client as did Ethics 2000; in NY, other than in ongoing domestic law matters, the prohibition is just for coercive or intimidating relations, or sex extorted to represent someone. And the prohibition is limited to the individual attorney, not by its terms applying vicariously to an office or law firm, 1.8(k). (Some of the wording is a bit odd in that it implies that coercive sexual relations, or representations made conditional on giving sex, are permitted if it is with a spouse or someone you already had a relationship with; I am sure they do not mean that.) NY lawyers need to understand that many situations which arguably do not fall within a specific prohibition of this rule (or other 1.8 delineated conflicts) may still fail other rules, such as the general 1.7 conflict of interest rule. Even outside divorce cases, relations may well cause a conflict of interest (as Glenn Close learned in The Jagged Edge). And I doubt that an associated lawyer who demands sex for representation or is coercive sexually will be able to cite the fact that he or she is not the lawyer personally on the case, to avoid bar discipline.
My review finds nothing in 1.9 or 1.10 on successive conflicts that would allow screening of the migratory attorney, so as to prevent vicarious law firm disqualification just because the new lawyer himself or herself is conflicted. New York might have considered going the way of the ALI's Law Governing Lawyers (and some other jurisdictions like the Seventh Circuit and Ohio) to permit screening within private firms. Apparently it did not, and that will continue to affect the mobility of lawyers who had access to some confidences at their old firm and may now "infect" a new firm wishing to hire them.
Anyway, those are some thoughts on my quick review of the new NY rules. Because there are several places where the substance or language of the old NY rules is retained, or the newest ABA proposed version is not accepted wholesale, in some ways the new NY rules are mainly about organization and style. But as Andy says, the changes are "significant."
My final PR thought: they should not make them effective on an April first. Newspaper headline writers will have a field day announcing the revisions to the NY lawyer ethics rules that day. I already suffer layperson snickers after I say I teach Legal Ethics. This lede is as predictable as your Action News reporter televising from a post office the night of April 15, 2009.
The New Jersey Supreme Court has vacated and remanded the opinion of its Committee on Attorney Advertising that had prohibited being designated and advertising as Super Lawyers, Best Lawyers in America or similar comparative titles. The court's opinion accepts the analysis of a Special Master that such advertising is not inherently misleading and its ban is unconstitutional. The committee's contrary opinion was vacated because "it does not provide the carefully nuanced analysis that informs the Special Master's Report." (Mike Frisch)
A Massachusetts judge who participated in a 60 mile walk for charity (raising funds for cancer research) did not violate judicial ethics rules in so doing, according to an opinion of the Committee on Judicial Ethics. However, a contribution made by a probation officer should have been and was returned:
The charitable enterprise that you engaged in was a laudable effort, indeed, a sixty mile walk is a daunting task. In order to make such events successful, obviously, much publicity is necessary. It is not surprising that your participation in the Walk became known beyond the bounds of your family and your judicial colleagues. Because this contribution was not solicited by you and because the donor was not a court employee or lawyer or litigant, the Committee is of the opinion that you need not reimburse her for her unsolicited contribution.
In sum, the contribution 1 and 2 from family and judicial colleagues were proper. Contribution 3 from the probation officer, in accordance with our advice in Opinion 2000-4 was properly returned. Because you did not solicit a contribution from the donor of Contribution 4, the Committee does not believe that any further action is required on your part as to that particular donation.
Finally, to avoid any further contributions being made by persons who may feel a desire to contribute based on your position as a judge, you should take down your webpage or otherwise make it publicly inaccessible. Allowing your name to be placed on the website creates a risk that individuals other than the small pool of individuals from whom the judge may solicit will also see and contribute on the judge's behalf. Consequently judges should make every effort to prevent a fundraising website containing their name from being made publicly available for fundraising purposes and, if the effort is unsuccessful, they should not permit their name to appear on the site.
A Virginia attorney has received a public admonition with terms for using language in a retainer agreement in a federal bankruptcy matter that sought to make his fees nonrefundable and to obtain unreasonable fees, to require prepayment for copying pleadings if terminated, to prospectively limit malpractice liability and to forego ethical obligations to escrow fees until earned. The specific improper language of the retainer is set forth in the adminition. the terms require the attorey to cease and desist from using such provisions, read Virginia ethics opinion 1606 and all opinions that cite it, and to certify his compliance with these conditions under oath to Deputy Bar Counsel. (Mike Frisch)
Tuesday, December 16, 2008
The North Carolina Court of Appeals affirmed the first-degree murder conviction of a wife charged with her husband's murder. The court rejected, among other claims, the contention that statements of the prosecutor in opening and closing arguments (not objected to at trial) were sufficiently prejudicial and improper to warrant a new trial. Among the remarks (from the closing):
You let her get go now, she's untouchable, untouchable. All she's got to do is get past you, ladies and gentlemen. You're like the goalie in hockey. If she can get the puck past you, she's home free. And not only is she home free, it's up to you as to whether or not she collects $98,000 in addition to being set free.
The court further held that arguments regarding the credibility of the accused had not been improper. The characterization of her testimony: "you ain't seen a work of fiction sit that long since Gone With The Wind." (Mike Frisch)