Thursday, July 23, 2009

Suspension For Undisclosed Revision To Agreement

From the web page of the Massachusetts Board of Bar Overseers comes the following summary of a recent matter:

From April 2000 through March 29, 2002, the respondent was employed as the director of procurement for a company that provided website access to Internet users. The respondent did not provide any legal services to the employer. On March 26, 2002, the respondent was informed that his position was being eliminated effective Friday, March 29, 2002.

The respondent was given a standard severance agreement and general release that the employer gave to all departing employees. Paragraph 3 of the agreement was titled “Release” and consisted of a thirty-two-line, single-spaced, boilerplate description of potential claims that the respondent released against the employer. The agreement contained a separate attachment specifying the severance payments to be made to the respondent upon his leaving the employer.

Sometime in early April 2002, the respondent retyped the entire second page of the agreement. The respondent deleted language from ¶ 3 releasing the employer from all common law claims, and, in its place, inserted provisions that the respondent would be paid a bonus of $850,000; that he would receive triple that amount if payment was not made within seven days; and that each of the employer’s officers and directors would be personally liable for the payments. The respondent intentionally concealed the alteration in the agreement by formatting the substituted language to fit exactly in the space left by the deleted language.

On April 19, 2002, the respondent sent the altered agreement to the employer’s director of human resources. The respondent did not include a cover letter or any other notice that he had altered the agreement, and the change went undetected. On or about April 20, 2002, the human resources director signed the altered agreement on the employer’s behalf. The respondent was sent a copy of the fully-executed altered agreement, and the original altered agreement was placed in the respondent’s personal file.

On May 17, 2002, the employer paid the respondent the severance benefits set out in the agreement but not the bonus added by the respondent unbeknownst to the employer.

On July 18, 2002, the respondent retained counsel to represent him in his claim against the employer for payment of the bonus provided for in the altered agreement as well as to secure other payments from the employer. On September 24, 2002, counsel wrote to the employer demanding, among other things, that the respondent be paid the $850,000 bonus provided for in the altered agreement.

The employer refused to make any additional payments to the respondent and, on October 11, 2002, filed suit seeking, among other things, a declaratory judgment that there was no enforceable agreement between the employer and the respondent and an order directing the respondent to return to the employer all severance payments. The respondent filed an answer denying wrongdoing and a counterclaim seeking payment of the bonus.

On March 9, 2005, the parties’ cross motions for summary judgment were filed with the court. On May 11, 2005, a judge of the superior court entered an order declaring the agreement void because there had been no meeting of the minds. The judge allowed the employer’s motion for summary judgment on all of the respondent’s counterclaims except the counts claiming the right to other payments. The case settled in July 2006 by the respondent’s agreement to pay the employer $21,000.00 and release the employer from any liability to the respondent.

The respondent’s conduct in concealing in the agreement provisions obligating his former employer to make significant payments to himself and imposing personal liability on his former employer’s officers and directors violated Mass. R. Prof. C. 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation) and (h) (conduct adversely reflecting on the fitness to practice law). His attempts to enforce the bonus, penalty, and personal liability provisions of the agreement through litigation violated Mass. R. Prof. C. 3.1 (lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous) and 8.4(d) (conduct prejudicial to the administration of justice).

The matter came before the Board of Bar Overseers on a stipulation of facts and a joint recommendation that the respondent be suspended from the practice of law for six months. In mitigation, the respondent’s conduct occurred outside the practice of law and involved an employer for which he did not provide legal services.

On June 8, 2008, the Board of Bar Overseers accepted the parties’ stipulation and joint recommendation and voted to file an Information with the Supreme Judicial Court recommending that the respondent be suspended from the practice of law for six months. On June 22, 2009, an order was entered in the Supreme Judicial Court for Suffolk County (Gants, J.), ordering that the respondent be suspended from the practice of law for six months effective thirty days from the entry of the order.

The case is Matter of Cloonan, No. BD 2009-049. (Mike Frisch)

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