Monday, December 14, 2009

Self-Interested Representation Draws Suspension

The Indiana Supreme Court has disciplined two attorneys for conflicts of interest. One was suspended for 120 days without automatic reinstatement for representing a client when the representation was materially limited by his self-interest; the other for 30 days for representing a client with interests directly adverse to another client.

The two lawyers were involved in a real-estate transaction. Seller had given control of property to Buyer, who collected rents. Buyer borrowed $11,500 from one of the lawyers. Because Seller still held the title, the subject property was used as collateral for the loan.  When Buyer fell behind in payments, both lawyers sent letters concerning the situation. At that juncture, there was no attorney-client relationship between Seller and the lawyers.

Seller approached one of the lawyers (the junior one) about hiring the firm. The other lawyer agreed to undertake the matter and struck a deal with Seller to assume Buyer's obligations, conyinue making interest payments and pay off the principal when the sale was completed. It was also agreed that the firm would sue Buyer if necessary. When negotiations failed, the firm sued Buyer and negotiated an agreement with Seller to assume Buyer's obligation to pay the lawyers. Later, one of the lawyers filed suit against Seller for unpaid legal fees.

The court here held that the interests of one of the lawyers and Seller were materially adverse and that any discussion of the possible conflicts was not adequate. Both lawyers "lack[ed] insight into their misconduct and expressed no remorse for it." The different sanctions were imposed "because of [one lawyer's] lesser role in the misconduct and his junior position to [the other] in experience and within the Firm." (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2009/12/the-indiana-supreme-court-has-disciplined-two-attorneys-for-conflicts-of-interest-one-was-suspended-for-120-days-without-aut.html

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