Monday, March 9, 2009

Slam Dunk

The South Carolina Supreme Court disbarred lawyer Michael Jordan as a result of admitted misconduct in two matters. One matter involved the following misconduct:

Respondent entered into a contract with his friend and business associate, Complainant.  In the contract, respondent agreed to purchase a residential lot from Complainant and Complainant agreed to finance the purchase.  There was no written contract memorializing the terms of the parties’ agreement. 

Respondent prepared all of the documents to complete the conveyance of the property, including the deed, the mortgage, and the note.  In preparing these documents, respondent was acting in a representative capacity for Complainant.   

Complainant knew respondent was an attorney with experience in residential real estate transactions.  As a result, she did not consult with or obtain her own counsel for the sale of her property to respondent.    

Respondent failed to disclose to Complainant that it was a conflict of interest for him to engage in a transaction with a client.  He did not obtain Complainant’s written waiver of or consent to the conflict and he did not advise Complainant to seek the advice of independent counsel prior to entering into the transaction. 

Respondent conducted a closing in which he delivered two checks to Complainant as the agreed-upon down payment.  At the closing, respondent instructed Complainant to sign two sets of documents, one naming himself as grantee and one naming his LLC as grantee. 

Respondent did not file the deed or the mortgage after the closing.  He did not deliver the note to Complainant. 

When Complainant attempted to negotiate the down payment checks, they were returned for insufficient funds.  At respondent’s request, Complainant attempted to negotiate the checks a second time.  Again, the checks were returned for insufficient funds. 

Two months after the closing, respondent applied for a loan to purchase another residential property.  He attempted to use the lot he purchased from Complainant as collateral.  The loan officer informed respondent that the deed conveying the lot to him was not recorded.  At that time, respondent recorded the deed, but not the mortgage. 

Respondent paid Complainant only five of the twelve scheduled payments in the year following the closing.  He did not pay the balance in full which was due at the end of the year. 

Six months after the balance in full was due, respondent brought his payments current, but did not pay off the balance.  Ultimately, Complainant hired a lawyer.  Respondent then sold the lot and paid her in full from the proceeds. 

Respondent agrees the terms of the transaction with Complainant were not fair and reasonable to Complainant because respondent’s personal financial situation rendered him unable to pay as agreed.

The second matter involved a guilty plea to wire fraud. (Mike Frisch)

March 9, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

License To Steal

An attorney voluntarily surrendered his license to practice law in Georgia, which the Georgia Supreme Court accepted as a sanction "tantamount to disbarment" in a case involving conversion of the proceeds of a personal injury settlement. The court noted that the lawyer had been disbarred in Tennessee in 1971 for similar misconduct that had taken place while employed by the Davidson County District Attorney. He had been reinstated in Tennessee in 1994.

I doubt he will be given an future opportunity to use a law license to steal, although the court notes that he was remorseful and cooperative. The court further notes that restitution is a condition of consideration of a reinstatement petition. (Mike Frisch)

March 9, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Financial Realities Of Protracted Litigation

In an opinion and recommendation finding no ethical violations in the representation of a client in a divorce case involving substantial assets, an IIlinois Hearing Board rejected all allegations of misconduct. The accused attorney had left a partnership at Jenner & Block to enter enter solo practice. The client was a sophisticated consumer of legal services. The board resolved factual disputes between lawyer and client in favor of the lawyer in its findings and conclusions by crediting the testimony of of lawyer over the former client:

Over the course of two days, we heard testimony from several witnesses and reviewed many documents. Since the two key witnesses, [the client] and Respondent, provided conflicting accounts as to many of the events that are critical in deciding this case, we must address the believability of each account and the credibility to be given to each witness. After observing the demeanor and listening carefully to the testimony of both [the client] and Respondent, it appeared to us that Respondent provided a more reliable and trustworthy account of what happened.

We perceived [the client] to be sophisticated and very familiar with high-end professionals, legal proceedings, and fee agreements. The evidence indicated that she took an active role in her case and did not hesitate to ask questions or offer comments for discussion. We note that Respondent was only one of a series of attorneys [she] had engaged to handle her divorce, and not the first with whom she had difficulties. With respect to [her]testimony at the hearing, a disturbing pattern emerged of her retracting statements after being confronted with indisputable evidence that contradicted her assertions. Also troubling was the fact that, in her underlying dispute with Respondent, she made erroneous assumptions that easily could have been corrected. We do not believe [her] inaccuracies and inconsistencies were the result of innocent mistakes or a faulty memory; rather, in our minds they point to a calculated effort to twist the events to her favor. Overall we found [her] testimony to be sorely lacking in credibility.

Conversely, we found Respondent to be a credible witness. His recitation of events and explanations for his actions were plausible and supported by the documentary evidence, including his detailed billing statements. In addition, Respondent's former associate...presented an unvarnished account of the divorce proceedings, her responsibilities in the protracted litigation and her interactions with Catherine, all of which was consistent with Respondent's testimony. We also take note of the testimony of ... Respondent's opposing counsel, who dealt with Respondent for many months in an adversarial setting and considered him to be nothing less than honest and professional...

As a result of the resolution of the credibility issue:

We conclude that Respondent asked  the client for payment of fees that he had earned but which, under their fee agreement, [she] was not yet obligated to pay. We see nothing unethical in an attorney explaining the financial realities of protracted litigation to a client and asking for or suggesting that a client pay fees that have accrued, even if the fee agreement provides that they are due at a later date, so long as the attorney advises the client that he/she has no contractual obligation to make the payment and the attorney does not use his position of influence to pressure the client into compliance. In this case we accept as true Respondent’s statement that he advised [her] she had no contractual obligation to pay him prior to the conclusion of the trial court proceeding. We further note that [the client] had a considerable amount of experience in dealing with attorneys, and the payments were fair in light of the amount owed to Respondent. Although Respondent did not advise [her] to seek independent legal advice, that omission, by itself, does not mean that Respondent exerted any undue influence over her. We find therefore that the Administrator did not prove that Respondent breached his fiduciary duty to [her].

For the same reasons, we find that Respondent did not violate Rule 1.7(b) by representing a client whose interests were materially adverse to his own interests. Since we have found the Catherine’s payments to Respondent were not a "loan," cases where the attorney was found to have engaged in a conflict of interest by obtaining loans from a client or entering into a business transaction with a client are not apposite...

The board further found that the attorney did not overreach in the attorney-client relationship and had not failed to make disclosures to a tribunal. (Mike Frisch)

March 9, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (1)