November 28, 2009
High Profile Disbarment
The Florida Supreme Court has accepted the consent disbarment of an attorney in the wake of a recent FBI raid on his law office. The Huffington Post reported as follows earlier this month:
Rothstein, 47, a flashy attorney who has raised millions of dollars for charities and politicians, has made no public statement since the fraud allegations surfaced earlier this week. The state Democratic and Republican parties are both returning tens of thousands of dollars in Rothstein's donations, and Gov. Charlie Crist is giving back $9,600 from his U.S. Senate campaign.
A spokesman for the law firm, Charles Jones, said the firm cooperated fully with the search and had reopened for business Thursday morning. Rothstein was removed as chief executive officer by a judge who also appointed a receiver to unravel its finances. Attorneys for investors say well over $100 million may be lost.
Attorney William Scherer, who represents a dozen investors out some $80 million, said lawsuits are in the works against banks, insurance policies and Rothstein's assets. He also plans to file lawsuits seeking the return of charitable and political contributions.
The court's web page links to the documents relating to the disbarment. (Mike Frisch)
"Such Action...As Is Deemed Appropriate..."
An attorney who had been subject to a public reprimand in 2007 also was required to provide the Office of Disciplinary Counsel with quarterly reports on the status of the underlying estate matter. The ODC filed charges concerning his alleged non-compliance which resulted in a finding of contempt by the West Virginia Supreme Court.
The court fashioned a sanction that took into consideration the need to bring the estate matter to a conclusion:
...we find that Respondent failed to comply with the directives of this Court set forth in the January 10, 2007, order, and, accordingly, we hold him in contempt of that order. We further hold that the appropriate sanction is to suspend his license to practice law in this State. However, because the underlying estate matter begs for an immediate resolution, we shall stay the suspension of Respondent's law license for 120 days so that the estate matter may be finally and conclusively resolved. On or before the end of 120 days, Respondent shall demonstrate to this Court that the estate matter has been fully and finally resolved. If the estate matter has been fully and finally resolved, the suspension of Respondent's law license will not go into effect. However, if the estate matter has not been fully and finally resolved, the stay will automatically be lifted and Respondent's law license shall be suspended. Because we also recognize that final resolution of the estate matter will require a ruling from the County Commission of Wood County _ over whose time frame Respondent has no control _ we order that if, for any reason, the matter is not concluded within 120 days, Respondent shall file with this Court a report setting forth in detail the reasons therefor. At that time, this Court will take such action with regard to Respondent's law license as is deemed appropriate under the circumstances.
Not Disbarred But SuspendedAn attorney who was disbarred in Missouri after defaulting on ethics charges was indefinitely suspended as reciprocal discipline by the Kansas Supreme Court. The proceeding in Missouri did not establish violations by clear and convincing evidence. However, the attorney was subject to discipline as a result of his failure to participate in the Kansas proceeding. (Mike Frisch)
November 25, 2009
Judge Denies Tardiness, Accuses Prosecutor Of Misconduct
A Tennessee general sessions court judge has filed an answer to charges of misconduct that deny that she was persistently late for court and explaining that late starts were the result, among other things, of her practice of providing time for parties to discuss matters before taking the bench. She admits that she hired her daughter but denies that the daughter was unqualified or overpaid for the court position. She denies improperly appointing special judges and asserts that her practices in that regard are common among judges who have not been charged with misconduct.
The answer also goes on the offensive, accusing the disciplinary counsel of selective prosecution, conspiracy to obtain confidential information and threatening witnesses.
Tennesssean.com has this report. (Mike Frisch)
No Ethics Charges For Investigation Of Judge
The Grand Rapids Press has a report that no disciplinary action will be brought against an attorney based on claims of misconduct relating to his investigation of a county district court judge:
More than a dozen prominent local lawyers, including former presidents of the Grand Rapids Bar Association, filed a grievance seeking sanctions against Fischer in July 2008. The attorneys alleged Fischer [the attorney] tried to extort Servaas’ [the judge's] resignation.
The grievance commission evidently did not agree.
“That’s amazing,” Servaas said Tuesday from a vacation in Florida. “This is some political refusal of what (Fischer) did and not based on the facts.”
Among the evidence presented to grievance investigators, also based in Detroit, was the 17-minute recording made of Fischer confronting Servaas in his former chambers in Rockford, where the judge was presented with a resignation letter to sign.
The Press report notes that the judge was reprimanded. (Mike Frisch)
The West Virginia Supreme Court affirmed the grant of summary judgment to a law firm but reversed summary judgment in favor of the wife of a former firm lawyer in a case involving a dispute over the purchase of land next to the Shenandoah River. The trial court had denied summary judgment to the individual lawyer. The key facts:
This case concerns an undeveloped 6.87 acre tract of land on the shore of the Shenandoah River in Jefferson County. The appellants and plaintiffs-below, Stanley and Katherine Dunn, had a written option to purchase approximately 460 acres of farmland which encompassed the 6.87 acre tract. However, the Dunns claim that the lawyer who drafted the written option _ appellee and defendant-below Douglas S. Rockwell (“Lawyer Rockwell”) _ improperly purchased the 6.87 acre tract and concealed the extent of the purchase from the Dunns. The question we are asked to resolve is whether all or part of the Dunns' lawsuit _ against Lawyer Rockwell's wife, appellee and defendant-below Carol Rockwell, and against Lawyer Rockwell's former law firm, appellee and defendant-below Martin & Seibert _ regarding the 6.87 acre tract is barred by any statutes of limitation.
In 2001, Hugh N. Hoover and his sister, Dianna Hoover Gray, owned approximately 460 acres of contiguous farmland in Jefferson County which bordered the Shenandoah River. In December 2001, Carol Rockwell, received title from Mr. Hoover and Ms. Gray to a three-acre parcel of that farmland along the Shenandoah River.
In 2002, the Dunns began negotiating with Hugh Hoover to purchase the remaining Hoover/Gray farmland. Mr. Dunn could not yet afford to purchase the farmland, and so he hired his friend, Lawyer Rockwell, to draft an agreement giving the Dunns the exclusive option to purchase the farmland. At that time _ and until March 2004 _ Lawyer Rockwell was employed at the law firm of Martin & Seibert in Charles Town, West Virginia. Lawyer Rockwell drafted the option agreement and gave it to Mr. Dunn.
On June 27, 2002, Stanley Dunn and Hugh Hoover executed the option, which permitted the Dunns to buy “460 acres more or less by survey” of the Hoover/Gray farmland for $6,000.00 per acre. The property subject to the option surrounded the three-acre parcel bought by the Rockwells in 2001. The 2002 option agreement was set to expire 12 months from the date it was executed.
In November or December 2002, Lawyer Rockwell and his wife sought to buy additional land surrounding their three-acre parcel. Knowing that the land was subject to Mr. Dunn's June 27, 2002 option _ the three-acre parcel was bordered on one side by the river and the other three sides by the Hoover/Gray farmland _ Lawyer Rockwell orally asked Mr. Dunn if he could buy some of the optioned acreage from Mr. Hoover and Ms. Gray in order to “square up” or “round off” his three-acre parcel. Mr. Dunn agreed, and later told Hugh Hoover that this was acceptable.
In December 2002, a surveyor prepared a map of the acreage that Lawyer Rockwell and his wife sought to purchase out of the optioned property. The map designated a 6.87 acre tract that squarely surrounded the Rockwells' three-acre residential lot, but which also extended north in a panhandle or dogleg along the Shenandoah riverbank approximately 115 feet wide and 589 feet long. The Rockwells paid with two checks _ one from Carol Rockwell and the other from Lawyer Rockwell _ and on December 27, 2002, the 6.87 acre tract was deeded solely to Ms. Rockwell. The closing on the Rockwells' acquisition of the 6.87 acre tract was handled at the Martin & Seibert law offices.
The Dunns allege that they never agreed that the Rockwells could purchase the 589-foot long strip fronting the Shenandoah River. The Dunns also assert that Lawyer Rockwell never advised them, orally or in writing, of the survey, the purchase or the precise size and location of the 6.87 acre tract. The Dunns also assert that Lawyer Rockwell never advised them that they should seek independent advice to protect themselves with regard to the Rockwells' December 2002 purchase.
In March 2003, Mr. Dunn asked Lawyer Rockwell to draft an extension for the 2002 option to purchase, which Lawyer Rockwell did. The written extension made no mention of the 6.87 acre tract that had been deeded to Lawyer Rockwell's wife, nor did it exclude the 6.87 acre tract from the new option. The extension extended the option end date from June 27, 2003 to August 1, 2003, when the option expired without Mr. Dunn purchasing the property. However, Mr. Dunn asserts that he and Mr. Hoover and Ms. Gray continued negotiating toward a purchase as though the option were still in effect.
Sometime during the Summer of 2003, Mr. Dunn and Mr. Hoover negotiated a new option agreement which was also drafted by Lawyer Rockwell. The option agreement was for a 24-month period, and raised the price to $6,500.00 per acre “which the parties estimate shall contain approximately 500 acres.” Again, the Rockwells' 6.87 acre tract was not excluded from the new option written by Lawyer Rockwell. Mr. Dunn and Mr. Hoover signed the agreement on August 26, 2003, and Mr. Dunn tendered a check for $50,000.00 in exchange for the option.
It was during this time period, in mid-2003, that events occurred giving rise to the Dunns' statute of limitation problems and to the instant appeal.
At the north edge of the 589-foot dogleg of river front land bought by the Rockwells there was an unrelated parcel of land owned by Mr. Hoover and Ms. Gray _ but not subject to the Dunn option _ with a house. In July 2003, Henry and Dale Walter bought the parcel and house. The house, however, was exposed to flooding from the river and the Walters wanted additional land to build above the flood plain.
Sometime in August or September 2003, Hugh Hoover approached Mr. Dunn seeking permission to sell some of the land surrounding the Walters' tract _ land which was subject to the Dunns' exclusive option to purchase _ to the Walters. Mr. Dunn says he responded (with emphasis added):
I told him I had no problem with him adding onto the back of it, it was just a rough hillside. But I told him, also, that I did not want to give him anything between the two, the Rockwell property . . . and that house. And he looked at me real funny and said, well, Stanley, Doug [Rockwell] has already taken that . . . .In late 2005, the Dunns were financially able to purchase the Hoover/Gray farmland. On October 27, 2005, the Dunns closed on the purchase of the Hoover-Gray farmland. The Dunns allege that at the closing, for the first time, they saw the December 27, 2002, deed to Carol Rockwell for the 6.87 acre tract with an accompanying survey plat showing the 589-foot dogleg along the Shenandoah River. The Dunns contend that this is when they first learned of the survey and the precise size and location of the Rockwells' acquisition of land that was subject to the 2002 option.
As we relate in greater detail in the discussion, infra, by no later than September 29, 2003, the Dunns learned that the Rockwells had purchased river front property subject to the 2002 option that not only “squared up” their three-acre property, but which extended far from their residence along the Shenandoah River. The Dunns state they did not conduct further investigation of the size or location of the Rockwells' purchase at that time, partly because they did not want to upset Mr. Hoover and Ms. Gray and lose the opportunity to purchase the Hoover/Gray farmland, and partly because they feared that Lawyer Rockwell might steer the Hoover/Gray farmland to another buyer.
Lawyer Rockwell stopped working for defendant Martin & Seibert on March 31, 2004. The Dunns, however, contend that in the Spring of 2005, Mr. Dunn asked Lawyer Rockwell to prepare another extension agreement relating to the 2003 option. Lawyer Rockwell prepared the extension agreement for Mr. Dunn (but the agreement was never executed).
The Dunns and the Rockwells then engaged in several discussions and exchanged correspondence about the 6.87 acre tract. When the Rockwells refused to give any portion of the tract to the Dunns (the Dunns appear to have offered the Rockwells the purchase price they paid plus interest), on August 21, 2006, the Dunns filed this lawsuit against the Rockwells and the Martin & Seibert law firm.
A dissent would affirm the grant of summary judgment to the lawyer's spouse (Mike Frisch)
D.C. Court Approves Consent Disposition
In a case that was being closely watched by those interested in the operation of the bar disciplinary system in the District of Columbia (we few, we happy few), the Court of Appeals issued an opinion today approving an agreed-upon 30 day suspension. The case, which had been opened seven years ago, involved the conduct of an attorney retained by the Hutu government of Rwanda. He admitted that he had violated his obligation to safeguard disputed entrusted funds after the RPF came into power.
A hearing committee had approved the consent disposition over a forceful dissent that expressed concern that the sanction was too light. The court, in its per curiam decision, described the limited role of the hearing committee in the consent process and discussed the implementation of the consent rule. The court noted that, as the rule is new, it was "departing from the brevity of disposition that both we and [the consent rule] expect to be the norm in these cases."
This decision is great news for those of us who believe that consent dispositions are an indispensable tool in resolving bar discipline matters in a prompt and fair manner. The decision can be found by following this link and clicking on the decision in In re Johnson. (Mike Frisch)
November 24, 2009
Calling Casey Jones
In an appeal in "a seemingly endless battle" between a county ethics commission and a former county attorney, the Maryland Court of Special Appeals has remanded for further proceedings. Two longtime county employees, the former county attorney and the former chief administrative officer, were involved as counsel in class action litigation against the county. The commission found an ethics violation and the judge in the class action denied the county's (late blooming) disqualification motion.
The court here notes that "the issues are muddled because we have two judicial trains running largely on parallel tracks, with different engineers. As we shall see, however, in this matter the tracks have crossed." The court observes that both the decisions in ethics and disqualification matters are now "set in stone." The matter was remanded for consideration of sanctions (possibly reduced fees) in the class action matter. The court concluded that principles of res judicata applied to the findings of the commission, which were upheld on appeal. (Mike Frisch)
Bedrock Of Lawyer-Client Relationship
The New Jersey Appellate Division affirmed in part and reversed in part a judgment awarding the plaintiff law firm for reasonable attorneys' fees and expenses arising out of the representation of the defendant former client. The amount of the awrd was remanded to determine which fees and expenses were incurred pursuant to a retention letter exclusive of sums due under a master retainer agreement. The court sets the stage for its decision:
This case focuses on the attorney-client relationship, especially its bedrock, the retainer agreement. It is a unique and extraordinary association. The attorney-client relationship has been a fertile source for authors over the years. It has spawned books, poems, plays, and movies. Literature on this topic includes fiction and non-fiction, tragedies and comedies. To resolve this case, we are obligated to review the long-established statements and principles of law concerning the attorney-client relationship and to analyse, in particular, the attorney's obligation to his potential client in finalizing the retainer agreement.
The law firm was initially contacted by the client for advice about possible ethics violations of opposing counsel, who represented the Bank of America in litigation against the client. The client signed a retainer agreement that made reference to, but did not append, the firm's master retainer agreement. The client did not see that agreement until seven months after signing the retention latter. The terms imposed by the master retainer agreement were at issue here.
The court held that the master retainer agreement was unenforceable and that fees associated with the law firm's pro se representation of itself may not be recoverable. (Mike Frisch)
Attention Ohio Lawyers
Important news for Ohio lawyers from the web page of the Ohio Supreme Court:
The Supreme Court of Ohio has adopted amendments that concern a lawyer’s duty to safeguard client funds and property in which third persons claim an interest. The amendments become effective Jan. 1, 2010. Justices concurred 7-0 in adopting the amendments.
The amendments to Prof. Cond. R. 1.15(d) and Comment  are based on a 2007 Advisory Opinion issued by the Board of Commissioners on Grievances & Discipline and recommendations issued in late 2008 by a special Ohio State Bar Association committee.
The current rule requires a lawyer to protect the interest of a third-party in client funds and property held by the client, unless the claim is frivolous. The amendments specify that a lawyer must have “actual knowledge” of a third person’s interest and that the claimed interest must be “a statutory lien, a final judgment addressing disposition of the funds or property, or a written agreement by the client of the lawyer on behalf of the client guaranteeing payment from the funds or property.”
Changes to the comment portion of the rule offer guidance about a lawyer’s ethical duties depending on whether the funds or property is in dispute and whether the client or third person’s claim to the funds or property is lawful. Where there is a dispute over interest in the funds or property, a lawyer must hold the funds or property in a trust account separate from the lawyer’s funds, until the dispute is resolved.
Based on the 16 public comments submitted during the public comment period, the Supreme Court approved three revisions:
- The word “lawful” was inserted in the first sentence of division (d) in light of the Supreme Court’s decision in W. Broad Chiropractic v. Am. Family Ins. This change also conforms the rule and Comment .
- The word “specific” was inserted in the second sentence of division (d) to clarify that an otherwise lawful claim must provide for payment from specific funds or property in the lawyer’s possession, and not from any client funds or property that the lawyer may possess. This change also conforms the rule and Comment .
- Use of the word “resolve” rather than “arbitrate” in the next-to-last sentence of Comment . Some viewed the use of “arbitrate” in the former rule and proposed amendment as referring to the process of arbitration.
View the final rule to access the final rule.
As disciplinary counsel will tell you, there few things more dangerous to an attorney's license than non-compliance with the duty to safeguard entrusted funds. (Mike Frisch)
Mediation Representation Not Unauthorized Practice
The Louisiana Attorney Disciplinary Board has dismissed ethics charges against an attorney admitted in New York and administratively suspended in Louisiana:
The issue is whether Respondent engaged in the unauthorized practice of law by participating as counsel for a party in mediation in Louisiana while she was certified as ineligible to practice law in Louisiana, but was licensed and eligible to practice law in New York, where she resides and operates a law practice.
The board agreed that the representation in an alternative dispute resolution process was permitted by an exception to Louisiana's rule governing unauthorized practice. The attorney was admitted elsewhere, was not disbarred or suspended ("Respondent's ineligibility in Louisiana does not qualify as a suspension or disbarment.") and was providing legal services on a temporary basis in Louisiana. The services provided did not require pro hac vice admission. The conduct involved "at most, two phone calls to the [worker's compensation office] in Louisiana." (Mike Frisch)
The Louisiana Attorney Disciplinary Board has recommended a suspension of a year and a day, which will require the attorney to serve a suspension of that length that was deferred in favor of probation in June 2005. The Office of Disciplinary Counsel moved to revoke probation in January 2008 based on an allegation that the attorney had failed to respond to a new bar complaint. A hearing was held on ODC's motion and probation was extended by a year. The probationary period expired in February 2009.
The ODC filed charges based on the client complaint that had led to the revocation hearing. The attorney (who defaulted in this proceeding) was found to have made material misrepresentations at the revocation hearing as well as client-related misconduct. The board viewed the matter as a revocation of the stayed earlier suspension and rejected as unduly harsh a hearing committee's proposed three-year suspension. (Mike Frisch)
November 23, 2009
Failure To Disclose Criminal Past, Present Leads To Disbarment
A Colorado attorney who had knowingly provided false information on his bar admission application was disbarred by the Presiding Disciplinary Judge based on his conditional admission of misconduct. According to the linked summary, he denied that he was under criminal investigation and "provided no information concerning his prior criminal activities." In September 2009, he pled guilty to conspiracy to launder the proceeds of meth and ecstacy sales and distribution.
Solicitation Charges Rejected But Suspension Imposed
The Louisiana Supreme Court imposed a three-year suspension of an attorney for conduct involving a loan from and financial assistance to the client. The court also affirmed findings of conversion and commingling. The client also testified that he served as a "runner" for the lawyer soliciting business. The court affirmed findings below rejecting charges based on that testimony in light of a hearing committee's conclusion that the witness was not credible and the absence of corroborating evidence.
The court found that the attorney had acted with a selfish motive and that there were no mitigating factors. (Mike Frisch)
"A Blatant Offense" Merits Disbarment
An Arizona hearing officer has recommended disbarment in a matter involving practice after suspension:
Unfortunately, Respondent has shown the Court and his profession that he no longer cares about following the rules of our profession. Respondent not only continued to practice law after he had been suspended, he completely ignored the State Bar's attempts to contact him and get him to participate in these proceedings. Respondent's conduct is a blatant offense to the standards by which lawyer's, as professionals, live by.
The hearing officer also recommends that the respondent pay restitution to two clients who retained him after his suspension. (Mike Frisch)
No Waiver Of ABA-Accredited Law Degree For Georgia Applicant
The Supreme Court of Georgia affirmed a determination of the Board of Bar Examiners declining to waive the requirement that an application for bar admission graduate from an ABA-accredited law school. The applicant had a degree from "a correpondence law school utilizing internet-based, online, and recorded instruction. Further, the applicant had a masters of law from an accredited institution. She had passed the "first-year" California state bar examination and the MPRE.
The court found that '[t]he Board's procedures provide the opportunity to show good cause why the traditional educational requirements should be waived" but that the board did not abuse its discretion here. (Mike Frisch)
No Disqualification Where Employer Pays For Counsel
The New Jersey Supreme Court affirmed a trial court decision denying the state's disqualification motion against attorneys retained and paid by a corporate contractor to represent employees who were potential adverse witnesses in a criminal investigation. The court held that:
Through the combined product of the good faith of the employer, the diligence of competent counsel and the exercise of the trial court's supervisory authority, the net result of the company's retention and payment of counsel for its employees complied with the Rules of Professional Conduct.
The court provided guidance for the ethical requirements for such situations. Third party fee payments are permissible if six conditions are met: (1) informed consent (2) the payer is prohibited from interfering, (3) lawyer does not currently represent payer, (4) no communication with payer on substance of representation, (5) payments are rendered in ordinary course of business and (6) payer must have leave of court to cease payments. No limitation should be imposed on the representation other than a reasonable limitation on fees and expenses. Future retainer agreements must spell out the lawyer's confidentiality obligations.
The court rejected the State's argument that third party payments in the context of criminal investigations were per se impermissible:
Although the State's arguments possess considerable initial appeal, in light of the modern changes in the manner in which attorney-client relationships are to be viewed, we are constrained to disagree.