February 3, 2009
Accusations Against Judge Lead To Five Year Suspension
The Pennsylvania Supreme Court (with one justice dissenting) adopted the Disciplinary Board's proposed five year suspension of a 73 year old attorney with no prior discipline. The misconduct involved false allegations of criminal conduct on the part of as judge of the court of common pleas in a case where the lawyer was a pro se defendant. The statements were contained in a motion to recuse the judge, claiming judge and opposing counsel "were in concert and were part of a conspiracy to extort a settlement...numerous perjured statement [in the court's opinion]...bribery may be involved." The assertions were repeated in appeals briefs.
A hearing panel had recommended a three year suspension. The board found the attorney had shown no remorse or recognition of misconduct. Further, there was no evidence of a mental disorder. Thus, the board concluded that a longer suspension was appropriate. (Mike Frisch)
The Perils Of Fee Arbitration
The Alaska Supreme Court affirmed a fee arbitration award in favor of an attorney. The client had retained the attorney in a criminal case and paid for most of the services. He fired the lawyer when plea negotiations broke down, hired new counsel and was convicted at trial. The client then filed for fee arbitration, contending that the legal services were "defective" and seeking return of the fees that had been paid. He got something else--the panel awarded additional fees to the lawyer. The client appealed to the superior court, which affirmed. Here, he loses in the court of last resort.
As one might imagine, the client is now no fan of fee arbitration, which in Alaska requires the lawyer to participate when a client seeks it. The appended superior court decision notes that the client now views a panel of two attorneys and one full-time court employee to have been biased against him and to have ruled on the basis of false testimony. The superior court did not find a basis to conclude that the client established "partiality and corruption among the arbitrators." (Mike Frisch)
February 2, 2009
Fifth Amendment In Bar Discipline
The Illinois Review Board has recommended a two year suspension with reinstatement conditioned on further court order in a case involving possession and use of cannibis and cocaine. The board denied a motion to submit the case as an agreed matter because of an issue that arose during the hearing of the case.
The Administrator had called the lawyer as a witness and he refused to answer certain questions on Fifth Amendment grounds. The Administrator then sought an unfavorable inference and to have the invocation treated as a sign that the lawyer was not candid and cooperative. The board here disagreed:
[A prior case] provides a method by which the rights of the respondent and the needs of the Commission can both be accommodated. A witness desiring to claim the privilege against self-incrimination must appear and do so in answer to each incriminating question, as Respondent did in this case. At that point, the Commission may seek judicial determination of the validity of the claim from the Chief Judge of the circuit in which the proceeding is located. The Chief Judge will assign a judge to hear the matter, who will consider all of the facts and circumstances of the case in order to determine whether Respondent’s assertion of the privilege is justified. In re Zisook, id., 88 Ill.2d at 333, 430 N.E.2d 1037, 58 Ill. Dec. 786.
No judicial determination was requested in this case. Without following the procedures set forth in Zisook, Respondent’s assertion of his rights under the Fifth Amendment to the United States Constitution was presumptively valid. And while it was wholly appropriate for the Hearing Board to draw an adverse inference from Respondent’s assertion of the Fifth Amendment for purposes of their function as a fact-finding body, (see In re Ellis, 97 CH 63 (Hearing Board, August 11, 1999), affirmed, (Review Board, February 15, 2000), approved and confirmed, No. M.R. 16744 (May 17, 2000); In re Hirschtick, 05 CH 32 (Hearing Board, April 13, 2007), approved and confirmed, No. M.R. 21668 (September 18, 2007)) it was inappropriate for the Hearing Board to have treated that assertion as tantamount to a "failure to cooperate" or as an aggravating factor for purposes of imposing discipline.
The New Era Begins In D.C.
Linked here is the very first hearing committee report from the District of Columbia approving an agreed disposition. The hearing committee accepts as proven (after a proceeding that looked a lot like a criminal plea) a laundry list of ethics violations in multiple client matters. The hearing was held less than six weeks prior to the filing of the report.
The committee, while recognizing that a sanction as heavy as disbarment was within the range of possible outcomes, recommends the adoption of the joint proposed sanction of a year and fitness:
After consideration of the record and based on the Chair's ex parte discussions with Bar Counsel, the committee is satisfied with the negotiated discipline because the sanction includes a fitness requirement. The Committee believes that the existence of a fitness requirement will ensure that the appropriate review will be undertaken before the [attorney] is readmitted to practice in the District of Columbia.
My understanding is that this proposed sanction goes directly to the Court of Appeals as an uncontested matter. The public is protected by the fitness provision and years of delay has been eliminated from the process. Having the lawyer's suspension imposed in months rather than years has to be regarded as progress.
I do not see any downside here and applaud the common sense, result-oriented approach of the participants. (Mike Frisch)
The New Jersey Appellate Division affirmed a finding of the trial court that denied a downward modification of a father's alimony and child support "rendered after a multi-day plenary hearing approximately one year earlier-- that defendant's claim of his law firm's plummeting fortunes was 'unconvincing' " The court notes:
as the judge perspicaciously recognized, the change in [the father's] income, if true, was only one part of the calculus to be considered in ruling upon the motion. Equally important was the fact--despite [his] assertion that changes in the area of law in which he practiced had caused a reduction in income--[he] had taken on considerable debt and adopted a lavish lifestyle inconsistent with the way his law practice was allegedly trending.
The lawyer had bought an expensive new home and a new car: his "inequitable attempt to have [mother] and their children bear the brunt of the luxurious lifestyle [he] adopted with his new wife" did not move the court to find anything untoward about the comments and questions of the trial judge. (Mike Frisch)
State v. Federal Bar Discipline
The difference between federal and state court bar sanctions is on display in a recent report and recommendation of the Illinois Review Board. The attorney had failed to provide competent representation, advanced unwarranted claims and defenses and attacked the integrity of judges in connection with his handling of asylum petitions in the United States Court of Appeals for the Seventh Circuit. The Seventh Circuit ordered him to show cause why sanctions should not be imposed on his license, calling his briefs "subprofessional" and disbarred him after he had filed two documents in response. He then sought to vacate the order, challenging the court's "factual baseless Order because of your laziness." A second motion called the court a "pure white boy club."
On the above facts, the lawyer was the subject of a plenary hearing on disciplinary charges. The hearing board proposed a one year suspension with all but 30 days stayed. The review board here proposes a suspension of five months and futher court order, staying all but 120 days (thereby making reinstatement automatic) with probation of two years, conditioned on CLE and a mentoring relationship with an experienced immigation attorney. the mentor must report any lapses in the lawyer's practice. (Mike Frisch)
"Blessing Of The Bikes"
The Pennsylvania Court of Judicial Discipline ordered that a Philadelphia traffic court judge be reprimanded and placed on probation for his seeking finiancial support in his campaign for office at a biker's rally. According to the court's findings, the judge had appeared before the Philadelphia First State Road Rattlers for a "Blessing of the Bikes." After giving his blessing, he queried:
"You're going to help me out?"
"There's going to be a basket going around because I'm running for Traffic Court Judge, right, and I need some money. I got some stuff to do, but if all you give is $20, your going to need me in Traffic Court, am I right about that?"
"Now you all want me there, you're all going to need my hook-up."
A total of $285 was collected and duly reported on the required forms.
The sanction was based on findings that included the mitigating factors of youth (age 26), lack of legal training, contrition and honorable military service in Operation Enduring Freedom. (Mike Frisch)
February 1, 2009
Explanation and Meaning in the Merrill Lynch/Bank of America Transaction
Posted by Jeff Lipshaw
The ongoing contretemps involving John Thain's recent dismissal from Merrill Lynch is once again (and unfortunately) an object lesson for corporate insiders and outsiders in the subtleties of judgment. I am, as Ronald Gilson observed of another law professor, a "beetle turned entomologist," so it ought not be surprising that what interests me is the relationship between the players in the corporate governance game and those who observe it. My thesis is that, consistent with the ascendance of scientific modes of thought over the last century, both insiders and outsiders fail to appreciate the important distinction between explanation and meaning.
Let's take the two issues separately. The first is the revelation that Thain caused Merrill to spend in excess of $1,000,000 redecorating his office. As a former public company general counsel, I am aghast. I believe firmly there is a relationship between a certain level of comfort in one's office and productivity, but that's why I have a University of Michigan beanbag chair that I bought for $49 over the Internet. I see this as a kind of tone-deafness to meaning; even if financial performance warranted the expenditure, or if there was room in the general and administrative budget, or if it can otherwise be explained (read: rationalized) the purchase takes on a meaning to those observing it, and the import of that meaning cannot possibly be a good one. I heard this a number of times from senior executives who attempted to rationalize questionable personal behavior: "as long as I'm doing my job, what I do in [you name the vice] is my own personal affair." No. The job carries with it the obligation to understand a bit of philosophy: if you are self-knowing and self-conscious, then so are others, and they are not merely objects. They in turn will attribute meaning to your actions, and it will affect your ability to lead the organization.
The second has to do with the payment of bonuses before the end of 2008 to senior (but not the most senior) executives at Merrill Lynch. This is a far more subtle issue, both as to explanation and meaning. The public interpretation (particularly in view of the TARP conditions affecting executive compensation) immediately jumps to the nefarious (particularly when juxtaposed with the far stupider furniture issue). Compensation in connection with a deal isn't that simple, however, and target and acquirer may have a community of interests, whether arising out of legitimate concerns about post-closing integration of the business, the retention of talent, or where and when the cost will be accounted for. Indeed, when Merrill issued its proxy solicitation, it was only able to disclose that BoA was still talking to senior Merrill executives about "arrangements seek[ing] to ensure continued service and align the executives’ interests with the combined company after consummation of the merger." This isn't to say that agency costs or greed are never involved, just that it is far more difficult to judge from mere appearance. Here, the issue is converse of the furniture purchase. Outsiders attribute meaning to the actions, where perhaps explanation would be the better way to go.
This is another instance of a problem I've discussed in this forum: the inter-relationship of the objective and the subjective in dealing with rule-based systems. My article, Models and Games: The Difference Between Explanation and Understanding for Lawyers and Ethicists, recently published in the Cleveland State Law Review, takes the view that outsiders are modelers and insiders are game players, each simultaneously explaining and interpreting, each both a subject and an object, and independent or interdependent within the context of the games they play and the models they construct. As the article suggests, there is real danger in confusing models and games both for modelers and game-players. For Thain, were the furniture purchases simply one move in the "new CEO" game? Did he fail to see how others would explain it or attribute meaning to it? For critics of the bonuses, do the explanatory models have anything to do with what was meaningful to the players - that is, do the observers understand, from the players' subjective point of view, what was going on? Or are the critics imposing another set of game rules (possibly after the fact) whose context imparts a different meaning to the bonuses?