Wednesday, May 12, 2010
The web page of the Massachusetts Board of Bar Overseers summarizes a recent public reprimand:
Beginning in late 2000, the respondent represented an administratrix in probating the estate of her sister, Mary. The client was also the administratrix of the estate of her brother, John, who had died shortly after Mary. The client was represented by separate counsel on John’s estate.
Mary had no funds in her name alone, but there were three bank accounts in Mary’s and John’s names—one account of $537,876 in a Florida bank and two accounts totaling $6795 in a Massachusetts bank. The interest earned by the three accounts had for several years been reported under Mary’s social security number and declared on Mary’s income tax returns. The respondent concluded that the accounts were not true joint accounts but were in fact Mary’s funds that had been held in joint accounts with John only as a matter of convenience. The respondent did not, however, attempt to obtain from the banks any account-opening documents, signature cards, or agreements governing the accounts to determine who owned the accounts.
Mary had no other assets, while John had an estate worth close to $2,000,000. At the time of John and Mary’s deaths, the federal estate tax exemption was $675,000. Consequently, John’s estate was taxable with or without the “joint” funds, while Mary’s estate was not taxable, even with the “joint” funds. The respondent and the client’s other attorney agreed that Mary was probably the owner of the three accounts and recommended to the client that the funds be considered as part of Mary’s estate. The client rejected that recommendation because she believed that all of the funds had belonged to John.
To resolve the conflict between the client’s and his understanding of the nature of the “joint” accounts, the respondent filed an action in the probate court, seeking instructions from the court as to how to treat the accounts. The client opposed the filing of such an action and the resulting mounting legal fees. She changed her earlier position and advocated filing tax returns consistent with the belief that the funds in the joint accounts were Mary’s. The client’s proposal was a legal and reasonable approach to the tax issue.
The respondent continued to prosecute and defend the equity action over the client’s objection. On September 15, 2004, a Middlesex probate court judge filed a reservation and report of the equity matter to the Massachusetts Appeals Court. On January 3, 2005, the Supreme Judicial Court granted direct appellate review. Prior to issuing a decision on the case, the SJC orally requested that the respondent obtain from the banks certain information about the subject accounts. In response to the request, the Cambridge Savings Bank produced a copy of a signature card for one of the accounts, indicating that Mary was the only signatory. The bank reported that it had no record of John.
On September 2, 2005, the SJC issued its ruling in Florio v. Florio, 445 Mass 1004 (2005). The Court stated that “because the record does not permit us to conclude that the Massachusetts accounts are in fact joint accounts, as alleged, it appears that the relief sought is not necessary.” The Court declined to make any ruling with respect to the Florida account, noting that a Florida statute mandates that Florida law governs all aspects of bank deposits in Florida.
The total fees charged by the respondent were $245,394, of which the respondent collected $177,000 from John’s estate. Most of the respondent’s fees related to the issue of the “joint” accounts and to the planning, discussing, filing and prosecution of the equity action. The equity action did not result in any benefit to the estate or to the heirs. The fees charged by the respondent were clearly excessive.
By failing to obtain relevant documentation of the “joint accounts” from the banks prior to initiating litigation, the respondent violated Mass. R. Prof. C. 1.1 and 1.3. By failing to seek the lawful objectives of his client through reasonably available means permitted by law, the respondent violated Mass. R. Prof. C. 1.2(a). By charging John’s estate a clearly excessive fee, the respondent violated Mass. R. Prof. C. 1.5(a).
In mitigation, the respondent has made restitution to John’s estate in an amount agreed to by the successor administrator of the estate.
The matter came before the Board of Bar Overseers on an agreed recommendation for discipline by public reprimand based on a stipulation of the parties. On March 8, 2010, the Board of Bar Overseers voted to administer a public reprimand to the respondent.
The case is Matter of Blake. (Mike Frisch)