Wednesday, October 20, 2010

Not A Gift

The New York Appellate Division for the First Judicial Department has disbarred an attorney for misconduct in connection with a personal injury case that settled for $3 million. The attorney had accepted substantial litigation funding from third parties and pledged the same assets as collateral. The client had been sued by the funding source after the settlement.

The court accepted findings of misconduct of the referee:

Respondent maintained that he accepted a gift given by Mr. Veneski [the client] to extricate the Veneskis from the [third party] Core Funding lawsuit and that any claim of duress or undue influence was vitiated by Mr. Veneski reaffirming the gift multiple times over the ensuing years while represented by other counsel. Respondent credited himself with shutting down his practice to devote his time to defending the Veneskis in the LAF litigation, at no cost.

On November 24, 2009, the Referee submitted his report and recommended disbarment. The Referee found "incredible" respondent's testimony that Mr. Veneski intended to make a gift of $454,000, or that respondent believed in good faith that it was a gift. In addition to the fact that Justice Heitler had also rejected respondent's claim as "incredible," the Referee based his conclusion on several factors, including that at the time each installment of the settlement payment was due, respondent wrote to Mr. Veneski that he was "owed" one-third of the amounts as "attorney's fees"; Mr. Veneski originally wrote "attorneys fees" on the memo line of the $454,000 check and only wrote "gift" at respondent's request; nothing in the relationship between Mr. Veneski and respondent would explain a gift of that amount; respondent did not "take any of the precautions one would expect a lawyer to take when accepting a gift' of this magnitude from a client in circumstances such as this"; and respondent's belated motion for increased legal fees was inconsistent with his claim that he had received such a substantial gift.

The Referee also identified several aggravating factors, including the vulnerability of Mr. Veneski, whom respondent himself had characterized as severely brain-damaged; respondent's lack of remorse, candor and insufficient appreciation of the seriousness of the proceedings; respondent's prior Admonition for false notarization, which was made worse by his attempted minimization thereof; and respondent's failure to satisfy the judgment. Further, a loan respondent brokered between Mr. Veneski and another of his clients, and three other lending scenarios he proposed, constituted a pattern of improper business dealings, or at the least a lack of "appropriate sensitivity to his fiduciary responsibilities as an attorney".

As to sanction:

Respondent charged a brain-damaged client over $500,000 more than the statutory maximum in attorney's fees. He tried to disguise those fees as a gift, and deceived his client to secure his assistance in the charade. Respondent has yet to satisfy the judgment directing him to return those fees and the over-billed disbursements, and he has a pending petition for Chapter 7 Bankruptcy relief. His other attempted and accomplished plans to obtain financing from clients demonstrate a pattern of conduct which, at best, reflects an indifference to his clients.

The Referee, who had an opportunity to observe respondent, found him to be deficient in honesty, remorse, and insight. Even at this stage of the proceeding, respondent attempts to relitigate the orders underlying the collateral estoppel finding, seeks to delay (by requesting an examination of Mr. Veneski), and tries to use clients with pending cases (the three affiants) to extricate himself from an adverse position and to the detriment of another client (the Veneskis).

(Mike Frisch)

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Sometimes I am amazed at how messy some of these disciplinary cases can become.


Posted by: FixedWing | Oct 20, 2010 7:24:17 AM

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