Thursday, April 21, 2011

Class Action Attorney Gets Three Year Suspension

As the number of lawyers increases to an unprecedented level, the responsibility of ensuring that all lawyers conduct themselves within the ethical bounds required by the Rules Regulating the Florida Bar continues to be a top priority for this court.

So says the Florida Supreme Court in rejecting a referee's proposed public reprimand in a case that "involves one of the more experienced members of the Bar..." and suspending the attorney for three years. The attorney was admitted in 1973 and is a named partner in a Miami law firm.

The attorney "committed serious violations" in representing class action plaintiffs in a case against the City of Miami. Seven named plaintiffs settled for $7 million, with the clients getting $84,000 and the law firm $2 million of the proceeds. The referee found the settlement was detrimental to the undetermined/putative class and was "prejudicial , illogical, and unexplainable."

The facts are set forth in the court's 43 page opinion. The underlying case was set for a trial on damages to the entire class that the attorney represented. Although the class had not yet been certified by the trial court, the judge had repeatedly stated that certification was certain. The class was an "easily identified group because it was composed of people who had paid the City's property assessment, so it would not be difficult to determine the amounts of refunds that would be owed."

The night before the trial, the attorney met with defense counsel. The City's attorney offered $5 to settle; the attorney replied, "there is no frigging way that [the judge] is going to approve $5 million."

The next morning, the attorney met with defense counsel at a cafe. Also present was the mayor of Miami. Defense counsel asked, "[I]s there anything we can do to avoid going to court today?"

There was.

The case settled for $7 million to only the benefit of the seven named plaintiffs. The attorney and his firm got the gold mine; the named plaintiffs got paid; the class members got the shaft. 

The attorney claimed he had no attorney-client relationship with putative class members. The court found he had a clear fiduciary obligation to the class that was violated for his personal gain. The attorney claimed the conduct was negligent and on advice of counsel. The court found it was knowing misconduct and rejected the "advice of counsel" defense in bar proceedings.

The court found that the attorney had abused the class action process to collect a significant fee by dishonest means. Although the attorney claimed the $2 million was a reasonable fee, the court noted he had no contingent fee agreement that would entitle him to the cut he took. Further, he had actively sought a nondisclosure agreement with the City and his clients. The agreement would have concealed the settlement from the putative class members and could possibly have allowed the statute of limitations on their claims to expire.

His reputation and pro bono works could not save him from a lengthy suspension for this episode.

An assistant city attorney also was charged. He was not found in violation of any Rule. (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2011/04/class-action-attorney-gets-three-year-suspension.html

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