July 7, 2012
No Law Firm Liability For Seizure Of Electronic Files From Opposing Party
The Utah Supreme Court has held that the judicial proceedings privilege applies to an attorney's course of conduct as well as to statements made in the course of litgation.
The law firm represented an employer who had sued a former employee for misappropriation of trade secrets and violation of a non-compete agreement. The firm sought and was granted a civil discovery court order authorizing its entry into the employee's home to seize electronic files from his computer and other electronic devices.
A firm attorney attended the execution of the order. The employee's fiancee (the employee was not there) objected. A second, ex parte order was obtained and she relented.
The employer-employee litigation settled. The employee did not raise the issue of the seizures in the litigation.
The employee then sued the law firm for on a variety of theories for the violation of his Fourth Amendment rights.
A lower court had applied res judicata principles based on the settled case and found the claims were barred.
Here, the court found res judicata inapplicable but nonetheless affirmed on the judicial proceedings privilege. The law firm had acted pursuant to a court order that had not been obtained by fraud or other improper means. (Mike Frisch)
A Farmer's Reputation
The Idaho Supreme Court has suspended an attorney for three years with an active suspension of 18 months for a series of ethical violations in the course of handling a driver's license suspension matter. The client had refused a field sobriety test when he was confronted by the police and accused of underage drinking after leaving a graduation party.
The client eventually hired new counsel for the matter. The new counsel assisted the client in filing a bar complaint. The accused attorney claimed that new counsel had a "deep animosity" for him because he was the "Lone Ranger" and new counsel was part of the "good old boys network" in their locale. They had been opposing counsel in a high-profile murder case.
The court here affirmed the findings of misconduct. It rejected the attorney's claimed due process violation for alleged delay in the bar investigation, finding that the attorney had not been prejudiced. The court also concluded that the attorney's threat to sue his former client was not protected by the First Amendment.
The attorney is now a farmer and does not intend to resume the practice of law. The court rejected his suggestion that these proceedings had served to "tarnish his reputation as a farmer."
The record is replete with fabricated documents, contradictions and flat out lies...If his reputation is tarnished, it will simply be due to his conduct.
July 6, 2012
Permission To Sit Granted, License To Practice Denied
The Louisiana Supreme Court has denied admission to an applicant on character and fitness grounds.
The issue related to the applicant's conduct brought to light in bankrutcy proceedings. The court's Committee on Bar Admissions had recommended against permitting the applicant to sit for the bar examination. The court disagreed and permitted him to sit. He passed the exam.
The court here found that the applicant had engaged in a "pettern of misrepresentation and fraud." He had "egregiously misspent the funds entrusted to him by a business partner for the benefit of the company and essentially used those funds as his own." (Mike Frisch)
Rule For Lawyer-Lobbyists
A new ethical rule adopted in Pennsylvania will govern the conduct of lawyer-lobbyists.
The web page of the Disciplinary Board reports:
By order dated May 17, 2012, the Supreme Court extended Rule 1.19 of the Rules of Professional Conduct, which deals with lawyers acting as lobbyists, to lobbying governed by ordinances or regulations of units of local government.
The substance of Rule 1.19 may not be familiar to all lawyers. The ABA Model Rules of Professional Conduct do not contain a corresponding provision. It requires lawyers acting as lobbyists before the Legislature, the Executive Branch, state agencies, and now units of local government to comply with all statutes, regulations, disclosure requirements, or other standards enacted by such bodies, to the extent they are consistent with the Rules of Professional Conduct. The Rule does not impose substantive requirements itself, but it does mean that violation of any applicable law can be grounds for discipline, even if it is not a criminal conviction subject to Rule 214, Pa.R.D.E., or a violation of any of the provisions of Rule 8.4., Pa.R.P.C.
Section (b) of Rule 1.19 provides that any disclosure required by such laws is a disclosure explicitly authorized to carry out the representation, not prohibited by the confidentiality provisions of Rule 1.6, Pa.R.P.C.
Second DUI Draws Interim Suspension
The Indiana Supreme Court has ordered interim suspension until further order or final resolution of bar charges against an attorney based on his conviction for operating a vehicle while intoxicated with a prior conviction. The offense is a felony.
Two justices "would deny the request for interim suspension and set a deadline to advance the case." (Mike Frisch)
An attorney who was suspended in September 1999 has twice applied for restoration of his Louisiana law license. He had agreed to the suspension while facing client complaints in 34 matters.
The focus of both petitions for reinstatement was the relationship between his combination of alcohol addiction and bipolar condition and his misconduct.
The first Louisiana hearing committee did not find a causal link and had recommended against reinstatement. That committee found that his misconduct was carefully planned and executed.
A second hearing committee has now disagreed and is in favor of the petitioner's return to practice. The committee relied on several medical and other witnesses that contradicted the earlier conclusion concerning the relationship between his conduct and condition.
The petitioner has been in treatment and has not consumed alcohol since 2003. There was evidence, accepted by the committee, that he is a "changed man." (Mike Frisch)
July 5, 2012
Four Years For Law Firm Thefts
From the web page of the Tennessee Supreme Court:
The Tennessee Supreme Court has reversed a lower court’s decision and reinstated a Tennessee Board of Professional Responsibility (TBPR) hearing panel’s ruling suspending a Knoxville attorney due to misconduct.
While working at the Knoxville law firm of Kennerly, Montgomery & Finley, William S. Lockett, Jr. received payments for legal services and failed to remit those payments to the firm as required by his employment agreement. Lockett pleaded guilty to theft and to willful failure to file income tax returns. After considering all aggravating and mitigating factors, a TBPR hearing panel found that Lockett should be suspended for four years and, if reinstated, should be supervised for one year.
Lockett appealed to the Chancery Court of Knox County. Following oral argument, the chancery court applied additional mitigating factors and reduced the suspension to two years.
In a unanimous opinion, the Tennessee Supreme Court reversed the chancery court’s decision, holding that the chancery court failed to base its discipline modification on any of the criteria set forth in Supreme Court Rule 9, section 1.3. The Court conducted its own review of the hearing panel’s decision and agreed that the four-year suspension was consistent with sanctions imposed on other attorneys for similar criminal conduct.
To read the William S. Lockett, Jr. v. Board of Professional Responsibility opinion authored by Justice Janice M. Holder, visit http://www.tncourts.gov/sites/default/files/lockettwsopn.pdf.
The misconduct was discovered by the law firm after the attorney had resigned to assume the elected position of Knox County Law Director. (Mike Frisch)
A Victory For Clinical Education
The New Jersey Supreme Court has held that the records of the clinical education program at Rutgers Law School-Newark are exempt from disclosure under the state's public records act.
The clinic provides pro bono legal assistance in environmental matters. They represented interests opposed to the development of an outlet mall.
The ruling "encompasses client-related documents or clinical case files, as well as requests for information about the development and management of litigation." The ruling not not address disclosure of litigation funding from public sources. (Mike Frisch)
Revoked Phamacist Can Never Be Ohio Attorney
From the Ohio Supreme Court:
The Supreme Court of Ohio today denied the application of Daniel P. Poignon of Monclova to take the Ohio Bar Examination, and permanently barred Poignon from reapplying for admission to the legal profession in Ohio.
The court based its decision on findings that Poignon’s past felony conviction, the revocation of his license as a pharmacist, and his failures to seek or obtain gainful employment or to demonstrate personal or financial responsibility over a period of many years showed a lack of the character and fitness necessary to be entrusted with the legal affairs of others now or in the future.
In a 5-0 per curiam decision adopting the findings and recommendation of its Board of Commissioners on Character and Fitness, the court cited the minimum requirements imposed by the state’s bar governance rules. “An applicant to the Ohio bar must prove by clear and convincing evidence that he or she ‘possesses the requisite character, fitness, and moral qualifications for admission to the practice of law.’ .... The applicant’s record must justify ‘the trust of clients, adversaries, courts, and others with respect to the professional duties owed to them.’ ... ‘A record manifesting a significant deficiency in the honesty, trustworthiness, diligence, or reliability of an applicant may constitute a basis for disapproval of the applicant.’”
“Poignon’s flouting of the standards of the pharmacy profession, his violations of the laws of this state, his ongoing failure to accept responsibility for his behavior and its consequences, his inability or unwillingness to maintain stable, gainful employment, his neglect of his own financial responsibilities, and his apparent ignorance of his own family’s serious financial and legal matters constitute a persistent and ongoing pattern of conduct spanning at least 20 years. In light of this pattern, we agree with the board’s conclusion that ‘the ideals of trustworthiness and honesty that are so crucial to the legal profession simply would not be served by allowing [Poignon’s] admission.’”
The court’s opinion was joined by Chief Justice Maureen O’Connor and Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Judith Ann Lanzinger and Yvette McGee Brown. Justices Terrence O’Donnell and Robert R. Cupp did not participate in the court’s deliberations or decision in the case.
The court's opinion is linked here. (Mike Frisch)
July 3, 2012
Suspension Pending Final Discipline
The New York Appellate Division for the First Judicial Department suspended an attorney based on a criminal conviction of a serious crme.
AmLawDaily had this december 2011 report on the criminal conviction:
Former Debevoise & Plimpton associate Kenneth Schneider was sentenced this week by a federal judge in Pennsylvania to 15 years in prison for forcing a Russian teenager to be his sex slave, according to a report by sibling publication The National Law Journal.
Schneider, who worked out of Debevoise’s Moscow office until he left the firm in February 2000, was arrested in Cyprus and charged with sex tourism in March 2010. A prominent philanthropist and founder and president of the nonprofit Apogee Foundation for arts education and training, Schneider was convicted in October 2010 of transporting a person for criminal sexual conduct and traveling for the purpose of having sex with a minor.
The NLJ reports that U.S. district judge Juan Sanchez called Schneider a "monster" who destroyed the life of a Bolshoi Ballet Academy student whom Schneider met in Moscow in 1998 when the boy was 12. The relationship escalated over the next eight years, with the pair traveling back and forth between Philadelphia and Moscow. Philadelphia’s Stradley Ronon Stevens & Young represented Schneider. (The Careerist has more on Schneider's case.)
The suspension takes immediate effect pending the determination of final discipline. (Mike Frisch)
Recused And Reprimanded
A Montgomery County judge has been publicly reprimanded by the Tennessee Court of the Judiciary.
The judge's spouse (an attorney) is involved in an ongoing dispute with lawyers that had previously been associated with her law firm. In response to recusal motions filed by the involved attorneys, the judge posted an order on his web site that made factual averments outside the record and accusations of unethical behavior on the part of the moving attorneys.
WSMV.com has information about the underlying dispute between the attorneys. (Mike Frisch)
Advanced Expenses For Defense Of Corporate Director Approved In Ohio
The web page of the Ohio Supreme Court reports:
The Supreme Court of Ohio ruled today that a corporation cannot avoid its duty under R.C. 1701.13(E)(5)(a) to advance the legal defense expenses of a corporate director who is sued in his or her capacity as a director by claiming that the director’s misconduct, if proven, would amount to a violation of his or her fiduciary duties to the corporation.
The court held further that when a director has submitted to the corporation a written undertaking (document) seeking an advance of legal expenses that meets the requirements of R.C. 1701.13(E)(5)(a), the corporation must provide the requested advance unless its articles of incorporation or regulations specifically state that R.C. 1701.13(E) does not apply to the corporation.
Applying those holdings to a Trumbull County case, the court ruled that Sam M. Miller, a director and co-owner of Trumbull Industries Inc., an Ohio corporation that sells plumbing supplies, was entitled to an advancement of his legal expenses from the corporation. Sam M. Miller had requested the advancement to cover the costs of defending a lawsuit filed against him by two other directors of the corporation, Murray Miller and Sam H. Miller, for allegedly violating his fiduciary duties to them as shareholders and to the corporation itself.
The court’s 6-1 majority decision was authored by Chief Justice Maureen O’Connor.
In December 2002, Sam M. sent a memorandum to Murray and Sam H. informing them about a business opportunity called the Brand Company Project. The proposed new company would market private-brand plumbing products for sale to manufacturers including Jacuzzi, Inc., and possibly to other wholesalers. Murray and Sam H. objected to Sam M.’s involvement in the new venture, and demanded that he cease and desist.
When Sam M. did not comply with those demands, Murray and Sam H. filed suit against him and other participants in the Brand Company Project in the Trumbull County Court of Common Pleas. Their complaint sought injunctive relief and damages, alleging that Sam M.’s involvement in the Brand Company Project was in violation of his fiduciary duties to them as shareholders of Trumbull Industries, and to the corporation itself.
Sam. M. subsequently sent a memorandum to Murray and Sam H. notifying them that he had reimbursed himself from Trumbull Industries’ corporate funds for the costs he had incurred in preparing a defense against their lawsuit. In support of his right to that advancement, he attached a copy of an “undertaking” he had executed “pursuant to R.C. 1701.13(E)(5)(a).” That document requested that the corporation advance him funds to cover his legal defense costs, and incorporated language from the statute agreeing that Sam M.: 1) would pay back any advancements he received if it were found that his acts or omissions had been committed with a deliberate intent to injure, or with reckless disregard for the corporation’s best interests; and 2) would reasonably cooperate with the corporation in the lawsuit or proceeding for which he sought the advancement.
Both sides filed motions with the court seeking a declaratory judgment on the issue of whether Sam M. was entitled to indemnification of attorney fees by the corporation. In January 2007, the trial court issued an opinion ordering Sam M. to reimburse Trumbull Industries for $240,068 of the $320,091 in legal fees that had been paid from corporate funds up to that time. The court based that holding on its “tentative” determination that because Sam M. was one of four defendants in the underlying lawsuit, only 25 percent of the legal fees that had been incurred were attributable to Sam M. as a corporate director, and therefore only 25 percent of the legal fees were subject to advancement by the corporation.
Sam M. filed a motion asking the trial court to reconsider and clarify its order, asserting that a review of the legal invoices that had been paid from corporate funds to date would show that 99 percent of those costs were attributable to the defense of Sam M. as a corporate director, and not to the other named defendants. Sam M. also argued that by filing the written undertaking required by R.C. 1701.13(E)(5)(a), he had already agreed to repay at the end of the litigation any advanced legal costs to which he was not entitled. The trial court denied the motion to reconsider.
Subsequently, both sides asked the trial court to clarify the impact of its January 2007 decision on the corporation’s ongoing obligation to advance Sam M. the costs of his legal defense. The court issued a new ruling in June 2008 in which it found that legal work performed by the firm of Ulmer and Berne beginning March 25, 2008 had been performed exclusively on behalf of Sam M. as a corporate director. The court therefore ordered Trumbull Industries to advance Sam M. funds to cover his bills from Ulmer and Berne from March 25, 2008 forward. When the corporation failed to obey that order, Sam M. sought and received a finding by the trial court that Trumbull was in contempt. The trial court subsequently imposed a sanction against Trumbull of $5 per day for each day it failed to advance Sam M. funds to cover the legal services he received from Ulmer and Berne starting March 25, 2008.
The corporation, Murray, and Sam H. appealed the trial court’s finding of contempt, sanction, and order awarding Sam M. fee advancements. On review, the Eleventh District Court of Appeals reversed the trial court and held that Sam M. was not entitled to indemnification for his legal defense costs from Trumbull Industries. Sam M. sought and was granted Supreme Court review of the Eleventh District’s ruling.
In today’s decision, Chief Justice O’Connor wrote that in arriving at its ruling, the court of appeals had incorrectly relied on R.C. 1701.13(E)(1) and (E)(2), legal provisions that address the entitlement of a corporate director to indemnification for litigation expenses after legal claims against the director have been determined. In this case, she wrote, Sam M.’s claims should have been considered only under R.C. 1701.13(E)(5)(a), which addresses the separate legal question of whether a corporation is obliged to make advance payments to cover a director’s legal defense costs while a lawsuit against the director is pending.
“The issue of whether Sam M. violated his fiduciary duties and, therefore, is not entitled to indemnification, is not appropriate for our review,” wrote Chief Justice O’Connor. “The only issue that is properly before this court now is whether Sam M. is entitled to advancement of expenses. Likewise, that is the only issue that should have been decided by the appellate court.”
“R.C. 1701.13(E)(5)(a) states that a director’s expenses ‘shall’ be paid by the corporation, evidencing an intent by the legislature to make advancement of a director’s expenses by a corporation to be mandatory. ... (A)dvancement was required only if Sam M. complied with the terms of R.C. 1701.13(E)(5)(a)(i) and (ii). It is undisputed that on September 13, 2005, Sam M. executed the requisite undertaking to comply with the terms of R.C. 1701.13(E)(5)(a) and that in that undertaking, Sam M. agreed to abide by the duties set forth in R.C. 1701.13(E)(5)(a)(i) and (ii). It is also undisputed that appellees received Sam M.’s undertaking.”
“Yet, appellees argue that Sam M.’s agreement to ‘reasonably cooperate’ with the corporation was ‘a sham.’ Appellees point to Sam M.’s deposition testimony as evidence that ‘he would not cooperate with Trumbull in this litigation unless ordered to do so by a majority of the Trumbull Board.’ The cited testimony does not support appellees’ argument. First, appellees fail to point to any specific evidence showing that Sam M. has actually failed to reasonably cooperate with the corporation. Second, when, as here, a director is being sued by his corporation, any duty to ‘reasonably cooperate’ should not require the director to surrender his right to defend himself.”
Quoting from United States v. Stein, a 2006 decision of the U.S. District Court for the Southern District of New York, the Chief Justice wrote: “Even when the parties are at odds in litigation, the duty to advance expenses often ‘requires companies to advance the cost of defending claims that allege wrongs to the companies, even lawsuits brought by companies themselves against former officers and directors.’ ... Here, Sam M. executed the requisite undertaking described in R.C. 1701.13(E)(5)(a)(i) and (ii). When appellees received the undertaking, their statutory duty to advance Sam M.’s expenses arose. Thus, appellees are required by statute to advance Sam M.’s expenses pursuant to R.C. 1701.13(E)(5)(a).”
“Based upon the unambiguous language of R.C. 1701.13(E)(5)(a), we hold that Trumbull is required by law to advance expenses to Sam M. Trumbull’s articles of incorporation do not state by specific reference that R.C. 1701.13(E)(5)(a) does not apply to Trumbull. Thus, we hold that appellees failed to show that Trumbull opted out of the mandatory advancement requirement. Finally, we hold that Trumbull’s statutory duty to advance Sam M.’s fees arose upon receipt of Sam M.’s undertaking. For these reasons, we reverse the appellate court’s judgment finding that the trial court improperly ordered Trumbull to pay the attorney fees of Sam M., reinstate the trial court’s judgment finding Trumbull in contempt for refusing to pay Sam M.’s expenses pursuant to R.C. 1701.13(E)(5)(a), and remand the cause to the trial court for further proceedings consistent with this opinion.”
Chief Justice O’Connor’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Judith Ann Lanzinger, Robert R. Cupp and Yvette McGee Brown.
Justice Terrence O’Donnell dissented, stating that in his view the majority misconstrued the advancement statute. He wrote: “It does not apply in these kinds of circumstances where a corporation is suing one of its own directors. Notably, the defendant director has a duty to cooperate with the plaintiff corporation and cannot do so. To require advancement of expenses in this situation is unwarranted and fails to carry out legislative intent.”
“The General Assembly ... did not intend to require a corporation suing one of its directors for fraud and for usurping a corporate opportunity to advance the costs of defending the action against itself. When the director and the corporation are adverse parties in litigation, the director simply cannot reasonably cooperate in the manner required by the statute, and the circumstances of this case demonstrate the futility of expecting a director to fully and honestly assist the corporation’s suit against him.
“I would affirm the judgment of the court of appeals, and because the majority of the court fails to recognize the director’s duty to reasonably cooperate with the corporation concerning actions, suits, or proceedings, I urge the General Assembly to reexamine this statute and further clarify that when the corporation is suing the director and there can be no such cooperation, no fees need be advanced in such circumstances.”
The opinion is linked here. (Mike Frisch)
A Four Year Career Ends In Disbarment
The Maryland Court of Appeals has disbarred an attorney admitted to practice in 2008.
The attorney was found in violation of multuple ethics rules in three complaints. One of the matters involved her failure of provide competent representation to a number of homeless clients. The matters were accepted by the attorney on a pro bono basis through the Homeless Persons Representation Project and involved expungement petitions that were time-sensitive.
The attorney had entered into a diversion agreement with the Bar but failed to honor its terms. She also had made false statements to Bar Counsel and failed to respond to the bar complaints. (Mike Frisch)
Read Before Suing
A Massachusetts attorney was retained by a divorced woman to pursue remedies when her ex-husband did not pay private school tuition for their child. She paid the attorney $3,500 and provided him with a copy of the divorce agreement.
The agreement provided for a process to resolve the issue of tuition payments. Unfortunately, the attorney failed to understand this, as he "did not review the agreement sufficiently to appreciate that the parties were required to present disputes over the payments to the court."
When the ex-husband advised the attorney that he was financially unable to pay, the attorney filed a motion for contempt. The ex-husband's attorney responded that there was no basis for contempt as his client had not violated an unambiguous court order. The attorney failed to review the agreement and did not file a response.
The contempt motion was dismissed and the client fired the attorney on the day of the hearing.
The attorney thereafter did not return the unearned portion of the fee until after a bar complaint was filed.
The atorney was publicly reprimanded, as described in this summary from the Massachusetts Board of Bar Overseers. (Mike Frisch)
Repeat Offense Draws Suspension
A Colorado attorney agreed to a suspension of a year and day for his "close. personal relationship [with his client], which included dating and physical contact."
The attorney was previously suspended for 60 days in a case that involved misconduct during the course of his representation of clients who were plaintiffs in a sexual harassment suit.
Among the violations in the earlier case:
The respondent represented a number of women clients in the sexual harassment action or actions against U.S. West. In early 1996, he engaged in a consensual sexual relationship with one of his clients, lasting one weekend. The relationship came to light when the woman was deposed by U.S. West's attorney. The respondent's conduct violated Colo. RPC 8.4(h) (engaging in conduct adversely reflecting on the lawyer's fitness to practice).
July 2, 2012
Wine, Beer And Vodka
An Illinois attorney has filed a motion seeking disbarment by consent for conduct arising from a single alcohol-related driving offense:
[On] April 6, 2012, Movant was arrested on charges of driving under the influence of alcohol (DUI)...On the evening of his arrest, Movant had consumed approximately two glasses of wine, two vodka tonics and four 16 ounce beers. At the time of his arrest, Movant refused to submit to field sobriety and blood-alcohol concentration testing. During the traffic stop, Movant falsely advised the arresting officer, more than one time, that he had not consumed any alcoholic beverages that evening.
On May 14, 2012, Movant pled guilty to an amended charge of reckless driving, in violation of 625 ILCS 5/11-503(a), in case no. 12 DT 733. Movant was sentenced to 18 months of supervised supervision, ordered to complete drug alcohol evaluation and program, submit to random drug/alcohol testing and assessed fines and costs in the amount of $3,640.
It is, in my experience, unusual for such violations to lead to disbarment. (Mike Frisch)
The license was granted in January 2010 with an admitted Rhode Island attorney designated as the sole attorney. The LLC filed a motion to change the facts of its initial petition to replace the prior attorney.
Unfortunately, the newly listed attorney had practiced as a professional services corporation without a license and had not obtained the court's permission to serve in the designated capacity under the Professional Services Corporations Act. (Mike Frisch)
Reprimand Not Sufficient
The Georgia Supreme Court has rejected a petition for voluntary discipline of Review Panel reprimand notwithstanding the State Bar's lack of opposition to the petition.
The attorney was retained to defend a civil suit and successfully defended a motion for summary judgment. However, he failed to respond to a second summary judgment motion. When the motion was granted, he did not inform the client or determine if the client wished to appeal.
The court noted that the attorney had mitigating factors but concluded that his prior discipline made a reprimand insufficient discipline. (Mike Frisch)
Teach Your Students Well
If you are teaching professional responsibility at a law school, you might want to take a look at a recent decision of the Nebraska Supreme Court.
The attorney was admitted to practice in 1983 and had no prior discipline. He settled a personal injury case in 2004. With the client's consent, he kept $2,000 in his trust account for payment of medical bills.
When the client sought the remainder of the money, there were insufficent funds because the attorney had used the money to cover payroll and operating costs. The funds were replaced and the client was paid on the very day of the request.
No harm, no foul?
This conduct involved intentional misappropriation, which is "not only stealing, but also unauthorized temporary use for the attorney's own purpose, whether or not the attorney derives any personal gain or benefit therefrom."
Because the attorney fully cooperated and had numerous character references, he was suspended for a year instead of disbarred. (Mike Frisch)