Friday, August 3, 2018

"To the Best Of My Recollection"

The Illinois Administrator has charged an attorney with having a sexual relationship with a client during the course of her marriage dissolution action.

Between February 20, 2015 and December 15, 2016, Respondent represented Fielder in case number 2015D78.

On or about March 23, 2016, Respondent began to have sexual relations with Fielder that continued until at least October 2016.

On July 25, 2016, a judgment for dissolution of marriage was entered in case number 2015D78.

He is also charged with lying about it in response to the complaint

Respondent described when he began having a sexual relationship with Fielder. In the letter, Respondent stated with regard to his relationship with Fielder:

"To the best of my recollection, the sexual relationship between Ms. Whiteside-Fielder and I did not begin until after July 25, 2016."

Respondent's statement...that the sexual relationship between Respondent and Fielder did not begin until after July 25, 2016, was false because Respondent and Fielder had sexual relations on or about March 23, 2016.

Respondent knew the statement...was false at the time he made it.

(Mike Frisch)

August 3, 2018 in Bar Discipline & Process | Permalink | Comments (1)

Thursday, August 2, 2018

Probation Insufficient; Suspension Ordered

The District of Columbia Court of Appeals agreed with Disciplinary Counsel and rejected a fully-stayed suspension proposed by the Board on Professional Responsibility in favor of an actual suspension

An Ad Hoc Hearing Committee (the “Hearing Committee” or the “Committee”) recommended that respondent Michael Avery be suspended for forty-five days for violations of several District of Columbia Rules of Professional Conduct in connection with his representation of a client, Mary Brown, in 2004 and 2005. The Board on Professional Responsibility (the “Board”) recommended a forty-five-day suspension stayed in favor of six months of probation. Respondent states that he disagrees with some of the Hearing Committee‟s and Board‟s findings, but he does not ask us to overturn any, and he takes no exception to the Board‟s recommended sanction. Disciplinary Counsel does not take exception to a forty-five-day suspension (although characterizing it as “particularly lenient”), but argues that respondent should be required to serve an actual suspension. Agreeing with the Board that this case is “most similar to those in which sixty-day suspensions were imposed” and acknowledging the assessment by the D.C. Bar Practice Management Advisory Service that respondent has made changes in his practice that “make an occurrence like that which gave rise to the bar complaint in 2004 very unlikely,” but also concurring with Disciplinary Counsel that an actual period of suspension is warranted as a deterrent, we conclude that a sixty-day suspension, with thirty days stayed in favor of a one-year period of probation, is the appropriate sanction. 

The attorney had a high-volume personal injury practice. He engaged in client-related misconduct in a single case 

The Committee found that respondent was “disengaged” from the matter and “abdicated responsibility for his representation of his client,” thereby failing to discover that his office had not “conduct[ed an] adequate investigation of Ms. Brown‟s injuries,” had not considered whether to obtain medical reports “to determine the precise nature of her injuries,” had not conveyed GEICO settlement offers to her, had not consulted with her before agreeing to a settlement, had deposited the GEICO check without obtaining a signed release from her, and had failed to notify her of the check and to send her a settlement disbursement sheet.

Further

The Committee found that respondent made misrepresentations to Disciplinary Counsel when he responded to Ms. Brown‟s complaint, “mischaracterizing the $8,800 payment from GEICO as a [mere] settlement offer and . . . giving the misleading impression that he had met with Ms. Brown to discuss the offer soon after it was made” (even though he did not meet with Ms. Brown until a year and a half later). (emphasis added). Further, the Hearing Committee found that respondent‟s testimony that Ms. Brown had approved the settlement (“despite all evidence pointing to the contrary conclusion”) was “not credible,” that respondent “essentially conceded that he had lied to GEICO „in an effort to protect [his] client‟s interest,‟” and that respondent “falsely testified” before the Committee when he told the Committee that his statement to GEICO was itself a lie. The Committee also cited as an aggravating factor the fact of respondent‟s prior discipline (a public censure in 2007 for incompetence, neglect, and failure to communicate with a client), but reasoned that the prior discipline was “not as aggravating as if the conduct had taken place[] after [respondent] had already been through a disciplinary proceeding.”

Actual suspension was deemed necessary to protect the public and guide the Bar.

Here, respondent neglected his client, made misleading statements to Disciplinary Counsel, and gave what the Hearing Committee and Board found was “not credible” or “false testimony.” Unlike Chapman, respondent has a prior disciplinary history (involving violation of some of the same Rules involved here), but the Hearing Committee and the Board found that he understands the seriousness of the issues. On balance, we conclude that a sanction similar to the one we imposed in Chapman — a sixty-day suspension, with thirty days stayed in favor of a one-year period of probation — is warranted here as well.

Note to Respondents on getting help from the Bar's practice assistance program

the Practice Management Advisory Service assessment is information that we deem reliable and that we may take into account for purposes of determining what sanction is appropriate. We have frequently directed respondents to “obtain an assessment from [the Practice Management Advisory Service] and comply with and implement any [Practice Management Advisory Service] recommendations.” In re Coleman, 162 A.3d 159, 161 (D.C. 2017); see also, e.g., In re Murdter, 131 A.3d 355, 362 (D.C. 2016).

Associate Judges Glickman, Thompson and Easterly were on the per curiam opinion. (Mike Frisch) 

August 2, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Sharing Not A Virtue

An attorney's misconduct in a criminal case drew a public censure from the New York Appellate Division for the Third Judicial Department

The factual specifications supporting the charges of the verified petition stem from the respondent’s representation of Gordon Woolf in a criminal case, and are as follows:

On June 4, 2013, federal agents arrested Woolf and charged him with having violated federal criminal statutes. On June 10, 2013, the respondent met with Woolf, who was then incarcerated in a federal detention facility awaiting arraignment. Luigi Vigliotti, Esq., accompanied the respondent to this meeting with Woolf. The respondent and Vigliotti were not law partners, and Vigliotti was not the respondent’s employee. During the meeting, Woolf executed a retainer agreement with “The Law Offices of Anthony J. Colleluori & Associates, PLLC,” and agreed to a $35,000 retainer fee, which was paid by Woolf on or before June 16, 2013.

On June 10, 2013, the respondent filed a notice of appearance in United States v Woolf, case No. 2:13-mj-00475, in the United States District Court for the Eastern District of New York. A few days later, on June 12, 2013, the respondent represented Woolf at a detention hearing in the District Court, which resulted in Woolf’s release from custody that day.

After receiving the retainer fee and before July 12, 2013, the respondent paid $14,000 of the $35,000 retainer to Vigliotti, without advising Woolf and without obtaining Woolf’s written consent.

The respondent was discharged by Woolf on or about July 12, 2013. At that time, Woolf requested the respondent to refund any unused portion of the retainer fee. In response, the respondent advised Woolf that he had previously given $14,000 to Vigliotti. The respondent also told Woolf that Vigliotti had spent all but $4,900 of the $14,000, and $4,900 was all that could be refunded.

The client then complained. 

In determining an appropriate measure of discipline to impose, the respondent contends that his admitted mistakes are “ministerial error only.” He requests that this Court issue him a private reprimand or a sanction no greater than a public censure in view of the mitigating evidence advanced, including evidence of his professional achievements and character, as well as the personal and medical difficulties he and his family have experienced. However, it is noted that the respondent’s disciplinary record is not unblemished, as he has received two Admonitions unrelated to this matter.

Under the totality of the circumstances, we find that a public censure is warranted

(Mike Frisch)

August 2, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Stayed Suspension Translates Into Reciprocal Censure

A reciprocal public censure has been imposed by the New York appellate Division for the First Judicial Department

On June 16, 2017, the District of Columbia Disciplinary Counsel (DC Disciplinary Counsel) filed a petition for negotiated discipline with the District of Columbia Court of Appeals Board of Professional Responsibility. The petition was based on respondent's representation of two joint clients who retained him in May 2015 to file patent applications. After he filed the patent applications, and the clients paid the associated fees and costs, respondent deposited the funds in an account that held other funds, and did not pay the filing fee for either patent. When the clients could no longer contact respondent, they retained new counsel. Eventually, when the clients located respondent, he admitted his omissions and worked with their new counsel to restore the patent applications.

The DC Disciplinary Counsel's petition stated that, at the time of his misconduct, respondent was suffering from severe depression, alcohol abuse and insomnia. However, the DC Disciplinary Counsel averred that respondent, after he received treatment in 2016, was "significantly rehabilitated" and unlikely to engage in future misconduct. The petition proposed a 30-day suspension, stayed, and three years of probation on the condition that respondent comply with certain requirements. By affidavit, respondent acknowledged the truth of the material facts in the petition and stated that he could not successfully defend against the disciplinary proceedings. The District of Columbia Court of Appeals accepted the DC Disciplinary Counsel's recommendation and imposed the negotiated discipline by order dated December 14, 2017 (In re McNeely, 174 A3d 865 [DC Ct App 2017]).

Sanction

While New York has no sanction equivalent to that imposed by the District of Columbia Court of Appeals, the misconduct for which respondent was disciplined constitutes misconduct in New York . As a general rule in matters of reciprocal discipline, this Court gives significant weight to the sanction imposed by the jurisdiction in which the charges were initially brought (see Matter of Cardillo, 123 AD3d 147 [1st Dept 2014]). Thus, based on respondent's consent to the relief sought by the Committee, and the findings of the District of Columbia Court of Appeals, the imposition of the reciprocal discipline sought by the Committee is warranted (see Matter of Bogard, 149 AD3d 224 [1st Dept 2017]).

Accordingly, the Committee's motion should be granted, and respondent publicly censured.

(Mike Frisch)

August 2, 2018 in Bar Discipline & Process | Permalink | Comments (0)

The Client He Never Met

The always excellent Dan Trevas has a summary of an Ohio Supreme Court case that raises (through a concurring opinion of three of seven justices) a significant regulatory gap in Ohio bar discipline that deprives the court of the ability to review dismissed complaints. 

In the case, the attorney walked because the sustained charges were predicated on an attorney-client that never existed. The concurrence notes that he likely violated other (dismissed) rules. 

Justice Fischer

Under the current rules and our precedents, which we created, an attorney may go unpunished for his misconduct—and the public will remain unprotected—in a situation in which the panel, the board, and this court agree that an attorney has violated one or more of the professional-conduct rules but disagree on which specific rule or rules the attorney has violated.

The Trevas summary

The Ohio Supreme Court today dismissed rule violation charges against a Cleveland attorney who filed and lost the criminal conviction appeal of man he never met or spoke to until after the case ended.

In a per curiam opinion, the Court ruled it could not find Paul A. Mancino Jr. of Cleveland violated three professional conduct rules. Those rules pertain to instances where there is attorney-client relationship. The Court found Mancino never had an attorney-client relationship with an imprisoned man.

While agreeing to dismiss the case, three justices, in a concurring opinion written by Justice Patrick F. Fischer, take issue with the current rules process. They note that five rule violations were dropped early in the proceedings against Mancino and could not be reviewed by the Supreme Court. The justices question whether a rule change is necessary.

Father of Fellow Inmate Pays for Appeal
Mancino represented Michael Jirousek who was jailed with Raymond Miller. Jirousek told his father, Robert Jirousek, that Miller wanted to appeal his criminal conviction. Robert Jirousek paid Mancino a $1,000 flat fee and the costs to appeal Miller’s conviction. Relying on the payment and his client’s father’s word, Mancino filed an appeal in March 2014, and did not correspond with Miller at that time. Mancino sent Miller a copy of the notice of the oral argument date, and sent him the appellate court’s decision affirming Miller’s conviction and sentence in December 2014.

When the Geauga County judge who originally sentenced Miller became aware of Mancino’s actions, he filed a grievance with the Office of the Disciplinary Counsel. In December 2016, the disciplinary counsel filed a complaint with the Board of Professional Conduct, charging Mancino with eight violations of the rules governing the conduct of Ohio attorneys.

 Hearing Panel Dismisses Violations
A three-member board hearing panel dismissed five of the alleged rule violations based on the “insufficiency of evidence.” The panel did find Mancino violated the rules requiring a lawyer consult with a client, inform the client of any decision or circumstance in which client consent is required, and the rule prohibiting a lawyer from accepting compensation to represent a client from someone else without the client’s consent.

The panel recommended that Mancino be publicly reprimanded, and the board agreed.

Mancino objected to the conclusions, arguing the rules could not be violated if there was no attorney-client relationship.

Inmate Claims No Harm
During the disciplinary hearing, Miller testified he was unaware that Mancino represented him, and Miller signed an affidavit stating that Mancino was not his attorney and he never asked Mancino nor anyone to appeal his conviction. He also testified that he was not harmed in any way by Mancino’s actions.

The board found Mancino acted in good faith based on Robert Jirousek’s word that Miller wanted to appeal his case, and noted that neither Mancino nor Robert Jirousek ever directly communicated with Miller. The board found Mancino’s admitted lack of communication led to the rules violation.

Court Examines Relationship
The Court’s opinion stated there was obviously no express agreement for Mancino to represent Miller. However, the Court has held that attorney-client relationships can be created by “implication” based on the conduct of the parties. The Court concluded that based on Miller’s statements, that there was no implied attorney-client relationship.

Because all three charges brought to the Court require an attorney-client relationship, the Court could not conclude that Mancino broke the rules. It stated that under Gov.Bar R. V(12)(G), any count of a disciplinary complaint that is unanimously dismissed by a board panel cannot be reviewed by the board or the Court.

“We do not condone Mancino’s decision to undertake legal representation without making any attempt to communicate with the intended client until after the case was decided by the court of appeals,” the justices wrote. “But we are constrained from considering whether his conduct violated any other professional-conduct rules because the panel unanimously dismissed the balance of the violations alleged in relator’s complaint based on the insufficiency of the evidence.

 Concurrence Concerned by Process
In his concurring opinion, Justice Fischer expressed concerns with the Court’s inability to review unanimous hearing-panel dismissals under the rules. Chief Justice Maureen O’Connor and Justice Terrence O’Donnell joined Justice Fischer’s opinion.

Gov.Bar R. V(12)(G) does not permit the Supreme Court or the professional conduct board to review rule violations that were unanimously dismissed by hearing panels for a lack of sufficient evidence. The concurrence recognized that the rule has no mechanism for disciplinary counsel or any county bar association grievance committee to submit objections to the hearing panel’s unanimous dismissals.

The concurrence noted that there are other professional conduct rules that specifically allow for other types of disciplinary decisions to be appealed. The lack of a review mechanism in Gov.Bar R. V(12)(G) means that unanimous hearing-panel dismissals are effectively shielded from review, the justices stated.

Justice Fischer explained that Article IV, Section 2(B)(1)(g) of the Ohio Constitution requires the Supreme Court to regulate all matters related to the practice of law. The concurrence indicated that the dismissal rule in Gov.Bar R. V(12)(G) prevents the Court from acting as the final decision maker in attorney discipline cases.

If a hearing panel mistakenly applies the professional conduct rules and unanimously dismisses rule violations, the attorney’s actions, as related to the dismissed counts, are insulated from the Court’s review, the concurrence asserted.

While Mancino did not violate any rules that required an attorney-client relationship, the concurring justices assured, Mancino arguably violated several other professional-conduct rules.

“Had the hearing panel properly discerned that lack of an attorney-client relationship, it may not have unanimously dismissed those counts for lack of sufficient evidence. Regrettably, we cannot revive or review those dismissed counts, and our responsibility to protect the public from the attorney’s possible misbehavior has been thwarted,” Justice Fischer stated.

The concurrence cautioned future hearing panels against unanimously dismissing rule violations based on insufficient evidence, especially in complex cases, and urged the Court to determine whether Gov.Bar R. V(12)(G) should be amended.

2017-1079. Disciplinary Counsel v. Mancino, Slip Opinion No. 2018-Ohio-3017

Note that the District of Columbia has a rule that specifically grants the court the authority to review a dismissed complaint.

 Rule XI, section 9 (j) Court review of final actions by the Board. In any disciplinary proceeding in which a dismissal, an informal admonition, or a reprimand is contemplated or effected, the Court shall have the right to review the matter on its own motion and to enter an appropriate order, including an order directing further proceedings.

Look for the Ohio Supreme Court to fix the regulatory gap. (Mike Frisch)

August 2, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Wednesday, August 1, 2018

Strict D.C. Misappropriation Rule In Serious Jeopardy

In In re Addams, a divided en banc District of Columbia Court of Appeals held that disbarment is the required sanction for intentional or reckless misappropriation absent extraordinary circumstances.

Other than for recovering addicts, the court had found an extraordinary circumstance in only one case.

Since the 1990 Addams decision, there has been a strong desire among elements of the Bar, bench and. most prominently, the Board on Professional Responsibility, to overturn it.

When I was an Assistant Bar Counsel, I was obligated to attend an annual dinner honoring the board and hearing committees. The subject matter of one dinner (there was always a presentation) was why Addams was so unfair to misappropriating lawyers. 

The vehicle for change may have arrived in a report just filed by the board in In re Bernard Gray, Sr. 

The board has proposed the disbarment of a veteran attorney who provides low to moderately-priced legal services to an underserved community

Respondent has been a sole practitioner in the District of Columbia for over 40 years. FF 2. His practice was mainly landlord-tenant matters, and his clients often were low or moderate income tenants or small landlords. FF 2; HC Rpt. 40. He used retainer agreements that required an initial payment ($100 to $1,500) but allowed his clients to pay in installments. FF 3. His hourly rate ranged from $75 to $125; but since 2007, he has not meaningfully tracked his hours or billed his clients. FF 3-4. He believes he has unpaid balances in at least half of his cases. FF 4.

The hearing committee found that the attorney was negligent, which normally would call for a six-month suspension. 

The board called it a "close call" but found he was reckless.

The distinction has a profound impact on the sanction

Whether Respondent’s misappropriation of client funds was negligent or reckless is a close call. Respondent undeniably was inattentive to his trust account for at least eight years; he commingled personal and client funds, failed to maintain records, and treated the account as a personal account. But the Committee found that his conduct was “simply negligent” because of the nature of his practice and because they found he acted in good faith—believing that the funds belonged to him. We disagree with the Committee and find that the misappropriation was reckless. See In re Micheel, 610 A.2d 231, 235 (D.C. 1992) (holding that the finding that the misappropriation was negligent or reckless is an “‘ultimate fact’—i.e., a conclusion of law” and the “Board owed no deference to the hearing committee’s conclusion that [respondent] was merely negligent”)...

The Board recognizes that its departure from the Committee’s conclusion on culpability has the effect of not fulfilling the Committee’s recommendation to allow Respondent to avoid disbarment. HC Rpt. 42 (“We also found compelling Respondent’s limited request to simply avoid disbarment at the end of his career in the law. We are unanimous in our hope that the Board will respect his wish.”). But, the Board is compelled to follow the rule in Addams when the facts show reckless misappropriation and do not show an extraordinary circumstance warranting departure. And we were mindful of the Court’s discussion in Pels, a case that involved a sympathetic respondent where the Board struggled with application of the Addams rule. We are in a similar position here:

[I]n Addams the court weighed the concern of seemingly unjust application of a categorical sanction to particular cases against “our concern . . . that there not be an erosion of public confidence in the integrity of the bar. Simply put, where client funds are involved, a more stringent rule is appropriate.”

Pels, 653 A.2d at 398 (alteration in original) (quoting Addams, 579 A.2d at 198). “‘The Board does not do the Court a service by trying to mitigate this result. . . . [Its] job is to follow the Court’s decisions.’” Id. (quoting Board Report at 3-4 (opinion by Mr. Fox)).

Four board members filed a Separate Statement that makes points that suggest either a second exceptional circumstance or a plea to overrule Addams

We join the well-reasoned Board report in finding that Respondent engaged in reckless misappropriation, but write separately on the issue of sanction to underscore a point about this case, and similar cases, under the Court of Appeals’ precedent in Addams.

The majority report is an accurate statement of the law. We agree that Respondent’s misappropriation was reckless. And, under Addams, we agree that the recklessness determination requires a sanction of disbarment, absent extraordinary mitigation of the kind found in In re Hewett, 11 A.3d 279 (D.C. 2011).

On this record, we stress the extraordinary circumstances that point to suspension rather than disbarment. Respondent is one of a number of lawyers we have seen who are in solo or small firm practice, engaged in otherwise laudable service to his clients, and yet would be disbarred under Addams. Although we agree that this is the result called for by Addams, we disagree that should be the outcome in this case.

First, though we disagree with Respondent that notice of a problem with his trust accounting is necessary to make a finding of recklessness, we do think that the absence of notice is significant. We think the majority report is right that the misappropriation was reckless, and – like the majority – we think that this is a close case. The line between what constitutes reckless misappropriation and negligent misappropriation is not always finely drawn. Yet the difference in sanction is so dramatic, and the consequences of the slight difference between recklessness and negligence in some cases is so slight, that this application of Addams appears, to us, at times, unjust.

Second, we are troubled by much of what is laudable about Respondent, and how little that matters in determining his sanction. The Hearing Committee discussion is persuasive. HC Rpt. at 40-41. Respondent has worked for little money serving a population that desperately needs his help. In a city where some lawyers routinely charge well over $1,000 per hour, during this period, Respondent’s hourly rate generally ranged from $75 to $125. And, in some cases, he did not attempt to collect all that he was owed. In light of the well-documented and often-discussed gap in legal services for those of limited means, Respondent was willing to forgo greater financial means to serve those who otherwise may be unable to afford counsel. While perhaps not “extraordinary” in the way the term is used in Addams, we find this extraordinary in a different sense.

Third, and finally, we note that we have seen a number of cases where an otherwise deserving solo or small firm lawyer has been disbarred because of Addams. Lawyers in larger firms serving clients with greater and easier access to legal counsel simply do not face these problems. It is lawyers who represent individuals – often of limited means – who have much greater difficulty setting up accounting and control practices that larger and more sophisticated firms easily can. Hiring a person who can handle trust accounting may, for someone like Respondent, be a significant cost. The rigid application of Addams in this context is not good. On balance, disbarment would be detrimental to the public, even when the risk created by Respondent’s trust accounting practices is considered. As the Court of Appeals noted in Hewett, quoting the Board report in that case, ‘“[i]n all events, it must be clear that giving effect to mitigating circumstances is consistent with protection of the public and preservation of public confidence in the legal profession.”’ 11 A.3d at 290 (alteration in original) (quoting Addams, 579 A.2d at 195). Here, protection of the public and preservation of the public’s confidence would, in our opinion, not be served by disbarring Respondent.

This is not to say that people of limited means are owed fewer duties to have their funds protected. Every client should have confidence that his or her funds are safe when in an attorney’s IOLTA account. We are emphatically not advocating that these attorneys receive no sanction. We merely believe that an inflexible rule that requires a sanction of disbarment in every instance of reckless misappropriation, without any room for mitigation, is excessive. And we further note that the respondent in Hewett, who acted in a misguided way to help his client, engaged in intentional misappropriation and yet managed to avoid disbarment.

If the application of Addams allowed greater consideration of mitigation in cases of reckless misappropriation – perhaps calibrated to the degree of recklessness to avoid particularly unsavory results in very close cases where a number of Anderson factors were not present – we believe that would result in more proportionate outcomes. An expansion of circumstances that could be considered in mitigation would better address situations like the instant case, in which disbarment may hurt the public more than protect it.

The statement would impose a three-year suspension with a year of probation after reinstatement.

I see a real possibility that this case and/or In re Harris Lindsey will be the end of Addams. 

Other than a 2016 informal admonition, the attorney has no prior discipline.

Addams has its genesis in a 1984 panel decision (Judges Newman. Nebeker and Terry) in In re Hines.

[T]he District of Columbia Court of Appeals has not yet ruled that misappropriation of the sort engaged in in this case will ordinarily result in disbarment. We think that such conduct should result in disbarment, but only after the bar has been put on notice by the District of Columbia Court of Appeals that misappropriation of client funds in cases involving more than simple negligence will ordinarily result in disbarment even though the proof does not rise to the level of willful corruption.

We agree with the BPR that "misappropriation of client funds in cases involving more than simple negligence [should] ordinarily result in disbarment," and we take this occasion to notify the bar that in future misappropriation cases disbarment will ordinarily be the sanction imposed by this court. We stress the word "ordinarily," for every case must turn on its own particular facts. There may be instances of misappropriation which, for any number of reasons, may call for a lesser sanction. Nevertheless, the bar should take notice that from this moment on, in disciplinary cases involving attorneys who misappropriate their clients' funds, disbarment will be the norm unless it appears that the misconduct resulted from nothing more than simple negligence.

The District of Columbia is one of the very few places that takes such a harsh approach to a lawyer's use of entrusted funds.

That undeniable fact either is a source of pride or consternation, depending on one's point of view.  ( Mike Frisch)

August 1, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Recorded Conversations Draw Suspension; Not Laughs

Dan Trevas reports on a discipline decision issued today by the Ohio Supreme Court

A Cleveland lawyer’s paralegal repeatedly recorded conversations of her boss berating her physical appearance and dress, and calling her a “ho,” “dirtbag,” and other obscenities. The lawyer’s explanation for his behavior was that he learned the lingo from rappers and hip-hop artists he represents as an entertainment lawyer, and he thought he was being funny.

The Ohio Supreme Court today suspended Howard E. Skolnick for one year with six months stayed. The Ohio Board of Professional Conduct had recommended a fully stayed suspension. In a per curiam opinion, the Court wrote that the “longstanding and pervasive nature of Skolnick’s degrading verbal attacks” make a suspension that removes him from practice for at least six months more appropriate.

Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Sharon L. Kennedy, Patrick F. Fischer, and R. Patrick DeWine joined the opinion. Justice Judith L. French dissented without a written opinion, and Justice Mary DeGenaro did not participate in the case.

Employee Endured Harassment While Job Seeking
Almost immediately after a woman — identified as L.D. in court documents — began working as a paralegal to Skolnick in August 2011, he began to criticize and verbally harass her. He called her “stupid, “dumb,” “fat,” and “whorey,” and made fun of her husband and mother. L.D. soon began looking for a new job, and told disciplinary investigators she could not afford to leave until she secured new employment. She responded to more than 100 job ads, but her search was unsuccessful. She stayed in Skolnick’s office until January 2014 when she found a new job.

L.D. began recording interactions with Skolnick, which revealed a number of statements he made disparaging L.D. and an instance where he sexually harassed her and another female employee. Skolnick also falsely told an African-American client that L.D. did not like black people, which upset L.D. and forced her to defend herself to the client.

Attorney’s Behavior Leads to Settlement
L.D. reported she suffered from anxiety, sleep disturbances, depression, and poor body image, even after she left the job. A clinical psychologist reported that her symptoms meet some of the criteria for a post-traumatic stress disorder diagnosis.

L.D. hired an attorney who sent Skolnick a letter accusing him of sexual harassment, discrimination, and creating a hostile work environment. He agreed to mediate the claim and settled her claims for $300,000 — the limit of his insurance coverage — without denying the allegations.

In 2017, the Office of the Disciplinary Counsel filed a complaint with the professional conduct board charging Skolnick with violating the rule that prohibits a lawyer from engaging in conduct that adversely reflects on his fitness to practice law.

Behavior Attributed to Entertainment Client Influence
Skolnick and the disciplinary counsel stipulated to the rule violation, and the board accepted the finding.

The board considered aggravating circumstances that could increase the punishment the board recommends for a lawyer and mitigating factors, which could lead to a suggested reduced penalty.

The parties stipulated that Skolnick engaged in a pattern of misconduct and caused harm to a vulnerable employee. It also found he did not have a disciplinary record, and he presented evidence of good character, cooperated with the disciplinary process, and expressed remorse to L.D. for his behavior.

Skolnick presented some evidence of diagnosis and treatment for a mental disorder, but no evidence that those conditions were related to his misconduct. He also testified that after the settlement, he hired a human-resource specialist to revise the firm’s employee handbook and provide sexual harassment training to the firm’s staff and himself.

Based on past cases of lawyers sanctioned for making sexually charged and abusive comments to staff members or clients, the board recommended a fully stayed six-month suspension.

Court’s View Differs from Board
The Court’s opinion stated that frequent tirades made to a vulnerable employee who needed her job to support her family makes this case different. The justices noted they heard Skolnick’s “outbursts” from the recordings and his explanation.

“The only explanation that Skolnick offered for his extreme, obnoxious, and humiliating attacks on L.D. was that he had learned the lingo from rappers and hip-hop artists while practicing entertainment law and that he believed he was using the phrases in more of a humorous than a harmful way,” the Court stated.

The justices wrote that Skolnick’s verbal attacks of L.D. called for a greater sanction than a fully stayed suspension. The Court wrote the suspension is necessary “not only to protect the public and the dignity of the legal system but also to deter future misconduct of this nature by Skolnick and other attorneys licensed to practice law in this state.”

2017-1735Disciplinary Counsel v. SkolnickSlip Opinion No. 2018-Ohio-2990.

(Mike Frisch)

August 1, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Brevity Not Soul Of Judicial Misconduct

The Maryland Court of Appeals has issued its opinion confirming that a district court judge did not commit judicial misconduct

Judge Reese has served as an Associate Judge of the District Court of Maryland, District Ten, which includes both Howard and Carroll counties, since 2006. On July 31, 2015, the Women’s Law Center of Maryland (“the Women’s Law Center”) filed a complaint against Judge Reese with the Maryland Commission on Judicial Disabilities (“the Commission”). The Women’s Law Center is a statewide non-profit organization that has operated the Protective Order Representation and Advocacy Project, a program providing direct legal services for victims of domestic violence, for over twenty years. The crux of the Women’s Law Center complaint involves Judge Reese’s conduct overseeing protective and peace orders, and cites three cases for reference: Lauren M. Lewis v. Richelieu W. James (Case No. 1002SP004962014), Patricia Stein v. Benton Stephen Lecuyer (Case No.1002SP001402015), and Biden v. Kramer (Case No. 1002SP005512014). In addition to the Women’s Law Center complaint, two of the individuals referenced therein, Lauren M. Lewis and Patricia Stein, also filed complaints against Judge Reese. Although the complete transcripts for the Lewis and Stein matters were accepted into evidence as joint exhibits before the Commission, the Lewis matter was dismissed by the Commission for insufficient evidence.

The court found no sanctionable conduct

Although the Commission and the Women’s Law Center have taken the position that Judge Reese committed sanctionable conduct because she did not, in their estimation, undertake a more thorough approach in developing the factual scenario in the peace order matter, we conclude otherwise. Judge Reese’s ruling reflects that she appreciated the factual circumstances that were presented to her and applied the law to the facts in a reasonable fashion, thereby complying with Rule 18-101.1. Further, Judge Reese also complied with Rule 18-102.5(a) as reflected by her performance of her judicial duties that belies any rational finding of a lack of competence or diligence on her part.

A judge must be able to exercise the appropriate discretion that reflects an appreciation of the facts presented, an understanding of the law that applies, and a reasonable conclusion based upon an analysis of the law’s application to those facts. Judge Reese carefully considered the testimony of seventeen year old Ms. Hiltz, and her grandmother, Ms. Stein, both of which provided the factual predicate for the petition for a peace order against Mr. Lecuyer, the ex-boyfriend of Ms. Hiltz. After considering the testimony and evidence presented, and ascertaining through questioning that similar conduct had not occurred previously, Judge Reese found insufficient evidence that the abuse was likely to occur in the future, and denied the petition. Reasonable minds could differ on the applicable law, such error does not constitute sanctionable conduct. whether the petition for a peace order should have been granted. However, if Judge Reese erred in her ultimate decision, appreciation of the factual circumstances and the applicable law, such error does not constitute sanctionable conduct. 

Conclusion

A proper exercise of discretion involves considering the particular circumstances and exercising sound judgment. 101 Geneva LLC v. Wynn, 435 Md. 233, 241, 77 A.3d 1064, 1069 (2013). Although reasonable minds could differ regarding the merits of Judge Reese’s decisions in the cases before her, those decisions were rooted in consideration of the law and the factual circumstances. In this proceeding, we examine whether Judge Reese’s actions constituted sanctionable conduct under our rules and the circumstances presented. Our review of the record persuades us that they did not.

Judge Watts concurred

the Commission found that Judge Reese violated Maryland Rules 18-101 and 18-102.5(a), because, during a peace order hearing, Judge Reese asked three questions of the petitioner; the interaction took nineteen seconds; and the entire peace order hearing occurred in three minutes. This is the sole rationale given by the Commission in its findings for its decision. Against this backdrop, I agree with the Majority that Judge Reese’s conduct did not rise to the level of violating Maryland Rules 18-101.1 and 18- 102.5(a)...

To find that Judge Reese’s conduct violated Maryland Rule 18-102.5(a) based only on the brevity of the hearing would intrude on a judge’s ability to determine when or at what point there is available sufficient information for the judge to rule on a specific issue.  Neither the Commission nor this Court should dictate that a judge must ask a requisite number of questions or spend a designated period of time in evaluating motions or objections, or ruling on any matter before the judge. It is inherent in the judicial decisionmaking process that a judge must have the freedom to determine when the judge has sufficient information to rule—without the judge being subject to a disciplinary proceeding alleging a lack of diligence or competence. To find sanctionable conduct in this case would result in any judge, who asked few questions or perhaps even issued an incomplete ruling, being subject to the disciplinary process for an alleged lack of diligence or competence.

Judge Watts would further find error in the exclusion of the proposed expert testimony of three judges, an issue the court did not decide in light of its ultimate conclusion. (Mike Frisch)

August 1, 2018 in Judicial Ethics and the Courts | Permalink | Comments (0)

79 Separate Complaints

The Tennessee Supreme Court has disbarred an attorney. 

Tennessean reports

A Sumner County lawyer has been disbarred by the Tennessee Supreme Court after a disciplinary panel found he failed to provide the services for which he was paid by clients.

Andy Lamar Allman's disbarment became effective Tuesday, and the court ordered him to pay $320,050 in restitution, along with the costs of the disciplinary proceeding.

According to the court's Board of Professional Responsibility, 79 separate complaints had been filed by clients against Allman.

More: Former Hendersonville attorney Andy Allman arrested on theft charges

The hearing panel found that Allman intentionally failed to provide the professional services for which he was retained, misappropriated unearned retainer fees provided by those clients and misled clients on the status of their cases, the Board of Professional Responsibility reported.

In August, Allman was indicted on 17 counts of theft of property following an investigation by the Tennessee Bureau of Investigation that began in December 2016.

Allman had been suspended from practicing law in September 2016.

(Mike Frisch)

August 1, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Tuesday, July 31, 2018

Whose My Lawyer?

A husband and wife practicing together were together suspended by the North Dakota Supreme Court.

From the order suspending the Husband for 60 days

Bruhn maintained a law practice in Dickinson with Marla L. Bruhn. The Bruhns would frequently appear on behalf of each other without informing the client or obtaining the client's consent. The Bruhns were often co-counsel representing clients. Related to these disciplinary matters, Bruhn represented 14 clients in criminal matters and 1 client in a civil matter.

Bruhn failed to adequately communicate with his clients and provided some with inaccurate information. He failed to notify clients of hearings, failed to appear for hearings, and failed to adequately prepare. Due to his failure to adequately communicate with his clients, some failed to appear in court. He made false statements to the district court. He or Marla L. Bruhn were late for hearings. He also failed to respond to a motion in the civil matter.

... Considering all relevant factors, the hearing panel concluded a 60-day suspension followed by one-year of probation is an appropriate sanction. It also recommended Bruhn pay the costs and expenses of these disciplinary proceedings in the amount of $250.

As to the wife

 Bruhn maintained a law practice in Dickinson with John D. Bruhn. The Bruhns would frequently appear on behalf of each other without informing the client or obtaining the client's consent. The Bruhns were also often co-counsel representing clients. Related to these disciplinary matters, Bruhn represented 7 clients in criminal matters and 1 client in a juvenile matter.

 Bruhn failed to adequately communicate with her clients and provided some with inaccurate information. She failed to notify clients of hearings, failed to appear for hearings, and failed to adequately prepare. She made false statements to the district court. She or John Bruhn were late for hearings.

Both were suspended for 60 days followed by one year of probation. (Mike Frisch)

July 31, 2018 in Bar Discipline & Process | Permalink | Comments (0)

No Suspension For Public Defender

The California State Bar Court Review Department ordered a public reproval with conditions rather than the suspension proposed by the hearing judge

Delia Marie Metoyer, a veteran public defender, answered ready for trial in a felony matter. During pretrial discussions, Metoyer requested time off the next day for a medical appointment. When the judge initially denied her request, Metoyer became emotionally distressed. After receiving permission to use the restroom, she did not return to the courtroom. Instead, she sought assistance from her supervisor, who removed her from the case and reassigned the matter to another public defender. The judge later sanctioned Metoyer $1,500 for failure to obey a court order and for client abandonment, which the Court of Appeal affirmed. Metoyer paid the sanctions, but failed to report them to the State Bar.

In this, her first disciplinary proceeding, Metoyer stipulated that she failed to report judicial sanctions. The hearing judge further found her culpable of violating a court order and improperly withdrawing from representation; he recommended a 30-day actual suspension.

Metoyer appeals. She challenges the hearing judge’s culpability findings, although she admits she could have handled the situation better. She argues that the disciplinary recommendation is excessive, and seeks an admonition or reproval for her stipulated misconduct.

The Office of Chief Trial Counsel of the State Bar (OCTC) did not cross-appeal and requests that we affirm the disciplinary recommendation.

After independently reviewing the record (Cal. Rules of Court, rule 9.12), and giving due weight to our disciplinary law, the findings of the courts of record, and the hearing judge, we find Metoyer culpable of violating a court order, but not for improperly withdrawing from employment. We find that her misconduct, precipitated by an unexpected and severe emotional episode, warrants a departure from the presumed sanction of actual suspension given Metoyer’s dedicated, lengthy, and, thus far, blemish-free career with the public defender’s office and the lack of client harm. We find that a public reproval with conditions, rather than the 30-day actual suspension recommended by the hearing judge, is appropriate discipline that protects the public, the profession, and the courts.

The incident occurred in a felony child molestation case

At 9:00 a.m., Judge Eleanor Hunter called the matter for trial. She invited Metoyer and the prosecutor into chambers for an informal, pretrial discussion about witnesses, motions, and trial estimates. When the approximately 20- to 30-minute conversation concluded, Metoyer informed the judge that she had a scheduled MRI the next day for a back injury she had sustained at work a week earlier. Since Judge Hunter saw no signs of physical distress and Metoyer had not previously mentioned this appointment, the judge told her to reschedule the MRI. On review, Metoyer acknowledges she had no physical discomfort that day, but emphasizes that she was anxious about the possibility of an unexpected recurrence of her back pain. Metoyer became emotionally distraught about delaying her scheduled MRI appointment as she had a hectic work schedule, including an impending murder trial. After Judge Hunter expressed her intent to proceed as scheduled, Metoyer began to cry. She told the judge that she had children to provide for and could not understand why her job was being placed above her health.

Judge Hunter directed the parties to return to the courtroom for formal discussions on the record. Metoyer then asked to use the back hallway restroom, which the judge permitted. While there, she called her supervisor, Rhonda May-Rucker. Metoyer did not tell Rucker where she was, other than to say she was in a restroom. Rucker had no idea Metoyer was still in the judge’s chambers area and believed she was calling from the public restroom outside of Metoyer’s office—located in the same building as the court, but on another floor. According to Rucker, Metoyer was upset, nearly incomprehensible, and said something to the effect, “They’re out to get me.” On this basis, and coupled with the fact that Metoyer sounded like she was crying, Rucker advised her to report to Rucker’s office.

There were discussions between the judge and the supervisor but the attorney did not return to court

As a result of Metoyer’s actions, Judge Hunter excused the prospective jury panel, and set an in-camera hearing for that afternoon. During the hearing, the judge indicated she would be initiating a sanctions proceeding against Metoyer, which she did in a written minute order entered later that day. Metoyer and her counsel were present at the sanctions hearing held on April 2, 2015. Metoyer did not call any witnesses or introduce any evidence other than her own declaration, wherein she denied any misconduct. Judge Hunter invited an apology from Metoyer at least twice during the hearing, but Metoyer declined to offer one, relying on her attorney’s instruction not to say anything.

The Review Board weighed mitigating and aggravating factors

We find that mitigation should be provided for Metoyer’s severe and unexpected emotional episode on January 15, 2015. Standard 1.6(d) provides that mitigation may be afforded for extreme emotional difficulties if (1) the attorney suffered from them at the time of the misconduct, (2) they are established by expert testimony as being directly responsible for the misconduct, and (3) they no longer pose a risk of future misconduct. The Stipulation, along with Metoyer’s and Rucker’s testimony, establish that Metoyer became emotionally distraught to the  extent that she did not return to the courtroom for her client’s trial, thus violating the order from the supervising judge in Department D.

While Metoyer did not provide expert testimony that her emotional state was directly responsible for her misconduct, she did convincingly testify that it was. (In the Matter of Ward (Review Dept. 1992) 2 Cal. State Bar Ct. Rptr. 47, 59–60 [“some mitigating weight” assigned to personal stress factors established by lay testimony].) Finally, as we have considered her emotional distress to be an isolated occurrence, we find it unlikely to recur and cause Metoyer to commit future misconduct. Thus, we find mitigation under this circumstance, but assign only moderate weight.

No suspension

We find it appropriate that a more lenient sanction be imposed than the one recommended by the hearing judge and called for under standard 2.12(a). First, we have found less culpability than the judge did. Second, we have also found less aggravation and more mitigation than the judge did, and Metoyer’s mitigation is significant overall when balanced with her aggravation. She is a veteran public defender, with 15 years of dedicated public service and no previous discipline, who had one emotional episode that delayed court proceedings. She has engaged in community and volunteer work for well over a decade. Finally, her witnesses testified to her extraordinarily good character and exceptional advocacy and lawyering skills, and she cooperated during these proceedings.

(Mike Frisch)

July 31, 2018 in Bar Discipline & Process | Permalink | Comments (0)

No Misconduct In Handling Of Armenian Genocide Settlement Proceeds

An unpublished decision of the California State Bar Court dismisses all charges

In this contested proceeding, Rita Mahdessian was charged, inter alia, with misappropriating in excess of $385,000 in cy près settlement funds awarded to a California nonprofit corporation established for the education and remembrance of the Armenian Genocide of 1915–1918, and with misleading the district court judge who approved the award. The hearing judge dismissed the charges of misleading the judge, but found that Mahdessian committed acts of moral turpitude by both (1) misappropriating $30,000 from the nonprofit, and (2) engaging in tax fraud by falsely reporting this and another $26,000 in taxable payouts to her children and their law school as donations or loan repayments, charges that were not contained in the Notice of Disciplinary Charges (NDC). Considering Mahdessian’s three prior disciplinary suspensions, the hearing judge recommended disbarment.

Both Mahdessian and the Office of Chief Trial Counsel of the State Bar (OCTC) appeal. OCTC supports the hearing judge’s disciplinary recommendation, does not challenge the considerable narrowing of the misappropriation charge, and requests review only as to the limited issue of whether Mahdessian engaged in additional acts of moral turpitude, by withholding material information from the district court judge.

Mahdessian disputes culpability and requests a full dismissal. Her argument is twofold: (1) OCTC did not charge her with either tax-related transgressions or breach of fiduciary duties; and (2) the evidence falls short of establishing the actual charged allegations of misappropriation and misrepresentation because (a) the nonprofit board approved all at-issue fund transactions, and (b) Mahdessian did not file any pleadings, make any court appearances, or have any proven duty to provide information to the district court judge.

Upon our independent review (Cal. Rules of Court, rule 9.12), we too find fatal deficiencies in the notice and evidentiary record in this case. Conduct in the nature of tax fraud
was not alleged in the NDC against Mahdessian. Moreover, we find no clear and convincing evidence to support culpability as to the charged misconduct. The evidence fails to establish that Mahdessian made any unauthorized fund withdrawals from the nonprofit or that she was ever involved in the district court litigation such that she had an obligation to disclose information. Accordingly, we dismiss this proceeding with prejudice.

On the merits of the charged misconduct

we do not find clear and convincing evidence that Mahdessian misappropriated $30,000 from CAR. CAR, as a nonprofit, is not the subject of these disciplinary proceedings and we have no basis to question the financial decisions of CAR or its board, which approved the transaction. Under the circumstances, and the uncontroverted evidence that CAR knowingly approved the fund transfer, we are unable to find that any unauthorized transaction occurred.

The Los Angeles Times covered the disbarment recommendation.

According to bar documents, Mahdessian and Yeghiayan misrepresented a pair of nonprofit groups they created to appropriate the settlement money.

The money was the result of a pair of class-action lawsuits in 2005 against French insurance company AXA and the New York Life Insurance Co. over survivor benefits for descendants of victims of the Armenian Genocide. The pair were co-counsels on the case against AXA.

The resulting $20-million settlement was split into two parts; $17.5 million was paid out to members of the class-action suit, while $3 million was set aside for an Unclaimed Benefits Fund, to which nine beneficiaries were named, according to court documents.

Any money left over after paying the main settlement and administrative costs would be transferred into the Unclaimed Benefits Fund, which could then be distributed to charitable nonprofit organizations recommended by the suit's lawyers — Mahdessian and Yeghiayan.

The organizations were to "advance the charitable interests of the Armenian community," according to documents from the state bar.

State bar officials said one of the nonprofits, the Center for Armenian Remembrance, was based out of the couple's Glendale law firm and created three months after the settlement's approval. A second nonprofit, the Conservatoire de la Memoire Armenienne, was also said to be based out of their office.

According to the state bar, Mahdessian and Yeghiayan requested more than $300,000 for the two nonprofits because of their supposed charitable status. However, according to court records, they were unable to provide any record of charitable activity and failed to disclose their ties to the two organizations.

The state bar said the couple used the funds for personal expenses such as issuing checks to their own law firm and paying law school tuition for their two children.

(Mike Frisch)

July 31, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Monday, July 30, 2018

A Good Day To Be A Utah Attorney

The Utah Supreme Court took away significant damages awarded to a legal malpractice plaintiff

Erik Highberg, a personal injury attorney for Gregory & Swapp, PLLC, failed to bring a claim against two truck drivers who severely injured Mr. Highberg’s client, Jodi Kranendonk, before the statute of limitations ran on Ms. Kranendonk’s claim. Mr. Highberg then failed to disclose to Ms. Kranendonk for ten months the fact that he missed the statute of limitations. During that time, he sought other legal avenues to correct his mistake. Ms. Kranendonk ultimately sued Mr. Highberg and Gregory & Swapp (collectively, the Swapp Defendants) for legal malpractice, breach of contract, breach of fiduciary duty, and negligent hiring, training, and supervision.

At trial, Mr. Highberg testified that he withheld information from Ms. Kranendonk because he wanted to protect her from stress and worry. In response to this testimony, she sought to admit two statements in which he had written that she was becoming “a pain [in] the ass” and was “a moron.” The district court refused, under rule 403 of the Utah Rules of Evidence, to admit these statements and the trial went forward.

The four claims ultimately went to a jury, which found in favor of Ms. Kranendonk on each. The jury first awarded her $750,000, the amount the jurors believed she would have received if Mr. Highberg had timely brought her personal injury claim against the truck drivers. The jury also awarded her $2.75 million for non-economic damages, i.e., emotional distress she sustained as the result of Mr. Highberg’s malpractice in this case. This second award did not relate in any way to the emotional distress she sustained from the original personal injury. The jury did not award punitive damages.

After the jury’s decision, Ms. Kranendonk moved for attorney fees and litigation expenses on the ground that the Swapp Defendants had breached their fiduciary duties. The district court awarded her $1,166,666.67 in attorney fees—the amount she owed under her contingency fee agreement—but did not award her litigation expenses.

The court vacated both the non-economic damages and attorney fees.

Because the nature and language of the contract in this case do not show that emotional distress damages were explicitly contemplated by the parties, the district court erred in upholding the $2.75 million jury award for non-economic damages under a breach of contract theory.

...we hold that the jury had no evidence upon which to base its verdict that Ms. Kranendonk suffered emotional distress damages as a result of Mr. Highberg’s intentional concealment and, therefore, the district court erred in dismissing the Swapp Defendants’ motion for JNOV under a breach of fiduciary duty theory. And because the $2.75 million jury award for non-economic damages is not supported under either a breach of contract or breach of fiduciary claim in this case, we vacate it.

...We also vacate the district court’s award of $1.666,667.67 in attorney fees because Ms. Kranendonk’s breach of fiduciary duty claim—the only claim that could support this award—failed. And we hold that her claim on cross-appeal for litigation expenses also fails for the same reason.

The court rejected her claims based on exclusion of the "pain in the ass/moron" evidence

we decline to reach Ms. Kranendonk’s challenge of the district court’s decision to exclude Mr. Highberg’s two statements. Ms. Kranendonk seeks the admission of these statements in order to support her prayer for punitive damages. But because her breach of fiduciary duty claim fails, punitive damages cannot be awarded in this case regardless of our decision on this issue. So the issue is moot.

(Mike Frisch)

July 30, 2018 in Clients | Permalink | Comments (0)

Misappropriation Rule Not Applied To Litigation Finance Agreement

The District of Columbia Board on Professional Responsibility recommends that an attorney be disbarred for reckless misappropriation of funds due to a medical provider.

The board also affirmed a finding of a non-waivable conflict of interest in an unrelated (romance gone sour) matter. He represented his former girlfriend in litigation where their interests were directly adverse.

In a charge brought based on his admitted failure to repay a third-party litigation funder named Lawsuit Financial Corporation ("LFC")

we discuss – but do not adopt – the Hearing Committee’s conclusion that Rule 1.15 should apply to an alternative litigation-financing arrangement, in which an attorney undertakes a non-recourse obligation to pay a third-party lender a percentage of the fees that he recovers in a contingent fee representation. The substantive law relating to such arrangements is undeveloped, and the application of disciplinary misappropriation principles to such commercial arrangements raises weighty policy questions. Because we recommend Respondent’s disbarment on unrelated grounds, those complicated issues need not be resolved in this case. We therefore decline to find violations of Rules 1.15(a), (c), and (d) in the LFC matter

But the board had views

Here, as the Hearing Committee recognized, Respondent received the funds claimed by LFC in connection with a representation. LFC had purchased an interest in Respondent’s contingent fee recovery in cases he was handling in his capacity as an attorney admitted in the District of Columbia. The gross settlement amount was paid, jointly to Respondent and his client, in connection with a personal injury action  pending in a District of Columbia court. When Respondent received the settlement check, he deposited the entire amount in his trust account. A portion of those funds was client money, and LFC had a just claim to part of the amount due Respondent as attorney’s fees. Although Respondent disputed the amount of LFC’s claim, he concededly owed it at least $32,000 under the Agreements, and he obstinately failed to maintain that amount in his trust account. That failure, as explained by the Hearing Committee, violated the literal mandate of Rule 1.15 and, without more, would seem to constitute an intentional misappropriation requiring Respondent’s disbarment under the rubric of Addams. HC Rpt. at 78-80.

My view: If one violates the "literal mandate" of any rule, one has violated that rule. Wishing otherwise for policy reasons (as set forth below) does not alter or amend the ethical obligation.

We do not believe, however, that the analysis can or should end there. Respondent concedes that he failed to escrow the funds owed to LFC, but contends that his business dispute with a commercial litigation-finance company was beyond the reach of Rule 1.15. See R. Br. at 8-13. His argument is far from fanciful. Lawyers and law firms regularly engage in commercial transactions and, when they do, are subject to the ordinary rules of the marketplace. A lawyer who is claimed to be in default on a business loan need not escrow the amount in dispute, on pain of disbarment. The Agreements at issue in this case are commercial in nature. They did not affect any client’s financial interests, but instead were a small sample of a commercial litigation funding industry that has drawn sophisticated lenders distributing billions of dollars to bankroll a diverse range of lawsuits.

Application of Rule 1.15 to litigation funding arrangements could affect many of those transactions, possibly disrupting them in unanticipated ways. We are unaware of any judicial or disciplinary decisions applying Rule 1.15 (or its equivalents) to such arrangements, and the parties have candidly conceded they are aware of none.

The Hearing Committee recognized as much, and attempted to circumscribe its application of the Rule to the specific circumstances presented here, and not to “every commercial debt dispute by a lawyer.” HC Rpt. at 77. We question whether the Hearing Committee’s conclusion was correct, for three fundamental reasons.

First, LFC – the “third person” with a just claim seemingly contemplated by Rule 1.15 – was asserting its claim directly against Respondent, not against or through his client. The client’s financial interests were not at risk in the Agreements. Under those circumstances, the application of Rule 1.15 becomes less clear. The Court’s Rule 1.15 misappropriation decisions have consistently emphasized the fundamental value underlying the Rule: protection of the client’s interest and th eattendant confidence of the public in the legal profession...

Second, the pertinence of misappropriation principles to the Agreements in this case seems less certain because the funds provided by LFC were not “entrusted” by LFC to Respondent as a fiduciary; rather, those funds were sent to him in his role akin to that of a commercial borrower...

Finally, there are policy concerns that call into question the reasonableness of applying the concept of misappropriation to litigation funding arrangements. The Rules of Professional Conduct “are rules of reason. They should be interpreted with reference to the purposes of legal representation and of the law itself. . . .”

...Layering the misappropriation concept onto the commercial litigation funding marketplace would seem to expand the application of Rule 1.15 well beyond its fundamental purpose, the protection of clients’ interests.

In that regard, we cannot blind ourselves to the sanction applicable were we to find misappropriation here. In Addams and its progeny, the Court emphasized that severe sanctions are imposed in Rule 1.15 misappropriation cases, because misappropriation ‘“strike[s] at the core of the attorney-client relationship’ by undermining the public’s faith that attorneys will fulfill their duties as fiduciaries in handling funds entrusted to them by their clients.” Pierson, 690 A.2d at 948 (quoting Addams, 579 A.2d at 198-99); see also Dulansey, 606 A.2d at 190. Whether the stark threat of disbarment should hover over attorneys who enter into commercial litigation funding agreements where, as here, no client funds are at risk is also a serious question.

All of these difficult and subtle issues present themselves in the context of an industry that is itself in flux and of concern to courts, legislatures, and disciplinary authorities. Moreover, although ethics opinions in some states have approved such arrangements under certain conditions (see, e.g., New York, Florida, Nevada, New Jersey, South Carolina, and North Carolina), others have prohibited them (see, e.g., Maine, Utah, Michigan, Ohio, and Virginia). Neither the substantive legality nor the ethical propriety of such arrangements has yet been addressed in the District of Columbia.

For all of these reasons, we conclude that the propriety of applying Rule 1.15 to the litigation funding agreements in this case – which purport to be governed by Utah law – would be imprudent, since the resolution of that thorny question would not affect our recommended sanction. See, e.g., Travers, 764 A.2d at 250 (leaving resolution of an issue for a future case where case law “sparse and inconclusive”). Respondent committed reckless misappropriation in the Mack matter and, for that reason, must be disbarred.

Chair Robert Bernius authored In re Jonathan Dailey, which may be found at this link.

There are no concurring or dissenting opinions.

The hearing committee had reached a contrary conclusion, noting (aptly, in my view) that the litigation funder had a specific protected interest in the proceeds at issue

the Hearing Committee concludes that funds in Respondent's possession from his Hedgepeth fee, the rightful ownership of which was being challenged by LFC, should be treated no differently from a client's funds or a client's creditor's funds in terms of Respondent's obligation to segregate those funds in a trust account until the dispute with LFC was resolved.

(Mike Frisch)

July 30, 2018 in Bar Discipline & Process | Permalink | Comments (0)

The Parking Ticket Guys

The Law Society of Upper Canada sanctioned a suspended paralegal

 As jointly agreed to by the parties, we ordered a penalty of 19 months’ suspension at the time of the hearing. By then, the Paralegal had already served all but three days of the suspension.

We ordered the Paralegal to refund to all clients listed in the Law Society’s Schedule A of the RTA the traffic ticket penalties paid in the amounts stated.

 We ordered that the Paralegal pay costs of $30,000.

The story

 the Paralegal obtained his licence to provide legal services in Ontario in November 2013. His licence had been suspended on an interlocutory basis since October 19, 2016.

The Paralegal owned a business called Parking Ticket Guys Inc. (“PTG”). He owned and operated a website called parkingticketguys.com, which advertised that the website-based services provided would save citizens of Toronto 50% of the cost of a parking ticket.

On the website, the “Guys” were described as paralegals licensed by the Law Society. The website promised that the Guys would “take care” of a parking ticket for half its value. The Frequently Asked Questions page of the website indicated that if the Guys lost in court, they, and not the client, would pay the full fine. The client would pay nothing extra, “guaranteed.”

The website advised clients to disregard any Notice of Trial that the City of Toronto sent them, and not to attend court, because the Guys would do it.

Clients would access the website and pay the required fee online – half the ticket value plus HST. The website then generated a receipt for the client. However, the clients never received an account for legal services rendered.

A notice on the website regarding Terms & Conditions advised that PTG did not offer legal advice.

The Law Society received its first complaint about the Paralegal’s services regarding a City of Toronto parking ticket in February 2014.

The Society received 17 more complaints between June 2015 and February 2016. After February 2016, the Society received approximately 40 further similar complaints. The volume of the complaints and their similar nature resulted in the Society investigating only 38 of the 57 total complaints.

The Law Society investigated the complaints of 38 clients, who complained that the Paralegal had failed to honour the guarantee made on the PTG website. These complaints were filed between February 2014 and July 2016.

The clients had each paid one-half of the original fine charged and expected the ticket to be taken care of. PTG completely failed to honour its guarantee in 30 of the 38 cases and partially honoured the guarantee in one case. It reimbursed clients in six cases, after the clients filed complaints to the Law Society. In one other case, the client was reimbursed after writing a negative report on Twitter.

One of the cases dealt with a red-light ticket, in addition to a parking ticket, and the red-light matter was not dealt with as part of the standard web-based process. In one case, PTG asked a client to attend and sign a blank affidavit to appeal a conviction, which the client refused to do.

The clients all believed that PTG was representing them and that PTG and the Paralegal were one and the same. The clients expected the Guys to handle or “deal with” the parking ticket as advertised on the web pages.

In some cases, clients received a Notice of Trial with a trial date from the City of Toronto, which they forwarded to PTG. They learned later that they had been convicted and that a fine was due or overdue, by way of a Notice of Conviction and Fine. In some cases, they were unable to renew licence plates because of unpaid fines. In one case, a client learned of the conviction and overdue fine when his car was towed.

(Mike Frisch)

July 30, 2018 in Bar Discipline & Process | Permalink | Comments (0)

No Standing To Appeal Dismissed Bar Complaints

The Connecticut Supreme Court affirmed the dismissal of a mandamus action brought to compel prosecution of bar complaints

On appeal, the plaintiffs claim that they were statutorily and classically aggrieved by certain decisions of those local panels dismissing their grievance complaints against five of those attorneys, and by certain other actions of the Statewide Grievance Committee with respect to the proceedings against the other two. We disagree and, accordingly, affirm the judgment of the trial court dismissing the present action for lack of standing.

The plaintiffs retained one law firm to pursue a medical malpractice case and a second firm to assist with taxes and investment of the proceeds.

In January, 2012, after a jury had awarded the plaintiffs a verdict of $58.6 million, the plaintiffs ultimately settled their medical malpractice case for $25 million. In February, 2012, while still represented by the Koskoff firm, the plaintiffs retained the law firm of Day Pitney, LLP (Day Pitney), to advise them on numerous financial and tax issues related to the settlement.

They complained about both sets of attorneys

In February, 2015, the plaintiffs filed grievance complaints against five attorneys from the Koskoff firm and two attorneys from Day Pitney, alleging that those attorneys had committed numerous violations of the Rules of Professional Conduct while representing them, in particular the misappropriation of client funds.

 The bar complaints against five attorneys were dismissed; two were reprimanded.

Notably

Throughout these proceedings, the Statewide Grievance Committee denied the plaintiffs’ attempts to supplement the record, and the chief disciplinary counsel refused their requests to submit certain evidence unfavorable to the Koskoff firm attorneys.

Here the court affirms the trial court's conclusion that the plaintiffs lacked standing to bring this mandamus action.

The trial court

The court is keenly aware of the plaintiffs’ frustration with and disappointment in the handling, if not the outcome, of the grievance proceedings. The facts and circumstances outlined in the complaint, if true, are deplorable. But these proceedings are not marked by ‘‘egregious and otherwise irreparable violations of state and federal constitutional guarantees.’’ Mere disagreement with how the grievance process has been handled, standing alone, does not provide appropriate justification for this court to supplant or usurp the established disciplinary process.

CTPost reported on the disposition of the bar grievances.

If there is a credible suggestion that well-connected attorneys got kid glove treatment at the hands of the Bar, it is unfortunate that standing rules prevent the court from addressing the well-pleaded concerns.

As noted in the Preamble to the ABA Model Rules

 The legal profession's relative autonomy carries with it special responsibilities of self-government. The profession has a responsibility to assure that its regulations are conceived in the public interest and not in furtherance of parochial or self-interested concerns of the bar.

The time for a serious conversation about attorney discipline with an eye toward major systemic change is long overdue. A significant problem with having that conversation is the high level of lawyer satisfaction with the status quo. (Mike Frisch)

July 30, 2018 in Bar Discipline & Process | Permalink | Comments (0)

No Violation In Dealings With Unrepresented Spouse

A justice of the Maine Supreme Judicial Court vacated a Rule 4.3 violation finding in an attorney's dealings with an unrepresented client's spouse

In domestic relations matters, many parties are unrepresented. And in many cases, as in this case, one party is represented and the other party may not be represented. In such circumstances, experience indicates that the attorney for the represented party often speaks with the unrepresented party about the substance of the case with an eye towards resolution of the matter without a full trial. There is no ethical violation in such contact. Such contact is encouraged by court processes in domestic relations matters with the hope of avoiding trauma to children by promoting resolution of cases by agreement without contested hearings. When, as here, agreements are reached in preliminary proceedings, magistrates are authorized to "enter agreements on the record at the conference." M.R. Civ. P. 110A[bJ[1].

Such discussions and negotiations occur in all types of cases, including cases where determination of child support may be an issue. Sometimes, there may even be a partial unity of interest between the represented party and the unrepresented party. The unrepresented party may be desirous of having sole parental rights to the child, with the represented party having no participation in the unrepresented party's life or the child's life. 0r, as here, the unrepresented party with the child may have no personal interest in collecting child support benefits from the represented party because the child support benefits would actually be paid to the Department. In such circumstances, it is neither unusual nor unethical for the attorney of the represented party to draft documents for the parties to sign to memorialize and implement agreements the parties have reached with regard to parental rights and responsibilities and child support.

...in the circumstances, the father's attorney's communications with the mother, his development of documents to implement their settlement agreement, and his drafting of a private termination of parental rights petition for the mother to file with the father's agreement, did not constitute a violation of Rule 4.3 or any other rule of ethics.

Any opinion suggesting that contact and drafting agreements between an attorney representing a party in a domestic relations matter and an unrepresented party in the same matter is an ethical violation could seriously complicate the processing of domestic relations cases. Such contacts must occur with the hope that, as occurred here, a domestic relations case can be resolved by agreements negotiated between the parties without the delay, cost and trauma to the child that result from fully contested proceedings. It must be noted also, that, beyond the contacts between the father's attorney and the mother, extra protection was provided by the fact that the trial court made an independent inquiry of the mother and the father about their understanding of the settlement agreement, and its implications and only indicated the court's approval of the represented terms of the settlement agreement after the court made its own inquiry of the parties.

The single justice affirmed a Rule 3.3(a) (1)  violation and imposed a public reprimand without probation (which the Board of Bar Overseers had ordered). (Mike Frisch)

July 30, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Sunday, July 29, 2018

Word Of Mouth

Disciplinary charges have been filed  by the Illinois Administrator for an associate attorney's thefts from her law firm.

On April 21, 2017, Respondent entered into a plea agreement and pled guilty to the first count of the indictment, which charged her with the theft of over $10,000 and less than $100,000 of the "property of Youman, being trust and partnership funds" in violation of Chapter 720, Section 5/16-1(a)(1)(A) of the Illinois Compiled Statutes. Pursuant to the plea agreement, the remaining counts against Respondent were dismissed on the motion of the McHenry County State’s Attorney’s Office. The Honorable Sharon Prather entered a judgment of conviction and sentenced Respondent to 36 months conditional discharge. The conviction and sentence required Respondent to report to the Probation Division and comply with requirements of the Probation Division. Additionally, Respondent was ordered to pay $11,229.50 in restitution to "Rupp & Youman trust account" as well as a $500 fine and court costs. The restitution was to be paid by April 17, 2020.

The Chicago Tribune reported on the criminal charges

A former McHenry County assistant state's attorney faced a judge Tuesday morning on charges she stole thousands of dollars from an ex-boss.

Robin L. Perry, 51, of Spring Grove, is accused of felony theft of funds, according to court records. She was arraigned Tuesday on an indictment alleging that, on multiple occasions between 2012 and 2015, she "exerted unauthorized control" over accounts held by Guy Youman, a civil attorney in McHenry who employed Perry for less than a year.

Perry pleaded not guilty and was appointed a public defender.

Youman, reached by phone, said he "discovered things" about a year ago that led to the investigation. He emphasized the money allegedly stolen was from his — not his clients' — accounts.

Prosecutors have not outlined how much money Perry is accused of stealing. Two counts against her allege she stole $10,000 to $100,000; four other counts are for alleged thefts of $500 to $10,000, records show.

Perry was taken into custody Friday and was released on a $5,000 bond Saturday, according to officials and records.

Perry worked as an assistant state's attorney in the civil division in McHenry County in the 1990s, officials said.

The bar charges that

Between November 2014 and March 2015, without the knowledge or authorization of any representative of Rupp & Youman, Respondent drew...nine checks on a Rupp & Youman account, totaling $21,742. Respondent made each check payable to herself or to her husband, Sam Kentopian ("Kentopian") and endorsed and deposited each of the nine checks in a personal account...

(Mike Frisch)

July 29, 2018 in Bar Discipline & Process | Permalink | Comments (0)

Saturday, July 28, 2018

Stayed Suspension For Failure To Pay Attorney's Fees Of Ex-Spouse

An agreed sanction approved by the Colorado Presiding Disciplinary Judge

The Presiding Disciplinary Judge approved the parties’ conditional admission of misconduct and suspended David Paul Michel (attorney registration number 37674) for ninety days, all stayed upon successful completion of a one-year period of probation, effective July 9, 2018.

In Michel’s own divorce case, the Jefferson County District Court awarded Michel’s ex-wife $15,000.00 in attorney’s fees in April 2016. Michel was given six months to pay the award, but he failed to do so. On June 21, 2018—one day before a scheduled disciplinary hearing premised on his failure to follow a court order—Michel paid the award. Through this conduct, Michel violated Colo. RPC 3.4(c) (a lawyer shall not knowingly disobey an obligation under the rules of a tribunal).

(Mike Frisch)

July 28, 2018 | Permalink | Comments (0)

Friday, July 27, 2018

The Enumerated Facts

An appeal has been dismissed by the Tribunal Appeal Division Law Society of Upper Canada in a claim that (in effect ) collateral estoppel was improperly applied based on civil litigation

According to the court decisions, the Lawyer acted for the Alfano brothers to incorporate Osler Paving Company Limited (“Osler”) in 1993 so that they could continue in the paving business. The Lawyer was made president of Osler and was given a 10% ownership interest. The Lawyer acted for the brothers to establish four family trusts which each held a 22.5% interest in Osler, by way of an option to purchase shares. Frank Alfano withdrew from the business in 1997, after Carmen’s death. As found by the trial judge and affirmed in the Appeal Decision, the remaining three family trusts then each held 29% of the equity in Osler, and the balance of 13% of the shares were held by the Lawyer.

In 2001 the relationship between the Lawyer and the Alfanos began to deteriorate. In 2002 the Lawyer took the position that he owned Osler, locked the Alfanos out of the business, listed the business premises for sale, and eventually assigned Osler into bankruptcy. This precipitated lengthy litigation, and eventually the trial and appeal proceedings, which resulted in the decisions that form the basis of the findings in these reasons.

In the Trial Decision Macdonald, J. made specific findings of fact (the “enumerated facts”) including that:

  1. The Lawyer concocted a fraudulent unanimous shareholders’ agreement (“USA”) which effectively eliminated the plaintiffs’ interests in 758 and Osler (paras. 60 to 62).
  2. The Lawyer improperly assigned Osler into bankruptcy (paras. 73 to 75).
  3. The Lawyer misappropriated funds totaling over $1,000,000 from Osler (para. 48).
  4. The Lawyer listed Osler’s building on Bowes Road for sale without informing the plaintiffs (para. 119).

Justice Macdonald also found that the Lawyer was in a solicitor-client relationship with the Alfanos when these events occurred.

Justice Macdonald declared (at para. 54) that the Alfano family trusts were each 29% owners of Osler and awarded punitive damages in the amount of $250,000 “for compensation for the fraud perpetrated on them” by the Lawyer.

There was no abuse of process

There was no allegation that the civil proceedings were unfair. Mr. Piersanti was a full party who participated in the prior proceedings, including the lengthy trial, an appeal to the Court of Appeal, and an unsuccessful application for leave to appeal to the Supreme Court of Canada. He had every opportunity and incentive to challenge the findings of fact that were made and upheld by the civil courts, and in most cases, he did so. It would have been obvious during the civil proceedings that the central issues that were being contested – ultimately embodied in the five findings we are dealing with – were directly relevant to his continued status as a licensee of the Law Society.

The matter now proceeds to the penalty phase. (Mike Frisch)

July 27, 2018 in Bar Discipline & Process | Permalink | Comments (0)