Tuesday, July 28, 2009

Inconsistent Testimony Shows Lack Of Remorse

The New York Appellate Division for the First Judicial Department rejected a proposed one-year suspension and suspended an attorney for three years. The attorney had been convicted of a misdemeanor serious crime involving falsification of business records in the second degree. The court sets out the facts in detail as well as the basis for its sanction determination:

The Hearing Panel found that respondent was vice president and general counsel to Take-Two Interactive Software, Inc., a maker of video games. In early 2002, NASDAQ made an official inquiry regarding the company's financial statements and, in particular, whether any executive officers had received stock options which had not been issued under a stockholder-approved plan ("non-plan" options). Inasmuch as Take-Two had no Chief Financial Officer, respondent responded to the inquiry.

Respondent testified at his deposition and before the Hearing Panel that, after consulting with outside counsel, he found out that two company executives had received "non-plan" options and he and the Chairman and CEO of Take-Two, Ryan Brant, to whom respondent primarily reported, then asked outside counsel whether they could redesignate the "non-plan" options to "plan" options by the company. According to respondent, outside counsel did not object to that approach. Respondent testified that he believed that Brant had then gone back to accounting and had the options redesignated. Two days later, Brant told respondent that the non-plan options had indeed been so redesignated.

Accordingly, in a letter dated March 6, 2002, respondent advised NASDAQ that no "non-plan" options had been issued to any executives of the company; however, within a week, Brant told respondent that the non-plan options had not, in fact, been redesignated. Respondent testified that he then drafted a letter to NASDAQ, dated March 14, 2002, correcting the inaccurate information contained in the March 6 letter but, in several conversations with Brant about the letter, Brant deemed it to not be in the best interests of the company and requested that respondent not send the letter. Respondent acceded to Brant's request and never sent the letter or otherwise corrected the false information given to NASDAQ.

Less than two months later, on May 2, 2002, respondent, on the advice of outside counsel, devised an internal ethics compliance questionnaire and certificate of compliance and had all appropriate employees of the company, including himself, sign it. Two questions asked were if he was aware of any company records that improperly described a transaction and if he was aware of any false entries made in the books and records of the company. Respondent answered "no" to both inquiries. Admitting to the Hearing Panel that those responses were inaccurate, respondent testified that when he filled out the questionnaire, the March 6 letter was not on his mind. However, the Panel commented, "[w]e have difficulty understanding why it was not, but if, indeed it was not, it raises the question of the extent to which Respondent believed it necessary to provide accurate answers to questions whether from Nasdaq or in the internal company inquiry."

Four years later, in June 2006, the New York County District Attorney commenced an investigation into the alleged backdating of stock options by Take-Two. During the course of that investigation, respondent was interviewed. In February 2007, the company's CEO, Brant, pleaded guilty to charges arising from the backdating investigation. In May 2007, respondent was told by his lawyer that the District Attorney's office intended to charge him with falsifying the company's financial statements. Respondent was then offered a plea deal whereby he pleaded guilty to the misdemeanor of falsifying business records —- the false business entry being the March 6 letter to Nasdaq. Notably, the factual basis recited in the plea agreement provided, in relevant part, that on or about March 6, 2002, "Kenneth Selterman knowingly prepared a letter containing false information addressed to Nasdaq and which he caused to be sent...."

As the Hearing Panel found, inasmuch as respondent does not dispute that he has been convicted of a "serious crime" within the meaning of Judiciary Law § 90(4)(d) and the rules of this Court (22 NYCRR § 603.12), the only issue to be determined is the sanction to be imposed.

In that regard, the Committee, in its current motion, as it did during the hearing, contends that respondent's testimony concerning the facts underlying his guilty plea was inconsistent with the factual premise contained in his plea agreement, and, such an attempt to mitigate the seriousness of his criminal conduct constituted an aggravating factor. Specifically, the Committee contends that respondent's testimony that he relied on Brant's representation regarding the conversion of the non-plan options when he wrote his March 6th letter to NASDAQ differed from his admission in the plea agreement, which stated that he acted with intent to defraud NASDAQ in the first instance.

The Hearing Panel disagreed concluding that the facial inconsistency between respondent's testimony and the plea agreement was apparent, but not dispositive, finding that it was certainly conceivable that respondent had always adhered to the substance of what he had testified to, but that for reasons of expediency the District Attorney's Office drafted the factual premise portion of the plea agreement in the simplest and most uncomplicated way possible. If that was what happened, the Panel stated that it had no concern.

In order to resolve the issue, the Panel suggested that respondent's counsel at the time, Mr. Heiss, appear and provide information about the circumstances surrounding the plea but, ultimately, because of a continuing SEC investigation and the uncertain effect of a limited waiver of attorney-client privilege, Mr. Heiss did not appear. Thus, the Panel found:

The question remains —- is respondent endeavoring to mitigate his conduct, thus demonstrating a lack of genuine remorse? On this issue, one which is open to competing interpretations, we decline to find an aggravating factor for two reasons. First, it is just as likely than not that respondent has consistently adhered to his factual recitations and that the plea agreement reflects the District Attorney's streamlined version of events. Second, whether respondent knowingly presented inaccurate information in the first letter or purposefully failed to correct inaccurate information eight days later is a distinction of marginal significance in any event. Under either scenario, the crime has been committed and respondent admits it.

In support of its motion, the Committee argues that a suspension coextensive with respondent's three-year probationary period is justified but in no case less than a one-year suspension. In addition, the Committee asks this Court to reject the Hearing Panel's suggestion that we impose a suspension nunc pro tunc because the Panel did not find that respondent had voluntarily ceased practicing law during that time, only that he was unemployed, and because this Court did not suspend respondent on an interim basis pending the resolution of the serious crime proceeding, therefore, he could have continued to practice law.

In support of censure, respondent points out that the Committee's basis for a one-year suspension is aggravating factors which the Hearing Panel never found, and that respondent's conduct demonstrated a "pattern" of fraud/dishonesty which the Panel similarly did not find. While respondent cites to numerous misdemeanor cases where censure was imposed, he also seems to support the Panel's suggestion of a retroactive suspension as it is "nearly the functional equivalent of a public censure."

Taking into consideration the evidence considered by the Panel in mitigation, e.g., respondent's prior unblemished disciplinary record; his cooperation with the Committee, the prosecutor, and the company's internal investigation; and the character witnesses who attested to his reputation for honesty and integrity, we disagree with the Panel's recommendation that respondent be suspended for one year. We also disagree with the Panel's finding that the facial inconsistency between respondent's testimony and the plea agreement had no bearing as to whether such inconsistency should be an aggravating factor in determining the appropriate sanction. Instead, we find that respondent's inconsistent testimony about his culpability of the intentional fraud should have been construed as a lack of remorse, and his additional conduct of providing false answers on the company's internal questionnaire and certificate of compliance demonstrated a "pattern" of fraud and dishonesty, which should be considered as evidence in aggravation. Therefore, in light of all the circumstances, including respondent's position, his level of sophistication and legal experience, and his apparent lack of remorse, we find that a three year suspension is appropriate.

(Mike Frisch)

July 28, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Attorney's Liens For Patent Prosecution Work

The Massachusetts Supreme Judicial Court decided the following two questions in the affirmative:

We consider in the present case, as a matter of first impression, the scope of the Massachusetts attorney's lien statute (lien statute), G.L. c. 221, § 50, vis-à-vis patent prosecution work. The United States Court of Appeals for the First Circuit has certified the following questions to this court, pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981) [FN2]:

"1. Does [G.L. c. 221, § 50,] grant a lien on patents and patent applications to a Massachusetts attorney for patent prosecution work performed on behalf of a client?

"2. If [G.L. c. 221, § 50,] does grant a lien and the issued patents or patent applications are sold, does the attorney's lien attach to the proceeds of the sale?"

The court concluded:

By its substantial amendment of the lien statute in 1945, the Legislature significantly expanded an attorney's right to recover legal fees for services rendered to a client in a variety of proceedings. The language of G.L. c. 221, § 50, states that an attorney shall have a lien for reasonable fees and expenses not only from the "authorized commencement of an action, counterclaim or other proceeding in any court," but also from the "appearance in any proceeding before any state or federal department, board or commission." When an attorney files a patent application for a client with the USPTO, that action constitutes appearing in a proceeding before a Federal department. [FN6] See 35 U.S.C. § 1 (2006) (USPTO was established as agency of United States, within Department of Commerce); 37 C.F.R. § 10.1 (2008) ("proceeding" before USPTO includes application for patent). Moreover, the broadening of the statute suggests a recognition by the Legislature that attorneys are entitled to be compensated for the work they perform that falls outside the purview of traditional litigation "in any court."

In assessing the scope of an attorney's lien for reasonable fees and expenses, the language of G.L. c. 221, § 50, provides that the attorney shall have a lien "upon his client's cause of action, counterclaim or claim, upon the judgment, decree or other order in his client's favor entered or made in such proceeding, and upon the proceeds derived therefrom." In the context of patent prosecution work, the patent application is the client's "claim." It is a request for recognition of a property right whereby an inventor can exclude all others from making, using, or selling a patented invention for a designated period of time. Therefore, in accordance with the first phrase of the "upon" clause, when rendering legal services to a client to secure a patent, an attorney can assert a lien on the patent application when it is filed with the USPTO, and the lien necessarily remains attached to the subsequently issued patent, protecting the attorney's right to compensation.

Contrary to the argument of the liquidating supervisor, the language of G.L. c. 221, § 50, does not require a "judgment" in order for an attorney's lien to attach. The repetition of the word "upon" in the statute describes three separate and independent bases for the assertion of an attorney's lien, namely (1) "upon [the] client's cause of action, counterclaim or claim," (2) "upon the judgment, decree or other order in [the] client's favor entered or made in such proceeding," and (3) "upon the proceeds derived therefrom." Interpreting the statute as requiring a "judgment" before a lien can attach, would render superfluous the words in the first "upon" clause. As we have already stated, every word of a statute must be given effect. See Bankers Life & Cas. Co. v. Commissioner of Ins., supra. Had the Legislature intended to limit the parameters of the lien statute to only those instances when an attorney has obtained a judgment, then the Legislature simply would have said that the attorney shall have a lien for his reasonable fees and expenses "upon the judgment, decree or other order in his client's favor," and nothing more.

The case is Ropes & Gray LLP v. Jalbert, decided July 28, 2009.  (Mike Frisch)

July 28, 2009 in The Practice | Permalink | Comments (0) | TrackBack (0)

Charges Filed Against Judges

KTAR.com reports:

A magisterial district judge in suburban Philadelphia is accused of reducing a fine her grandson got for underage drinking and screaming at a police officer.

The state Judicial Conduct Board made the allegations Monday in a complaint about District Judge Susan McEwen.

The complaint says McEwen's then-18-year-old grandson was cited for underage drinking at a 2007 party held at her home while she slept. The case was assigned to another judge, who found the teen guilty and fined him $300. The complaint says McEwen reduced the fine to $150.

McEwen is also accused of screaming and swearing at a police officer about being called in to sign a warrant at about 4 a.m.

McEwen's lawyer didn't immediately respond to a phone message left Monday night.

The Examiner.com reports on unrelated charges against another judge:

A state watchdog panel Monday charged a district judge from Erie County with violating the state constitution and ethical rules by harassing women and lying about his qualifications to hold office.

The Judicial Conduct Board alleged that Judge Gerard L. Alonge brought disrepute to the judiciary by making harassing phone calls and having improper contact with more than a half-dozen women, including lawyers and law clerks he worked with.

Erie County's president judge, Elizabeth Kelley, asked the board to investigate after she issued two written warnings to Alonge to stop the harassment. In the most recent letter, written earlier this year, she advised Alonge that he was "well on his way to destruction," the board said in its complaint.

While campaigning for office in 2005, Alonge also misrepresented himself as an adjunct faculty member of the criminal justice department at Mercyhurst College-North East, the board said. Although he was on a list of people available to teach, he never taught a class as an adjunct professor, it said.

(Mike Frisch)

July 28, 2009 in Judicial Ethics and the Courts | Permalink | Comments (0) | TrackBack (0)

Tax Offense Leads To Suspension

An attorney who had entered a guilty plea to one count of failure to file state income taxes was suspended for 90 days by the South Carolina Supreme Court. The court's reasoning:

Respondent admits that by his conduct he has violated Rule 8.4(b) of the Rules of Professional Conduct, Rule 407, SCACR (it is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice).  We also find respondent violated the following Rules of Professional Conduct:  Rule 8.4(a)(it is professional misconduct for a lawyer to violate the Rules of Professional Conduct); Rule 8.4(b)(it is professional misconduct for a lawyer to commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness); and Rule 8.4(d)(it is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation).

Respondent also admits he has violated the following Rules for Lawyer Disciplinary Enforcement, Rule 413, SCACR: Rule 7(a)(4) (it shall be a ground for discipline for a lawyer to be convicted of crime of moral turpitude or serious crime); Rule 7(a)(5) (it shall be a ground for discipline for a lawyer to engage in conduct tending to pollute the administration of justice or to bring the courts or the legal profession into disrepute or conduct demonstrating an unfitness to practice law).  We also find respondent has violated Rule 7(a)(1), RLDE, Rule 413, SCACR (it shall be a ground for discipline for a lawyer to violate the Rules of Professional Conduct or any other rules of this jurisdiction regarding professional conduct of lawyers).


We find a ninety day suspension is the appropriate sanction for respondent’s misconduct.  Accordingly, we accept the Agreement for Discipline by Consent and suspend respondent from the practice of law for a ninety day period.  However, we deny respondent’s request that the suspension be made retroactive to the date of his interim suspension.  Respondent shall not be eligible for reinstatement or readmission until he has successfully completed all conditions of his sentence, including, but not limited to, any conditions of probation.  Rule 33(f)(10), RLDE, Rule 413, SCACR.  Within fifteen days of the date of this opinion, respondent shall file an affidavit with the Clerk of Court showing that he has complied with Rule 30, RLDE, Rule 413, SCACR.

The attorney has paid the taxes, as well as a fine and the costs of prosecution that were imposed in the criminal case. (Mike Frisch)

July 28, 2009 in Bar Discipline & Process | Permalink | Comments (1) | TrackBack (0)

Monday, July 27, 2009

I've Got You Under My Skin

A Three-Judge Panel in Virginia accepted and imposed an agreed 30 day suspension for misconduct in the defense of a first-degree murder case. The attorney had endorsed and filed a motion for permission to issue testimonial subpoenas to two attorneys who represented the person that the defendant had allegedly hired to commit the murder. The motion alleged as a basis that the prosecuting attorney had contacted the two lawyers "for help in fabricating a case against the Defendant."

The attorney had never communicated with either of the lawyers about the allegations prior to the filing of the motion. One testified that the attorney told him he had filed the motion to "either get [the prosecutor] off balance or get under [his] skin during the course of the prosecution of the case..."

A sanctions hearing conducted by the trial court led to a finding that the motion falsely accused the prosecutor of suborning perjury. The attorney had appealed the sanction imposed ($4,000.00) all the way to cert. denied by the U.S. Supreme Court. (Mike Frisch)

July 27, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Power Of Attorney

A summary of a disciplinary matter from the web page of the Massachusetts Board of Bar Overseers:

On January 27, 2009, the respondent pled guilty in the United States District Court for the District of Massachusetts to six felony counts of wire fraud in violation of 18 U. S. C. § 1343 and one felony count of mail fraud in violation of 18 U. S. C. § 1341. The charges arose from the respondent’s representation of a retired educator who held two single-life annuity contracts administered by TIAA-CREF that paid her a monthly sum

In 1989, the respondent was given power of attorney for the woman. The respondent became executor of her estate when she died in 1994. The respondent did not report the woman’s death to TIAA-CREF, and continued to collect the payments for fourteen years. In 1996, the respondent asked TIAA-CREF to change the mailing address for the monthly payments to his post office address. In 1998, he responded to TIAA-CREF’s regarding the woman that she was still alive but was physically incapacitated. The respondent collected a total of $237,291.80 illegally, which he used to pay for family entertainment and other expenses.

TIAA-CREF did not discover that the woman was deceased until March 2008. In June 2008, TIAA CREF called the respondent to inquire about the status of the account. The respondent told the caller that he represented the woman, that she had died, and that he was the executor of her estate. On June 10th, the respondent sent a letter to TIAA-CREF stating that the date of death was April 10th, without providing the year, thereby falsely implying that her death was recent.

The respondent was temporarily suspended from the practice of law on February 19, 2009. He complied with the order of temporary suspension on March 19, 2009. On April 1, 2009, the respondent filed an affidavit of resignation pursuant to S. J. C. Rule 4:01, § 15, with the Board of Bar Overseers. He acknowledged that his conduct violated Mass. R. Prof. C. 8.4(b) and (c). Bar counsel asked the board to recommend that the affidavit of resignation be accepted and an order of disbarment entered effective March 19, 2009.

On April 13, 2009, the Board of Bar Overseers voted to recommend to the court to accept the affidavit of resignation and enter a judgment of disbarment effective March 19, 2009. On April 27, 2009, the Supreme Judicial Court for Suffolk County (Spina, J.) accepted the affidavit of resignation and entered judgment of disbarment effective March 19, 2009.

The case is Matter of Passmore, No. BD 2009-15. A Department of Justice release describes him as an attorney and criminal justice professor. (Mike Frisch)

July 27, 2009 in Bar Discipline & Process | Permalink | Comments (1) | TrackBack (0)

Yes And No

The Pennsylvania Supreme Court granted the reinstatement petition of one applicant and denied that of another. The court granted the petition of an attorney who had consented to disbarment in New York as a result of a fraudulent conveyance designed to shield his marital home from loss in a legal malpractice action against him. He has been employed in a number of positions since the 2002 disbarment, including giving bar and bat mitzvah lessons. He has been treated for depression and was dealing with family health issues at the time of the misconduct.

The court denied the petition of an attorney who had been suspended for a year and a day in 2006 for escrow account violations. He had failed to make full disclosures concerning his post-suspension conduct in the reinstatement petition. He had also been employed as a secretary/legal assistant to an attorney without making required disclosure to the Disciplinary Board. (Mike Frisch)

July 27, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Friday, July 24, 2009

"Eminently Practical And Efficient"

A Pennsylvania attorney attorney was suspended for failure to pay annual fess in 2002 and on disability in 2006. He petitioned for reinstatement based on his claim of rehabilitation from his disability. His prospects for reinstatement took a blow when he was convicted of an alcohol-related driving offense in Florida.

Disciplinary Counsel brought charges based on the conviction as well the failure to disclose the incident in his reinstatement questionnaire. The matter was resolved by an agreement to withdraw the reinstatement petition and impose a year and a day suspension. The Pennsylvania Supreme Court adopted the proposed disposition, which the joint petition for discipline had characterized as "eminently practical and efficient." The joint petition agrees that the focus of any future reinstatement will be on the recovery from the disabling condition. (Mike Frisch)

July 24, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Habeas Corpus

A man who was arrested for disturbing the peace in the Gold Strike Casino in Tunica, Mississippi died of apparent suicide while in police custody. His body was held at a local mortuary because the county did not have a morgue. After some efforts to locate and advise next-of-kin, the body was cremated. The relatives showed up and sued the county for violation of the provisions of a statute regarding notification obligations. The trial court found they had suffered damages and awarded a $20,000.00 judgment. The county appealed.

The Mississippi Supreme Court held that the statute does not create a private cause of action and reversed the judgment. A dissent would hold that the statutory notice requirement vests rights for the benefit of the relatives and establishes a cause of action on their behalf. (Mike Frisch)

July 24, 2009 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Heartaches By The Number, Troubles By The Score

The Tennessee Court of Appeals has affirmed a trial court determination regarding the estate of legendary country music songwriter Harlan Perry Howard, who was described in trial testimony as the "Irving Berlin of Country Music." The estate consisted primarily of songwriting royalties. The court rejected claims by his two eldest children that his fifth wife had breached fiduciary obligations and that her accountant, who had valued the royalties, had labored under an impermissible conflict of interest. (Mike Frisch)

July 24, 2009 | Permalink | Comments (0) | TrackBack (0)

Cover Up Worse Than Crime

A recent decision from the New York Appellate Division for the Second Judicial Department demonstrates the worst possible way to deal with an instance of neglect. The charges and disposition are described by the court:

Charge one alleges that the respondent neglected a legal matter entrusted to him by failing to file and serve a motion for a default judgment in an action in the Supreme Court, Queens County, in violation of Code of Professional Responsibility DR 6-101(a)(3).

In or about June 2002, the respondent, as an associate with the law firm of Weinberg & Kert LLP, prepared a summons and complaint on behalf of a client, Howard Kaufman, which was signed solely by Mr. Kaufman, who was ostensibly proceeding pro se. In or about July 2002, the respondent caused the summons and complaint to be filed in the Supreme Court, Queens County, and served on the defendants on Mr. Kaufman's behalf. 

In or about October 2002, Mr. Kaufman advised the law firm that the defendants had not answered the summons and complaint. The law firm directed the respondent to prepare, serve, and file motion papers on Mr. Kaufman's behalf seeking to adjudicate the defendants in default. In or about November 2002, the respondent prepared the motion papers, including Mr. Kaufman's affidavit, but failed to have those motion papers filed and served.

Charge two alleges that the respondent engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation by creating fictitious court documents and providing them to a client for the purpose of misleading the client about the status and progress of his lawsuit, in violation of Code of Professional Responsibility DR 1-102(a)(4).

In or about May 2003, Mr. Kaufman contacted the law firm to inquire about the status of his lawsuit. The respondent thereafter began creating fictitious court documents, which he provided to Mr. Kaufman over a period of time, for the purpose of misleading him as to the status and progress of his lawsuit. The fictitious court documents which respondent created and provided to Mr. Kaufman included (a) a short form order dated April 23, 2003, issued and signed by the Honorable M. Ritholtz, granting Mr. Kaufman's motion for a default judgment and referring the issue of damages to an inquest, (b) the defendant's order to show cause, signed by the Honorable M. Ritholtz on September 12, 2003, seeking to set aside the default judgment, accompanied by defense counsel's signed affirmation and the defendant's signed, but not notarized, affidavit, (c) the respondent's affirmation in opposition to the defendant's order to show cause, dated October 8, 2003, (d) a preliminary conference stipulation and order dated March 17, 2004, signed by the respondent and defense counsel, and (e) a notice of compliance/settlement conference scheduled for October 21, 2004, before the Honorable M. Ritholtz.

Charge three alleges that the respondent engaged in conduct that adversely reflects on his fitness as a lawyer by creating fictitious court documents and providing same to a client for the purpose of misleading the client about the status and progress of his lawsuit, in violation of Code of Professional Responsibiilty DR 1-102(a)(7), based on the factual specifications of charge two.

Based on the respondent's admissions to the factual allegations in the three charges and the evidence adduced at the hearing, the Special Referee erred in failing to sustain charge one. Accordingly, the Grievance Committee's motion to confirm in part and disaffirm in part the report of the Special Referee should be granted, with the result that all three charges of the petition are sustained.

In determining an appropriate measure of discipline to impose, the Grievance Committee notes that the respondent has no prior disciplinary history.

In mitigation, the respondent asked the Court to consider the treatment he underwent to deal with his anxiety disorder, his youth and inexperience, his efforts to address the issues and to voluntarily remove himself from the practice of law until such time as remedial measures could assure the non-recurrence of similar behavior, and the absence of financial harm to the client, to whom full restitution was made. The client demanded, and was paid, $7,500 to resolve his claims against the law firm. The respondent paid $6,500 of that sum. In the respondent's view, the restitution paid far exceeded any anticipated award by the courts.

Notwithstanding the mitigation advanced, the respondent's fabrication of court documents to which he affixed a judge's signature constitutes serious professional misconduct. Under the circumstances, the respondent is suspended from the practice of law for a period of three years.

(Mike Frisch)

July 24, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Thursday, July 23, 2009

Suspension For Undisclosed Revision To Agreement

From the web page of the Massachusetts Board of Bar Overseers comes the following summary of a recent matter:

From April 2000 through March 29, 2002, the respondent was employed as the director of procurement for a company that provided website access to Internet users. The respondent did not provide any legal services to the employer. On March 26, 2002, the respondent was informed that his position was being eliminated effective Friday, March 29, 2002.

The respondent was given a standard severance agreement and general release that the employer gave to all departing employees. Paragraph 3 of the agreement was titled “Release” and consisted of a thirty-two-line, single-spaced, boilerplate description of potential claims that the respondent released against the employer. The agreement contained a separate attachment specifying the severance payments to be made to the respondent upon his leaving the employer.

Sometime in early April 2002, the respondent retyped the entire second page of the agreement. The respondent deleted language from ¶ 3 releasing the employer from all common law claims, and, in its place, inserted provisions that the respondent would be paid a bonus of $850,000; that he would receive triple that amount if payment was not made within seven days; and that each of the employer’s officers and directors would be personally liable for the payments. The respondent intentionally concealed the alteration in the agreement by formatting the substituted language to fit exactly in the space left by the deleted language.

On April 19, 2002, the respondent sent the altered agreement to the employer’s director of human resources. The respondent did not include a cover letter or any other notice that he had altered the agreement, and the change went undetected. On or about April 20, 2002, the human resources director signed the altered agreement on the employer’s behalf. The respondent was sent a copy of the fully-executed altered agreement, and the original altered agreement was placed in the respondent’s personal file.

On May 17, 2002, the employer paid the respondent the severance benefits set out in the agreement but not the bonus added by the respondent unbeknownst to the employer.

On July 18, 2002, the respondent retained counsel to represent him in his claim against the employer for payment of the bonus provided for in the altered agreement as well as to secure other payments from the employer. On September 24, 2002, counsel wrote to the employer demanding, among other things, that the respondent be paid the $850,000 bonus provided for in the altered agreement.

The employer refused to make any additional payments to the respondent and, on October 11, 2002, filed suit seeking, among other things, a declaratory judgment that there was no enforceable agreement between the employer and the respondent and an order directing the respondent to return to the employer all severance payments. The respondent filed an answer denying wrongdoing and a counterclaim seeking payment of the bonus.

On March 9, 2005, the parties’ cross motions for summary judgment were filed with the court. On May 11, 2005, a judge of the superior court entered an order declaring the agreement void because there had been no meeting of the minds. The judge allowed the employer’s motion for summary judgment on all of the respondent’s counterclaims except the counts claiming the right to other payments. The case settled in July 2006 by the respondent’s agreement to pay the employer $21,000.00 and release the employer from any liability to the respondent.

The respondent’s conduct in concealing in the agreement provisions obligating his former employer to make significant payments to himself and imposing personal liability on his former employer’s officers and directors violated Mass. R. Prof. C. 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation) and (h) (conduct adversely reflecting on the fitness to practice law). His attempts to enforce the bonus, penalty, and personal liability provisions of the agreement through litigation violated Mass. R. Prof. C. 3.1 (lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous) and 8.4(d) (conduct prejudicial to the administration of justice).

The matter came before the Board of Bar Overseers on a stipulation of facts and a joint recommendation that the respondent be suspended from the practice of law for six months. In mitigation, the respondent’s conduct occurred outside the practice of law and involved an employer for which he did not provide legal services.

On June 8, 2008, the Board of Bar Overseers accepted the parties’ stipulation and joint recommendation and voted to file an Information with the Supreme Judicial Court recommending that the respondent be suspended from the practice of law for six months. On June 22, 2009, an order was entered in the Supreme Judicial Court for Suffolk County (Gants, J.), ordering that the respondent be suspended from the practice of law for six months effective thirty days from the entry of the order.

The case is Matter of Cloonan, No. BD 2009-049. (Mike Frisch)

July 23, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Mediation Ethics

The North Dakota Supreme Court has adopted a Code of Mediation Ethics and procedures for enforcement of its provisions. The code will be in effect as of August 1. (Mike Frisch)

July 23, 2009 in Law & Society | Permalink | Comments (0) | TrackBack (0)

No Cause Of Action For Unauthorized Practice Prior To Statute

From the web page of the Ohio Supreme Court:

The Supreme Court of Ohio ruled today that it has exclusive jurisdiction over the unauthorized practice of law in this state, and held that there was no legal basis for a private lawsuit based on a claim of unauthorized law practice in Ohio prior to September 2004, when the General Assembly amended R.C. 4705.07 to expressly recognize such a cause of action.

Applying that analysis to a Cuyahoga County case, the Court ruled 6-1 that a home buyer had no legal basis to seek civil damages from a mortgage lender for allegedly using non-attorneys in 2002 to perform legal services for which the lender charged a “document preparation fee.”  The Court’s  majority opinion was written by Justice Maureen O’Connor.

The case involved a class action lawsuit filed on behalf of Gary Greenspan of Cleveland and other plaintiffs. Greenspan sought to recover from Third Federal Savings & Loan a $300 document preparation fee that was included in the transaction costs he was charged by Third Federal in 2002 in connection with closing on a residential mortgage. The complaint alleged that the drafting of promissory notes, mortgage agreements and similar documents constituted the practice of law, and that Third Federal had gained unjust enrichment by charging Greenspan and other borrowers for the preparation of legal documents by non-lawyer clerical employees. Citing prior court decisions holding that a non-attorney is not entitled to payment for any service that constitutes the unauthorized practice of law, Greenspan asked the trial court to order the lender to refund the $300 he had paid for document preparation services.

Greenspan did not file a grievance with the Ohio Supreme Court’s Board on the Unauthorized Practice of Law or a local bar association regarding the lender’s actions, and did not obtain a ruling by the board that Third Federal’s conduct constituted the unauthorized practice of law.

Third Federal filed a pretrial motion to dismiss Greenspan’s complaint. It argued that, prior to the adoption of amendments to R.C. 4705.07 effective in September 2004, Ohio did not recognize a private cause of action (legal basis for a civil lawsuit) based on the unauthorized practice of law. The trial court granted judgment in favor of Third Federal, stating in its judgment entry that at the time Greenspan was assessed and paid the document preparation fee in 2002, there was no provision of state law that authorized civil claims based on the unauthorized practice of law.

Greenspan appealed the order dismissing his suit.  While Greenspan’s appeal was pending before the 8th District Court of Appeals, that court issued a decision in a virtually identical case, Crawford v. FirstMerit Mortgage Corp. In Crawford, the 8th District held that the plaintiff could not sue to recover document preparation fees he paid to a mortgage lender prior to September 2004 because a private cause of action for unauthorized practice of law did not exist in Ohio prior to the 2004 amendment of R.C. 4705.07. Despite the holding in Crawford, a different panel of the 8th District overruled the trial court in Greenspan’s case and reinstated his suit against Third Federal. The court held that because the unauthorized practice of law was available as a defense to breach-of-contract and fee-collection actions, it “inexorably” followed that it was also available as an affirmative cause of action. The appellate court acknowledged that its decision conflicted with Crawford, but declared that Crawford was “simply in error.”

Despite the Supreme Court’s mandate in In re J.J. (2006) and subsequent rulings that courts of appeals must convene en banc (with all judges participating) to resolve conflicting rulings by different three-judge panels, the 8th District did not convene en banc to settle the conflict between Crawford and Greenspan.  Third Federal sought and was granted Supreme Court review of the 8th District’s decision.

Writing for the Court in today’s decision, Justice O’Connor rejected the 8th District’s finding that Greenspan’s suit did not make a direct claim for the unauthorized practice of law, but rather asserted common-law claims for unjust enrichment and money had and received. She observed that, notwithstanding  the wording of Greenspan’s complaint, “(U)ltimately, he sought to recover for Third Federal’s purported unauthorized practice of law. The fact that Greenspan creatively framed the action as one for unjust enrichment and money had and received does not alter the essential nature of the action. ... Greenspan’s complaint alleges that Third Federal charged him for legal work performed by nonattorney employees. However styled, Greenspan seeks to recover for Third Federal’s purported unauthorized practice of law.”

Because the events giving rise to Greenspan’s claim occurred before September 2004, when the legislature created a statutory cause of action for unauthorized law practice, Justice O’Connor wrote, “(T)his case turns on whether a common-law right of action for the unauthorized practice of law existed prior to 2004.  Greenspan cites a myriad of cases from various state and federal courts for the proposition that courts have long recognized common-law claims for unjust enrichment and money had and received when a person without a license performs a service for which a license is required. But the caselaw upon which Greenspan relies almost exclusively relates to architectural and engineering services.  Caselaw acknowledging a common-law claim for recovery of fees charged by unlicensed architects and engineers does not establish the existence of a common-law claim for the unauthorized practice of law.” 

“Greenspan also points to three cases involving legal services rendered by nonattorneys in support of his argument. However, none of these cases recognizes an affirmative common-law claim for either unjust enrichment or money had and received arising from the unauthorized practice of law. Instead, the cases involve breach-of-contract and fee-collection actions in which the court allowed defendants to raise the unauthorized practice of law as a defense to the plaintiffs’ attempts to recover fees for services rendered by nonattorneys.  Contrary to the Eighth District’s holding, it does not ‘inexorably’ follow that because the unauthorized practice of law may be an affirmative defense in breach-of-contract and fee-collection actions, an affirmative cause of action for the unauthorized practice of law must exist. Greenspan cites no case law, and this court is not aware of any, that recognizes an affirmative common-law cause of action for the unauthorized practice of law.”

In addition to the lack of case law recognizing a common-law claim for the unauthorized practice of law, Justice O’Connor wrote:  “Greenspan simply cannot escape the fact that the Supreme Court has exclusive jurisdiction over the practice of law, including the unauthorized practice of law. Section 2(B)(1)(g), Article IV of the Ohio Constitution confers on this court ‘exclusive power to regulate, control, and define the practice of law in Ohio.’ ... Greenspan argues that because trial courts have ‘original jurisdiction in all civil cases’ pursuant to R.C. 2305.01, they must have jurisdiction over civil actions arising from claims related to the unauthorized practice of law. We are not persuaded by that argument. A common-law claim for the unauthorized practice of law would require trial courts to make determinations explicitly reserved for this court.”

She also observed that, in enacting a statutory cause of action for the unauthorized practice of law in 2004, “ the General Assembly avoided invading this court’s exclusive jurisdiction over the practice of law by creating a statutory scheme under which a claimant may commence a civil action for the unauthorized practice of law only ‘upon a finding by the supreme court that the other person has committed an act that is prohibited by the supreme court as being the unauthorized practice of law.’...

Thus, although trial courts will preside over actions brought pursuant to R.C. 4705.07(C)(2), all determinations regarding the unauthorized practice of law remain within this court’s exclusive jurisdiction. Because courts did not recognize a common-law cause of action for the unauthorized practice of law, and because such a cause would invade this court’s exclusive jurisdiction over the practice of law, a private right of action for the unauthorized practice of law did not exist before September 15, 2004.”

The majority opinion was joined by Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton, Terrence O’Donnell, Judith Ann Lanzinger and Robert R. Cupp. Justice Paul E. Pfeifer dissented without opinion, stating that he would affirm the ruling of the court of appeals.

The court's decision is linked here. (Mike Frisch)

July 23, 2009 in Law & Business | Permalink | Comments (0) | TrackBack (0)

Pay Dr. D.

While noting that the determination of sanction in a bar discipline matter is "not an exact science," the Wisconsin Supreme Court imposed a 90-day suspension and restitution in matter in which the attorney had failed to pay chiropractic bills. The facts:

All of the allegations in the current complaint involve a business referral relationship that Attorney['s] law firm ("the law firm") maintained with a chiropractor, Dr. D.  Attorney...or his partner...and certain clients would execute a doctor's lien whereby the client and the law firm agreed to pay for Dr. D.'s chiropractic services out of anticipated settlement proceeds

The OLR complaint alleged that in 15 cases where such a lien existed, the law firm failed to send proper written notice to Dr. D. when settlement funds were received.  In some cases the law firm did inform Dr. D. that a settlement had been received.  However, the referee ruled these communications did not satisfy the supreme court rule requirements, and Attorney...does not contest that finding.

In many of these cases the law firm did not pay the full amount of the chiropractic bill.  Notably, neither Attorney...nor the law firm necessarily benefited financially from the law firm's failure to pay these chiropractic bills in full.  The record reflects the law firm or the client sought to negotiate a fee reduction in these cases.

At some point Dr. D. retained a collection firm to pursue these accounts.  On at least two occasions the law firm wrote checks in partial payment of a client's chiropractic bill with the intention of settling the fee dispute in full.  In both cases the proffered settlement check was promptly endorsed and cashed, but Dr. D. claimed he did not receive these monies.  The license of the collection firm employed by Dr. D. was later revoked for failing to turn over collected funds to clients.

Dr. D. initiated small claims cases against some of these clients to recoup his fees.  Eventually, Dr. D. agreed to take remaining fees held in the law firm's trust account in satisfaction of these obligations.  He obtained a judgment against the client in three matters.

On February 4, 2006, after Dr. D. had filed a series of grievances against Attorney..., the law firm and Attorney...(in his personal capacity) filed a civil action against Dr. D. seeking a declaratory judgment that all chiropractic fees due and owing to Dr. D. had been paid.  Dr. D. did not respond to the complaint.  On June 22, 2006, the MilwaukeeCounty

circuit court issued a default judgment ruling that if the law firm transferred amounts remaining in the law firm's trust account to Dr. D., this transfer would satisfy the law firm's obligations to Dr. D. in full.  The judgment did not absolve clients of potential indebtedness to Dr. D.

The attorney and his partner were previously disciplined for a series of matters involving neglect and failure to communicate with clients. (Mike Frisch)

July 23, 2009 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Not Moving Forward

From the web page of the Ohio Supreme Court:

The Supreme Court of Ohio has suspended the law license of [an] attorney...for one year, with the final six months of that term stayed on conditions, for neglecting the case of a personal injury client  and making false statements to the client.

The Court adopted findings by the Board of Commissioners on Grievances & Discipline that after agreeing to represent a woman injured in a traffic accident and unsuccessfully seeking a settlement from the other driver’s insurer, [The attorney] took no further action in the case and ultimately allowed the statute of limitations for filing a lawsuit to expire, leaving the client with no legal remedy to recover for her damages. The board also found that despite her lack of progress in the case, [the attorney] repeatedly told the client that her legal matter was “moving forward,” and assured her that a financial settlement was imminent when neither statement was true.

The Court accepted the board’s findings that [the attorney], who has been registered as inactive since 2007,  violated the state attorney discipline rules that prohibit neglect of an entrusted legal matter, conduct prejudicial to the administration of justice, conduct that adversely reflects on an attorney’s fitness to practice and conduct involving fraud, deceit, dishonesty or misrepresentation.

The court's decision is linked here. (Mike Frisch)

July 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Computer Related Misconduct

A Tennessee lawyer received a public censure for misconduct that had taken place while she was an independant contractor working at a law firm on personal injury cases. Law firm management "discovered that [the attorney] had somehow obtained other employees' passwords, which gave [the attorney] access to information from the case management system, including client lists, files, and management reports." The problem persisted after several password changes. Prior to departure from the firm, the attorney had installed a file shredder system on her computer to shred her personal files. As a result, the firm was unable to use the computer.

There was no evidence that files were exported to an outside source. The firm, which had filed the complaint, "conceded that no files or information was exported." The attorney was found to have violated Rule 8.4(c).

A second attorney was censured for similar misconduct. Although the notices do not so specify, it appears to have happened at the same law firm.  (Mike Frisch)

July 23, 2009 in Bar Discipline & Process | Permalink | Comments (1) | TrackBack (0)

When In Doubt, Disclose

The District of Columbia Court of Appeals imposed a three year suspension of an attorney as reciprocal discipline for a suspension of that same length in Virginia. The misconduct involved a failure to disclose information in the Virginia bar admission questionnaire while waiving in from Pennsylvania. The applicant had been charged with murder in Jamaica while on leave from his duties as an infantry officer in the United States Marines. He was tried and convicted of the lesser offense of manslaughter and sentenced to two years imprisonment at hard labor.

He had failed to disclose the conviction despite a specific instruction on the application to the effect that, if there is any doubt, report. In the Virginia proceedings, he claimed that he had relied on advice from an unidentified Pennsylvania bar employee that he had no duty to report the outcome of a matter before a "kangaroo court." He also presented evidence that the police inspector who investigated the criminal matter had sought a bribe to drop the charges. As the court here states, the Virginia hearing tribunal was "[u]nderstandably not impressed by these representations..." The obligation is to report and give the admitting authorities the opportunity to decide the impact of the incident on character and fitness. (Mike Frisch)

July 23, 2009 in Bar Discipline & Process | Permalink | Comments (1) | TrackBack (0)

Wednesday, July 22, 2009

Sotomayor's High Road, Writes Kelly Anders

[Our occasional guest-poster Kelly Lynn Anders, associate dean for students at Washburn Law and author of The Organized Lawyer, wrote a version of this op-ed for the Missouri Lawyers Media (subscr reqd), and we reprint it here with permission. Thanks, Kelly.  -- Alan Childress]

The High Road to the High Court is the Best Route
Kelly Lynn Anders

Watching Sonia Sotomayor respond to questions during the U.S. Supreme Court confirmation hearings sheds light on two important issues that no economic conditions can trump or ignore – diversity and professionalism. Sotomayor has already demonstrated her skills as a jurist, and the confirmation process will test her abilities to surpass these additional hurdles to reach the High Court. In each instance, she will need to continue to take the high road.

Diversity – Just the sound of this word makes many people cringe and sigh. “Is this still necessary?” “What is there to talk about?” “Everyone has it tough now, so why should any group receive favorable treatment?” The legal profession is making a sincere effort to increase the percentage of minorities in its ranks, and there are many people who are or who will become the first ones in their departments who are of color. Should they be looked to as resources, or should their ethnicities be overlooked in favor of not noticing the differences? However, if we don’t acknowledge differences, doesn’t that dilute the point of diversity in the first place? In contrast, if we constantly highlight our differences, doesn’t that unfairly overshadow all of the other things that unify us? How do we maintain a balance among these interests?

Professionalism – What does it mean to be a legal professional in the 21st century? How should lawyers work with each other, and how are they viewed by society? Do image and personality matter as much as a “win” in the courtroom, or are they mutually exclusive? Where do “soft” skills, such as attire, protocol, and polish, mesh into what makes a great lawyer, judge, or, in this case, a U.S. Supreme Court Justice? Are expectations higher in these areas for women and minorities?

Despite how far we have come with the election of our current President, this confirmation process reflects the challenges that many women and minority lawyers face every day. Sotomayor has been compared with other Latinos, with the implication that these are her only, or primary, “peers.” She has been accused of having a hot temper, while demonstrating the calmest, non-combative demeanor in the room. She has been repeatedly asked about a quote that was most likely meshed within other language that would render its meaning moot if taken in its full and intended context, providing patient and detailed responses to every nuanced inquiry.

While Sotomayor’s appointment would render her the first Latina to become a U.S. Supreme Court Justice – a milestone not to be ignored – it is perhaps more important to remember that her confirmation would enhance the High Court with another professional who has shown the world that she is also a skilled traveler of the high road.

July 22, 2009 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Cautionary Tale But No Violation Found

An interesting bar discipline matter from Louisiana involves charges of unauthorized practice against an attorney who was in good standing in New York but ineligible to practice in Louisiana due to a lapse in CLE obligations and non-payment of bar dues. The charges arose out of the representation of a single client. The attorney had participated by telephone from her New York office in a Louisiana mediation.

A hearing committee recommends that the charges be dismissed. The representation of the client "arose out of [the lawyer's] New York practice." The committee noted that Louisiana's Rule 5.5 on multijurisdictional practice permits lawyers not admitted there to handle matters that have incidental contacts with the state. Further, a non-lawyer could participate in the mediation. The committee calls the matter a "cautionary tale" and notes that the lawyer's "decisions raised the specter of unauthorized practice." (Mike Frisch)

July 22, 2009 in Bar Discipline & Process | Permalink | Comments (1) | TrackBack (0)