Client Had "Disposable Income And A Zealous Interest In Litigating"

A recent bar discipline decision was summarized on the web page of the Massachusetts Board of Bar Overseers:

The Board of Bar Overseers (board) filed an Information recommending that the respondent...be suspended from the practice of law for a term of four months, and that his reinstatement be conditioned on taking and passing the Massachusetts Professional Responsibility Examination. The respondent joins in the board's recommendation. Bar Counsel recommends that the respondent be suspended for the term of one year and one day, and that he be ordered to submit to fee arbitration with the deceased client's estate.

The board adopted the findings of fact of the hearing committee, which can be summarized by quoting this introductory paragraph from the hearing committee report:

"The credible evidence amounts to this: Representing a [professional woman] with disposable income and a zealous interest in litigating against [two of] her former employers, the respondent allowed the client to dictate a misguided strategy involving excessive and improper discovery requests that did not materially advance the client's cases but did generate large hourly-based fees for the respondent. The respondent should have done far more than he did to restrain the client's overzealous pursuit of discovery with realistic, focused, and independent professional advice. Instead, the respondent voiced only limited objections and then continued to pursue the client's hopelessly excessive and improper discovery requests. Given the misguided strategy, the high fees generated little or no value for the client. While much of the respondent's work in this misdirected pursuit was competent, the cases went nowhere and the work was ultimately wasted. The gravamen of the misconduct here is that the respondent placed his interest in retaining a profitable client ahead of his professional duties as a member of the bar to effectively counsel clients and provide diligent, competent representation. As a result, the client's cases never advanced beyond discovery disputes despite the passage of years and the payment of high fees."

The board adopted the conclusions of law of the hearing committee, namely, that the respondent violated Mass. R. Prof. C. 1.1 (competent representation), 1.3 (diligent representation), 1.4 (b) (explain matters to permit informed client decisions), and 1.5 (a) (charging and collecting clearly excessive fee), but not 1.2 (a) (seek client's lawful objectives through reasonably available means). The hearing committee reasoned that although the pleadings and motion papers in both cases generally were competently prepared, that the respondent was reasonably prepared in the depositions he defended, and that his pursuit of interlocutory relief was appropriate, he failed to focus on the two employers' reasons for terminating the client's employment. Instead, he allowed the client to dictate the general thrust of the litigation by turning it into a forum to validate the client's scientific opinions. As a result, the cases were mired in discovery for more than three years. The hearing committee concluded that the respondent failed to design and implement a strategy to move the cases forward in a reasonably diligent and prompt manner, and his overall handling of the cases fell short of the competence, reasonable diligence, and promptness required by Rules 1.1 and 1.3.

The hearing committee determined that the respondent's failure to realistically evaluate the client's likely recovery in the two cases also violated Rule 1.1, but because he was diligently pursuing the client's expressed goals, he did not violate Rule 1.2.

The committee found that the respondent failed to help the client focus on what her goals should be and how best to pursue them. He was aware that she had been terminated by three employers in five years under similar circumstances, and that there were significant legal and damages issues with the two cases he was prosecuting. Nevertheless, he presented a best case scenario suggesting the client could recover up to $770,000 against employer A. The committee determined that the respondent's evaluation did not assist the client in making the kind of informed decision contemplated by Rule 1.4(b).

The time, labor, and skills required by the cases were not unusual, but the cases did present some novel and unsettled issues of law typical of wrongful termination and wage claims at the time. The hearing committee determined that these issues did not warrant the time billed, and because the vast bulk of the fee was based on an hourly rate, the respondent unfairly placed the risk of inefficiency and delay on the client. The committee found that although the respondent's hourly rate was reasonable, considering the locality, the type of case, and the respondent's experience, the total fee was excessive and substantially exceeded fees typically charged in such cases. The total fee charged by the respondent for the discovery phase of the two cases, about $700,000, "destroyed the economic viability of the cases," as the hearing committee found. After discharging the respondent, the client secured other counsel who promptly settled the case against employer A for approximately $40,000, and dismissed the case against employer B without compensation. The committee determined that, even considering the client's contribution to the wasted time and expense, the fee was clearly excessive under Rule 1.5 (a). See Matter of Fordham, 423 Mass. 481 (1996).

In aggravation, the hearing committee found (adopted by the board) that in 1998, the respondent received an admonition for failing to promptly disburse the balance of a personal injury settlement withheld to pay a medical provider. In 2005, he received a three-month suspension for failing to handle settlement funds received on behalf of a minor client in accordance with a court order, distributing funds to the minor's mother in violation of court orders, and failing to keep adequate records of the settlement funds.

Also in aggravation, the hearing committee found that the respondent's failure to control the litigation and to properly advise his client was motivated by a desire to retain a client who was paying him large fees. Finally, the hearing committee found that the respondent's substantial experience is a matter in aggravation.

The parties do not contest the findings and conclusions of the hearing committee. I am satisfied that the findings are supported by substantial evidence, see S.J.C. Rule 4.01, § 8 (6), and that the conclusions of law of the hearing committee are correct.

Turning to the question of the sanction, the typical sanction for neglect with resulting harm is a public reprimand. The typical sanction for charging an excessive fee is a public reprimand. The respondent's conduct is more egregious than that in Fordham because the client in this case was charged more and received less than in Fordham. In that case counsel charged a $50,000 fee to represent a client in 1989 on an OUI charge at a bench trial, more than three times the fee typically charged for such a case (it included a novel and successful motion to suppress breathalyzer test results, but otherwise was not a particularly complex matter). Another feature of this case that distinguishes it from Fordham is that here the respondent compounded his misconduct by failing to advise the client properly. Any doubt about the propriety of a suspension is put to rest by the hearing committee's finding that the respondent acted selfishly, and has a disciplinary history that includes a three-month suspension.

A term of four months is consistent with recent decisions involving neglect, excessive fees, and other aggravating circumstances. It is also appropriate to require the respondent to take and pass the Massachusetts Professional Responsibility Examination in light of his disciplinary history and to provide additional assurance that he understands his duties and responsibilities and will not repeat his misconduct.

Bar Counsel requests that the respondent's reinstatement be conditioned on making restitution as determined by fee arbitration. This request had been rejected by the hearing committee and the board on the ground that reinstatement from a suspension shorter than a year and a day should not be conditioned on making restitution in an amount agreed to by the client's estate or as determined in fee arbitration. What constitutes an excessive fee in this case will not be ascertainable without difficulty, not the least of which is that the client is deceased and her absence will make it difficult to determine the effect of her influence over the respondent; and the respondent is experiencing problems with his memory, apparently due to medical issues that rendered him comatose for over one month. However, restitution is appropriate, as both the hearing committee and the board acknowledge, and Bar Counsel persuasively argues that the respondent should not be unjustly enriched by his professional incompetence and selfishness. Where restitution is an appropriate remedy, it would not be "in the interest of the public welfare" to avoid the issue.

An award of damages need not be proved with mathematical precision, although mere speculation is insufficient. An element of uncertainty is permitted in calculating damages, particularly in business torts, which are similar to this case, where the critical focus is on the wrongfulness of the defendant's conduct. If damages can be estimated, based on reason, principle, and sound judgment, that is sufficient in the circumstances.Consequently, the respondent must submit to fee arbitration, if requested by the client's estate within sixty days of the date of entry of this decision, as a condition of reinstatement. As a further condition of reinstatement he must pay any such award or submit a payment schedule subject to approval by this court, and his adherence to such schedule will be a continuing condition of reinstatement. (citations omitted)

The case is Matter of Rafferty, January 28, 2010. (Mike Frisch)