Friday, October 31, 2014

Wild In Cody

A Cody attorney has been censured by the Wyoming Supreme Court for litigation misconduct.

The Missoulian has the details

 The Wyoming Supreme Court on Wednesday censured a Cody lawyer who represented a surgeon in a defamation lawsuit filed by another doctor.

The court ruled lawyer Laurence Stinson violated a professional rule prohibiting lawyers from making court filings without a good-faith basis and making filings intended only to embarrass the other party in litigation. It ordered him to pay over $15,000 to cover disciplinary proceedings.

Stinson's office said he was unavailable for comment Wednesday.

Stinson had represented Dr. John H. Schneider, a neurosurgeon who practiced in Cody. The Wyoming Board of Medicine revoked Schneider's license early this year.

Dr. Jimmie Biles of Cody sued Schneider in 2011 contending he was behind anonymous fliers disparaging Biles' medical practice. Biles also had sued Lisa Fallon, of Indiana, alleging she had distributed the fliers.

According to Biles' lawsuits, the flier was sent in 2010 to more than 14,000 residents of north-central Wyoming. The lawsuits alleged that Schneider hoped the mailing would result in his getting more neurosurgical patients. Schneider had denied he was behind the mailings.

The Supreme Court ruling states the following:

— Fallon had told Biles' lawyers that Schneider had given her money to produce the fliers and provided her with a mailing list.

— While the lawsuit was pending, workers at West Park Hospital in Cody discovered a computer flash drive in the hospital laundry. It showed communications between Schneider and Fallon in which he encouraged her not to talk to Biles' lawyers.

— Stinson was aware that Schneider had written the flash-drive communications to Fallon when Stinson wrote Schneider's response to Biles' complaint. In the response, Stinson alleged that Biles knew his allegations against Schneider were false because Fallon had said she alone was responsible for the fliers. The response then listed "affirmative defenses" disparaging Biles personally and professionally.

— Biles' lawyers found an email-exchange between Schneider and Fallon showing he encouraged her to say she was too sick to testify to Biles' lawyers at a deposition and promising her a "a 250K-plus payoff." Soon after that discovery, Schneider entered a confidential settlement with Biles, ending the lawsuit.

The Supreme Court ruling on Wednesday says Stinson has contested the conclusions by the Wyoming State Bar that he had violated professional standards. Stinson maintained that he had an obligation to his client to mount a vigorous defense to Biles' lawsuit.

Schneider's settlement of the Biles' lawsuit remains an issue in an ongoing civil case in U.S. District Court in Wyoming.

The Wyoming Board of Medicine early this year revoked Schneider's license following an investigation into his involvement in treating Russell Monaco, 47, of Billings, Montana. Monaco died from an overdose of painkillers the day after his release from West Park Hospital in late 2011.

Monaco's relatives filed a federal lawsuit last year claiming negligence by the hospital and medical personnel, including Schneider. Lawyers for Monaco now are seeking details of the settlement between Schneider, his corporate interests and Biles.

In July, U.S. District Judge Scott Skavdahl of Casper signed an order denying a request from Schneider for a protective order to prevent Monaco's lawyers from pursuing information about whether Schneider moved money around after Monaco's death to attempt to shield it from creditors.

Skavdahl stated in his ruling that Monaco's lawyers allege that after Monaco's death, Schneider borrowed $3 million from a limited family partnership, submitted a claim for indemnification from an insurance company he owned and then paid the claim, leaving the insurance company insolvent.

Casper lawyer Stephenson Emery represents Schneider in the Monaco suit and filed another brief earlier this month asking for a protective order to keep Schneider's financial records secret. "The fraudulent transfer alleged is the Biles lawsuit settlement," he wrote. "The settlement is confidential."

An attempt to reach Emery for comment on Wednesday was unsuccessful.

Lawyer Jon Moyers of Billings, Montana, represents the Monaco family. He declined comment on the case Wednesday.

(Mike Frisch)

October 31, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Affairs Of Court

A circuit court judge has been censured, suspended and ordered to pay costs by the West Virginia Supreme Court of Appeals.

In this judicial disciplinary proceeding, a circuit court judge admits that she had an affair with a local man for over two years, and concealed the relationship from her husband and the man’s wife. The judge deliberately intertwined the affair with her judicial office, and eventually involved her staff, courthouse employees, the prosecuting attorney’s office, and local lawyers in concealing the affair. Further, the circuit court judge’s paramour and his subordinates routinely appeared in criminal cases on the prosecuting attorney’s behalf in her courtroom. The judge never revealed her relationship to any defendant or any other litigant even though she knew she was ethically bound to do so. She only admitted to the relationship when she learned that other lawyers were contemplating filing complaints against her with the Judicial Investigation Commission.

Eventually, the circuit court judge stipulated to some of the facts relevant to the affair. The circuit court judge also agreed not to contest some of the disciplinary charges against her because, as the Judicial Hearing Board found, "it was not credible to do so."

The evidence before the Hearing Board established a clearly articulable nexus between the judge’s extrajudicial misconduct and her judicial duties. The Hearing Board determined that the circuit court judge’s conduct constituted eleven separate violations of seven Canons of the Code of Judicial Conduct, and recommended she be severely sanctioned. The circuit court judge now appeals, arguing that there is insufficient proof to support five of the eleven violations, and arguing that the recommended sanctions are too severe.

As set forth below, this Court adopts the Hearing Board’s finding that the judge committed eleven violations of seven Canons. The judge demeaned her office, and significantly impaired public confidence in her personal integrity and in the integrity of her judicial office. As a sanction, we hold that the judge must be censured; suspended until the end of her term in December 2016; and required to pay the costs of investigating and prosecuting these proceedings.

The judge had the affair with a Mr. Carter. She placed court staff in a "difficult position" and used the services of her clerk, two attorneys and others to facilitate the relationship.

The court rejected her claim that this was a private matter

We largely reject Judge Wilfong’s arguments. We recognize that Judge Wilfong probably, initially, intended her conduct with Mr. Carter to be nothing more than a private relationship between consenting adults. "Although both were married to other people, we normally would be loath to interfere in such personal matters. In this case, however, the private aspects of the affair are secondary to the public problems it has created." In re Gerard, 631 N.W.2d 271, 277 (Iowa 2001). Judge Wilfong carelessly and deliberately intertwined her affair with her judicial office, and in so doing seriously damaged public confidence in the integrity and impartiality of the judiciary.

The suspension is without pay.

Judge Loughry concurred and dissented, reserving the right to file an opinion.  (Mike Frisch)

October 31, 2014 in Judicial Ethics and the Courts | Permalink | Comments (0) | TrackBack (0)

A Short Stay

An attorney admitted in 2011 has had his career end with disbarment by the Nebraska Supreme Court.

The attorney had accepted retainers that he used as his own but had not been earned, mishandled cases and failed to respond to the disciplinary charges.

He also fabricated evidence submitted in response to one client bar complaint.

The court

Respondent did not communicate with his clients regarding their cases and did not properly appropriate his clients’ trust fund accounts. He did not properly withdraw from representation of any of his clients and still maintains their files to this day. Correspondingly, Respondent prejudiced several of his clients’ cases; in particular, he allowed Rodwell’s case to be dismissed completely for failure to update the court. The Respondent has not cooperated with the Counsel for Discipline in its efforts to investigate his case, and in fact, Respondent is evading service from the Counsel for Discipline and this court. Respondent failed to provide records necessary to audit his client trust account. In the one instance when Respondent did reply to the Counsel for Discipline, he fabricated evidence of alleged communication with his clients. Thus, Respondent has engaged in dishonesty, fraud, deceit, and misrepresentation.

It's (mercifully) not often that a career at law terminates in this fashion in less time that it takes to get through law school. (Mike Frisch)

October 31, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Local Expert Not Required For Legal Malpractice Claim

The South Dakota Supreme Court affirmed and reversed in part and remanded a trial court grant of summary judgment to the defendants in a legal malpractice case.

The case involved a conflict of interest claim against a law firm that had represented three defendants in litigation over bee sites. The plaintiff here was a beekeeper.

The representation had broken down when the other clients wished to settle. The opposing party insisted that all of the clients settle or none could but the plaintiff here balked.

The trial court erred in excluding the plaintiff's expert witness, then a partner of a Minneapolis law firm and now a justice of the Minnesota Supreme Court.

Analyzing the facts in this case, in regard to the conflicted representation claim, we note that [expert winess] Lillehaug wrote in his expert report that "the applicable standard of care is consistent with, and well stated by, Rule 1.7." He noted how South Dakota’s Rules of Professional Conduct Rule 1.7 is identical to the American Bar Association’s Model Rules of Professional Conduct Rule 1.7. Then, during his deposition, Lillehaug testified that a national standard of care applied to legal ethics...

The Court noted that "in many cases locality is not relevant to the application of the standard of care."  Thus, the expert testimony should have been allowed.

Further, the court found that the trial court improperly weighed the evidence in granting summary judgment to the defendants.

Chief Justice Gilbertson dissented and would retain the locality rule as a consideration in qualifying a legal malpractice expert witness:

The Court’s decision today to remove the consideration of locality from the expert witness qualification process is unnecessary and limits a circuit court’s ability to ensure that expert witnesses do, in fact, possess heightened expertise on whatever issue they are called upon to explain. Simply declaring that we apply a state or national standard does not actually remove the local legal peculiarities that attorneys in this state must handle on a daily basis. For the above reasons I would retain the locality rule.

A thought: perhaps the law of representing multiple clients  in bee site matters is a localized issue.

Then again, perhaps not.

In any event, law professors would have to give the attorneys here a bee grade. (Mike Frisch)

October 31, 2014 in Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, October 30, 2014

Twilight Time

The Illinois Review Board has recommended disbarment of attorney who took funds from a client's trust.

The findings

In 1987, Marion Moran ("Moran") executed a trust  agreement. In 2004, she amended the agreement to name Respondent, her attorney,  as a successor trustee. The trust agreement provided for certain distributions  to be made upon Moran's death to various relatives, friends and charities. After Moran's death in 2005,  the trust held assets worth more than $200,000. When Respondent became trustee  of the trust, he distributed $131,200 in trust assets in accordance with the  terms of the trust agreement. However, from 2005 to 2010, Respondent also took  $44,100 for himself, characterizing some of the payments as attorney's fees. He  did not submit a bill or fee statement for any of the payments to himself nor  did he provide an accounting of the payments.

In March 2010, attorney John Rock ("Rock") learned  from his mother, one of the beneficiaries of the Moran trust, that a local  newspaper reported that Moran held property that was in danger of escheating to  the State of Illinois. Rock contacted Respondent to inquire as to why it was  taking so long to wind up the trust's affairs and to inquire about the alleged  unclaimed property. Respondent refused to provide any information to Rock and  refused to provide an accounting of his handling of the trust. Eventually, Rock  filed a civil action seeking an accounting and alleging that Respondent breached  his fiduciary duties to the trust. The lengthy litigation is set out in detail  in the Hearing Board's report. Incredibly, Respondent refused to provide an  accounting, in spite of court orders to do so. He removed the remaining assets  from the trust bank account, which at the time totaled approximately $82,500,  and moved them to a new bank without notifying the beneficiaries, Rock or the  court. Respondent then secretly took an additional $21,000 from the trust  account during the litigation and used the funds for his own purposes. He  refused to advise the court of the whereabouts of the new account where he was  holding the funds, despite a court order to do so.

In March 2012, the court entered a judgment against  Respondent and awarded the beneficiaries $124,659.91 in damages and $79,450.09  in punitive damages reflecting Rock's attorneys fees incurred in his attempts to  obtain an accounting from Respondent. The court found that throughout the litigation, Respondent had  "demonstrat[ed] a pattern of deliberate, contumacious and unwarranted disregard  for this Court's authority." As of the hearing date in this proceeding, Rock had  collected some, but not all of the judgment, by receiving the trust assets,  recording a judgment against Respondent's home and initiating garnishment  proceedings.

The board found its duty painful

We recognize that Respondent is in the twilight of  his career. However, we believe that disbarment is warranted given the serious  nature of Respondent's misconduct and the numerous aggravating factors.  Respondent's ignorance of his obligations puts other clients at risk. Disbarment  best serves the purposes of the disciplinary system.

(Mike Frisch)

October 30, 2014 | Permalink | Comments (0) | TrackBack (0)

Book Is Thrown At Removed Judge

A county court judge has been removed from office by order of the Florida Supreme Court.

Among the findings of misconduct were issues relating to the sale of her self-published book

After considering all the evidence presented, the Hearing Panel concluded that Judge Hawkins was guilty of violation of Count I(A) in that she operated a private, for-profit business, from which she derived substantial income, from her judicial chambers using official time and judicial resources. The Hearing Panel also concluded that she used her judicial position to promote Gaza Road Ministries by selling and offering to sell Gaza Road Ministries products in the courthouse to persons over whom she had disparate influence and authority, including lawyers who appeared before her and various courthouse employees. The Hearing Panel found Judge Hawkins guilty of promoting the sale of Gaza Road Ministries products on a website that included photographs of her in her judicial robes, and guilty of knowingly using her judicial assistant to promote and produce the Gaza Road Ministries products during working hours.

The hearing panel also found that the judge had violated tax laws and

she was openly observed reading magazines, which Judge Hawkins later characterized as legal materials, during court proceedings and covering up her inattentiveness by asking counsel to rephrase the question.

The judge displayed lack of candor in the investigation.

The court

we are constrained to conclude that Judge Hawkins’ prior record of service and good intentions cannot overcome the grievous nature of the violations in this case. While sale of her book to employees and lawyers in the courthouse, standing alone, would not justify removal, we cannot ignore the fact that Judge Hawkins employed court resources in the operation of her business for a lengthy period of time and failed to see that such conduct was improper under the Canons of Judicial Conduct. Moreover, even in the response to our final order to show cause, Judge Hawkins maintained a defensive posture concerning her conduct in refusing to answer questions and refusing to provide investigatory materials, even after issuance of an order to compel. In defending her conduct, Judge Hawkins asserted that her faith instructed her to hold fast to her innocence and "fight the good fight." We agree with the Commission that obfuscation and frustration of proper discovery, and refusal to answer questions posed by the Investigative Panel, Judicial Qualifications Commission counsel, the Investigator, and the Hearing Panel, do not constitute fighting the "good fight." The Canons require a judge to personally observe high standards of conduct so that the integrity of the judicial system may be observed

The opinion ends on this note

It is our hope that this decision will serve as a reminder to judges of their continuing obligation to personally observe the high standards of conduct mandated by the Code of Judicial Conduct, and to conduct themselves in all things in a manner that will demonstrate candor and preserve the integrity and independence of the judiciary.

Earlier coverage here from the Tallahassee Democrat. (Mike Frisch)

October 30, 2014 in Judicial Ethics and the Courts | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 29, 2014

Privity Relaxed In South Carolina

South Carolina now recognizes that a beneficiary of a will or trust may sue the attorney for drafting errors:

Erika Fabian (Appellant) brought this action for legal malpractice and breach of contract by a third-party beneficiary, alleging attorney Ross M. Lindsay, III and his law firm Lindsay & Lindsay (collectively, Respondents) made a drafting error in preparing a trust instrument for her late uncle and, as a result, she was effectively disinherited. Appellant appeals from a circuit court order dismissing her action under Rule 12(b)(6), SCRCP for failure to state a claim and contends South Carolina should recognize a cause of action, in tort and in contract, by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent. We agree, and we reverse and remand for further proceedings.

The court's reasoning

Recognizing a cause of action is not a radical departure from the existing law of legal malpractice that requires a lawyer-client relationship, which is equated with privity and standing. Where a client hires an attorney to carry out his intent for estate planning and to provide for his beneficiaries, there is an attorney-client relationship that forms the basis for the attorney's duty to carry out the client's intent. This intent in estate planning is directly and inescapably for the benefit of the third-party beneficiaries. Thus, imposing an avenue for recourse in the beneficiary, where the client is deceased, is effectively enforcing the client's intent, and the third party is in privity with the attorney. It is the breach of the attorney's duty to the client that is the actionable conduct in these cases.

 In these circumstances, retaining strict privity in a legal malpractice action for negligence committed in preparing will or estate documents would serve to improperly immunize this particular subset of attorneys from liability for their professional negligence. Joining the majority of states that have recognized causes of action is the just result. This does not impose an undue burden on estate planning attorneys as it merely puts them in the same position as most other legal professionals by making them responsible for their professional negligence to the same extent as attorneys practicing in other areas.

And holding

 We recognize a cause of action, in both tort and contract, by a third-party beneficiary of an existing will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent. Recovery under either cause of action is limited to persons who are named in the estate planning document or otherwise identified in the instrument by their status. Where the claim sounds in both tort and contract, the plaintiff may elect a recovery. We apply this holding in the instant appeal and to cases pending on appeal as of the date of this opinion. As a result, we reverse the order dismissing Appellant's complaint and remand the matter to the circuit court for further proceedings consistent with this opinion.

There are concurring and concurring/dissenting opinions. (Mike Frisch)

October 29, 2014 in Clients | Permalink | Comments (0) | TrackBack (0)

In My Mind I'm Going To Carolina

An attorney admitted to practice in Utah and California has been permanently disbarred in south Carolina for solicitation of a South Carolina client and subsequent false statements to disciplinary authorities.

The attorney was associated with a company named Fulcram 360

Fulcrum 360 was owned and operated by non-lawyers. Fulcrum 360 prepared and distributed marketing materials for J Nolan Legal on behalf of respondent. The materials included a direct mail solicitation and a website. Fulcrum 360 represented to respondent that an attorney had reviewed the marketing materials for ethical compliance and that it had developed a referral network consisting of attorneys in each state to refer clients for foreclosure representation if necessary. In fact, neither respondent nor Fulcrum 360 had a referral relationship or association with an attorney licensed to practice law in South Carolina.

In or around February 2013, a South Carolina resident received a direct mail solicitation from respondent addressed to her at her home in Eastover, South Carolina. The solicitation stated it was issued after the prospective client made known to respondent a desire not to be solicited by virtue of her failure to respond to prior attempts to contact her. The direct mail solicitation contained material misrepresentations and omissions of facts necessary to make certain statements considered as a whole not materially misleading. Specifically, the solicitation did not  disclose the name under which respondent was licensed to practice law, contained the trade name J Nolan Legal which made it difficult for the prospective client to identify respondent, and did not specify that respondent is not licensed to practice law in South Carolina or otherwise indicate the jurisdictional limitations on his ability to practice law in this state. The direct mail solicitation: 1) listed a "virtual office" in California which respondent only used for the purpose of receiving mail while he actually worked from an office in Utah and 2) failed to include the various disclaimers required by Rule 7.3(d)(1), (2) and (3), Rule 407, SCACR. Further, respondent sent the solicitation in the form of a folded postcard that revealed the nature of the prospective client's legal problem on the outside and he failed to maintain a record of dissemination of his solicitations to South Carolina residents.


Respondent made false statements during the disciplinary investigation. In particular, respondent stated in his response to the initial notice of investigation, "I have a lawyer licensed to practice law in South Carolina as part of my network. This lawyer was responsible for all legal work for South Carolina residents and lives in South Carolina." At the interview, respondent admitted he did not have an attorney licensed or living in South Carolina in his network and that a representative of Fulcrum 360 prepared his response and he signed it.

As to sanction

We find it appropriate to permanently debar respondent from seeking any form of admission to practice law in this state (including pro hac vice admission) without first obtaining an order from this Court allowing him to seek admission. Further, we prohibit respondent from advertising or soliciting business in South Carolina without first obtaining an order from this Court allowing him to advertise or solicit business in this state. Before seeking an order from this Court to either allow him to seek admission or to advertise or solicit, respondent shall complete the South Carolina Bar's Legal Ethics and Practice Program Ethics School, Law Office Management School, and Advertising School.

(Mike Frisch)

October 29, 2014 in Bar Discipline & Process | Permalink | Comments (3) | TrackBack (0)

Protecting Lawyers Rather Than The Public

Ever mindful of its role as the protector of accused attorneys rather than the public, the District of Columbia Board on Professional Responsibility has proposed a 90 day suspension with automatic reinstatement of an attorney who engaged in serious neglect.

The board applied the so-called Cater standard to find that Bar Counsel had failed to prove by clear and convincing evidence that there was a "serious doubt" as to the attorney's fitness to practice law.

Thus reinstatement will be automatic if the D.C. Court of Appeals agrees.

The Cater case is a rather unusual decision.

The Court of Appeals hates to hurt the feelings of the volunteer lawyers on the board and, in Cater, a unanimous panel had soundly rejected the board's  interpretation of the supervisory duty of an attorney for non-lawyer employees.

The board had found no violation of the duty to supervise the work of an embezzling secretary where, over an extended period of time, the attorney had allowed the employee to steal and abscond with entrusted estate funds.

The court flatly rejected the board's elaborate effort to render the supervision obligations of Rule 5.3 non-existent from an enforcement point of view.

As a sop (I believe), the court accepted the lesser evil proposed by the board and adopted its wildly public-unfriendly standard for determining when a fitness showing should be imposed for attorney misconduct

..we grant the Board's request for clarification of the legal standard to be followed in deciding whether the so-called fitness requirement is warranted.   Resolving a disagreement between the Board and Bar Counsel, we approve the “clear standard” proposed by the Board:  to justify requiring a suspended attorney to prove fitness as a condition of reinstatement, the record in the disciplinary proceeding must contain clear and convincing evidence that casts a serious doubt upon the attorney's continuing fitness to practice law.

This ill-advised "clarification" has led to a number of instances of erring on the side of automatic reinstatement contrary to the public interest.

As I noted in this March 20, 2008 post titled The Public Speaks:

What is interesting is the hearing committee report itself. The two lawyers agree on sanction, finding that automatic reinstatement is in the public interest because Bar Counsel failed to show clear and convincing evidence of a serious doubt regarding fitness to practice. This is the so-called Cater standard, which I criticized in my article on the D.C. disciplinary system. This case shows how this laughably legalistic formulation can be used to frustrate the overarching goal of any disciplinary system, which is protecting the public from unfit lawyers. As I had predicted, it permits the system to justify leniency as a supposed failure of Bar Counsel to meet its burden of proof.

Notably, the non-lawyer is having none of this lawyerese mumbo jumbo and rightly complains about the leniency of the sanction: "Remorse does not, by itself, demonstrate [his] rehabilitation... only that he is aware he did wrong... Any recommended sanction should accurately reflect the seriousness of the offense. Eighteen months does not, in this case, achieve that goal." I suppose one needs to become a lawyer to unlearn such common sense.

Here, the attorney had failed to file a post-hearing brief and appear for oral argument before the board. No problem, in their eyes

We have considered Respondent’s failure to consistently respond to Bar Counsel’s inquiries during the course of its investigation and his lack of participation in proceedings before the Board in assessing the second Roundtree factor. However, we do not find that this lack of consistent participation in the disciplinary process detracts from Respondent’s forthright admissions and recognition of the seriousness of his misconduct in his testimony before the Hearing Committee.

Also unimportant was the attorney's reprimand in Maryland for similar misconduct.

The case is In re John Green and can be accessed at this link.


I have learned that Bar Counsel had filed additional charges against this attorney on September 25, 2013. The charges were not reviewed and approved until last week - thirteen months later.

I find it shocking that the BPR would issue this report knowing that its own deficient processes had delayed consideration of further charges while blithely assuring the public that the attorney is fit to practice.

If someone can explain to me why charges sit unreviewed for over a year while other charges against the same attorney are being litigated, I'd be pleased to hear that justification.

Until then, spare me the concern about the deficiency of Bar Counsel's proof of the attorney's unfitness to practice.  (Mike Frisch)

October 29, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 28, 2014

Law Firm Hits Jackpot

The long running and hotly-contested dispute between the heirs of real estate magnate Sylvan Lawrence and the Graubard Miller law firm has been resolved in favor of the law firm by the New York Court of Appeals.

The court enforced a revised contingent fee retainer agreement found "unconscionable" by the lower court that results in a fee of $44 million for five months work on top of $18 million paid in hourly fees.

The court noted that the underlying estate litigation unexpectedly settled when the firm uncovered "smoking gun" evidence shortly after entering into the revised agreement.

The court

Beginning in 1983, defendant law firm Graubard Miller (Graubard or the law firm) represented Alice Lawrence (Lawrence) and her three children in litigation arising from the death of her husband and their father, Sylvan Lawrence (decedent), a real estate developer. At the time of decedent's death in 1981, his company owned commercial real estate in New York City valued at an estimated $1 billion. Decedent's brother and lifelong equal business partner, Seymour Cohn (Cohn), was executor of the estate. Cohn resisted selling decedent's properties and distributing the proceeds to Lawrence and the children, which caused Lawrence to bring suit in 1983. For over two decades, she and Cohn (and after he died in November 2003, his estate) battled in court (hereafter, the estate litigation)...

The estate litigation came to an abrupt and unexpected end on May 18, 2005, when the Cohn estate agreed to settle for over $100 million, a sum about twice what Graubard assessed the remaining claims to be worth. There quickly followed, though, this dispute between Lawrence and Graubard with respect to the law firm's fee, and the validity of certain gifts made by Lawrence to three Graubard partners in 1998. For the reasons that follow, we hold that the parties' revised retainer agreement was neither procedurally nor substantively unconscionable and is therefore enforceable; and that the Lawrence estate's claim for return of the gifts is time-barred.

The court found that a revised retainer that ended up substantially benefiting the firm was not unconscionable.

Further, the client was "no naif."

The court

We agree with Graubard that a hindsight analysis of contingent fee agreements not unconscionable when made is a dangerous business, especially when a determination of unconscionability is made solely on the basis that the size of the fee seems too high to be fair...

It is in the nature of a contingency fee that a lawyer, through skill or luck (or some combination thereof), may achieve a very favorable result in short order; conversely, the lawyer may put in many years of work for no or a modest reward.

Notably absent from the court's opinion is any discussion of the ethics rules governing fees and gifts.

A concurring and dissenting opinion would find that the return of gift claim is not time-barred.

The court here reviewed the decision of the Appellate Division for the First Judicial Department remanding the matter to the Surrogate for further findings.

The Appellate Division described the situation

In 1983, Mrs. Lawrence retained the Graubard firm to represent her in connection with her deceased husband's estate on an hourly fee basis, which retention was confirmed by letter dated August 4, 1983.   Thereafter, the Graubard firm billed Mrs. Lawrence over $18 million in legal fees incurred in litigation instituted against the executor of the estate concerning his administration of the estate, as well as other matters.   During that period more than $350 million in distributions were made to the beneficiaries of the estate.   In addition, in December 1998, Mrs. Lawrence paid three of the firm's partners bonuses or gifts totalling over $5 million, plus approximately $2.7 million in gift taxes on such payments.

In November 2004, according to Mrs. Lawrence, she noticed that her legal bills were increasing to almost $1 million per quarter and asked about the possibility of entering into a new fee arrangement.   As a result, in January 2005, a modified retainer agreement was entered into which provided, in pertinent part, that, commencing January 1, 2005, the firm would continue to bill Mrs. Lawrence on an hourly basis for services rendered with an annual cap of $1.2 million, exclusive of disbursements.   In the event any additional monies were distributed to the beneficiaries of the estate, or Mrs. Lawrence settled the litigation with the executor's estate, the Graubard firm was to be paid from Mrs. Lawrence's share of such monies 40% of the total distributed to the beneficiaries, minus the total amount previously paid by her pursuant to the one-year, $1.2 million retainer.   Prior to the revised retainer agreement, Mrs. Lawrence had personally negotiated with her nephew, the late executor's son, and received a $60 million offer from the executor's estate, but such offer did not result in a settlement.

On May 18, 2005, about four and a half months after the modified retainer agreement was entered into, the Graubard firm reached a settlement in the litigation against the former executor's estate in which it agreed to pay the Lawrence estate approximately $104.8 million.   Shortly thereafter, Mrs. Lawrence retained new counsel and refused to pay the Graubard firm's fee.

On August 5, 2005, the Graubard firm filed a petition in Surrogate's Court to compel payment of its legal fees, asserting claims against Mrs. Lawrence for breach of the 2005 retainer fee agreement in the amount of 40% of not less than $110.3 million plus 40% of any additional sums paid to the estate, less $348,272.78 paid by Mrs. Lawrence to Graubard on May 6, 2005, together with statutory interest, or alternatively, quantum meruit legal fees in the same amount.   The petition also asserted claims against the current executor, Richard Lawrence, for tortious interference with contract in inducing his mother's breach of the retainer agreement and to recoup for legal services benefitting the estate.

It is my view that this dissenting opinion from Judge Catterson with respect to the Appellate Division remand got it exactly right.

Because I believe that as a matter of law a legal fee of $40 million for five months work following years of litigation which was fully compensated on an hourly basis, is unconscionable, I respectfully dissent and would void the agreement embodying that fee. Further, because of the allegations by plaintiff that the defendants violated certain provisions of the Code of Professional Responsibility, I would refer the defendants to the Departmental Disciplinary Committee.

I cannot agree with the majority's view that the undisputed facts of this case are insufficient for a ruling of unconscionability as a matter of law.   Specifically, it is undisputed that, for almost the entire year prior to January 2005, Graubard focused on litigating an accounting claim after Alice Lawrence (Alice) declined a $60 million dollar settlement offer on that claim.   It is also undisputed that five and half months after signing the modified retainer agreement containing the 40% contingent fee provision, Graubard finalized a settlement of approximately $100 million dollars on the claim.   It then sought $40 million as its contingent fee.

In other words, having billed Alice for every hour expended on work in connection with the claim after Alice left the $60 million offer on the table, Graubard now seeks to retain every dollar over and above that amount as its contingent fee, essentially divesting Alice of any benefit she may have gained from Graubard's legal services.   The majority's contention that the circumstances underlying the agreement must be further fully developed is incomprehensible in the face of this substantive unconscionability.

For these reasons as set forth more fully below, I believe that, the agreement embodying that fee should be declared void.

This decision is a huge win for the lawyers but a lamentably pro-lawyer view of unconscionable fees.  (Mike Frisch)

October 28, 2014 in Billable Hours | Permalink | Comments (0) | TrackBack (0)

Monday, October 27, 2014

Duty To Court Trumps Client's Wishes


The Delaware Supreme Court has publicly reprimanded a Maryland lawyer who had been admitted pro hac vice by the Court of Chancery for violation of a court order.

The attorney had, at the behest of his client, filed an action in Maryland in violation of a court order in the Delaware matter.

The attorney admitted that the Maryland action violated the Delaware order and "testified credibly that he was under great pressure from his client to file the Maryland Action, that he knew that it violated the Seizure Order, but that he chose to carry out his client's wishes rather than respect the Seizure Order."

The Court of Chancery granted the attorney's motion to withdraw. (Mike Frisch)

October 27, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Readmission Impossible

An attorney convicted in a tax shelter scheme was permanently disbarred by the Louisiana Supreme Court.

The underlying facts of the Third Superseding Indictment are complex, but essentially, the Government alleged that respondent’s criminal conduct occurred as part of an effort to market, sell, and implement a tax shelter known as "Hedge Option Monetization of Economic Remainder," or HOMER, which respondent designed for high net worth clients of Bank One. Respondent, who is also a CPA, allegedly prepared fraudulent invoices to obtain referral fees from Bank One on the transactions relating to this tax shelter, although he was not entitled to receive the fees, and then concealed the receipt of the ill-gotten referral fees by failing to report them on his individual tax returns. Furthermore, the Government alleged that respondent embezzled at least $3 million dollars from a client’s trust account and willfully evaded taxes on approximately $6.5 million in income in 2001 and 2002.

On June 2, 2010, following a three-week trial, the jury found respondent guilty of all three counts of the Third Superseding Indictment. In response to a special interrogatory, the jury found that the Government had proven respondent’s guilt with respect to both alleged objects of the Count One conspiracy.

The conviction was affirmed and is presently under collateral attack.

As to sanction

The record reveals that respondent orchestrated a complex scheme in which he stole money from a client’s trust, then stole fees from Bank One that would not otherwise have gone to him, and finally avoided paying federal income taxes on the monies so obtained. See United States v. Ohle, 441 Fed. Appx. 798, 800, 2011 WL 4978442 (2nd Cir. 2011). Without a doubt, such conduct reveals a fundamental lack of honesty and integrity in respondent’s character which makes him unfit to hold a license to practice law in this state.

We do not impose permanent disbarment lightly. In re: Morphis, 01-2803 (La. 12/4/02), 831 So. 2d 934. However, in light of the undisputed facts of this case, we can conceive of no circumstances under which we would ever allow respondent to be readmitted to the practice of law in Louisiana. He must be permanently disbarred.

(Mike Frisch)

October 27, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Unpardonable Offense

 The Maryland Court of Appeals has disbarred an attorney for misappropriation and other misconduct.

The court offered a reminder of the sanctity of entrusted funds

The gravamen of Respondent’s misconduct is the misappropriation of funds he collected on his clients’ behalf. As discussed above, we have concluded that, because Respondent had insufficient funds to pay C. Jones and Mr. Potochney the money owed to them, and he failed to promptly pay Ms. Dress’s medical bill, Respondent misappropriated both client and third-party funds. Respondent, as the only name on both his operating and trust account, was solely responsible for the funds and had knowledge of all account activity.

We are consistent in holding that the “misappropriation of funds by an attorney is an act infected with deceit and dishonesty and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction.” (citation omitted)...

 here Respondent’s misconduct in misappropriating funds is exacerbated by multiple other violations, including his failure to provide competent representation to his clients, his failure to prosecute diligently his clients’ claims, and his failure to communicate adequately with his clients on their respective matters. These combined violations create an even stronger case for disbarment.

(Mike Frisch)


October 27, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Friday, October 24, 2014

No Beauty Or Culture In These Arguments

An attorney who is not regularly engaged in the practice of law but rather serves as chief financial officer of the Charleston Academy of Beauty Culture ("CABC") was suspended for three months by the West Virginia Supreme Court of Appeals.

The misconduct involved arguments made on behalf of CABC in  an appeal brief that attacked an administrative law judge. 

The underlying case involved the allegations of two former students that CABC had engaged in race discrimination. The claims were filed with the state Human Rights Commission.

The ALJ was African-American.

The attorney asserted, among other things

[ALJ] Phyllis H. Carter failed to execute her duties as ALJ for the HRC in a fair an (sic) impartial manner by, and in direct conflict with the Code of Judicial Conduct, exhibiting clear bias and having personal knowledge of the matters appearing before her; refusing to disclose the same; and ruling against that which she personally knew to be false...

In an outlandish display of tyrannical inclination, ALJ Carter found that Respondents discriminated because they were unable to force other companies and trade groups to provide instruction and product knowledge at the Respondents’ school. . . . ALJ Carter basing her Decision upon the absence of such an outlandish forced coercion, as she obviously did, indicates not only that ALJ Carter is deluded into thinking that this is a Communist country where companies are forced to perform services for others, but is under the deluded impression that Respondents have the power and authority to compel others to do its bidding. For the foregoing reasons, Respondents recommend that ALJ Carter seek professional psychiatric help, or be required to attend a forced reeducation camp . . . oops . . . wrong country...

The court rejected a number of contentions, concluding that Rule 8.2 applies to statements about administrative law judges and that the statements were not protected by the First Amendment.

The court

 An attorney is obligated to present the most effective argument for his client within the Rules of Professional Conduct and to pursue his client’s interests in a lawful manner. Attorneys are encouraged to present zealous advocacy and pursue all available avenues of relief on the client’s behalf. Dissatisfaction with adverse rulings, however, does not justify unwarranted attacks upon the credibility and personal values of the adjudicatory officer. Such irresponsible behavior is injurious to the client’s interests and to the attorney’s obligation to the legal system.

The [Hearing Panel Subcommittee] also properly ruled upon the second factor under the Rule 3.16 [sanction] analysis. Mr. Hall acted intentionally and knowingly; his violations were made in writing after deliberation. Moreover, he presented his statements in two separate appeals and has remained steadfast in his assertion that his statements regarding ALJ Carter were justified.

The attorney also must take a CLE ethics course. (Mike Frisch)

October 24, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Roeder Conviction Affirmed, Hard 50 Sentence Vacated

The Kansas Supreme Court has affirmed the conviction of the killer of Dr. George Tiller.

The court found no basis for the defense of necessity or imperfect self-defense of others.

Among the other arguments rejected was prosecutorial misconduct in argument

...the prosecutor's statements, although arguably misconduct, were very mild and were made in response to defense counsel's argument. Further, the abundant evidence of premeditation made any error in failing to provide a second-degree murder instruction harmless beyond a reasonable doubt. Consequently, especially in light of the overwhelming evidence, we conclude that cumulative error did not affect the trial's outcome and did not deny Roeder a fair trial.

The court vacated the Hard 50 aspect of the sentence imposed

Since Roeder's sentencing, we have held that a hard 50 sentence based upon a judge's own preponderance-of-the-evidence determination that an aggravating factor existed is unconstitutional and must be vacated.

(Mike Frisch)

October 24, 2014 | Permalink | Comments (0) | TrackBack (0)

Crimes Draw Suspension

Two incidents of criminal conduct have led to an attorney's 181 day suspension by the Kentucky Supreme Court.

The first involved a guilty plea to criminal endangerment

The charges relate to an altercation between Benton and his then girlfriend that occurred around 2:00 a.m. on May 14, 2011, near the corner of Short and Market Streets in Lexington. After Benton reportedly quickly and aggressively accelerated his car toward the victim, he exited his vehicle brandishing a semiautomatic handgun. According to witnesses, Benton then struck the victim in the head with either the pistol or a closed fist, knocking her unconscious.

He then tested positive for marijuana use while on probation. The probation was continued rather than revoked but he got two weekends in jail.

The second incident

Benton entered a guilty plea in Fayette Circuit Court to terroristic threatening, third-degree, which is a Class A misdemeanor. The charge arose from threatening text messages and voicemails Benton sent to an 18-year-old male high school student who had been bullying Benton's daughter. Benton was sentenced to sixty days imprisonment with credit for time served, and he has served his time.

The attorney must be assessed by the bar's treatment program and comply with any conditions imposed as a result. (Mike Frisch)

October 24, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

What It Takes To Get Disbarred In New Jersey

An attorney who had continued to represent clients while suspended (and did a poor job of it) has been disbarred by the New Jersey Supreme Court.

The Disciplinary Review Board

Respondent’s most serious ethics offense was practicing law while suspended. He represented at least six clients, starting on the day after his temporary suspension and for a period of eight months

He had previously defaulted on bar charges and defaulted in this one

The two present matters constitute his fourth and fifth brushes with the disciplinary system. They are also his fourth and fifth defaults. In our view, nothing short of disbarment is justified for respondent’s persistent refusal to abide by the rules of the profession and obvious disregard for the ethics system...

For his pattern of disrespect for disciplinary authorities, for the Court, and for the profession at  large respondent must be disbarred. We so recommend to the Court.

The court agreed. (Mike Frisch)

October 24, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

"So Either File A Complaint Or Get The Hell Off My Back"

An attorney who had failed to remove earned fees from his escrow account and was initially uncooperative with the bar investigation has been reprimanded by the Maryland Court of Appeals.

From the hearing judge's findings

To some extent, Respondent appeared to be the victim of the old adage, “no good deeds go unpunished.” He repeatedly provided free legal advice to Mr. Hulamm, who in turn appeared to believe that Respondent should provide him free services. Respondent was not faultless, however... Respondent Weiers’[s] failure to keep time sheets and to bill accordingly led to Mr. Hulamm’s insistence that he was due a refund although Respondent had earned his fee. Further, Respondent’s failure to timely pay himself for services rendered to Crescendo Realty, LLC, resulted Respondent Weiers’[s] failure to keep time sheets and to bill accordingly led to Mr. Hulamm’s insistence that he was due a refund although Respondent had earned his fee. Further, Respondent’s failure to timely pay himself for services rendered to Crescendo Realty, LLC, resulted in the commingling of earned and unearned funds in Respondent’s trust account for approximately one year.

The court was not impressed with the attorney's attitude as reflected by this communication to Bar Counsel

I do not know what misconduct you are investigating and I don’t think you do either. Your latest demand appears to be a desperate attempt to justify the time you have wasted so far. . . I don’t know if you are on a witch hunt, a personal vendetta, a fishing expedition, or if you just don’t have enough to do, but I’ve had my fill of you. So either file a complaint or get the hell off my back.

This attitude was also reflected in Respondent’s statements during oral arguments, asserting for instance that this entire situation was “Kafkaesque.” These statements reflect a disparagement of and lack of regard for the Attorney Grievance Commission. In our review of the record, we agree with the hearing judge that Mr. Weiers’s failure to cooperate readily with Bar Counsel constitutes a MLRPC 8.1(b) violation.

But in the end

Respondent’s conduct in this case caused no harm to his clients. Respondent has no history of prior disciplinary offenses, and there is no evidence that his conduct was motivated by a dishonest or selfish motive. Although Respondent failed to timely comply with Bar Counsel’s requests for information, Respondent ultimately responded to Bar Counsel and participated in the disciplinary process. Mindful of Respondent’s troubling attitude toward Bar Counsel and the investigative process, and having cautioned Respondent against such conduct in the future, we conclude that a reprimand is the appropriate sanction in this case.

(Mike Frisch)

October 24, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Amount Due

A law firm was entitled to its legal fees, notwithstanding errors made by its original counsel, according to a decision of the New York Appellate Division for the First Judicial Department:

The motion court properly concluded that the varying figures given by R & M during this litigation, as to the total outstanding fees due, did not undermine R & M's prima facie case for an account stated, inasmuch as the discrepancies were plainly attributable to the incompetence of its original attorney in drafting the motion papers on its previous motions for summary judgment, which, inter alia, did not include R & M's complete billing invoices from the past, and records of off-sets that the parties had agreed to. The monthly invoices and records - the timely receipt of which Sakow never disputed - were never challenged by Sakow as to accuracy or reasonableness until the instant litigation was commenced years later. Such circumstances, including that Sakow continued to make payments towards the total fees accrued and billed, without reservation, belie the belated challenges to the reasonableness of the invoiced fees...

The record reflects that R & M represented Sakow on many legal matters since 1989, and that R & M would send regular, detailed monthly invoices to account for the fees claimed. The record also demonstrates that Sakow never denied receipt of invoices supporting the "balance forward" figure referenced in the March 7, 2002 invoice, that no objection was raised as to such invoices, and that Sakow continued to make regular payments towards the invoices.

(Mike Frisch)

October 24, 2014 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, October 23, 2014

Suspension For Computer Child Porn

An attorney convicted of second degree endangerment of children has been suspended for an indeterminate period by the New Jersey Supreme Court.

He may seek reinstatement in five years from the date of his January 2011 interim suspension on a showing of fitness to practice.

From the court's summary

 The facts of this case are undisputed. In July 2008, printouts of pornographic images, some of which depicted young female victims, were found in a receptionist’s desk drawer at the district office of New Jersey’s Twentieth Legislative District. At the time, respondent was an assemblyman representing the Twentieth District. The discovery led to an investigation by the New Jersey State Police, which revealed that this was not the first time pornography was encountered at the office; staff had previously discovered sexually explicit images in the office during morning work hours or following a weekend. As a result, the Office of Legislative Services required passwords on the computers.

When confronted, respondent admitted to the State Police that he had visited pornographic sites and printed the sexually explicit pictures. He acknowledged that the sites he viewed and the printed images contained both adult and child pornography. He explained that he had accessed the receptionist’s state-issued computer with a password that he instructed another member of his staff to obtain. Interviews also revealed that staff members observed respondent viewing pornography on the receptionist’s computer on prior occasions. In total, the police recovered thirty-four images of child pornography that respondent accessed on computers at the district office and at respondent’s law office. The images retrieved from respondent’s law office depicted nineteen girls under sixteen years old.

Respondent resigned from his position in the Legislature on July 20, 2008.

The court called the sanction a "step short" of disbarment. (Mike Frisch)

October 23, 2014 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)