Friday, May 22, 2020
The Alaska Supreme Court upheld a contingent fee forfeiture as a result of ethics issues in the representation.
If the link does not work, the case is Kenneth P. Jacobus, P.C. and Kenneth P. Jacobus v. Uwe Kalenka, Personal Representative of the Estate of Eric Wayne Kalenka, decided today.
The court sets out the story
After a conflict of interest between an attorney and a long-time client arose during settlement negotiations, the attorney filed a confidential motion with the superior court criticizing his client. The client discharged the attorney and hired new counsel. But the attorney continued to control the settlement funds and disbursed himself his fee, even though the amount was disputed by the client. The court found that the attorney’s actions had violated the rules of professional conduct and ordered forfeiture of most of his attorney’s fees. We affirm the holding of the superior court.
Kenneth Jacobus represented the estate of Eric Kalenka for over a decade after Eric Kalenka was murdered in 2004. Eric’s divorced parents, Uwe Kalenka and Dorcas Teall, were the estate’s beneficiaries; Uwe Kalenka was the personal representative. Uwe Kalenka retained Jacobus to represent him in the administration of his deceased son’s estate and to bring claims against insurance companies and third parties. Kalenka agreed to pay Jacobus’s fees by a combination of an hourly rate for work relating to the administration of the estate and a share of any recovery from the claims against insurance companies and third parties.
Three cases arose fromEric’s murder: a criminal case in which Jack Morell was convicted of second-degree murder; a civil suit against an automobile insurer; and a civil suit for wrongful death against the bar that had served alcohol to Morell (the Jadon litigation). Jacobus prevailed in reversing summary judgment for the bar in the Jadon litigation and entered into settlement negotiations.
In 2015 Jacobus filed an ex parte “Confidential Status Report” with the superior court. In it he stated that although the Jadon litigation appeared to be near settlement, he was concerned that Kalenka was unable “to reasonably evaluate any settlement offer.” Jacobus believed that Kalenka’s emotional state and desire for revenge would lead him to “refus[e] to accept a reasonable settlement offer,” and result in a trial with a “substantial chance of a defense verdict.” Jacobus believed that refusing to settle would be contrary to the best interests of the estate and the estate’s other beneficiary, Teall. Jacobus was also concerned he would not collect his fee given the low likelihood of success at trial. He therefore concluded that he could no longer assist Kalenka.
The trial judge ordered disclosure of the report to the client and held a hearing
The hearing was held in September 2015. Jacobus and Kalenka were present; Kalenka had retained a new attorney, Alfred Clayton. The court ordered the substitution of counsel, replacing Jacobus with Clayton. The next day Jacobus filed an attorney’s lien on funds related to his representation of Kalenka.
Kalenka, represented by Clayton, then settled the Jadon litigation. Following the settlement Clayton wrote Jacobus. This October 2015 letter advised Jacobus that “[t]he settlement check should soon be delivered to [Jacobus’s] office” and authorized him “to deposit [it] into [Jacobus’s] trust account.” The letter also stated that Jacobus was “not authorized to disburse any of the settlement funds from trust until disputes relating to [his] claim for fees and costs are resolved.”
Clayton’s letter then addressed Jacobus’s “claim for a . . . contingent fee from the settlement.” The letter listed events that had occurred since “the confidential probate filing” and stated that as a result “it is . . . Kalenka’s position you are entitled only to a fee in the amount of $83,333.33” rather than the $112,500 Jacobus claimed he was owed.
Clayton sought an accounting but
Jacobus responded a few days later in a lengthy letter with a number of attachments. The letter informed Clayton that Jacobus had already acted regarding the settlement proceeds and had created a new trust account, the “Kalenka Settlement Proceeds Trust,” with himself as trustee. Attached to the letter were an ethics opinion from the Alaska Bar Association and the Declaration of Trust for the newly established trust. The Declaration stated that the trust was created because “it appears necessary to protect the interests of all people who are involved with . . . Kalenka.” The trust’s purposes included protecting Teall’s share of the inheritance and Jacobus’s and Clayton’s fees and costs from interference by Kalenka.
On November 23 Clayton responded to Jacobus’s “astonishing letter.” He again requested the formal accounting of Jacobus’s costs and fees he had sought in his first letter. He then objected to Jacobus’s “extraordinary” actions in creating a new trust, unilaterally determining its purposes, and declaring himself its sole trustee, serving without bond. He accused Jacobus of “usurp[ing] the role of [the judge] who actually presides over the Probate proceeding.” Clayton described as “[e]ven more astonishing” Jacobus’s declaration that the “first thing” he intended to do was “communicate with . . . Teall” after the court had expressly denied his request for permission to do so.
A month after receiving Clayton’s letter, Jacobus filed a “Notice of Intent to Violate Court Order,” asserting that Alaska Rule of Professional Conduct 1.15(d) required him to violate the August order that forbade him from disclosing any confidential information to Teall without Kalenka’s permission. Jacobus claimed that he was ethically required both to promptly notify Teall that he had received funds and to distribute the amount to which Teall was entitled as a beneficiary of the estate.
The superior court ruled against the attorney
Jacobus appeals the superior court’s orders prohibiting him from revealing confidential information to Teall; its findings that he violated his duties to his client; and the order forfeiting the majority of his fees.
Here as to the superior court order
But Jacobus misinterprets both Rule 1.15(d) and the court’s order regarding communication with Teall. Rule 1.15(d) directs an attorney to promptly notify a client or third party upon receipt of funds or property in which the client or third party has an interest. The order prohibiting Jacobus from speaking with Teall only proscribed the “disclos[ure of] any confidential information.” Jacobus could thus have complied with both the order and Rule 1.15(d)’s directive simply by notifying Teall of the existence of settlement funds.
And contrary to Jacobus’s arguments, the December 2015 order made clear he was permitted to communicate with Teall or others. This order reiterated that Jacobus was ordered in August to refrain only from disclosing confidential information unless authorized by Kalenka; it did not prohibit Jacobus from revealing non-confidential information. Noting that the Jadon file was not confidential, the court stated that nothing in its August order prevented Jacobus from sharing information with Teall that a settlement had been reached.
And as to loyalty
The superior court found that Jacobus “continually violated” the duty of loyalty to his client, Kalenka. Jacobus filed pleadings that were directly adverse to Kalenka, ignored Kalenka’s instructions, and urged the court to take actions that were contrary to the instructions he had received from Kalenka.
The superior court did not err by concluding that Jacobus violated his duty to Kalenka when he disbursed funds to himself. Clayton’s October 2015 letter explicitly directed Jacobus to refrain from disbursing funds because of the ongoing dispute over the amount to which he was entitled. Jacobus therefore violated his duty of loyalty by paying himself $83,333.33. By filing pleadings and requesting authorization to take actions that were contrary to Kalenka’s interests and instructions to him, Jacobus also violated his duty of loyalty to his client. Further, by creating a trust for the specific purpose of protecting himself and third parties from his client after his client discharged him, and by paying himself from the trust funds despite an ongoing dispute over fees, Jacobus committed additional violations of his duty of loyalty to Kalenka. The superior court did not err by concluding that Jacobus had committed “egregious” violations of his ethical duties.
The court upheld forfeiture of the contingent fee. (MIke Frisch)
Monday, May 18, 2020
The Delaware Superior Court affirmed a Court of Chancery decision finding in favor of a defendant law firm in a contingency fee dispute
Appellant had been involved in a multi-vehicle accident. Appellant eventually retained the law firm of Pratcher Krayer, LLC to represent him in a claim against one of the other drivers. Appellant exhausted his PIP benefits (including some loss of wages benefits) under his own insurance policy, Travelers Insurance (“Travelers”). The retainer agreement that Appellant signed provided for the firm to represent him against the other driver, who was represented by GEICO Insurance (“GEICO”). The retainer agreement stated that the attorney’s fee would be one-third of Appellant’s total award. A mediation was held and GEICO, that day, offered a settlement of $60,000. Appellee explained the settlement offer and the approximate sum of money that Appellant would receive after payment of the attorney’s fee, expenses, etc. Thereupon, Appellant signed the settlement agreement. Shortly thereafter, GEICO sent a $60,000 check and a release to Appellee’s office. However, Appellant refused to sign the release because he believed that he was owed additional lost wages (which he calculated to be $25,000), that $25,000 should first be given to him from the settlement, and that Appellee’s one-third fee should be determined from the remainder. As such, Appellant contended that Appellee was only entitled to one-third of $35,000. Appellant sued the law firm in the Court of Common Pleas. The Court of Common Pleas decided in favor of the law firm, finding that Appellant did not meet his burden of proof. Appellant now appeals that judgment.
In his Notice of Appeal, Appellant contends that he did not receive a fair and just trial, Attorney Pratcher fabricated stories and manipulated Appellant’s subpoenaed witness, and Appellant was denied his out-of-work wages of $25,000 that was agreed upon by Appellee.
Appellant appears to argue that the Court of Common Pleas’ decision is contrary to the evidence and should be reversed. Appellant also asserts that the decision should be reversed because his attorney-client privilege was violated, Attorney Pratcher manipulated Appellant’s witness, and Appellant was denied his rights to appeal the settlement agreement or to sue the other driver.
A careful review of the record and the parties’ submissions reflect that the Court of Common Pleas’ factual findings are supported by the record and are the product of an orderly and logical reasoning process. Additionally, it did not commit legal error in holding that Appellant did not meet his burden of proof.
The Court of Common Pleas held that Appellee was entitled to one-third of the entire settlement agreement amount of $60,000. It made this finding after reviewing all of the Appellee was entitled to one-third of the total settlement amount...
While it is understandable that Appellant would like to receive more money for his loss of wages, Appellant did not prove his case.
Friday, May 15, 2020
The Utah Supreme Court remanded a dispute between a departed attorney and his former firm
This appeal arises out of a longstanding dispute between attorney Gregory Jones and his former law firm, Mackey Price Thompson & Ostler, P.C. (MPTO), over the distribution of litigation proceeds. Jones claims a right to some of the fees collected by the firm in personal injury cases arising out of the use of the diet drug known as Fen-Phen. Jones has asserted claims for quantum meruit/unjust enrichment, breach of fiduciary duty, and fraudulent transfer. He also claims a right to an award of punitive damages and seeks to impose a constructive trust on the funds held by MPTO.
In 2017, after nearly ten years of litigation (including a previous appeal to this court), a jury entered a $647,090 verdict against MPTO on a quantum meruit/unjust enrichment theory. But the district court dismissed Jones’s claims for breach of fiduciary duty, fraudulent transfer, and punitive damages after MPTO filed a motion for directed verdict. It also rejected Jones’s request for a constructive trust.
Both sides appealed
We affirm the directed verdict on the fiduciary duty claim but reverse the dismissal of the fraudulent transfer and punitive damages claims and reverse and remand for further proceedings on Jones’s request for imposition of a constructive trust. We also affirm the denial of Jones’s alter ego and statutory claims against Mackey, Price, and Mackey Price Law because such claims cannot be asserted in post-judgment proceedings under Brigham Young University v. Tremco Consultants, Inc., 2007 UT 17, 156 P.3d 782. And we uphold the jury verdict on the quantum meruit/unjust enrichment claim on the ground that the district court did not abuse its discretion in admitting the testimony of Jones’s expert witness.
Two attorneys associated with MPTO, Jeffrey Thompson and Russell Skousen, initiated a Fen-Phen program with MPTO to litigate claims arising from the fallout surrounding the beleaguered weight-loss pill. Jones also worked for MPTO and focused on Fen-Phen cases from 2002 to May 2005. At that time, Jones developed dissociative amnesia, which severely impaired his memory and prevented him from continuing his work. The Fen-Phen cases eventually generated over $1 million in fees for MPTO. After Jones claimed to be entitled to some of the Fen-Phen funds, MPTO deposited the fee checks into its trust account and agreed as a “professional courtesy” to let Jones know if any of the funds were to be distributed.
The court rejected the fiduciary claim
We affirm because we find no evidence of a trustee-beneficiary relationship between Jones and MPTO. Trusts and corresponding fiduciary relationships are generally created by contract, statute, judicial decree, or some manifestation of an intent to create a trust. Jones’s situation matches none of these scenarios, and he has not identified a basis for an exception to the general rule...
Because neither general trust principles, rule 1.15(e), nor the law-of-the-case doctrine supports a finding that MPTO owed Jones a fiduciary duty, we affirm the district court’s entry of partial directed verdict on Jones’s claim for breach of fiduciary duty.
We first conclude that a “mixed motive” is sufficient to establish an “actual intent” to hinder, delay, or defraud under the Fraudulent Transfer Act. We then hold that Jones was required to establish such actual intent by clear and convincing evidence. With these premises in mind, we conclude that there was sufficient evidence in the trial record for a jury to find by clear and convincing evidence that there was a fraudulent transfer in this case...
MPTO’s failure to explain its calculation of Jones’s payment, as well as its possible offset for Jones’s alleged mishandling of cases, make it more likely that MPTO also acted to hinder or delay Jones in his efforts to recover his share of the Fen-Phen fees. We hold that there was sufficient evidence for a reasonable jury to conclude by clear and convincing evidence that MPTO acted with actual intent to hinder or delay Jones. And we accordingly reverse the directed verdict on this claim.
The court also reversed the dismissal of the punitive damages and constructive trust claims
In so doing we are not endorsing the propriety of a constructive trust in the circumstances of this case. See Wilcox v. Anchor Wate, Co., 2007 UT 39, ¶ 34, 164 P.3d 353 (identifying factors for consideration in the imposition of a constructive trust). We leave the resolution of that question for the district court on remand.
As to the cross appeal on the expert witness
Hansen’s experience, methodology, and opinions were all highlighted in his report and deposition. MPTO was thus on notice about the substance of Hansen’s trial testimony. There is no undue surprise when experts summarize factors listed in their report into succinct groupings or use slightly different terminology. We hold that Hansen’s testimony was properly admitted and that Jones’s disclosure of Hansen’s expert testimony was adequate under the then-applicable rule 26 of the Utah Rules of Civil Procedure.
And as to the new firm
Once the district court determined that it had jurisdiction over Mackey Price, LLC, it should have required Jones to show that Mackey Price, LLC was in fact a successor in interest to MPTO. The district court should not have taken Mackey Price, LLC’s silence during a special appearance as a concession or endorsement of Jones’s position. We reverse and remand for a resolution of Mackey Price, LLC’s status on the merits—under procedures deemed appropriate by the district court on remand.
We reverse the dismissal of Jones’s fraudulent transfer and punitive damages claims, the decision that a constructive trust was categorically unavailable, and the default determination that Mackey Price, LLC was a successor in interest to MPTO. But we affirm the district court in all other respects and remand for further proceedings consistent with this opinion.
Wednesday, April 8, 2020
The Maryland Court of Special Appeals has upheld the enforcement of an attorney's lien
Bibi Khan retained Tracey J. Coates, Esq. and the law firm of Paley, Rothman, Goldstein, Rosenberg, Eig & Cooper, Chartered (the “Law Firm”) to represent her in an action for modification of child custody and child support against her ex-husband Douglas Moore. As a result of the legal services rendered by the Law Firm, the Circuit Court for Montgomery County granted the Law Firm’s Motion to Adjudicate Rights in Connection with Attorney’s Lien. In granting the motion, the court ruled that the $50,000 attorney fee award, granted to Khan against Moore and deposited in Khan’s personal bank account, was subject to the Law Firm’s attorney’s lien and should be paid towards the lien. It is from this ruling that Khan appeals.
The [circuit] court’s ruling effectively validated the Law Firm’s attorney’s lien in the amount of $50,000 against the $50,000 fee award that Khan deposited in her personal Citibank account, and ordered Citibank to pay the $50,000 in her account to the Law Firm.
The court here rejected this contention
Khan argues that an attorney’s lien may only be enforced against the corpus of an existing award, not an account held by a third party. She contends that once the award for attorney’s fees was received from Moore and deposited into her bank account, the corpus no longer existed, and the Law Firm lost any right to assert a lien against the award...
Khan’s contentions are not supported by the plain meaning of § 10–501 or Maryland Rule 2-652(b), and the cases relied on are incompatible with the facts of the present case. For this reason, we hold that the circuit court’s interpretation and application of Maryland statutory and case law was legally correct.
Monday, March 30, 2020
The United States Court of Appeals for the District of Columbia Circuit has limited the taxable costs sought and obtained in the District Court by prevailing party Kellogg Brown & Root
The discovery response
To process Barko’s document requests, KBR used an ediscovery software called Introspect to “host, review, and export data for production.” Appellees’ Br. 4. The 2.4 million potentially responsive pages were loaded into Introspect, which required scanning hard copies of certain documents into electronic form and converting preexisting electronic files into the hosting platform’s format. Within the platform, documents were organized, keyword-searched, indexed, screened, and otherwise processed—tasks familiar to any law-firm associate who has survived “doc review.” As a last step, KBR converted the 171,000 responsive documents into TIFF or PDF files, transferred them onto USB drives, and produced the materials to Barko’s counsel.
The costs award sought
KBR’s e-discovery costs, all of which the district court awarded, stem from five different stages: (1) initial conversion, i.e., converting files from their native formats into a format compatible with an e-discovery hosting platform; (2) subscribing to a hosting platform, in this case Introspect, that facilitates the various steps of e-discovery; (3) processing documents, e.g., organizing, keyword-searching, and Bates stamping; (4) conversion for production, i.e., converting documents into shareable formats for production to opposing counsel, and, where necessary, transferring those files onto portable media, e.g., USB drives; and (5) production processing, i.e., drafting production cover letters and shipping discovery materials to opposing counsel.
Hewing close to section 1920(4)’s text and guided by Taniguchi, we conclude that the only e-discovery costs that KBR may recover are those incurred in step (4)—converting electronic files to the production formats (in this case, PDF and TIFF) and transferring those production files to portable media (here, USB drives). That means KBR can recover $362.41 in “External E-Discovery” conversion and production costs— expenses that Barko concedes are taxable. Appellant’s Br. 3 n.3. These tasks resemble the final stage of “doc review” in the pre-digital age: photocopying the stack of responsive and privilege-screened documents to hand over to opposing counsel. Such costs were taxable then, and the e-discovery analogs of such costs are taxable now.
Again, these e-discovery tasks are comparable to the steps that law-firm associates took in the pre-digital era in the course of “doc review”—identifying stacks of potentially relevant materials, culling those materials for documents containing specific keywords, screening those culled documents for potential privilege issues, Bates-stamping each screened document, and mailing discovery materials to opposing counsel. Because “[n]one of the steps that preceded [or followed] the actual act of making copies in the pre-digital era would have been considered taxable,” id., such tasks are untaxable now, whether performed by law-firm associate or algorithm.
Circuit Judge Tatel authored the opinion. (Mike Frisch)
Wednesday, January 29, 2020
The facts of a decision by the New Jersey Supreme Court are summarized in the headnote
Plaintiff Lisa Balducci instituted a declaratory-judgment action to invalidate the retainer agreement into which she entered with her former attorney, defendant Brian Cige, on the ground that Cige procured the agreement in violation of the Rules of Professional Conduct. A Superior Court judge voided the agreement, and the Appellate Division affirmed. But the Appellate Division also made a number of pronouncements about ethical obligations on attorneys handling fee-shifting claims. The Court considers Cige’s challenge to the judgment against him, as well as arguments that the professional obligations imposed by the Appellate Division are at odds with current practices and are not mandated by the Rules of Professional Conduct.
Balducci retained Cige to represent her son in a bullying lawsuit, brought under New Jersey’s Law Against Discrimination (LAD), against a school district. Three years later, she terminated Cige’s representation and retained another lawyer to handle the case. Balducci filed a declaratory-judgment action to void the retainer agreement, and a Superior Court judge conducted a hearing at which Balducci, her son, and Cige testified.
Balducci testified that, in September 2012, she approached Cige about bullying that her son had encountered in school. Cige presented her with what he described as a standard retainer agreement for a LAD case, and Balducci raised questions about language that seemingly made her the guarantor of all legal fees and costs, even if the lawsuit failed. Cige told her not to be alarmed by the “standard language” and assured her that the attorney’s fees would be paid by the school board, not by her. (That account was corroborated by Balducci’s son, who testified that he was present during the meeting.) Trusting Cige, Balducci signed the agreement, one key provision of which required her to “pay the Law Firm for legal services the greater of” Cige’s hourly rate, 37 1/2% of both the net recovery and any statutory fee award, or statutory attorney’s fees.
By early 2015, Balducci became dissatisfied with Cige’s handling of the case. The school board rejected her first settlement demand of $3,500,000. After consulting with an expert in bullying cases, Cige approximated the value of the case at somewhere between $500,000 and $700,000. Only when Balducci terminated his services did he inform her she was responsible for the payment of his hourly fees -- almost $271,000.
Cige gave a very different account, but admitted that he did not inform Balducci of the potential value of the case, of the potential litigation expenses, or of the estimated financial obligation she would bear if the litigation did not succeed. Nor did he detail the billing rates for expenses in the retainer agreement. The expenses for the emails -- $1.00 for every email sent or received -- amounted to just over $1700 and were in addition to the hourly rate he charged. Photocopying costs represented almost $12,000 of the nearly $16,000 in expenses owed at the time Cige’s services were terminated.
At the conclusion of the plenary hearing, the trial court invalidated the retainer agreement, crediting Balducci’s testimony over Cige’s. The Appellate Division affirmed, finding substantial and credible evidence in the record to support the trial court’s decision. 456 N.J. Super. 219, 234, 243-44 (App. Div. 2018).
The Appellate Division also articulated a set of ethical obligations, purportedly arising from the Rules of Professional Conduct, that must be followed by attorneys in fee-shifting actions when a retainer agreement includes an hourly fee component. Those obligations are discussed in numbered paragraphs 6-9 below.
The Court granted certification limited to Cige’s challenge of the invalidation of the agreement and his claim that the Appellate Division retroactively applied new rules of professional conduct. 236 N.J. 616 (2019).
The court affirmed the invalidation of the agreement but rather than adopt the expansive views of the Appellate Division regarding fee-shifting retainer agreement ethics
The invalidation of the retainer agreement is supported by sufficient credible evidence in the record. Although the Appellate Division’s concerns over the retainer agreement in this case are understandable, the ethical pronouncements issued in its opinion may have far-reaching and negative effects, not only on employment-law attorneys and attorneys handling fee-shifting claims, but also on their clients. Some of those pronouncements appear too broad and some unsound, and others are worthy of the deliberative process by which new ethical rules are promulgated by the Court...
The Court notes that those issues all require careful and thoughtful consideration and deliberation. The Court generally establishes professional standards governing attorneys through the rulemaking process. Several Supreme Court committees have overlapping jurisdiction over the professional-responsibility issues raised in this opinion: the Civil Practice Committee, the Professional Responsibility Rules Committee, and the Advisory Committee on Professional Ethics. The Court has decided that the study of the professional-responsibility issues should be addressed by a newly established ad hoc committee comprised of representatives of those three committees, and of other representative members of the Bar and Bench with experience in these matters. The Court therefore will ask the Administrative Director of the Courts to select members for this committee for the Court’s approval.
This committee of experienced judges and attorneys will make recommendations on the questions raised in this opinion. With the valuable input and insight from the committee, the Court then will be able to carefully survey all viewpoints and deliberate before considering any new rule of general applicability to the Bar. The committee may also consider whether to revisit a cap on contingent fees in statutorily based discrimination and employment claims. See R. 1:21-7(c). The Court expresses no ultimate opinion on the matters referred to the committee.
Thursday, January 16, 2020
Dan Trevas summarizes a decision issued today by the Ohio Supreme Court
An insurer that settles a personal-injury claim with a victim who discharged his lawyers before a lawsuit is filed has no obligation to distribute a portion of the settlement to the lawyers for their prior work. Instead, the law firm must take legal action against its former client to get paid, the Ohio Supreme Court ruled today.
In a unanimous opinion, the Supreme Court ruled that lawyers can obtain the help of a court to enforce their ability to get paid for legal work through a “charging lien” — an attorney’s lien on a claim that the attorney has helped the client perfect — when a case is [filed]. But when no case is filed, the lawyers cannot successfully bring a separate action to make the opposing party deduct money from the settlement to pay the lawyer’s claim for services.
Writing for the Court, Justice Sharon L. Kennedy wrote that a charging lien “follows the fund,” not the entity that paid it. When Progressive Insurance paid a former client of law firm Kisling, Nestico & Redick (KNR) before a case was filed against Progressive, the money transferred to the former client. Progressive had no obligation to ensure the firm received any portion of it, she concluded
The Court’s opinion stated that for well over a century Ohio courts have recognized the ability of attorneys to use charging liens to ensure payment from clients after a court case concludes. But unlike the majority of states, Ohio has no statute that guides the enforcement of charging liens, and instead relies on common law. Under common law, the lawyer can seek “equitable relief” from the client.
Today’s decision reversed an Eighth District Court of Appeals decision, which found that since Progressive was “on notice” that KNR was seeking payment for its work on the matter even before any lawsuit was filed, KNR could file a lawsuit against Progressive for its share of the out-of-court settlement.
Accident Victim Signs Law Firm’s Fee Agreement
Darvale Thomas was injured in an auto accident caused by a man who was insured by a subsidiary of Progressive. In July 2014, Thomas entered into a contingent-fee agreement with KNR that entitled the firm to 25 percent of all amounts recovered and, in order to secure payment for its services, gave the firm “a charging lien upon the proceeds of insurance proceeds, settlement, judgment, verdict award, or property obtained” for Thomas.
KNR and Progressive began negotiating, and the insurer offered to settle for $12,500. Thomas fired KNR, and in July 2015, Thomas settled the claim himself with Progressive for $13,044. A week before the settlement, KNR informed Progressive that Thomas discharged the firm, and that it was claiming a lien against any settlement funds paid to Thomas. Progressive made no promise to KNR to protect the lien.
Progressive paid the settlement to Thomas. Thomas did not pay KNR its attorney fees or expenses KNR said it incurred. KNR sued Thomas, Progressive, and the driver who caused the accident. The Cuyahoga County Common Pleas Court granted a default judgment against Thomas to KNR and dismissed the case against the driver.
The court ruled that Progressive failed to protect KNR’s charging lien. Because the firm and the insurer were negotiating, and KNR informed Progressive about the lien, Progressive had a duty to protect KNR’s interest. The parties agreed KNR was owed about $3,400, and the trial court granted KNR summary judgment for the amount it was owed.
Progressive appealed the decision to the Eighth District, which affirmed the trial court’s decision. The Eighth District ruled that under Ohio law, the charging lien KNR had against Thomas became binding on Progressive because Progressive had notice of its existence.
Progressive appealed the decision to the Supreme Court, which agreed to hear the case.
Liens Long Recognized by Courts
The Court’s opinion explained that the philosophy behind charging liens is that “an attorney who has not been paid for his or her legal services is entitled to receive payment for those services from a judgment or fund that was created through his or her efforts.” Charging liens have long been supported by courts to insure that lawyers are paid “out of the fund to be distributed” when there is a final judgment or decree in a case. To enforce a lien, an attorney must have a contract with the client and there must be funds recovered by the attorney. The attorney must provide notice of an intent to enforce the lien and seek to enforce it in a timely manner.
Because a lien is filed against the “fund” and not a person, the nature of any lawsuit is to obtain money from an identifiable fund created by a judgment or settlement, the opinion stated. Typically, the “fund” is created while a case is under the jurisdiction of the court after a lawsuit has been filed and the parties work toward a settlement, or litigate the case until there is a judgment, the Court explained.
In contrast, KNR and Progressive were never involved in a lawsuit regarding Thomas.
“Thomas never filed a personal-injury lawsuit, and therefore, there was no involvement by a court and there was no existing action in which KNR could pursue its claim to a portion of the fund created by the settlement,” the opinion stated.
KNR filed its lawsuit after the fund was created, and the Court considered whether Progressive controlled that fund. The Court ruled the fund was created when Progressive paid Thomas and Thomas agreed not to sue Progressive for additional payment. The money was out of Progressive’s hands when KNR attempted to assert its charging lien, and KNR had no right to seek relief from the insurer, the Court concluded.
The Court remanded the case to the trial court for further proceedings.
Sunday, November 24, 2019
The West Virginia Supreme Court of Appeals answers a certified question from federal court in the negative
Ms. Blanda was an accounts receivable clerk employed by Martin & Seibert, L.C. and was tasked with billing clients for the hours worked by the firm’s employees and attorneys. Ms. Blanda alleges that she began noticing irregularities such as billing clients for paralegal and secretary services at the attorney’s hourly rate. She decided in 2013 that the firm was engaging in illegal billing practices. Ms. Blanda began persistently voicing her concerns to others at the law firm, including the individual Respondents. The law firm never took formal disciplinary action against Ms. Blanda for her complaints, and she did not threaten to report its activities to an outside law enforcement agency or elsewhere. But, Ms. Blanda believed that actions taken by the law firm showed an intent to discharge her in retaliation for voicing her concerns.
on January 23, 2015, Ms. Blanda noticed that the law firm had posted her job for hiring. Ms. Blanda immediately contacted one of the law firm’s attorneys, Lisa Green, who had become aware of the billing irregularities. According to the facts presented by the District Court, Ms. Green suspected that the law firm may be setting up Ms. Blanda to take the blame for them. Ms. Green confirmed her suspicions and immediately contacted attorney Michael Callaghan, former Assistant United States Attorney and chief of the Criminal Division in the Southern District of West Virginia, for advice on reporting Respondents’ conduct to the West Virginia State Bar and the Federal Bureau of Investigations (FBI). According to Ms. Green, Mr. Callaghan contacted the FBI that day; in turn, Ms. Green advised Ms. Blanda to contact Mr. Callaghan for advice.
She then began to gather evidence and
After she was fired, Ms. Blanda also took paper files from the law firm. Ultimately, the FBI “raided” the law firm based, in part, on information Ms. Blanda provided to them after her discharge. It has since disbanded as a result. Ms. Blanda later applied for unemployment benefits stating that she was discharged for emailing timesheets to herself in violation of firm policy. She reiterated the same during her deposition.
She filed a whistleblower complaint in federal court, which sent a certified question to the West Virginia high court.
The court majority holds that no substantial public policy under state law creates liability
we hold that West Virginia Code § 61-3-24 does not constitute a substantial public policy under Harless v. First National Bank, 162 W. Va. 116, 246 S.E.2d 270 (1978), and its progeny, to protect an employee of a non-public employer who reported suspected criminal conduct to the appropriate authority and claims to have been retaliated against as a result.
Justice Workman dissented
In light of the egregious facts pled here, this Court should have taken the opportunity to recognize a public-policy exception to at-will employment when an employee is terminated for reporting her employer’s alleged theft of client funds by overbilling for legal services to the proper authorities. West Virginia’s criminal statutes reflect myriad expressions of the public policy to encourage the reporting of crimes and correction of activities harmful to our citizenry.
...this Court should have answered the certified question in the affirmative and held: an alleged violation of West Virginia Code § 61-3-24 constitutes a substantial public policy of the State of West Virginia and may support a Harless claim when an employee reports the alleged criminal conduct to an appropriate government authority under penalty of perjury. This ruling would recognize the long-established proposition that substantial public policy encourages citizens to report crimes.
The majority’s failure to expand Harless to the facts presented here constitutes neither judicial restraint nor neutrality, but rather an active participation in perpetuating injustice. This is particularly true when the judiciary can craft a narrow exception that protects the interests of responsible, law-abiding employers while holding accountable those whose activities threaten the public interest. Society can never eradicate wrongdoing, but this Court should shield from retaliation those citizens who, urged on by their integrity and social responsibility, speak out to protect the public.
Herald-Mail Media reported on the firm's demise.
Martin & Seibert L.C., a general-practice law firm in Martinsburg that dates back to 1908, is winding down business and will be closing Saturday.
"I can confirm that, regrettably, the firm is dissolving at the end of 2016," Morgantown, W.Va., attorney Richard M. "Rick" Wallace said in an email Thursday.
The firm's office in Charleston, W.Va., also is closing, Wallace said.
The move comes a little more than a year after FBI agents searched the firm's Martinsburg offices at 1453 Winchester Ave.
No criminal charges have been filed, and Wallace, who is representing the law firm in a civil lawsuit, indicated that Martin & Seibert's business was damaged significantly by a former employee who claimed she was fired after reporting alleged wrongdoing.
"It's reprehensible that the malicious and unfounded actions of a disgruntled former employee can have such a deleterious impact on a well-respected firm and the livelihoods of hundreds of individuals," Wallace said.
On Nov. 17, 2015, Martin & Seibert said in a statement that FBI agents "aggressively seized property and detained personnel" at the law firm's headquarters on Winchester Avenue, but noted that it was cooperating fully with the government's investigation.
On Jan. 28, Martin & Seibert, along with shareholders and Gress, were named as defendants in a federal lawsuit by former employee Christine Blanda.
Blanda claimed she is one of the professionals who brought alleged mail and wire fraud to the FBI's attention.
The law firm has denied the allegations and countered that Blanda was discharged "solely because she engaged in highly unprofessional conduct which violated Martin & Seibert policy and potentially federal and/or state law by misappropriating confidential, proprietary and trade secret information of Martin & Seibert," according to court records.
The firm filed a counterclaim against Blanda, claiming she knowingly provided false statements to public officials, including FBI agents, that alleged improper billing practices by the law firm, records said.
Friday, November 15, 2019
The Kansas Supreme Court remanded a case that involved an employer's potential liability for conduct committed by an attorney-employee in his (prohibited) private practice
The Trust Company of Kansas (TCK) employed Jon M. King, a Kansas-licensed attorney, as a trust officer. TCK had a policy prohibiting employees from practicing law during employment. Unbeknownst to TCK, King represented his TCK client—Marilyn K. Parsons—in legal matters before, during, and after his employment with TCK. In his capacity as a trust officer, King would transfer funds from Parsons' TCK account to her personal account to pay a flat rate legal fee of $5,000 per month. Once TCK learned about King's attorney-client relationship with Parsons, TCK filed a complaint of suspected elder abuse with the Kansas Department of Social and Rehabilitation Services and an ethics complaint with the Kansas Disciplinary Administrator's Office.
Further investigation by the Kansas Disciplinary Administrator's Office revealed that Parsons paid King approximately $250,271.50 in attorney fees during his employment at TCK. As a result, King voluntarily surrendered his license to practice law. See In re King, 297 Kan. 208, 300 P.3d 643 (2013). Soon after, Parsons filed a lawsuit against TCK and King, asserting various theories of liability. The case went to trial, and a jury found TCK liable for "negligent training" and King liable for breach of fiduciary duty. The Court of Appeals reversed the jury's verdict against TCK, finding the evidence insufficient. Accordingly, the panel remanded the case with instructions to enter judgment as a matter of law in favor of TCK.
On review, we conclude the district court's instructions failed to present the jury with an accurate statement of our negligence law and incorrectly separated Parsons' negligence claim against TCK into two causes of action. As a result of these errors, questions of fact remain. We reverse the Court of Appeals and remand this matter for a new trial decided on proper instructions.
The end is in the middle
We take the unusual step of beginning with our conclusion. In short, we agree with both parties. The trial court's jury instructions on Parsons' negligence claim were erroneous. And as a direct result of this error, the Court of Appeals erred in granting judgment as a matter of law in favor of TCK. The instructions and verdict form in this case were so erroneous that an after-the-fact evaluation of the evidence is not possible. The jury instructions did not adequately or accurately explain the elements of Parsons' negligence claim. This prevented the jury from ever being able to consider whether Parsons had sufficiently proven each of the elements of the claim. Given this failure, any review of the evidence for sufficiency became futile and the case must now be returned to the district court for a new trial on proper instructions.
Oral argument linked here. (Mike Frisch)
Wednesday, November 13, 2019
In an unpublished opinion, the Virgin Islands Supreme Court remanded in a matter where counsel had his compensation for court-appointed services reduced by the trial judge
Upon a review of the appellant’s brief, it is clear that the gravamen of Appellant’s claim is that the Superior Court judge who reviewed his request for compensation and reimbursement “for no apparent reason, reduced the out of court time from 119.6 hours to exactly 60.0 hours” and that Appellant “ha[s] not been given any explanation as to why the out of court time has [been] reduced by almost exactly 50%.” (Appellant’s Br. 8.) The amended Rule 210.4, however, expressly provides that if a judge rejects the payment in request in whole or in part, that the judge shall state the reasons for doing so in an accompanying order. V.I. S. CT. R. 210.4(c). This is consistent with prior decisions of this Court, which require the Superior Court to provide enough information on the record so as to enable this Court to meaningfully review its decisions, including sufficiently explaining the basis of its decision.
ORDERED that the Superior Court’s June 30, 2016 order is VACATED, and that this matter is REMANDED to the Superior Court for issuance of a new decision on the request for compensation and reimbursement, which shall be governed by the procedure set forth in Rule 210, as amended.
This once happened to me as told in this opinion authored by Circuit Judge Spottswood Robinson.
For these reasons, counsel's request for reconsideration of his excess-compensation request will be transmitted to the panel for consideration as an application for rehearing.
Eventually the compensation was increased a bit but the taste remains bitter after 40 year where my voucher for over $13,000 had been reduced to $1,000.
I represented my client in an appeal from a 15-week trial as a partner in a two-lawyer firm and got paid at roughly a McDonalds rate for hundreds of hours of work.
Following a four-month jury trial on an indictment charging unlawful distribution of a controlled substance, interstate travel in aid of a racketeering enterprise, and conspiracy to distribute narcotic drugs, the seven appellants were convicted. Central to the charges was a six-year multi-state drug conspiracy centered in Washington, D. C.
Tuesday, August 27, 2019
An argument today before the Florida Supreme Court
This Court requested the Rules of Judicial Administration Committee submit a parental-leave continuance rule for consideration. The Committee submitted Draft Rule of Judicial Administration 2.570 (Parental Leave Continuance), which addresses motions for continuances based on the lead attorney’s parental leave. The Committee recommends against the adoption of a parental-leave continuance rule because it believes such a rule would reduce judicial discretion to manage cases adequately.
Appearance for Opponents: Eduardo Sanchez, Past Chair of the Rules of Judicial Administration Committee, Miami, 305-961-9057 and Theodore F. Green of Law Office of Theodore F. Green, LC, Orlando, 328-720-9157
Appearance for Proponents: John M. Stewart, President of Florida Bar, Vero Beach, 772-231-4440; Susan V. Warner, Rules of Judicial Administration Committee Member, Miami, 904-293-0725; Lara B. Bach, Young Lawyers Division of the Florida Bar, Miami, 305-577-3135 and Jennifer S. Richardson, Florida Association of Women Lawyers, Jacksonville, 904-638-2655
Appearance for Statewide Guardian ad Litem Program: Thomasina F. Moore, Tallahassee, 850-922-7213
Appearance for Juvenile Court Rules Committee: David Silverstein, Bradenton, 941-741-3706
From the Florida Bar majority opposition to the proposed Rule
Ultimately, the question comes down to whether it is prudent to delay the progression of a case due to one attorney’s personal situation, particularly if that delay may cause possible harm to any of the parties, opposing counsel, witnesses, and the court’s busy calendar. Considerations weighing on the discretionary call a judge must make in considering a continuance often include: the nature of the litigation, the age of the case, the established priority of the case, the history of the case that has proceeded the continuance request, the needs and rights (substantive and procedural) of the parties, the availability of court resources, the interests of the other attorneys involved in the case, and whatever broader needs may also exist in the court system at that time. The judge must carefully balance these and many other potential factors that might be implicated in a fair and unbiased way that endeavors to best preserve the integrity and reputation of the courts and the fairness of the process. That is the responsibility and authority bestowed upon a judge by Rule 2.545. No other rule is necessary—particularly not one of single purpose or use...
To the extent that there may be some members of Florida’s judiciary who in the past were not properly cognizant of the value that ought to be given parental leave, the committee respectfully suggests that the almost three-year debate about the adoption of some form of a parental-leave continuance rule in Florida has succeeded in elevating the discussion to a point where few judges, if any, will now ignore the issue. The very widely publicized robust debate over the issue has sensitized both practitioners and the judiciary. And while the committee supports action by the Court in its supervisory capacity to further educate and sensitize the members of the judiciary to the parental leave issue, the committee does not believe that the proposed Rule 2.570 is either the proper or best vehicle to achieve that laudable goal. In this area, as in most such areas that require the exercise of sound judicial discretion, it is the firm and definite belief of the committee that “less is more.”
The minority supported adoption of the proposed Rule 2.570 because it believed a parental-leave continuance rule would provide more predictability in the courts’ treatment of parental leave, reduce obstacles to career advancement faced by women who bear children, encourage male use of parental leave, and help alleviate the stigma of the “mommy track,” all of which would help close the workplace gender gap in the legal profession. In reporting its position in support of the adoption of Rule 2.570, the minority analyzed the existing rules and case law addressing continuances and how they impact the consideration of parental-leave continuances, as well as laws and policies concerning parental leave.
Link to the docket entries here. (Mike Frisch)
Monday, July 8, 2019
The United States Court of Appeals for the District of Columbia Circuit affirmed the dismissal of claims brought by a law firm under a "novel theory."
"Pecunia non satiat avaritiam, sed inritat” translates from Latin to English as “money doesn’t satisfy greed; it stimulates it.” This case teaches that money also stimulates legal artifice. For over one hundred and fifty years, the False Claims Act (FCA) has imposed civil liability on anyone who defrauds the federal government of money or property. See generally Act of March 2, 1863, ch. 67, 12 Stat. 696 (1863) (codified as amended at 31 U.S.C. §§ 3729 et seq.). A third party—a relator—may bring an FCA lawsuit on behalf of the government and collect a substantial bounty if he prevails. See 31 U.S.C. § 3730(b), (d). Today we review a relator’s novel theory of FCA liability.
The law firm Kasowitz Benson Torres LLP (Kasowitz) alleges that a handful of large chemical manufacturers violated the Toxic Substances Control Act, Pub. L. No. 94-469, 90 Stat. 2003 (1976) (codified as amended at 15 U.S.C. §§ 2601 et seq.) (TSCA), by repeatedly failing to inform the United States Environmental Protection Agency (EPA) of information regarding the dangers of isocyanate chemicals. Kasowitz claims the defendant-chemical manufacturers’ failure to disclose and subsequent actions deprived the government of property (substantial risk information) and money (TSCA civil penalties and contract damages). Kasowitz demands billions of dollars in damages, even though the government openly supports the defendants. The district court dismissed its lawsuit. Kasowitz now appeals, asking us to become the first court to recognize FCA liability based on the defendants’ failure to meet a TSCA reporting requirement and on their failure to pay an unassessed TSCA penalty. We decline the invitation and affirm the dismissal.
Wednesday, July 3, 2019
The District of Columbia Court of Appeals reversed and remanded an appeal involving court-ordered fees in a guardianship matter.
Rosenau LLP represented Jennifer Brown, the daughter of Vivian N. Brown, in her successful attempt to be appointed her mother’s guardian. In 2015, Rosenau LLP petitioned the court under Super. Ct. Prob. R. 308 and D.C. Code §§ 21-2047, -2060, for an interim award of fees from Vivian N. Brown’s assets in the amount of $25,358.18. The firm attached timesheets listing its attorneys’ entries of time worked on the case, including brief descriptions of the work and the rate at which that time was charged. This first petition was denied without prejudice by the trial court (the Hon. Natalia M. Combs Greene) after the estate’s conservator responded, inter alia, that more than one Rosenau attorney was billing for some of the same work in the petition. The court noted that, in addition to double billing, some of the tasks in the firm’s petition were bundled such that certain related and unrelated tasks were billed together (block or bundled billing).
The firm subsequently filed an amended petition in which it lowered the amount requested, corrected the double billing, and “earnest[ly] attempt[ed]” to separate unrelated bundled tasks. The trial court (the Hon. Kaye K. Christian), however, denied payment of the full amount requested. The court ruled that each “fee petition billing entr[y] regarding meetings, telephone conferences, or other written correspondence” must list “the subject matter of the correspondence, the person with whom Petitioner is corresponding, and said person’s relevance to the well[-]being of the ward.” The court concluded that more than 70 entries were deficient on this basis. The court also ruled that “‘block-billing,’ ‘aggregate’ or ‘blended’ time claims [are] forbidden because time records lumping together multiple tasks make it impossible to evaluate their reasonableness” (internal quotation marks and alterations omitted). The court concluded that an additional 17 entries were deficient on this basis. In all, the court disallowed entries from the amended petition totaling $11,325.41 out of $22,412.95 in fees requested. The court then granted the remainder of the requested fees and costs without engaging in any additional analysis. The firm filed a consent motion for reconsideration, which the court denied. This appeal followed.
The trial court found that Rosenau LLP’s fee petition failed to meet the threshold requirement of Rule 308(b)(1) in that it lacked the requisite detail and impermissibly relied on block billing. Although it may be prudent for individuals seeking compensation under Rule 308 to set forth tasks in as much detail as possible, we see no requirement under our probate statute, our probate rules, or our case law that compelled the court to deny fees for the reasons it provided. Rule 308 asks for a “reasonabl[y] detail[ed]” petition to aid the trial court’s ultimate assessment: whether the fees requested by attorneys and other individuals who perform work for the estate are reasonable...
Likewise, Rule 308 does not plainly prohibit all “bundling,” and we have never interpreted it to convey such a prohibition. We see no reason to impose such a prohibition now, so long as the description of bundled tasks is sufficiently detailed to permit a court to assess the reasonableness of the time billed. We agree, however, that entries bundling time so vaguely as to make a reasonableness determination impossible may be appropriately disallowed.
Associate Judge Easterly authored the opinion. (Mike Frisch)
Wednesday, June 19, 2019
The claim to disgorge legal fees was reinstated by the New York Appellate Division for the Second Judicial Department
“An attorney who violates a disciplinary rule may be discharged for cause and is not entitled to fees for any services rendered” (Jay Dietz & Assoc. of Nassau County, Ltd. v Breslow & Walker, LLP, 153 AD3d 503, 506; see Matter of Montgomery, 272 NY 323, 326; Saint Annes Dev. Co. v Batista, 165 AD3d 997, 998; Doviak v Finkelstein &Partners, LLP, 90 AD3d 696, 699; Quinn v Walsh, 18 AD3d 638; Brill v Friends World Coll., 133 AD2d 729). A cause of action for forfeiture of legal fees based on an attorney’s discharge for cause due to ethical violations may be maintained independent of a cause of action alleging legal malpractice or breach of fiduciary duty, and does not require proof or allegations of damages (see Jay Dietz & Assoc. of Nassau County, Ltd. v Breslow & Walker, LLP, 153 AD3d at 506; Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1).
Here, the complaint seeks forfeiture of legal fees paid to the defendant between January 2007 and August 2009 in connection with the plaintiff’s decedent’s claim against Wilson for retained earnings. The complaint alleges that the decedent retained the defendant in January 2007 to recoup the retained earnings from Wilson, that the defendant also represented and performed legal work for Wilson on that issue between 2008 and 2009, that the interests of the decedent and Wilson on that issue were adverse, and that the dual representation violated rule 1.7 of the Rules of Professional Conduct (22 NYCRR 1200.0). The complaint further alleged that, as a result of its previous dual representation, the defendant was disqualified from representing the decedent’s estate in a 2009 turnover proceeding against Wilson to collect the retained earnings. Contrary to the determination of the Supreme Court, these allegations are sufficient to state a viable cause of action
to disgorge legal fees (see Jay Dietz &Assoc. of Nassau County, Ltd. v Breslow & Walker, LLP, 153 AD3d at 506).
Thursday, May 23, 2019
The Connecticut Appellate Court has held that a self-represented lawyer or law firm may not recover attorneys fees in litigation.
The attorney had received an award in arbitration
On March 3, 2014, the plaintiff petitioned the legal fee resolution board of the Connecticut Bar Association (board) to resolve a fee dispute that had arisen between the parties. On December 24, 2014, a panel of three arbitrators found that the plaintiff was owed $109,683 in fees for its representation of the defendant. The plaintiff subsequently filed an application to confirm the arbitration award in the Superior Court, which the court, Scholl, J., granted on March 17, 2015. The defendant appealed to this court, which affirmed the trial court’s judgment confirming the arbitration award, and our Supreme Court denied the defendant’s petition for certification to appeal. See Rosenthal Law Firm, LLC v. Cohen, 165 Conn. App. 467, 473, 139 A.3d 774, cert. denied, 322 Conn. 904, 138 A.3d 933 (2016). Attorney Edward Rosenthal, the sole member of the plaintiff, represented the plaintiff throughout the proceedings before the board and in the trial and appellate courts.
The attorney then sued for his fees relying on the retainer agreement
the plaintiff claimed that it had incurred $59,600 in ‘‘legal fees’’ in connection with the arbitration and related court proceedings, which reflected the time spent by Rosenthal on these matters.
The trial court relied on precedent
The plaintiff’s sole claim on appeal is that the trial court erred in determining that the law barring self represented non attorney litigants from recovering statutory attorney’s fees also precludes a self-represented law firm from recovering contractual attorney’s fees.
The court here rejected the suggestion that the precedent was dictum
The court intentionally took up and analyzed the issue and concluded that the general rule announced in Lev would bar the plaintiff attorneys in Jones from recovering attorney’s fees. Although the court discussed the issue only briefly, there is nothing in its opinion or the record to suggest that its conclusion was less carefully reasoned than it might otherwise have been. In sum, the court’s conclusion cannot reasonably be characterized as a merely casual, passing comment made without analysis or due consideration of conflicting authorities. It is clear that the court made a deliberate decision to resolve this issue and that it undeniably decided it. Accordingly, the court’s conclusion that self-represented attorney litigants cannot recover attorney’s fees constitutes an alternative holding, not dictum.
A firmly-held view
we need not determine whether the plaintiff’s status as a law firm litigant renders this case materially distinguishable from Jones, which involved attorney litigants. We note, however, that among the courts that have considered these issues in jurisdictions in which self represented attorney litigants are barred from recovering attorney’s fees, the majority agree that there is no meaningful distinction between solo practitioners who represent themselves and law firms that are represented by their own attorneys.
Wednesday, May 22, 2019
The Illinois Administrator has charged an attorney with charging unnecessary and unreasonable fees and dishonesty in an estate matter.
In 2015, Dee ("D.J.) and Jane ("Jane") Newby were a married couple who had three adult children: Elizabeth ("Liz"), William and David. Neither D.J. nor Jane had previously been married.
In 2000, attorney Kevin J. Huck prepared, at D.J.'s and Jane's request, living trust agreements for D.J. and Jane. Both trust agreements provided that D.J. and Jane were co-trustees of the trusts and that upon either one of their deaths, the surviving spouse would become the sole successor trustee of the deceased spouse's trust. D.J. and Jane's living trust agreements also created two sub-trusts, a marital and a family trust, which the grantors funded with assets from his or her trust upon the grantor's death.
D.J. and Jane executed the living trust agreements on April 20, 2000.
Between April 20, 2000 and September 2015, some of D.J.'s assets were re-titled or transferred into his trust. Those assets included the couple's residence, which was located in St. Charles, investment accounts at Raymond James investment company, and a life insurance policy issued by Zurich American Insurance ("Zurich"). D.J. also had a life insurance policy with National Education Association ("NEA"), and an Individual Retirement Account ("IRA") at Raymond James, both of which named Jane as the beneficiary.
D.J. and Jane were owners of a business involving the breeding and raising of miniature poodles. In or about 2009, Respondent met D.J. and Jane at a poodle-training class. Between 2009 and 2015, they became friends through their shared interest in breeding poodles and traveling to dog shows.
In 2015, D.J. was hospitalized due to a serious illness. Jane sent regular updates to Respondent about her husband’s health condition.
On September 20, 2015, D.J. Newby died at age 75. He was survived by his wife, Jane, who was then 73 years old, and their children Liz, William and David.
At the time of D.J.’s death, D.J.’s and Jane’s assets were valued at $1.2 million. The value of those assets was well below the federal estate tax exemption of $5.43 million and the Illinois estate tax exemption of $4 million, and therefore would not be taxable. D.J.’s estate had no probate assets, and did not require a probate estate to be opened in order to distribute his assets to Jane.
The administration of D.J.’s trust matters included the settlement of D.J.’s credit card bill, obtaining D.J.’s life insurance proceeds from NEA and Zurich (both policies naming Jane as the beneficiary), transferring the proceeds of D.J.’s investment account at the Raymond James investment company to Jane’s trust account, rolling over of D.J.’s IRA to Jane’s IRA, notifying creditors of D.J.’s death and filing D.J.’s will.
Between October 2015 and December 2015, Respondent informed Jane that in order to protect her assets, she would need to hire him for additional work beyond the administration of D.J.’s trust, which included preparing wills and trusts for Jane and Liz. Respondent also told Jane and Liz that he would need to do additional work to incorporate Liz’s separate dog breeding business. Based on Respondent’s advice, Jane and Liz allowed Respondent to proceed with this proposed work.
At no time did Respondent provide Jane or Liz with a written fee agreement or discuss any hourly rate or flat fee he would charge for this additional work described...above.
At no time did Respondent discuss with Jane or Liz that Joseph would also provide services with respect to the proposed additional work described...above, or the hourly rates that Respondent would charge her for any services Joseph performed.
Between October 2015 and December 2015, Respondent asked Jane to pay him a total of $20,605 as purported legal fees of $20,000 plus purported costs of $605, related to the matters he was handling on her behalf. Jane made three payments during this time totaling $20,605 to Respondent.
At no time between October 2, 2015 and January 20, 2016, did Respondent provide Jane with an invoice outlining the work he claimed he and Joseph did, when they did that work, how long it took them to do it, his or Joseph’s hourly rates, or whether the payments Jane made were advance fees or payment for work already completed.
On January 21, 2016, approximately three-and-one-half months after their initial meeting, Jane and Liz met Respondent at his office to sign the estate plan documents Respondent had prepared for them. At that meeting, and without any notice to Jane, Respondent gave Jane an itemized billing statement for fees and costs totaling $87,302.27 which, in addition to charges at an hourly rate of $595, included a $15,000 flat fee for purported work described as "trusts and corporation" and an overall proposed five percent bonus for his work ($4,157.27). Respondent’s billing statement listed the services Respondent claimed that he and Joseph provided to Jane and Liz between October 2, 2015 and January 20, 2016 relating to the administration of D.J.’s trust, preparation of wills and trusts for Jane and Liz and the incorporation of Liz’s dog-breeding business. Respondent deducted a purported 50 percent discount from the $83,145 (the amount of fees before adding the bonus) he had charged her, and then deducted Jane’s payments towards fees (totaling $20,000) from the remaining balance, which left a total outstanding balance of $25,729.75 (including the five percent bonus).
At no time prior to January 21, 2016, did Respondent inform Jane that he would charge her $595 per hour for the time he claimed to have spent on her matters, of the purported $15,000 flat rate fee or five percent bonus, and the costs incurred in connection with the purported services Respondent claimed to have provided on her and Liz’s behalf.
There are a number of other allegations of false and unreasonable billings, e.g.,
In the January 21, 2016 billing statement, Respondent charged Jane a "flat fee" of $15,000 (which was discounted at the bottom of the billing statement to $7,500) for purported estate planning work related to creating trusts for Jane and Liz and for the incorporation of Liz’s poodle breeding business. But, in addition to the flat $15,000 fee, Respondent also charged Jane $4,763.50 (6.8 hours of his time at $595 per hour for a total of $4,046, and 2.05 of Joseph’s time at $350 per hour for a total of $717.50) for estate planning work related to creating trusts for Jane and Liz. Respondent also charged Jane 1.7 hours of his time (at $595 per hour for a total of $1,011.50) and .4 hours of Joseph’s time (at $350 per hour for a total of $140) for work related to the incorporation of Liz’s poodle breeding business.
Respondent’s hourly charges for work related to creating trusts for Jane and Liz and incorporating Liz’s poodle breeding business were false and unreasonable. Respondent knew that he had had already charged Jane for those services when he charged the $15,000 flat fee that covered those services. Further, Respondent knew that the total fee of $13,415 that he charged Jane ($15,000 flat fee, less 50 percent discount ($7,500), plus charges of $4,763.50, $1,011.50 and $140 equals $13,415) was unreasonable for two simple wills and trusts and the incorporation of a business.
The phrasing of the fee-related allegations
...charging or collecting an unreasonable fee, by conduct including charging Jane $87,302.27, and collecting $20,605 in legal fees for services related to the administration of D.J.'s trust, Jane and Liz's estate planning and incorporation of Liz's business for which the amount of time, labor or difficulty of the work required was exaggerated, not necessary or duplicative, in violation of Rule 1.5(a) of the Illinois Rules of Professional Conduct (2010);
Tuesday, May 14, 2019
From the web page of the Tennessee Supreme Court
The Tennessee Supreme Court has upheld an attorney’s public censure, concluding that the sanction was not arbitrary or capricious and was supported by substantial and material evidence.
This disciplinary matter arose out of Carlos Eugene Moore’s representation of his client in a personal injury action. Mr. Moore entered into a contingent fee agreement with his client, which provided that if the client refused to accept a settlement offer that Mr. Moore advised was reasonable and should be taken, the client would be required to pay Mr. Moore the contingency fee “on the basis of that offer” unless waived by Mr. Moore.
When Mr. Moore received a settlement offer, he advised his client that she should accept the offer, but she refused. The trial court then granted Mr. Moore’s motion to withdraw from representation of the client, and Mr. Moore filed a series of motions for a lien against his client’s eventual recovery in her personal injury case for fees and expenses “presently owed.”
The hearing panel determined that Mr. Moore’s contingency fee agreement violated the Rules of Professional Conduct because the fee was unreasonable in that it was not contingent on the case’s outcome but rather contingent upon Mr. Moore’s determination that a settlement offer was “reasonable.” The panel also determined that, in Mr. Moore’s motions to assert lien filed, Mr. Moore violated the Rules of Professional Conduct by seeking an amount in excess of the fee agreement and using an hourly rate, which was not contemplated in the written fee agreement. Accordingly, the panel imposed a public censure as Mr. Moore’s discipline. The chancery court, on appeal, upheld the decision of the hearing panel. Mr. Moore then appealed to the Tennessee Supreme Court.
In the unanimous opinion authored by Chief Justice Jeff Bivins, the Court agreed with the hearing panel that the contingent fee agreement was ambiguous at best and that, under two possible interpretations, the fee was based on the original settlement offer and not the client’s eventual recovery. Thus, the fee was unreasonable and violated the Rules of Professional Conduct because the Rules only allow a contingency fee on the outcome of the matter. The Court also agreed with the hearing panel that the contingency fee agreement violated the Rules of Professional Conduct because it gave Mr. Moore a proprietary interest in any settlement offer arising in the case. The Court determined that the hearing panel’s judgment was supported by evidence that is both substantial and material. As a result, the panel’s judgment was not arbitrary or capricious. The Court affirmed the judgments of the trial court and the hearing panel imposing a public censure.
To read the Court’s opinion in Carlos Eugene Moore v. Board of Professional Responsibility, authored by Chief Justice Jeff Bivins, go to the opinions section of TNCourts.gov.
Monday, May 6, 2019
Also before the Ohio Supreme Court this week
Kisling, Nestico & Redick LLC v. Progressive Max Insurance Company et al., Case no. 2018-0682
Eighth District Court of Appeals (Cuyahoga County)
- Does a lawyer’s charging lien give the lawyer the right to be compensated from a settlement resulting from the lawyer’s services and skills provided during pending litigation?
- Does R.C. 3929.06 bar a tort claimant’s former lawyer from suing a third party’s insurer to enforce a charging lien against a settlement paid by an insurer?
Darvale Thomas was injured in a July 2014 automobile accident in Franklin County. The accident was allegedly caused by Todd Thorton, who was insured by Progressive Insurance. Thomas hired law firm Kisling, Nestico & Redick (KNR) to represent him under a contingent-fee agreement, in which the firm would be paid from the proceeds if it won the case.
After KNR worked on the case for about a year, Progressive notified KNR on June 30, 2015, of an offer to settle the claim for $12,500. KNR states that Thomas was unhappy with the offer and ended the firm’s representation, then hired another attorney. On July 9, KNR informed Progressive that the firm no longer was representing Thomas and asserted that it was entitled to its portion of any settlement based on the fee agreement Thomas signed.
The law firm’s fee was one-quarter of the gross amount of any recovery, and the agreement stated: “Attorney shall have a charging lien upon the proceeds of any insurance proceeds, settlement, judgment, verdict award or property obtained on your behalf.”
Progressive responded that KNR’s only recourse was against Thomas. On July 14, Thomas’ new lawyer informed Progressive that Thomas wanted to negotiate the claim himself. That day, Thomas and Progressive agreed to a $13,044 settlement, and payment was made directly to Thomas.
Law Firm Seeks Payment for Work from Insurance Company
KNR filed a lawsuit in Cuyahoga County Common Pleas Court against Progressive Max Insurance Company, Progressive Southeastern Insurance Company, and Progressive John Doe Companies – headquartered in Mayfield Village – as well as Thomas and Thorton. KNR’s former client – Thomas – didn’t appear or answer the firm’s complaint, and the court entered a default judgment against him for $3,411.48, which he hasn’t paid. In March 2016, Progressive and KNR agreed to dismiss Thorton as a party in the case.
The trial court granted summary judgment to KNR, determining Progressive was notified before the settlement of KNR’s fee agreement with Thomas, yet distributed the settlement proceeds to Thomas without making an effort to protect KNR’s interest.
Insurer Contends It Wasn’t Responsible for Paying Former Law Firm
Progressive argues that a lawyer cannot use a charging lien that is in a contract with a client as a vehicle for separate litigation against a wrongdoer’s liability insurer to recover attorney fees not paid by the lawyer’s former client. Progressive maintains that the Eighth District is the first court in Ohio to make this holding, which the insurer believes is erroneous.
Progressive describes a “charging lien” as an “equitable rule of priority” against any other person or entity claiming a right to part of a “fund” that resulted from the lawyer’s services. Yet, in the insurer’s view, a settlement doesn’t exist until the payment is made in exchange for the claim’s release – and, in this case, the money at that point was with Thomas, not the insurance company. In these circumstances, a law firm can’t recover fees from an insurer, Progressive states.
In addition, Ohio courts have concluded that a charging lien can’t exist in the absence of a court-controlled fund, Progressive argues, but Thomas’ claim resulted in an out-of-court settlement. The insurer contends that the Eighth District was wrong to conclude that the notice KNR made to Progressive of the firm’s lien was all that was needed to allow KNR to pursue its lawsuit against the insurance company. But, Progressive counters, notice alone doesn’t allow enforcement of a charging lien, particularly before a settlement is paid.
The insurer also asserts that R.C. 3929.06 prevents an assignee of possible settlement proceeds, such as a law firm, from suing a third-party insurer in the absence of a final judgment against the insured. Progressive maintains that instead of shifting business risks to a third party, KNR could pursue other methods for resolving fee disputes without litigation or use another type of fee agreement.
Law Firm Maintains Insurer Had Duty to Pay Firm
KNR counters that the Eighth District’s decision isn’t the first in Ohio to recognize an attorney’s right to recover fees in such a manner, and the law firm points back as far as an 1898 Ohio Supreme Court decision (Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Volkert). The majority view nationally is that a discharged attorney may recover unpaid legal fees from a wrongdoer, including an insurance company acting on behalf of the wrongdoer, KNR maintains. Having acknowledged the need to protect attorneys from clients that deprive their attorneys from compensation, the Ohio Supreme Court has concluded that attorneys providing legal services and paying their own legal expenses before a client can pay “creates an equitable interest in the client’s property,” the law firm’s brief states.
KNR argues that charging liens are “an active, enforceable right” against one possessing the property – such as an insurance company issuing a settlement – and the possessor has a duty to hold the property and ensure that it is given to the true owner.
In addition, charging liens are enforceable not only against court judgments but also against settlements, KNR states, citing to multiple Ohio and federal court rulings. The law firm also disputes Progressive’s position that it couldn’t pay KNR its portion because the money was already with Thomas. The law firm contends that once a settlement is agreed on, the client’s recovery no longer is in question, and there is a window between the time the settlement is accepted and the time it is paid. If the Supreme Court rules otherwise, KNR stresses that contingent-fee agreements would be undermined because attorneys would have no recourse for obtaining compensation. Given that Progressive knew KNR was entitled to a portion of any settlement when Thomas accepted the settlement, the insurance company was obligated to ensure payment was made to the firm, KNR argues.
Progressive also cannot claim protection under R.C. 3929.06 because it agreed to stand in Thorton’s shoes when the insured was dropped from the case. The statute doesn’t bar a lawsuit against the wrongdoer’s insurance company when the claim is based on the insurer’s own misconduct rather than the company’s status as the insurer, KNR maintains.
Associations Take Stances on Each Side
An amicus curiae brief supporting Progressive’s position has been submitted by the Ohio Association of Civil Trial Attorneys. The Ohio Association for Justice has filed an amicus brief supporting KNR.
- Kathleen Maloney
Representing Progressive Max Insurance Company et al.: Richard Garner, 614.901.9600
Representing Kisling, Nestico & Redick LLC: Christopher Van Blargan, 330.869.9007
Monday, April 22, 2019
The New York Appellate Division for the First Judicial Department declined to dismiss an excessive fee claim against an attorney but affirmed dismissal of fraud allegations
Plaintiff's fraud claim should have been dismissed because the complaint did not sufficiently plead justifiable reliance upon defendant's claim that it needed an additional $10,000 to continue its work on her lawsuit. In fact, the complaint specifically asserts that plaintiff knew the additional $10,000 legal fee demanded by defendant would not be used for her benefit, but he required it because other clients had not paid him. This admission negates an element of the fraud claim, that plaintiff justifiably relied on the defendant's alleged misrepresentation that "[defendants] needed $10,000 to continue their work [on her case]" (see Shalam v KPMG LLP, 89 AD3d 155, 157-158 [1st Dept 2011]; Havell Capital Enhanced Mun. Income Fund, L.P. v Citibank, N.A., 84 AD3d 588, 589 [1st Dept 2011]).
The claim for excessive legal fees (and the related discussion in the complaint of defendants' alleged breach of fiduciary duty based on the alleged overcharges) was correctly sustained. Plaintiff alleged that "[her] fee bore no rational relationship to the product delivered," and detailed that, in exchange for the $25,000 fee, defendants produced only a draft complaint that was essentially identical to the one that she had presented to them (see Johnson v Proskauer Rose LLP, 129 AD3d 59, 70 [1st Dept 2015]). This claim is not duplicative of the legal malpractice claim, as plaintiff's complaints regarding the over billing were not a direct challenge to the quality of the work but instead a claim that the fee paid bore no rational relationship to the work performed (see Ullmann-Schneider v Lacher & Lovell-Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014]; Johnson, 129 AD3d at 70). To the extent that the motion court read the pro se complaint as alleging a separate cause of action for breach of fiduciary duty, these allegations are subsumed in the cause of action for excessive attorney fees.
Sunday, April 7, 2019
The Connecticut Appellate Court affirmed a verdict favoring a former client who had filed a civil claim of misappropriation
The parties’ fee agreement provided for a contingent fee of 40 percent. Id. On June 29, 2004, an arbitration panel awarded Yuille $1,096,032.93 in damages. Id., 153. Parnoff sent an invoice to Yuille that included an attorney’s fee representing 40 percent of the gross settlement proceeds. Id. Yuille objected to the fee and Parnoff subsequently brought an action against Yuille to recover the fee. Id., 154. Parnoff’s action alleged breach of contract, quantum meruit and bad faith. Id., 154–55. Following a trial, the jury found in favor of Parnoff on the breach of contract counts and, thus, did not reach the quantum meruit count. Id., 157–58.
On appeal, this court held that the parties’ fee agreement exceeded the cap contained in General Statutes § 52-251c and, therefore, was unenforceable as against public policy. Id., 169, 172.
The trial court later rendered judgment for Yuille on the quantum meruit count, which this court affirmed on appeal, concluding that an attorney ‘‘who is barred from contract recovery because of the contract’s failure to comply with the fee cap statute cannot recover under the doctrine of quantum.
For the attorney, things went from bad to worse
In 2013, Yuille commenced the present action alleging that Parnoff had misappropriated funds that had been held in escrow pending resolution of the parties’ fee dispute. The operative amended complaint alleged conversion, statutory theft pursuant to General Statutes § 52-564,4 and breach of fiduciary duty. At the conclusion of the evidence, the court denied Parnoff’s motion for a directed verdict. The jury returned a verdict in favor of Yuille on the counts alleging conversion and statutory theft, and for Parnoff on the count alleging breach of fiduciary duty. The court subsequently rendered judgment for Yuille on the conversion and statutory theft counts in the total amount of $1,480,336.37.
Parnoff then filed the present appeal. Additional facts will be set forth as necessary.
The court rejected the attorney's claims regarding his counsel's withdrawal
Specifically, after noting the complicated history between these parties and the disputed attorney’s fees, the motion indicated that in December, 2016, Parnoff had advised in writing that the law firm was required to obtain his authorization prior to performing any further work on his file. After attending the status conference in which the matter was ordered to trial, Lynch indicated that he repeatedly requested authorization from Parnoff to work on the file; Parnoff, however, did not provide the necessary authorization. Under these circumstances, Lynch and the law firm requested permission to withdraw their appearance in this matter.
He thus was the author of his own travails
we disagree with Parnoff that the court abused its discretion by ordering this matter to trial. It is important to note that six years had elapsed between June 29, 2004, the date that Yuille received her arbitration award in this matter; Parnoff I, supra, 139 Conn. App. 153; and July 26, 2010, the date that Parnoff misappropriated the funds that had been placed in escrow pending resolution of the parties’ dispute. Another six and one-half years had passed before the court’s January 26, 2017 order directing that this matter was scheduled for trial. During this time, in addition to Parnoff I, supra, 147, and Parnoff II, supra, 163 Conn. App. 273, Yuille had also filed a grievance against Parnoff, alleging that he had violated the Rules of Professional Conduct by transferring and commingling the funds; this proceeding resulted in a formal reprimand being issued against Parnoff. Disciplinary Counsel v. Parnoff, 324 Conn. 505, 511, 513, 152 A.3d 1222 (2016). Moreover, Parnoff, an attorney with an active law license, as noted by the trial court, was a party to all of this litigation and would have had firsthand knowledge of the underlying proceedings and complicated history involving the disputed funds.
And rejected his "inconsistent verdict" contentions
It was a reasonable hypothesis for the jury to believe that at the time Parnoff converted the funds in 2010, he was no longer acting as Yuille’s attorney. Accordingly, because the jury’s answer to the interrogatory can be harmonized with the verdict, Parnoff cannot prevail on his claim that the verdict is irreconcilably inconsistent.
Notably (and I would have to say lamentably) Disciplinary Counsel v. Parnoff has the bar discipline story which involved the taking of the funds after the attorney had won the trial verdict that was reversed on appeal
“[The defendant] held the funds in escrow continuously [until] July 26, 2010, when the Chase Certificate of Deposit containing the funds, then in the amount of $363,960.87, was not renewed. The funds were transferred into [the defendant's] personal savings account.
As to knowing misappropriation
In the present case, the disciplinary proceeding before the court involved the defendant's alleged violation of rule 1.15(f) of our Rules of Professional Conduct. The alleged violation was based on (1) the defendant's failure to continue to safeguard funds that were the subject of the parties' long-standing fee dispute in an escrow account and (2) the commingling of those funds with the defendant's personal funds. The court found by clear and convincing evidence that the defendant had failed to keep the disputed fees in escrow and that he impermissibly allowed those funds to be transferred into his personal bank account. As Disciplinary Counsel aptly notes in her brief, scienter is generally not required to establish a violation of our rules of professional responsibility; see Daniels v. Statewide Grievance Committee, 72 Conn.App. 203, 211, 804 A.2d 1027 (2002); and the court did not require Disciplinary Counsel to prove as much in concluding that the defendant had violated rule 1.15(f).
In so ruling, however, the court, in essence, emphasized that the defendant lacked the knowledge that the funds belonged to Yuille. The court explained that the parties' fee dispute had a tortuous and very confusing procedural history, and that the defendant had acted in this case on the basis of an unreasonable belief that he no longer was required to maintain the disputed funds in the escrow account. Put in other terms, the court found that the defendant acted with carelessness rather than with the awareness necessary to find that the defendant violated Practice Book § 2–47A. Having made these findings, the court expressly found that the defendant's conduct “[d]id not give rise to a knowing misappropriation of funds pursuant to Practice Book § 2–47A.”
...In short, Disciplinary Counsel has failed to convince us that the court applied an incorrect legal standard in determining that the defendant's actions in the present case did not amount to a knowing misappropriation. Accordingly, her claim fails.
As did Disciplinary Counsel's other contentions
Finally, Disciplinary Counsel claims that a reprimand was an insufficient sanction given that the defendant unilaterally and unreasonably determined that the fee dispute had been resolved and allegedly misappropriated $363,760.86 of his client's funds. Accepting, as we must, the facts found by the court, we are not convinced that the court abused its discretion by only reprimanding the defendant.
In the present case, the court heard three days of testimony and arguments regarding the defendant's actions as they pertained to his safeguarding of the funds in dispute. This included testimony from the defendant. The court found that although the defendant failed to exercise properly his fiduciary and professional responsibilities to keep the disputed funds safe and separate from his personal account, he did not engage in a knowing misappropriation of the funds; rather, his conduct was negligent, based on a unreasonable belief that he no longer was required to keep the disputed funds in escrow. As we have already indicated in part II A of this opinion, the court's finding that the defendant's actions were negligent is supported by the record as a whole and, when viewed with the requisite presumption of correctness, rationally supports the court's exercise of its discretion to impose a more lenient sanction. Accordingly, we cannot conclude that the court's imposition of reprimand rather than the suspension or disbarment sought by Disciplinary Counsel was a clear abuse of discretion.
Our review of the record leaves us with no doubt that the actions of the defendant were, at best, unreasonable. We also fully agree with the statements of the court in In re Wilson that misappropriation of a client's funds cuts to the very heart of the trust that the public places in attorneys every day and in our legal system generally. It is a fundamental duty of attorneys to safeguard and protect with the utmost diligence any property held by the attorney on behalf of his or her clients. “[T]he fiduciary relationship between an attorney and a client requires absolute perfect candor, openness and honesty, and the absence of any concealment or deception.” (Internal quotation marks omitted.) Disciplinary Counsel v. Smigelski, 124 Conn.App. 81, 89–90, 4 A .3d 336 (2010), cert. denied, 300 Conn. 906, 12 A.3d 1004, cert. denied, U.S., 132 S.Ct. 101, 181 L.Ed.2d 28 (2011). Nevertheless, the mere fact that a more severe sanction might have been justified given the nature of the violation does not mean that the court here manifestly abused its discretion in imposing a lesser sanction or that the discipline imposed amounted to an injustice that must be remedied by a reversal.
"At best, unreasonable" is, at best, a timid approach to enforcing a sacred fiduciary obligation.
The Connecticut Supreme Court affirmed the above-recited conclusions of the Appellate Court. (Mike Frisch)