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)
Friday, March 29, 2019
On September 27, 2012, the State filed an ex parte verified petition asking the district court, among other things, to temporarily restrain and then preliminary and permanently enjoin Defendants from the sale, publication, replication, and distribution of any and all Kansas Bureau of Investigation file materials relating to the 1959 murder of members of the Clutter family in Holcomb, Kansas. That same day, the district court entered the ex parte temporary restraining order as requested. An amended ex parte temporary restraining order was filed on October 9, 2012.
On December 17, 2012, the district court held an evidentiary hearing on the State's request to convert the ex parte temporary restraining order into a preliminary injunction. At the end of the hearing, the court granted the parties' joint request to submit legal arguments in support of their respective positions. On April 23, 2013, the district court granted the State's request and entered a preliminary injunction but left open the possibility for Defendants to request the court vacate it at a later date. Citing K.S.A. 60- 905(b) as authority, the district court noted the State would not be required to post a bond in conjunction with the preliminary injunction.
On August 22, 2013, Defendants filed a motion to vacate the preliminary injunction. After significant delay due to discovery disputes, the State filed a motion for summary judgment on January 29, 2014. Defendants supplemented their motion to vacate on March 14, 2014, March 21, 2014, and June 6, 2014. The district court heard oral argument from the parties with regard to all pending motions on June 26, 2014, and took the matters under advisement. On November 7, 2014, Defendants filed an urgent request
for a ruling on their motion to vacate. On November 26, 2014, the district court granted Defendants' motion to vacate the preliminary injunction, concluding that it should not have been granted in the first place.
On May 27, 2015, Defendants filed a motion to compel discovery that the State previously had failed to produce. Following a hearing, the district court granted that motion and ordered the State to produce the requested documents no later than July 7, 2015. Rather than produce the documents as ordered, the State filed a motion to voluntarily dismiss the case. Defendants indicated they did not object to voluntary dismissal but noted that allowing the State to do so before Defendants had an opportunity to present the court with various motions related to the litigation (including but not limited to their forthcoming motion for costs and attorney fees pursuant to K.S.A. 60- 905[b]) would be highly prejudicial. Defendants subsequently filed a motion for costs and attorney fees. After further briefing and a hearing, the district court granted Defendants' motion for fees, awarding them $152,585 in attorney fees, but denied awarding costs. The district court held that the amount of fees it awarded all stemmed from the wrongfully issued preliminary injunction that was requested by the State. The district court also granted the State's motion to dismiss.
The court rejected the State's claim that sovereign immunity barred an adverse fee award
No Kansas court has ever held that the State may waive its immunity from suit in state court through its litigation conduct. But sovereign immunity finds its source in the common law, and the common law adapts to changing circumstances to advance notions of fair play and equity.
...we hold the defense of sovereign immunity is not available to the State to shield it from liability for damages, including attorney fees, incurred by Defendants in seeking dissolution of the temporary injunction affirmatively sought and granted in its favor but later vacated based on a finding that it was wrongfully issued. The fact that the State was statutorily exempted from posting a bond to secure the availability of monetary funds in the event an award of damages and attorney fees was granted is immaterial to our holding.
On the fee award merits below
In this case the district court awarded Defendants $152,585 in attorney fees, $137,937.50 of which went to the Hendricks & Lewis, PLLC law firm and $14,647.50 of which went to the Cornwell & Vokins law firm. The district court based that award on a careful review of Defendants' attorney billing logs and the KRPC 1.5(a) factors. Specifically, the district court found that (1) the case was novel and difficult and therefore required significant time and skill to perform the necessary services appropriately; (2) the work in this case precluded the attorneys involved from working on other cases due to the time sensitivity of the action; (3) the hourly rates charged by both firms were within the range of those customarily charged for similar services in Topeka, Kansas; (4) the work required to obtain the result was exceptional particularly in light of the constitutional issues involved; (5) Hendricks & Lewis had a prior relationship with one of the defendants and because it was an out-of-state firm, it was necessary to involve Cornwell & Vokins as local counsel; (6) all of the attorneys involved in the case were highly qualified and experienced; and (7) the fees assessed were based on hourly rates that were reasonable given the nature and uniqueness of the case. Based on a review of the record, we conclude that the district court's findings are supported by substantial competent evidence and that a reasonable person would agree with its award of attorney fees totaling $152,585.
But on appeal attorneys fees
Based on the eight factors set forth in KRPC 1.5(a), we find the $58,490 in attorney fees requested for work on this appeal to be excessive. In support of our finding, we note the issue in this appeal already had been extensively litigated through written motions and oral argument at the district court level. We also note the lack of sufficient information to evaluate the reasonableness of Mr. Lewis' reduced fee request. In addition, we find the fees requested for time spent to travel to oral argument is excessive. Finally, we find unreasonable the fees request for time spent to prepare the three motions for an extension of time to file Defendants' appellate brief. In the absence of evidence to the contrary, such motions are for the convenience of counsel and their schedule. Because some of the entries in the affidavit submitted by Mr. Vokins include time spent on motions for extension of time as well as an additional task, we have calculated the total of those entries and credited half that amount to time spent on motions for extension of time and the other half to time spent on other tasks. For all of these reasons, we award to Defendants the sum of $15,450 in appellate attorney fees and the sum of $264.02 in expenses associated with this appeal. The award totals $15,714.02.
Wednesday, March 13, 2019
The New York Appellate Division for the Third Judicial Department vacated a confessed judgment for legal fees
In early February 2013, the defendant executed a blank affidavit of confession of judgment in favor of the plaintiff for “unpaid attorney’s fees and expenses due on cases plaintiff referred to the defendant for continued prosecution as co-counsel to plaintiff’s law firm and in accordance with the terms of the letter agreement entered into between plaintiff and defendant dated January 24, 2013.” It is undisputed that at the time the affidavit was executed, neither the plaintiff nor the defendant knew the exact amount owed by the defendant to the plaintiff under the January 24, 2013, letter agreement.
Approximately one year later, still unable to secure the defendant’s cooperation in calculating the exact amount owed, the plaintiff unilaterally estimated the amount to be $207,474.92 filled in the previously executed affidavit of confession of judgment accordingly, and used that affidavit, as so modified, as the basis for obtaining a judgment by confession against the defendant in that amount, which was filed in the Nassau County Clerk’s Office on April 8, 2014.
In September 2016, nonparty Elena M. Perez, a junior judgment creditor of the defendant, moved to vacate the judgment by confession on the ground that the affidavit of confession of judgment failed to comply with the strict requirements of CPLR 3218. In an affidavit filed in support of the motion, the defendant averred that the affidavit of confession of judgment was executed in blank, and the sum confessed was inserted at a later time without his knowledge or consent. The plaintiff opposed the motion. The Supreme Court denied the motion, and Perez appeals.
Here, it is undisputed that the affidavit of confession of judgment, at the time it was executed by the defendant, failed to state the sum for which judgment could be entered. It is also undisputed that the sum was unilaterally filled in months later by the plaintiff, based on calculations that are neither fully explained nor ascertainable from the evidence contained in the record. Under the circumstances, the affidavit did not meet the requirements of CPLR 3218(a)
The New York Appellate Division for the First Judicial Department dismissed an appeal
Under the Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.5(g)(1), a lawyer may not divide a fee for legal services with another lawyer who is not associated with the same firm unless, inter alia, the division is in proportion to the services performed by each, and by writing given to the client, each lawyer assumes joint responsibility for the representation (Samuel v Druckman & Sinel, LLP, 12 NY3d 205, 210 ). Here, the record does not permit resolution of the claim for breach of contract regarding fee-sharing as a matter of law, given plaintiff's partner's affidavit regarding his firm's participation in the contested Workers' Compensation cases, through staff translations, arranging appointments, and performing various other tasks associated with those cases.
We grant plaintiff's motion to compel defendants to provide access to the Workers' Compensation Board's eCase system with respect to the cases referred to defendants by plaintiff because the information sought is material and necessary.
Monday, February 18, 2019
The Massachusetts Supreme Judicial Court has affirmed the dismissal of a suit for legal fees on statute of limitations grounds.
An attorney had left the plaintiff law firm and taken the case with him
Grace, then an employee of HLO, performed most, if not all, of the legal work on the case, but neither he nor HLO recorded Grace's hours contemporaneously.
HLO terminated Grace on June 25, 2010, while Hicks's medical malpractice case was pending. Hicks, notified of Grace's departure, elected to have Grace continue to represent
him in the medical malpractice action. Grace and HLO were notified of Hicks's election in writing on July 1, 2010. On July 2, HLO transferred Hicks's file to Grace at his new firm, Denner Pellegrino, LLP (Pellegrino), and shortly thereafter Hicks entered into a second contingent fee agreement regarding his medical malpractice action with Pellegrino.
The retainer agreement with HLO allowed an hourly fee if discharged.
The pertinent discharge provision unmistakably provides that if the client discharges HLO, then the client will be liable to HLO for work performed by HLO at a prescribed rate. Therefore, whether we apply the usual rule restated in Jenney, 402 Mass. at 154, or confine our analysis to the plain language of HLO's fee agreement makes no meaningful difference -- HLO's cause of action against Hicks for legal services accrued no later than July 1, 2010, the date that HLO was notified that Hicks had elected to terminate HLO's services.
HLO's argument to extend the statute because Grace had not provided his hours failed.
Grace's refusal to cooperate with HLO has no bearing on when HLO's cause of action for legal fees against [client] Hicks accrued.
...If HLO had conditioned its entitlement to fees on Hicks's recovery in the underlying medical malpractice suit, then Halstrom's argument that the statute of limitations began to run when Hicks received his settlement check might be persuasive; but HLO did not do that. It is to the terms of that provision that HLO is now bound.
In short, in accordance G. L. c. 260, § 2, Halstrom had until July 1, 2016, to bring his contract action against Hicks. That Halstrom missed the deadline "by a few days" is inconsequential -- his claim is time barred nevertheless.
Equitable claims also failed. (Mike Frisch)
Monday, February 4, 2019
A newly-released opinion of the District of Columbia Bar Legal Ethics Committee
Ethics Opinion 376
Mandatory Arbitration Provisions in Fee AgreementsFee agreements containing mandatory arbitration provisions are "ordinary fee arrangements," and the requirements of Rule 1.8 which addresses business transactions between lawyers and clients do not apply. The standard for obtaining client consent to fee agreements containing mandatory arbitration provisions is set forth in Comment  to Rule 1.8, and Legal Ethics Opinions 211 and 218 are superseded by Comment  and this opinion.
Saturday, January 26, 2019
The South Carolina Court of Appeals has enforced a fee arbitration provision of a retainer agreement
This is an appeal from a circuit court order compelling Lisa Moore (Client) to resolve a fee dispute through the Resolution of Fee Disputes Board of the South Carolina Bar (the Board). Client argues (1) Jean Derrick (Attorney) waived the right to compel her appearance before the Board by first filing an action in the circuit court, (2) the circuit court lacked authority to compel Client's appearance before the Board, and (3) Attorney's fee agreement is unenforceable under the South Carolina Uniform Arbitration Act. We affirm.
The client retained the attorney in a family law matter. The agreement
Client retained Attorney in April 2011 to represent her in a family court matter in Kershaw County. At the onset of the representation, Client and Attorney signed a fee agreement, which provided: "ANY DISPUTE CONCERNING THE FEE DUE PURSUANT TO THIS AGREEMENT SHALL BE SUBMITTED BY THE DISSATISFIED PARTY FOR A FULL, FINAL RESOLUTION TO [THE BOARD], PURSUANT TO RULE 416 OF THE SOUTH CAROLINA APPELLATE COURT RULES."
Client's last payment to Attorney was in May 2014; however, there still remained an outstanding balance of $10,484.40. Client did not object to the amount of the bill and repeatedly assured Attorney she would pay, although this evidently never happened. On October 6, 2014, Attorney commenced an action against Client in the circuit court to recover the unpaid fees.
Client answered, and by way of an affirmative defense, asserted Attorney had failed to comply with the provision of the fee agreement that required all fee disputes to be resolved by the Board. Client also submitted counterclaims for breach of contract accompanied by a fraudulent act, violation of the South Carolina Unfair Trade Practices Act, abuse of process, and conversion. Attorney answered and moved for an order compelling Client to submit the fee dispute to the Board pursuant to the fee agreement and Rule 416, SCACR.
We find Client consented to the jurisdiction of the Board as required under Rule 9 of Rule 416, SCACR, by signing the fee agreement. The rule does not draw a distinction between a client who consents to jurisdiction prior to the representation and one who gives consent after a fee dispute arises...By signing the contract and agreeing to be bound by the terms of the fee agreement, the parties conferred exclusive jurisdiction to the Board over fee disputes. See Bailey v. Bailey, 312 S.C. 454, 459, 441 S.E.2d 325, 327 (1997) (noting exclusive jurisdiction over a fee dispute vests in the Board upon a client's consent to be bound). Accordingly, we find the circuit court was within its authority to enforce the contractual provision and send the fee dispute to the Board.
we find no error in the circuit court order compelling Client and Attorney to resolve their fee dispute before the Board. We further find the Uniform Arbitration Act is inapplicable to fee agreements entered into between an attorney and client.