When you, a lawyer, are in trouble, hire a competent lawyer; NY Times on Billing Troubles Abound with Fraud Allegation; More on Fee issues – what is a “document review” billing entry worth?

Can you believe this guy is [might once again be] a lawyer?

It is reportedly a heart stopping moment, you get a certified letter from the Disciplinary Commission inviting you to explain some complaint made against you.  It has to be even more disconcerting when the Commission files, and serves you with its Verified Complaint; now you are past the informal opportunity to solve the problem.

The Best Practice is to hire a competent lawyer to help you at the first letter, but if you don’t, then hire one at the complaint stage – you failed to get yourself off, get help.

Before you go to lunch, find someone, call and set an appointment. Do not go out for the afternoon golf game.  Save your license.

Jeffery Fetters had even been through the process before. In 2012 he started down a path he had previously walked in 2005.  This time he did not read the A&D Rules that govern the disciplinary process.  He misfiled his answer to the complaint. The misfiled answer did not meet the standards for an answer to a complaint. He apparently took the whole process lightly.

Just like he took the duty of effectively representing his client in the eviction process. He won the immediate eviction hearing, but did nothing after that, and eventually refused to talk to the client about the problems.

The court found the following violations:

The Court finds that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct:

1.2(a): Failure to abide by a client’s decisions concerning the objectives of representation.

1.3: Failure to act with reasonable diligence and promptness.

1.4(a)(3): Failure to keep a client reasonably informed about the status of a matter.

1.4(b): Failure to explain a matter to the extent reasonably necessary to permit a client to make informed decisions.

8.1(a): Knowingly making a false statement of material fact to the Disciplinary Commission in connection with a disciplinary matter.

Lots of failures there, and no effective way to answer the allegations because he did not follow the rules, or hire a competent lawyer to assist him.
What do you think the Court did? Answer is below.

DLA Piper in More Trouble

In March, I reported the biggest of the BIGLAW firms that may have gotten caught engaging in serious bill padding. And this was a billing problem of the magnitude of a $200,000 over-estimate, and it was as much as $675,000 in dispute. The NY Times article updating us on the value of the dispute now is here.

One rule of being a smart lawyer is to be real careful before deciding to “sue a client for fees.”  It is on many of the “do not ever do this” lists right before “fool around with the staff, nobody will ever know,” and after “what is a small loan from the trust account going to hurt.”  There are a lot of reasons, not to sue a client, and I will mention a couple illustrated by this case:

1 – you already created a litigation tiger and now you grabbed him by the tail.  Clients going through a lawsuit are often seriously ticked off, and to then be sued by your lawyers, the people you put your trust in, really gets under most clients’ skin.

2 – if you sue your client, be sure that you don’t have a smoking gun in the file, or on the computer. That means you don’t have anything that suggests, let alone shows that you were padding the bill or committing malpractice or ethical violations, or anything else, anywhere in a letter, an email, an interoffice communication, or on a scratch pad. Discovery is getting good.

If you think your client owes you $675K, then the client probably has the resources to spend another $500K searching your database.

Another reason to use a smaller firm?

The Times quotes a “billing ethics professor” (I did not know we have ethics professors who specialize in billing matters – but now know why we do) in this paragraph:

In a survey of about 250 lawyers that Professor Ross conducted in 2007, more than half acknowledged that the prospect of billing extra time influenced their decision to perform pointless assignments, such as doing excessive legal research or extraneous document review. There is also the issue of “featherbedding,” he said, or throwing armies of bodies at every problem.

When your law firm does not have “armies of bodies” hanging around looking for something to do, the “featherbedding” issue is mooted to a great extent.  And when your lawyer or small team of lawyers, that you know by name, are working on your matter, the thought of performing “pointless assignments” is not near as tempting as it might be if you are teaching a large class of first year lawyers the ways of research or the firm’s ethics of billing.

The most recent news in the case?

His [Victor’s] lawyer, Larry Hutcher at Davidoff Hutcher & Citron, amended the countersuit last week to include a fraud claim and a request for $22.5 million in punitive damages, a number representing 1 percent of DLA Piper’s reported revenue last year. (my emphasis)

***

The other end of the Canada case.

Last week we discussed the Canada case, where the fees, though flat, were earned, and upon the client’s demand did not need to be returned.  Octavia Snulligan did not understand that rule before Canada was decided.

She too requested a flat fee, but did not appear to do the work required, or at least she could not satisfy the client that she was doing the work that was expected.  After five months she was fired, and the client wanted part of her retainer money back. Snulligan refused, and when she was asked for an invoice, she crafted one. She, like many lawyers do not keep time sheets, but she created one anyway, and showed 37.8 hours of work, in 32 entries.  28 of the entries were for “Document Review” without further explanation. The hearing officer, the commission and the Supreme Court were all unimpressed with the reconstructed time records.

So unimpressed that it was the most serious aggravating factor found. It was “calculated to mislead the Family, the Commission and the Hearing Officer” said the Supreme Court.

Snulligan got a retainer of $6,000 on a flat fee of $12,000. She had the case for five months and said she had worked it. The court said she failed to refund the unearned portion, which the hearing officer calculated as $5,000 in unearned fees of the $6,000 she had received.

The court goes out of its way to say that a “$12,000 total fee, or her collection of $6,000 of that fee before she was terminated would [not] have been unreasonable” if she had been able to complete the representation. But she did not, she was discharged and had not met the Realtor’s Rule of getting to the close before getting fired by the client.

Another good discussion on fee issues by the court, helping the bar to better understand where the line of good behavior ends before you get into bad behavior.

What do you think the Court did? Answer is below.

***

Fetters got Six month suspension without automatic reinstatement [follow link to find out about automatic reinstatement], with a requirement for restitution for reinstatement.

Snulligan got a 30 day suspension without automatic reinstatement, but with a proviso that if she refunds the $5,000 in overcharged fees, she may petition for immediate reinstatement.

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One thought on “When you, a lawyer, are in trouble, hire a competent lawyer; NY Times on Billing Troubles Abound with Fraud Allegation; More on Fee issues – what is a “document review” billing entry worth?

  1. The Fetters case illustrates a couple of points that underscore your point about the need to get a competent lawyer to represent you if you have to deal with a disc. complaint. The first point is that so many times, what may look to an attorney like one possible violation of one RPC actually involves a number of RPC. The second (and more important) point is that discipline is progressive. This means even if you read the cases and see that attorneys have gotten a reprimand for similar conduct,, you will likely get a suspension if you already have been reprimanded. So while you think you might at best be dealing with a possible reprimand, you are actually be looking at a suspension. So you need to do as Ted suggests and get a competent lawyer to advise you at the onset of a D.C. complaint.

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