Be Careful Helping your Friends – Sharing with Friends – Treating Staff and Litigants

When is a Lawyer just a Friend — in trouble?

Jameson Conrad was with a friend on New Year’s Eve, in Charleston WV. Conrad’s friend got into a dispute with another man, and used his gun to make his point. The shooting was caught on tape. Conrad then used his lawyerly skills to advise friend to “run,” he then kept friend’s cell phone and refused to identify friend when police asked.

When you are a fact witness, it is hard to claim a lawyer-client privilege, because the police think you are an “accessory to malicious wounding.” It might work, we will know in several months.

But, upon these facts, WV Bar Counsel alto thinks you are enough of a menace to make a prompt Complaint to the Investigation Commission, seeking suspension from the practice, and to report it when asked by the local paper.

H/T Gary Welsh.

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Who do YOU Trust with your Client’s Secrets?

It is only a little secret. Something you learned while working with the world’s most famous writer. Surely your wife’s best friend can be trusted not to tell what you should not have told her.  But she told, and now you pay, in a couple of ways.

JK Rowling has been known to write some pretty good books, sold millions of books, and movie tickets from the Harry Potter series.  She ought to be able to trust her secrets to her solicitors.  But Robert Galbraith’s identity was not safe with Christopher Gossage, one of her lawyers.  Robert Galbraith is the pseudonym Rowling used on a new book she wrote, trying to see if she could enjoy writing without the hype and expectations of her name.  She was displeased, even though the book sales jumped after the word was leaked by the trusted friend of Gossage’s wife.

The law firm fell on the sword, quickly admitting that Gossage had shared the information with Judith Callegari during a private conversation. “The disclosure was made in confidence to someone he trusted implicitly.”  Not a great judge of character there.

Who do you trust implicitly enough to turn your license over for their discretion? The Solicitors Regulation Authority in England fined Gossage £ 1,000. for the breach of confidentiality.  Rowlings charged even more.

There was a winner in this matter. “The Soldiers Charity” was the recipient of all the book proceeds, plus the settlement damages Gossage and his firm, as well as his trusted friend paid to Ms. Rowling. Nice touch.  Hard for a billionaire to get much in the way of sympathy for herself.

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Judge Suspended for Treatment of Staff, Lawyers and Litigants.

The Judge Kimberly Brown story is a big story in Indiana legal circles. She has been through a protracted hearing before the Master Panel to determine a recommended punishment, based on a multi-count complaint of judicial misconduct. She was reported to have mistreated staff, lawyers and litigants in unusual and contemptible ways.

The Master Panel has recommended her removal in spite of some clever legal maneuvering by her new lawyer-team, after firing her earlier team of lawyers.  Now the Supreme Court has temporarily suspended Judge Brown and will take further action in due course.  Her suspension, as recommended is with pay.

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Ted Waggoner will be offering the annual kickoff session to the IVY Tech Agricultural Seminar Series on Jan. 22, at the Cole campus in Logansport. The topic – Family Farm Ownership: What is the Right Solution for You and Your Family. For more information, contact Julie Byrd at IVY Tech, 765-459-0651 x 288.

Before Me – means just that; Get a Retainer; Price of an Insult

Just because you did, don’t.
It hurts to report on lawyer-friends, and yet they too provide lessons for us to learn.  Larry Beeson is a good lawyer from a neighboring county. We have tried a few cases against each other over the nearly 35 years we have been here.  Larry just got a public reprimand, and included was a strong warning from the Chief Justice that the act should have resulted in a suspension.

After seeing this, I called Larry and we discussed the ruling.  The case was an older couple, blended family, and a transfer of the Power of Attorney from the elderly wife to wife’s children.  Husband’s children later objected to everything and among the things in the objection was the handling of the POA.  Husband signed it, wife returned it to the drafting lawyer who added his notary.  He had known the couple for more than 20 years, was familiar with the signature, but did not see it signed, and did not return to have the signer acknowledge before him that the signature was his.

Later there were problems between the various family members, a disciplinary complaint filed, and this issue stood out.  Beeson admitted the violation early. The 2007 incident resulted in the 2013 ruling.

A lively discussion was had on the Indiana State Bar discussion list, with a few confessions from lawyers admitting doing the same things, but most notably, a defense of the Supreme Court’s ruling was in a comment by Indianapolis lawyer Jon Pactor reminding the profession that the legal system depends on honest documents, and as officers of the court, it is critical that no document breaks down at the hands of a lawyer.

Don’t notarize documents when you don’t see the signer sign, and as a lawyer, don’t count on the warning from the CJ remaining the minority view in your case. And if you did it before, or had staff do it before, stop!

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Get a Retainer or stay quiet

Harry Tun was talking to a witness in a murder case he was defending when the witness asked if she could invoke the 5th Amendment to avoid testifying.  Rather than say “you need to talk to a lawyer of your choosing about that.”  Tun answered that she could not invoke the 5th Amendment. Someone else in the room (M.B.) also told the witness the same information. M.B. was later charged with obstruction of justice.

Tun should not have offered legal advice to a non-client.  There was a conflict of interest between his client’s position and the witness’s, and the advice was a concern for the panel.  He got a public admonition from the District of Columbia Bar.

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Deposition Fights – Suspension?

Lawyers should be the professionals in the room when a deposition is going on. Cliff Van Syoc forgot that, and ended up calling the opposing lawyer names such as “stupid” and “bush-league.” (Apparently DC does not allow Joe Jamail deposition tactics from Texas, as shown here) When he told his deposition witness clients to leave the room, the inquiring lawyer said that he would call the judge to supervise the deposition. Van Syoc then said that the “presiding judge is corrupt,” and told an employee to call 911 to have the New Jersey police evict the opposing lawyer.

Van Syoc did give an apology, but the court did not give him much credit since he continued to criticize the judge in his apology. The court reporter testified at the disciplinary hearing, not to Van Syoc’s advantage.

New Jersey discipline is heard by a board that makes recommendations to the Court. The DRB split on the recommendation: four for a six month suspension, one for a three-month suspension, and two for a censure.  The Court will determine the final sentence.

Hiding Things Brings Trouble: Assets, Evidence and a Court Order.

Hiding Assets

The case started for Washington State lawyer, Thomas McGrath when his wife, a chiropractor, started a fight with her ex-employee.  Forbes reports on his bad actions: first to represent his wife in a case where she lost a judgment of $500,000; and then to do improper asset protection in violation of the RPC.

Shifting assets when the case is going badly is a time honored tactic, but shifting a spouse’s asset through the office trust account in violation of Rule 1.15 is still a forbidden mixture of personal assets with clients’ assets.

Filing bankruptcy is not generally improper, but falsifying the Bankruptcy Petition is a federal felony and an ethical violation.

As Jay Atkisson, the Forbes columnist explains: “This case has nothing to do with legitimate asset protection planning, and everything to do with plain old fraud on creditors.”

What do you think the Washington State Supreme Court did to the husband lawyer, just trying to help his wife?

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Hiding Evidence on Facebook:

Matthew Murray was slow to advise his client about the eternal nature of electronic evidence. Murray’s client lost his wife and filed a wrongful death case.  Among the damages claimed was loss of love, affection and companionship.  After being asked to produce “screenshots” from his client’s Facebook account, Murray told his paralegal to make sure the account had been “cleaned up. ” The plaintiff-client’s photos disappeared from his Facebook wall, but the defense counsel already had 16 of them, including the one that showed him wearing a T-shirt that said “I ♥ hot moms” while holding a beer, soon after the wife’s death.  Since the suit was for the losses he suffered due to the wrongful death of the plaintiff’s wife as caused by the defendant, the photo was thought to be material to damages.

First, the trial court ordered the payment of defendant’s attorney fees against Murray and his client in the amount of $722,000 and slashed the jury’s $8.5M verdict. The VA Supreme Court reinstated the verdict, but allowed the attorney fees order to stand.

It also found Murray violated the RPC and entered a sanction: What would you have ordered?

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Hiding the Court Order?

A busy time for the Washington State Disciplinary Board.
And Tom Kamb was a busy lawyer. He had a criminal law practice, mostly DUI defense work. On the day of the problem, he had 20 case hearings set in the morning.  He got a plea on one case, which was submitted, and approved by the court.  He forgot to get the breath test suppressed, which appears to be a normal event, since suppression of the breath test protects the client’s driver’s license.

Kamb later had a hearing with the Dept. of Licensing’s ALJ about his client’s driver’s license, Kamb reported that he had gotten the breath test suppressed in the criminal charge.  Now he had to find a way to prove that.  Bad idea.  He asked for the closed file from the clerk, and penciled a note about the test being suppressed on the signed order. The now suspicious clerk refused to provide him with a certified copy of the newly forged order, and sent him to the prosecutor.  The prosecutor agreed to a retroactive suppression, not knowing that Kamb had lied to the DOL’s ALJ, and forged the court’s order.  When Kamb returned with the note from the prosecutor, the clerk sent him to the presiding judge who was not pleased.

The judge files disciplinary charges, and after the investigation by bar counsel, there was a finding of Kamb’s guilt on three counts:

Count 1 charge[d] Kamb with misrepresenting the existence of an order suppressing his client’s breath test to the hearing officer in violation of RPC
3.3(a)(1). Count 2 charge[d] Kamb with changing Judge Svaren’s order in violation of RPC 8.4(b ), 8.4( c), and 8.4( d). Count 3 charge[d] Kamb with violating RPC 1.3 which  requires a lawyer to act diligently and promptly, by failing to discuss suppression of the breath test with [prosecutor] Johnson before the DOL hearing.
Kamb challenged the Hearing Officer’s findings. The court found his version of facts lacked credibility.  The transcript of the ALJ’s hearing proved the timeline and his misstatement of facts about the existence of a court order that helped his client.
What did the WA Supreme Court do in this case?

Poll Results:

1. Washington Supreme Court disbarred the lawyer after 40+ years of practice – citing the filing of false filings and claims, and lack of remorse.

2. Murray got a five-year suspension from the practice of law.

3. The opinion cites as authority: “The American Bar Association’s Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992)” as the guide for lawyer discipline in Washington State.   Kamb got disbarred.

Neglecting Clients Here and There: Indiana; & New Jersey

Neglecting clients is a bad thing to do. Let’s learn the lesson at someone else’s experience, and not do it ourselves:

Indiana:

In 1997 Biomet, Inc. a worldwide ortho manufacturer from Warsaw IN hired Kent Frandsen, of Parr Richey law firm, to file a legal malpractice claim against Barnes & Thornburg for the way it handled a patent infringement case.  The firm filed the suit followed by, as you can imagine, lots of intrigue, including an interlocutory appeal decided in 2003.  After the Court of Appeals opinion approved the case moving forward, nothing happened on the case.

In 2006 B&T sought a Rule 41(E) dismissal that was heard, with an honest discussion of the delay at the hearing:

THE COURT: What has happened ? Why has nothing
happened since transfer wasn’t granted, sir?
COUNSEL: That’s a fair question, Your Honor. First of
all, I was stunned personally when the Court of Appeals
issued the decision it made. I was extremely busy in my
practice. This case takes a lot of time to put together. It has been one (1) of those cases where I couldn’t bring myself to dig into it enough to be ready to do what needs to be done. This is not an automobile accident case, Your Honor.This involves difficult issues that were involving patent litigation that frankly has been very uncomfortable for me and I don’t know that I’ve ever felt competent to deal with the underlying merits of the judgment that is at issue in this case. *** When that did not come, … I simply could not get to where I could take or have anyone else take the time to get into the merits of the case. I take full responsibility for it and we were in communication with Biomet. We indicated to our client that we would do things but we simply didn’t do them. We would get going on the case. Biomet seriously wants this case pursued and resolved on its merits. We’ve not been able to get that done. ***
THE COURT: … The question is if we talk about the
judicial system, why should I penalize this Defendant ?
Why should I penalize this Defendant because of what you have described as your inaction, sir ? I guess I want to try to understand that.
The court did not understand that, and the client did not either, later filing a malpractice case after the case vs. B&T was dismissed.  Biomet got a partial summary judgment v. the law firm and lawyer, and then Parr Richey appealed. The question was whether there was a duty and a breach, and it was decided (in a NFP opinion*) there was.  Other issues remained for trial.
*While NFP opinions have no precedential value in a court of law, they are great teaching tools in the hands of a blogger! 
Be careful taking on more than you and your firm are capable of handling.  Stay on the case even when things get busy or you get distracted.  The client is still counting on you.
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New Jersey
“They are pestering me!” “Their calls got nastier and nastier, and quite frankly I did not need that.” “I fired them [the client], told them to get a new lawyer!”  NJ’s Disciplinary Review Board did not take kindly to Victor Azar’s attitude about people who had hired him, paid him money and then got neglected.  The board objected to his defensive responses to the clients’ seemingly legitimate complaints.  He also withheld their files.
The report was complimentary about his skills in getting clients and their retainers, but suggested that the follow through lacked a lawyerly precision, and he “neglected, if not grossly neglected” the client’s interest and “engaged in a pattern of failing to communicate” with his clients.
Azar is facing a reprimand at DRC’s recommendation.
h/t Vic Indiano

Corporate Lawyers have Troubles too; E-Discovery Issues; Reimbursements?

Corporate lawyers don’t get too much discipline press

Sometimes they deserve it, so they too, can stay off the radar of LawyersWithTroubles.

Ky. lawyer Ronald Hines was a corporate lawyer with Cody Properties, Inc.  He worked there for years, Cody was the employer.  Then trouble brewed in the corporate boardroom, and Hines took a side with one faction.  In fact he filed a suit against some of the corporate officers, without the Board’s approval, and expressed his opinion that the Board was not properly elected.  But he did not do it within the chain of command, or under the Rules of Professional Conduct.

He turned corporate files over to dissident shareholders, and objected to the LLC’s organizing papers that he had drafted to create the entity, calling them “fraudulent.”  He got fired by the new management, but still continued to hold himself out as “counsel for the corporation.”

The Kentucky Supreme Court found violations or Rule 1.7 – Conflict of Interests, 1.13(a) – Duty of Loyalty with Organizational Clients, 1.4(a) Failure to Communicate with Client (the new officers he was fired by), 1.16 Duties  Upon Termination of Representation, and 1.8 Duty of Confidentiality of Client Information.

The Court suspended Hines for 120 days for this series of violations.  KY does not report the process of reinstatement in this Order.

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“I [heart] hot moms”

One thing about technology is the great evidence that is contained there. Clients do dumb things, and tell the world.  Lawyers who help them “clean up the record” are doing even dumber (and more expensive) things as Virginia lawyer Matt Murray found out.

Fortunately for the client the VA Supreme Court upheld the $8.5M wrongful death verdict coming out of the tragic case, but Murray got tagged for a $542,000 legal fee sanction for advising the client to “clean up the Facebook pages” where, among other things, the deceased woman’s husband and plaintiff had a photo showing himself in a T-shirt that read “I love hot moms.”  Murray thought that might hurt the case, so he had a paralegal instruct the husband to remove that photo, 15 others and some text.  Because the husband had previously communicated with the adjuster through Facebook, the defendants knew of  the materials.

Murray has been reported to DC for abusing the Rules of Professional Conduct, and is now under investigation. He is no longer actively practicing law.

Another article on this case by Sharon Nelson: http://tinyurl.com/l586f5k

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Reimbursements — I  need an expense for that?

BIGLAW lawyers live in a different world.  One thought nothing of seeking $69,000 in reimbursements for cab fare, but forgot to first incur the $69,000 in fares.  Lee Smolen, of the Chicago office of Chicago’s biggest law firm Sidley & Austin, not only got his cab fares paid, but also $50,000 in entertainment expenses “not incurred for legitimate firm purposes.”

Apparently the partners at S&A did not see the humor, fired him and submitted the theft to the IL disciplinary authorities.

But it did not faze his new firm, DLA Piper, with law offices in Chicago and around the world.  It said that Lee had “learned from his experience” and will be a productive member of their team.

H/T John Conlon

PA Judge steals Drugs?; Former VA Bar President gets Disbarred; the Indiana Oath of Attorneys

Another PA Judge goes bad?

Pennsylvania has had a run of bad luck with its judges. In 2011, two judges were sentenced for taking kickbacks for sending kids to a private juvenile prison instead of to juvenile probation. Now a judge is charged with stealing cocaine from the evidence locker on drug cases that had been closed.

Judge Paul Pozonsky resigned abruptly last year, after questions were raised about his residency. Now charges are pending for the alleged theft of drugs from his evidence locker. Pozonsky had changed the local rules for evidence in drug cases, requiring that the actual drugs be brought to court in criminal cases, and placed in evidence. After a while State Police did an inventory of the evidence closet, and found drugs missing and evidence tampered with.

His lawyer calls it “a serious matter, and he [Pozonsky] is treating it as such.” Really serious.
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Former Virginia Bar President Bills Big – Disbarred

With a billing rate of $850 per hour, former Virginia Bar President Glenn Lewis still thought he needed to pad his bill. But there is the padding of a coffee break while on the client’s clock, and then there is Lewis’s padding.

According to the Washington Post, Lewis was “once one of the Washington area’s highest-paid and most-respected divorce lawyers and a former president of the Virginia Bar Association…” See the previous post on the Icarus Rule.

Suing clients over a bill is often a mistake (one PLP defense lawyer reports that 90% of client claims for malpractice against lawyers are, in fact, cross claims filed when the lawyer first sued for unpaid fees), but when the client you sue is also a lawyer, and the suit is for $500,000 more in fees on a divorce case where the client has already paid $382,000, and the case settled during pre-trial work, that should be a concern that was considered before filing the first lawsuit. Among the charges in the suit was a claim $253,000 in interest on the past due legal fees [doing the math, $253,000 interest on $632,000 in fees, more than 1/2 of which had been paid might be a usurious interest rate].

When a smart client gets sued for fees, and the client can afford a billing expert, the lawyer’s time records will get reviewed, very carefully. Lewis’s records could not stand up to a serious challenge, although he did stand by the accounting offered to the court. When the records started showing more than 30 hours a day billed by Lewis, the situation got sticky for him. He blamed “block billing” but that is no excuse, the Virginia Disciplinary Commission decided. The decision is appealable to the VA Supreme Court.

Lewis settled the civil case with the lawyer-client. He had asked for $500K from the client, but Lewis paid out $102K to the client. Then the trouble got worse for Lewis. Two more former clients sued, they claimed that they had paid, but Lewis did not do the work, and refused to refund retainers. Once things started falling in, they fell hard, these two got default judgments and then more claims came in.

Bar Discipline Commissions understand that working with clients can be tough, but taking clients’ money and doing no work, that is just not acceptable. It is hard to understand why the lawyers violate their Oath of Attorneys.

 

Oath of Attorneys

FYI – this is Indiana Admission and Discipline Rule 22.

Upon being admitted to practice law in the state of Indiana, each applicant shall take and subscribe to the following oath or affirmation:

“I do solemnly swear or affirm that: I will support the Constitution of the United States and the Constitution of the State of Indiana; I will maintain the respect due to courts of justice and judicial officers; I will not counsel or maintain any action, proceeding, or defense which shall appear to me to be unjust, but this obligation shall not prevent me from defending a person charged with crime in any case; I will employ for the purpose of maintaining the causes confided to me, such means only as are consistent with truth, and never seek to mislead the court or jury by any artifice or false statement of fact or law; I will maintain the confidence and preserve inviolate the secrets of my client at every peril to myself; I will abstain from offensive personality and advance no fact prejudicial to the honor or reputation of a party or witness, unless required by the justice of the cause with which I am charged; I will not encourage either the commencement or the continuance of any action or proceeding from any motive of passion or interest; I will never reject, from any consideration personal to myself, the cause of the defenseless, the oppressed or those who cannot afford adequate legal assistance; so help me God.”

The Indiana Bar Fellows dinner will join in reciting the Oath of Attorneys this Friday at the annual Fellows Dinner, this time in Chicago.  If you are interested in becoming a Fellow of the Indiana Bar Foundation, call the IBF office.

2nd try: Law & Sex, trouble.

Indy BIGLAW guy gets it

Arthur J. Usher IV was a Bose partner when his troubles started, a Kreig DeVault partner when everything blew up, now he is out of BIGLAW, and out of the profession for a while.

In what sounds like the plot line of a cheap romance novel, Usher got focused on a woman at Bose, and went overboard in a really weird way. If you have the time you have to read the story here. Long story short, he got infatuated, rebuffed and went ballistic, trying to destroy “Jane Doe” and her career. He recruited his paralegal to help him further the campaign. He used fictitious emails to spread his bizarre tale, trying to cost Doe her career at Bose, and elsewhere.

His actions started in 2008, the opinion was issued May 17, 2013. I can only imagine the nearly 5 years of trouble that Jane Doe has put up with waiting on a resolution. There was a civil lawsuit, and it appears to have settled on the courthouse steps with “a payment of an undisclosed amount to [Doe]”. The Supreme Court did not allow that to take the place of the disciplinary process.

The Court found violations of Rules 3.3(a)(1) Candor to tribunal, false statements, 8.1(a) False statement Bar application or Disciplinary Process, 8.1(b) failure to disclose facts to correct, 8.4(a, b, c, & d) Misconduct of various stripes. The Court found for him, agreeing with the Hearing Officer, that his problem was with Jane Doe, and not with all women, which would have been a violation of 8.4(g)

The disciplinary ruling: For Respondent’s professional misconduct, the Court suspends Respondent from the practice of law in this state for a period of not less than three years, without automatic reinstatement, beginning June 28, 2013.

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A Chicago law firm, Prenda Law Inc., found a spot as innovative lawyers or scoundrels. A California federal judge decided that scoundrels fit, better than lawyers. A fight is going on. On one side is a self-professed millionaire copyright lawyer and his team, who have sued over 20,000 for illegally downloading pornography, the other a judge who says it is a scam and shakedown effort.

Now the judge has reported the team to disciplinary groups, and to the federal prosecutors for RICO violations. He says the team identifies alleged copyright infringers by IP addresses, it then alleges that the download of porn occurred, in a demand letter that requests an amount “just below the cost of a bare-bones defense” to the suit, if the alleged infringer does not settle. Public embarrassment to a person’s reputation forces settlement, whether there was a violation or not. Hundreds of lawsuits were filed when payment did not come. These lawsuits are unraveling. At a recent hearing before the trial judge, the plaintiffs’ lawyers from Prenda took the Fifth Amendment, to avoid subjecting themselves to criminal prosecution. Not a good step in any case.

The lawyers who started representing Prenda have bailed out of the case, the appellate court is not telling the district judge to back off, One lawyer is alleged to have committed identity theft in getting a named party for the suits filed. Just a mess, as reported in AM LAW’s daily digest and Forbes.

h/t Patrick Olmstead.

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Two things: 1) PWP FB page: If you haven’t seen the recent FB page for the law firm Peterson Waggoner & Perkins, LLP you have missed the Run in a Dress for MS photo. Having fun, raising funds, and supporting family. https://www.facebook.com/PetersonWaggonerPerkinsLLP

2) Glitch: In starting this blog entry, the little finger on my right hand missed the Shift Key, hitting the Return Key. Somehow that published part of the title to the blog entry for this week. My apologies for filling in your mailbox/reader.

Thanks for reading.

Report the Claim; Trust Account Abuse

Lawyer Messed Up Deal, Better Report

Koransky Bouwer & Poracky P.C. had an associate mess up. It ended up in Federal Court, then the 7th Cir. <here>.  Lots to put on the back of an associate.

The young associate filed a signed contract rather than send it to the parties as evidence that the deal was completed. The party not represented by the firm withdrew its acceptance before delivery of the contract to all parties, black letter law allows that. Client is justifiably upset.

While this is going on, the law firm that the associate works for, Koransky & Bouwer, renews its malpractice coverage with The Bar Plan, its professional liability carrier. In the process, there is a question that reads something like “are there any claims or potential claims in existence, now or before we renew?”  Firm, which knew about this problem, with one of the name partners being involved in the matter, said “no problem” [or words to that effect].

Client, not happy to have lost the contract sues the firm, who turns the complaint over to the PLP company.  It says something like “wait, from these dates and all, it appears you knew of this claim when you renewed your insurance, and you did not tell us.” Another black letter issue in the law is that a misstatement in an insurance application will void the application. So the Bar Plan says: “We have no duty to defend or pay for the claim!” K&B filed for declaratory judgment on that issue in ND Ind. federal court, the trial court said “sorry law firm, no coverage.” The 7th Circuit agreed.
Lesson? The quick response application often found in policy renewals is not your friend. Your duty to disclose still exists. Does that mean you must report every disgruntled client who might conceivably file a claim? This blog does not offer legal advice, but I recommend you read the underlying policy about when you need to submit a timely claim.

One lawyer has suggested that the insurance company should be required to show that it was prejudiced by the delay in the notice, but that is not the current state of the law, in this Circuit.

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Watch the Trust Account

Edguardo Martinez Suarez is a Hamilton County lawyer, with a pattern of trust account problems. In 2006 he bounced a trust account check, which automatically brought the Disciplinary Commission in via the rule of mandatory reporting of bounced trust checks by a bank holding an IOLTA account. Suarez said “it is a mistake” but could not show how the mistake occurred. In 2009 the Commission demanded a CPA audit of the account, but the CPA reported there was a lack of documents to allow for an audit.

With that, the Commission started an in-house audit. The Supreme Court characterized the findings as many “violations, which took place from 2006 through 2012, includ[ing] at least six instances of paying personal and business expenses from the trust account, 55 instances of disbursing funds in excess of the amount held in trust for each corresponding client, and making 14 cash withdrawals.”

Then to compound problems he committed another violation, keeping more than “a nominal balance of” personal funds commingled to protect the account. But the court, in reviewing the Agreed Stipulation with Suarez, found three good things: no prior discipline history; no selfish motive on Suarez’s part; and, no client lost any funds from his violations.

The parties agreed to a 60 day suspension, stayed with two years probation. For two years he must: 1) maintain his trust account in accordance with the Disciplinary Commission’s 51 page white paper on Trust Account Management: Handling Client and Third Party Funds most recently updated in March 2012; 2) Have the Trust Account monitored by a CPA approved by the Commission, and have quarterly reports made to the Commission; and, 3) Agree that a violation of probation will cause the 60 day suspension to go into effect, and there will be no automatic reinstatement after the suspension. Finally, at the end of probation Suarez will be required to petition for dismissal of the probation. Somehow he was not ordered into the CLE on trust account management.

Seems like an appropriate disposition, as no clients were harmed by the mistakes. Management of the trust account is one of the most critical skills an attorney with trust account duties must have. Failure there is a ticket to Discipline World, and it is tough to get out with your skin intact.

There are CLE courses on Trust Account management, the DC staff often are speakers. Indiana’s Solo and Small Firm Conference has done sessions on this in 2004 and 2007, and likely will do more. ISBA-CLE and ICLEF do sessions annually. A great book is out there by one of the ABA’s most successful writers, Jay Foonberg titled “The ABA Guide to Lawyer Trust Accounts” (my version is dated 1996.)

Protect yourself and your clients and your license. Review Rule 1.15 of the Rules of Professional Conduct, and Admission & Discipline Rule 23 Sec. 29-30, and Overdraft Rule 2.

Neglect gets 3 years; Lawyer arrested for fraud?; Report your Sex Offender Client? NY says no!

There must have been neglect, statement of proof in the opinion would be nice.

Louis Denney eventually had four DI cases filed, one for each year of 2008, 2009, 2010, and finally one in 2011 that did him in. Unfortunately the Order reads more like a CCS entry, so it is hard to tell what all Denney did. We are told that the Hearing Officer, Judge Jeff Todd issued a 56 page report, Denney appealed and was heard by the Supreme Court, and the court adopted that Report, but we just get a snippet of info on Counts 2,5,7 and 9. The court found violations of Rules 1.2(a), 1.3, 1.4(a) & (b), 1.5(a), 1.15(d), 1.16(a)(3) & (d), 3.1, 3.2, 3.4(c), 4.4(a), 5.4(a), 8.1(b) and 8.4(b).  Denney was a busy guy, and apparently  neglected many of his cases. He did fight the allegations and the Hearing Officer report, but the final order does not offer many details.

There is no link to the 56 page report, so what we know is that Denney: charged unreasonable fees, neglected client cases, failed to do the work for which he was hired, failed to communicate, refused to return unearned fees, disobeyed court orders for accountings, and made scandalous and irrelevant accusations against a judge when the judge refused a continuance, in an attempt to remove the judge from the case.

As a result he is suspended from the practice for three years without automatic reinstatement, and we know  that Justice Rucker would have approved a one year suspension, and Justice David would have disbarred Denney.

What we don’t know that would be educational for lawyers who review disciplinary matters is: How many total counts were found against the respondent; were any counts found for the respondent; what time frame was Denney committing violations, and did he continue to violate the duty to clients after the 2008 complaint (which resulted from his failure to respond to grievance), and was the 2008 issue (or the ’09 or ’10 issues) wrapped into the 2011 matters? Were any clients made whole during this matter or will the ISBA’s Client’s Financial Assistance Fund be involved, if the clients are aware of this benefit?

I imagine writing disciplinary opinions is difficult, but we could learn more if more information and judicial reasoning was put on display in the opinions that are issued. Especially after a well fought hearing.

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Lawyer Arrested for Benefits Fraud…

Shawn Donahue pleaded not guilty to fraud in Harrison County recently.  The Louisville Courier Journal’s story called it welfare fraud, but it appears to be unemployment compensation benefits at issue.

The allegations are that Donahue received UE benefits while still working for a couple local entities that were paying him for legal work. It is alleged that he failed to disclose the earnings. Donahue’s lawyer, Bart Betteau predicted that his client would be cleared of the charges.

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NY Opinion, Lawyer not required to Report Inaccurate reports by Sex Offender

Legal services lawyer is contacted by potential client PC, who is a registered sex offender.  Lawyer is asked to review an administrative filing, made under penalty of perjury, to a state agency. She does, and in confirming the information submitted determines that the allegation of being a felon is inadequate, because pc did not disclose the sex offender status of Level Three Rapist, and pc did not register as required by law, under his properly spelled name.  PC  did not appear for appointment, so Agency decided not to represent him further, but did not report the evidence it found to the agency.

Should lawyer have reported the findings to the state agency? NY Ethics Committee says No! (see Opinion 963) Rules of Professional Conduct # 1.6 deals with confidentiality of client communications, and if PC had not become a client, Rule 1.18 carries duties to prospective clients. The rub is that Rule 3.3 “Conduct before a Tribunal” puts duties to disclose confidential information on lawyers, if the situation meets the standards. Here it is a close call, but since the lawyer did not appear before the tribunal, but only reviewed information submitted to it, and the submission was not by the lawyer, the committee finds that “It would not make sense to require a lawyer to take reasonable remedial measures regarding proceedings before a tribunal in which the lawyer has never appeared on behalf of the client.”

But does the lawyer have to report the failure to register properly with the police?  Rule 1.6(b)(2) in NY and in Indiana, is a permissive rule.  “A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary: (2) to prevent the client from committing a crime… and in furtherance of which the client has used or is using the lawyer’s services” (Ind. Rule).  NY’s Rule 1.6 does not have the “and in furtherance” language.  Indiana’s does which makes it even less likely that a disclosure would be appropriate even with the permissive disclosure language.

In NY the committee previously opined that past crimes cannot be revealed under this provision, only future crimes. Either way there is no mandatory disclosure, but a permissive disclosure in NY looks to be less risky than in Indiana, where there was no use of the lawyer’s services in furtherance of the misreporting.

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Jeffersonville INNS of Court meeting

Thursday March 21, Ted Waggoner will attend the Jeffersonville IN Inns of Court meeting at the invitation of Judge Terry Cody to speak on the Indiana Attorney Surrogate Rule, and its application to lawyers and law firms.  Ted chairs the Attorney Surrogate Rule Special Committee of the ISBA. 

Contact me for more information about this important rule.

IOLTA UPDATE if you accept Credit Cards: Circular 230 Disclosure: CBS Radio v. Emmis = DQ:

Credit Cards and IOLTA – New Problem

If you have been innovative over the past few years and started to accept credit card payments, and then posted them when required, directly to your IOLTA trust account (thanks Dan Reed and LawPay – a great ISBA member benefit) you better check your merchant account now.

Congress added Section 6050W to the code effective Jan 1, 2013.  As reported in LawBizzCoo, a legal business blog, there is a new requirement that if the credit card processor’s information is not exactly as contained in the IRS’s file (i.e. name change of firm, new address) the processor must withhold 28% of each deposit processed by the credit card company, including funds deposited in IOLTA.

The Disciplinary Commission may start getting notices of bounced checks from banks (required under the rules allowing banks to hold IOLTA funds) and lawyers may start getting certified letters from the Commission.  Those funds are not being mis-deposited, so you cannot just move them, they are held for potential taxes. You have to come up with the funds, and answer the grievance, in short order. Take a moment now and check your EIN letter and your Merchant Account Agreement. Fix it ASAP.

The same will happen to your general account, but that will not automatically involve the DC. It may later, but your landlord will not appreciate the rent check bouncing.

I discussed this with my office manager and she has been on top of it for a while, thanks to AffiniPay (a/k/a LawPay and Dan Reed). Whether you are with LawPay or some other provider, it is your skin in the game. Make sure everything lines up as it should.

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Tax abuse schemes are serious! Up to $190M serious for one lawyer.

The IRS issued one of its worst ideas a few years ago, called the Circular 230 Disclosure. Good in theory, to require lawyers to warn clients and potential clients not to construe information in a letter or email as being tax advice from the author to engage in a tax scheme, unless that is the purpose of the letter. Now a majority of lawyers’ posts of recipes or sports commentary carries a long disclaimer at the end that no client lacking an MBA could understand, and that most posters do not understand, or they would not prize their every utterance so highly!

But, sometimes folks should avoid doing what lawyers like Donna Guerin did, and review the tax code before writing tax schemes.

Ms. Guerin wrote a scheme so good she and her co-author claimed that her law firm’s clients could save millions of dollars in taxes. And she was no fly-by-night lawyer. A partner in the once prestigious BIG law firm Jenkins & Gilchrist, she recently pleaded guilt to criminal tax fraud, will go to prison for 8 years and has agreed to a penalty and restitution of $190 Million. Her partner entered his plea early and only has to pay $1.6 Million.

For my lawyer friends, be careful with the indiscriminate use of the Circular 230 language, and for the lawyers who do tax work, go back and read Circular 230 in-depth. Then be careful.

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Great fight, but Ice goes down.

Speaking last week on the Ethics of Developing and Representing Businesses, I was asked to discuss those lawyers who get disqualified from cases for overlooking and violating a Conflict of Interest. Rules 1.7 & 1.9 of the Indiana Rules of Professional Conduct are pretty clear when lawyers must not violate the pledge of loyalty we take to our clients (see Comment 1 to RPC 1.7). But lawyers continue to lose focus of their duty, often when one engagement is completed and a chance to earn a new fee surfaces in a “new” case.

I have had the call on the Ethics Hotline (facts changed to protect the calling lawyers) where a previous client went to a new lawyer, with a similar problem, and the same or similar issues. The old lawyer gets in the case, deciding that things have changed since the first time these folks met. Then that old lawyer just hates getting the call or letter saying “I think you have a conflict and need to get out of the case.”  Take that call seriously!

One of Indy’s premiere big firms, Ice Miller was hired by Walter Berger, an employee of Emmis Broadcasting Co., to help him in a senior management employment contract in 2002. Emmis had suggested Ice Miller to Berger. In 2005 Berger renewed that contract with Emmis, then several months later left Emmis to go to work for CBS Radio, Inc. Emmis did not like that, hired their lawyers, Another of Indy’s top big firms, Barnes & Thornburg to sue CBS for hiring Berger, (USDC, So. IN, Case No. 1:06-cv-0920) then it discharged B&T and hired Ice Miller to represent it in the case.

Ice shows up in the suit, and CBS and Berger demand it get out of the case due to an alleged conflict of interest. Ice, showing an incredible amount of chutzpah, lashed back with several defenses and a couple of accusations (which to an outsider read like they were based on client confidences), including that there is no conflict because “it is clear” that Berger breached the Emmis contract. The facts and issues were well briefed by both sides (materials in the ICLEF book) and Federal Judge Larry J. McKinney wrote a great explanation of the tests and the considerations involved in a DQ motion, in his 14 page Order. It is available on Pacer, or through Westlaw($$$).

Bottom line, loyalty is paramount, the issues are looked at from the client’s POV, and while case dicta and commentary makes it sound tough for the clients to prevail, in reality it is hard for a lawyer to win on this issue. There are a few outlier cases, but from my study, the issue, once raised, should be seen in the practical light of “how much is it worth to fight this issue, plus the possible ethics complaint, if you win? Is there enough in the case to pay all that?”  After looking at that, you should consider the option to prepare that Motion to Withdraw and have a talk with your now ex-client.