Fee Shifting is no Reason to Mishandle a Case
There are a number of statutes that allow for fee shifting, and we hear calls daily for “tort reform” that pushes that idea. Here it caused all kinds of bad incentives, as pointed out in a 113 page trial court order on the Fee Petitions under USTA and/or ELA environmental laws. [My experience in front of Judge Goshorn in a few cases is that he is normally a judge who uses few words to make his points – this output is unlike his normal work.]
Judge Goshorn of Wells County was asked to approve fees for the plaintiffs’ lawyer in the amount of $676,986.11. He denied the request, mostly due to the conduct of the plaintiff’s counsel in the handling of the case. Award to counsel $0. actually less, due to several contempt of court orders.
The judge said many things in 113 pages, none complimentary to Mark E. Shere, the lawyer for the plaintiffs in this case. A few direct slapdowns:
- …Shere caused “untold grief and damage to [his] former clients”… [p.2]
- “has been an impediment, not a facilitator, to the just resolution of this cause.” [p.2]
- “this case has been extraordinarily and needlessly protracted…due to Mr. Shere’s fee agreement with his client.” [p.3]
- “… Shere drove this case off a cliff, leaving in his wake two bankrupt and divorced clients and a third client in financial trouble with its reputation sullied.” [p.5]
The judge was just getting warmed up. He continued through 169 Findings of Fact and Conclusions of Law, never letting up on Shere. On page 96 he found that the Fee Agreement Shere had with his clients violated Rule 1.8(i) of the Indiana Rules of Professional Conduct which states:
(i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:
(1)acquire a lien authorized by law to secure the lawyer’s fee or expenses; and
(2)contract with a client for a reasonable contingent fee in a civil case.
Judge Goshorn saw the fee agreement as giving Shere a stake in the case for clients Witt, to his favor and to the favor of co-client Hydrotech. He found that:
- “… the driver of this litigation was recovery of the maximum amount of fees for Mr. Shere, not assisting the Witts.” [p.99]
But this was not a screed against plaintiffs’ lawyers, he gave some fees to lawyers who worked for Shere, ordering the payment to the Clerk, and the clerk to direct the fees to those lawyers. [p.113].
The judge did not feel particularly sorry for the defendants in the case either, denying their petition for fees from Shere or his clients. The Court found:
- “This litigation was a caged grudge match [I like that word-picture offered by the judge] with both sides throwing punches. … The Court is concerned about the chilling effect an award of fees to defendants in a USTA or ELA action might have…” [p.111-2]
Shere gets nothing due to the way he tried the case, putting his interests above those of the client.
This case was also addressed by the Indiana Supreme Court in a March 21, 2012 opinion where Shere and his clients were held in contempt of court. The Court, in a 3-2 opinion agreed with the contempt finding, overturning a reversal by the Court of Appeals.
For some reason I suspect we may see another Supreme Court opinion coming out in the future concerning the actions taken by counsel in this case.
Learn from your Neighbors*
One lesson that is important is for lawyers to learn from the mistakes of their neighbors. It is one of the reasons this blog exists. Elden Stoops, for example, should have learned from neighboring county lawyer Jeffrey Price‘s 2009 public reprimand. The cases as described sound surprisingly similar. Both lawyers filed family law matters, seeking emergency relief. Both offered proposed Orders to the court granting the emergency relief their clients sought. Neither petition cited or certified the steps made to notify the opposing parties of the filing of the emergency filing, as required under Trial Rule 65(B). Both courts set hearings and immediately granted the emergency relief. [Query, when can parties, and lawyers, count on judges reading pleadings and knowing the law on such things?]
Later the opposing parties were notified of the actions taken.
Unlike Price, who was charged with one offense, Stoops was charged and sanctioned for two offenses. The one above was for violating Rules 3.5(b) – ex parte communication with a judge; 8.4(d) & (f) conduct prejudicial to the administration of justice, and assisting a judicial officer in violation of rules of judicial conduct. Stoops second violation was a conflict of interest, when co-clients turned against each other, and he took the case of one of the former co-clients.
Public reprimand for his actions. He had a clean record, and the court accepted the idea that he was trying to protect children, were mitigating factors accepted by the court.
* A lawyer from my firm was involved in the Stoops case.
Take Care of the Clients
Ron Weldy has been a frequent poster on the ISBA email discussion lists. He should have been paying attention to his clients’ matters a bit better. The Supreme Court recently suspended Weldy for 180 days, 90 to serve and one year probation. From the six counts, there were issues of fee agreements, client communication, case management, and knowledge of the law were problems for the respondent. The list of rule problems is lengthy:
Violations: The parties agree that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct:
1.2(a): Failure to abide by a client’s decision 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(a)(4): Failure to comply promptly with a client’s reasonable requests for information.
1.4(b): Failure to explain a matter to the extent reasonably necessary to permit a client to make informed decisions.
1.5(b): Failure to communicate the basis or rate of the fee for which a client will be responsible before or within a reasonable time after commencing the representation.
1.5(c): Failure to disclose to a client the method by which a contingent legal fee will be determined.
1.7(a)(2): Representing a client when the representation may be materially limited by the attorney’s own self-interest.
1.15(e): Failure to properly secure disputed property until the dispute is resolved.
1.16(a)(3): Continuing representation of a client after the lawyer is discharged.
3.1: Asserting a position for which there is no non-frivolous basis in law or fact.
3.2: Failure to expedite litigation consistent with the interests of a client.
3.3(a)(1): Knowingly making a false statement of fact or law to a tribunal.
8.4(c): Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.
8.4(d): Engaging in conduct prejudicial to the administration of justice.
This case is a good one to review before taking a weekend off. Stay diligent, read the law. Be careful with your fee agreements