Little Corruption or Little Jail Time? Wyser – No Time=Right result?; Conour Redux, again!

What is the cost for fixing tickets?

How corrupt is a NJ judge who fixes tickets for her “significant other?”  Corrupt enough to get kicked off the bench, and have her license suspended it appears.  Former judge Wanda Molina already lost her position as chief municipal judge, and the NJ Supreme Court will decide on whether and how long to suspend her license to practice law.  The disciplinary prosecutors are asking for a 2-3 year suspension, but others expect maybe a six month layoff.

Four other municipal court judges were also caught up in the ticket fixing scandal, and resolved their charges.

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Was Wyser’s Punishment the Right Result?

The Indy Star story starts: “Former deputy prosecutor David Wyser’s after-the-fact acceptance of $2,500 for approving the early release of a convicted killer was a “wobble” in an otherwise unblemished career of public service, federal Judge Sarah Evans Barker said [Nov. 25] as she sentenced Wyser to three years of probation.”

Paula Willoughby, convicted of murdering her husband, was sentenced to 70 years, but after lobbying by her defense lawyer (who appears to have offered a bribe and has not been charged yet) the deputy prosecutor David Wyser agreed to reduce the sentence to the 18 years she had served.  That was followed by a “campaign contribution” of $2500 from the father of Willoughby. The timing was apparently critical.  In 2006 Wyser decided that a sentence modification was appropriate “once she served the minimum time” she could have been sentenced to, which was the 18 years, in 2009. When that time came, Wyser filed the paperwork. He was campaigning for Hamilton County Prosecutor at that time, and says the contribution came when he needed some campaign cash.

The victim’s family thought a travesty occurred when Federal Judge Sarah Barker ordered six months sentence of house arrest and three years probation (reports do not identify the underlying sentence that would be imposed if Wyser violates the terms of the probation).

Judge Barker comment that Wyser helped with investigations into the defense lawyer who offered the contribution and Carl Brizzi, Wyser’s former boss. No charges have been filed against either person, and none apparently will be filed against Brizzi.

A check today shows that Wyser’s law license is still “Active in Good Standing.”

My take: The law license matter is incredible.  That should have been resolved by now with a disbarment or resignation.  Interesting when/if it will occur.  The sentence is a more difficult matter to decide. Judge Barker is not a “softee” on anyone. Her rationale makes some sense – if the law license is gone.  But there are lawyers who do crimes similar to non-lawyers, and who get more favorable treatment. Sorry fellow lawyers, but the Courts should hold us to the standards of the law.  Exceptions ought to be the rare event, and it does not seem like it is.

That is the troubling trend.

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Another Round for Conour?

This blog has covered the William Conour matter in some detail. With six previous stories, his sentencing and McKinney Law stripping his name off the wall of the atrium, I thought I was done with him.  Today the federal prosecutors are talking out loud about the possibility of appealing the 10 year sentence he got for stealing millions from widows, orphans, and severely injured clients.   A notice of appeal was filed last week in the 7th Circuit Court of Appeals.

The sentencing judge said at the time of sentencing that the time was set so there is a possibility that Conour will make some restitution to the victims. At 66 years of age there is some concern that a longer sentence will make that impossible. But there is the troubling trend.

A check on the status of Conour’s license:  Resigned.

No published report from the ISBA on the impact on the Client’s Financial Assistance Fund.

More to come.

How Stupid is that Other Party?; Should I Push that Client?; Extra Punishment for Public Officials; Ogden Update

Legal writing experts tell lawyers to be careful with tone and expressions of disdain or dismissive attitudes towards opponents in motions and briefs.  And lawyers understand (usually) that what might work in traffic court should not be tried in Federal Circuit Courts of Appeals.  And lawyers who represent big clients, like State Farm Auto ought to expect extra scrutiny from courts and judges (mostly due to the respect courts often are suspected of giving to the biglaw lawyer types who represent the big companies.

Imagine what the discussion with General Counsel for State Farm was for the lawyers in Bennett v. State Farm earlier this week.  The Sixth Circuit Court of Appeals (one level below the US Supreme Court in the judicial hierarchy) mocked the insurance company’s lawyers for their brief opposing the efforts of the Bennetts to get what they had coming from Mrs. Bennett being struck while walking her dog.

The opening sentence of the opinion states:

There are good reasons not to call an opponent’s
argument “ridiculous,” which is what State Farm calls Barbara Bennett’s principal argument here. The reasons include civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief); and that, even where the record supports an extreme modifier, “the better practice is usually to lay out the facts and let the court reach its own conclusions.”[citations omitted]  But here the biggest reason is more simple: the argument that State Farm derides as ridiculous is instead correct. (emphasis is added).
Oops.  That qualifies as a slapdown.  Now we don’t know which lawyer of the team of Richard M. Garner or Gregory H. Collins, both Ohio lawyers, gets credit for the brief, but the other probably had an opportunity to say “maybe we ought to read our client’s insurance policy before we ask the court to ignore the definition plaintiff is asking for.”

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Clients in dissolution cases can be difficult. they are going through a stressful time in their lives. They often have to deal with their lawyer, the spouse, the spouse’s lawyer, and maybe the kids.  you expect them to lose their cool on occasion.

Lawyers are to be the professionals, even when our client is not dealing well with matters.as well as we want.  Kokomo lawyer Dan May, a long time practitioner, forgot for a moment.

The details are sketchy, but include him shoving the client over the courtroom railing, a battery charge, a diversion agreement, and now a 60 days suspension with automatic reinstatement.

As Sgt. Esterhaus used to say:

http://www.youtube.com/watch?v=Jmg86CRBBtw

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We appreciate our public officials in strange ways.  We pay them less than they could make as practicing lawyers (at least that is the myth – see the SSF Conference Salary Survey report here from 2007).  Then when a public official has a bad moment, we hold her to a higher standard.

Lori Hittle is a part-time deputy prosecutor in Howard County.  She pleaded guilty to OVWI.  Took her punishment in court, got a month suspension from her job without pay, and now gets a public reprimand. That is a bit more than the normal lawyer gets for such an offense, often getting a private reprimand with JLAP provisions.

But we hold public officials to a stricter standard.

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Finally, Paul Ogden update.

I have commented on the Ogden disciplinary case several times, like here, and here. Paul writes about it on his blog with more regularity than most would. Tuesday Ogden said that the Disciplinary Commission is seeking a one year suspension in his post here. He follows up with more commentary in Thursday’s post here.

I will let Paul Ogden speak for himself.  The issues are complex, and important. As a lawyer, you need to think about them.  If you are not a lawyer, you ought to consider where your rights to speak freely are if the lawyers lose their rights.

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.

Billing troubles abound

Inflating the fees

BigLaw firm gets caught in mocking a client about the fees the firm is charging, and get sued. DLA Piper, the world’s largest law firm was representing a client, Mr. Victor, in a potential bankruptcy of one of his companies.  The fees started and never quit.  Victor asked about the size of the bills, and  the number of new lawyers working on the case, the lead lawyers working the case started mocking him. “I hear we are 200k over our estimate – that’s Team DLA Piper” and “churn that bill, baby” emails made their way around the office.

Once DLA Piper filed suit for $675,000 in past due fees, Victor counter-sued for the “sweeping practice of overbilling.”  He got the emails described in his discovery request, along with 250,000 pages of other stuff created in the case. Victor amended his complaint, added fraud and punitive damages request of $22.5M.

Don’t mock your clients, or overbill. And be careful even joking about billing in an email or other discoverable method.
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Losing Half the Billing on a Big Case

The plaintiffs lawyers had a good deal, they thought.  12 law firms came together to file a class action suit against LivingSocial, a daily deal online marketing group.  The issue was expired deals, a customer buys a deal, pays for it and the deal expires before it is used. The question is who gets the money?

46 lawyers worked on the case, and the lawyers and their paralegals racked up over 4,000 hours.  The fee request was $3M.  That is only $750 per hour across the board.  LivingSocial did not object, but Federal Judge Ellen Huvelle in DC did the math, asked a bunch of questions and wrote a 39 page opinion that decided that the lawyers should not get that much money, and criticized lots of what they did and did not do.

Judgge Huvelle said they would have to make due with only $1.35M and leave the other $2.65M in the pot for the class members.

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How much is a name worth?

For Stan Chesley, he thought his name as a “the godfather of the modern class-action lawsuit” ought to get  him something extra.  His fee was only $20M on a $200M case. The phen-fen cases in KY are now notorious, and Chesley’s matter is not the worst.  He got disbarred in KY (his home is Ohio, and what they do is yet to be determined) for an unreasonable fee in the case.

The Court said “his professed ignorance and lack of responsibility for any aspect of the litigation except showing up…” argued against a large fee. Also, the clients signed up for a 1/3 contingency, but the lawyers had charged 49%.  Chesley was to get about $14M if he deserved any fee, but he still charged $20M.

Two lawyers in the case have gone to prison for swindling their clients out of $94M of the settlement funds. Their sentences – 20-25 years.

H/T John Conlon

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.

Ethics and Conflict Issues in Business Representation; Conour Questions –

BUSINESS ETHICS FOR LAWYERS

I will be doing a seminar on Feb. 28 for ICLEF, the legal education provider created by the Indiana State Bar Association in the 1970s to help get lawyers better prepared to handle their clients’ legal matters. Now a stand-alone not for profit corporation ICLEF is the leading provider of Continuing Legal Education in Indiana..

The seminar title is Developing and Representing the Business Entity, and my portion is Ethics in a Business Practice. We will be discussing the Rules of Professional Conduct, the Traps of working with businesses and the Remedies for lawyers and businesses if unethical events occur.

In focusing on the Rules of Professional Conduct, we will discuss recent cases in state and federal courts where the clients complained that their lawyer had jumped sides, and how the courts and lawyers handled that issue. Motions to Disqualify some of the biggest law firms you know will be reviewed, and we will review how the courts’ findings and orders, when presented with valid conflict issues protect the business or the lawyers.

We will also review other events that may prompt a client to think that the loyalty obligation discussed in comment 1 to Rule 1.7 has been violated.

Program chair, Jeffrey Nickloy (a lawyer I have sent clients to for complex issues) has brought together a faculty of some of the brightest lawyers in Indiana to present on various topics that day. The Business Law Section and the Ethics Committee of the ISBA will be well represented.

Registration materials are available here.

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Bill Conour

The Indianapolis Star had a long story about Bill Conour on Sunday, here.  I never worked with Bill, but you could not be a lawyer in the state for the past 30 years and not know about him, his practice, or his atrium.

I will do a more thorough analysis of his fall, his plea, and his resignation in a few weeks, but I would like a few comments about Bill from those of you who knew him, worked with him, did or did not get cheated by him.

I will say (treading carefully as a Maurer grad, talking about our friends and fellow IU law siblings at McKinney) that the first time I walked into the Inlow Hall atrium, and saw the decor, I overheard a comment (it has been years ago, maybe it was my comment) that “the decor looks like a 1950s prison cell block,” with the metal wrapped columns to the ceiling.  So long as it carries Bill Conour’s name (together with that of his ex-wife Jennifer), the image will fit.

Please share comments on Bill and his situation, if you will.