Indy lawyer Paul Ogden writes a blog and challenges authority regularly. Today (Thursday) he threw a punch at the Disciplinary Commission with this blog post.
His trial before the Indiana Supreme Court is next Tuesday, July 30.
But Alex, Don’t forget to Fight the cases you are hired to fight.
Alex Voils was hired to fight an insurance company for benefits as the company denied the client’s claim in 2005. In 2009, after repeated requests for action, the client fired Voils. Then he failed to provide the file to new counsel and he ignored the Disciplinary Commission’s request for a response to the grievance.
The parties agreed on discipline of 30 days suspension with automatic reinstatement. The court suggested that punishment might have been more severe if there had not been an agreement. They agreed that Voils violated three rules:
1.3: Failure to act with reasonable diligence and promptness. 1.16(d): Failure promptly to return to a client case file materials to which the client is entitled after termination of representation. 8.1(b): Failure to respond in a timely manner to the Commission’s demands for information.
We don’t see too many of these, and as the Boomers age, and the Greatest Generation ages even more, we may see these with more regularity. Indy lawyer Mary K. Kleiss was accused by the Disc. Comm. of being disabled “by reason of physical or mental illness or infirmity, or because of the use of or addiction to intoxicants or drugs.” No more is described. Kleiss filed an Affidavit of Consent to the Disability Suspension.
The Supreme Court accepted the filings and suspended Kleiss under the A&D Rule 23(25), and ordered that she may petition for reinstatement upon the termination of the disability. Good Luck.
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]
(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
Georgia lawyer Arjun Kapoor was accused of committing acts of domestic violence. That is a bad thing. But the allegations came through a Family Crisis Center, and Kapoor decided to find out more about the allegations. He demanded the documents held by the Center. They rejected his demands, so he made misrepresentations to the local clerk to obtain a Subpoena Duces Tecum for the evidence. The Center knew what it was doing, so it ignored the subpoena and made a report.
The Georgia Supreme Court was not pleased. He was charged by the Disciplinary authorities, and tried to work matters out. Twice rejected for a “slap on the wrist” by the hearing officer, the recommendation was for a public reprimand. The Court found acts of Misrepresentation – violation of GA Rule 8.4(a)(4)(a) [differently numbered than the Indiana RPC] and imposed discipline.
Resigning with Pending Troubles?
Recently several lawyers have “resigned” their licenses while facing criminal charges. One reported in IBJ on June 18, David Rees was convicted and sentenced to four years home detention, two years probation and restitution, for stealing more than $270,000 from an estate he was managing. (The story does not say what happened to the balance of the $400,000 found missing, that was under Rees’ control.)
These cases come under the Admission and Discipline Rules. A conflict appears to exist between Rule 2(L) which prohibits “withdrawing from the practice” while under accusation, and Rule 23(§17), where the provisions allow for such resignations.
Rule 2(l). Affidavit of Permanent Withdrawal. An attorney in good standing, who is current in payment of all applicable registration fees and other financial obligations imposed by these rules, and who is not the subject of an investigation into, or a pending proceeding involving, allegations of misconduct, who desires to relinquish permanently his or her license to practice law in the State of Indiana may do so by tendering an Affidavit of Permanent Withdrawal from the practice of law in this State to the Executive Secretary of the Indiana Supreme Court Disciplinary Commission. The Executive Secretary shall promptly verify the eligibility of the attorney to resign under this section, and if eligible, forward a certification of eligibility, together with the Affidavit of Permanent Withdrawal to the Clerk of the Indiana Supreme Court, and the Clerk shall show on the roll of attorneys that the attorney’s Indiana law license has been relinquished permanently and that the lawyer is no longer considered an attorney licensed to practice law in the State of Indiana.
Rule 23. Section 17. Resignations and Consents to Discipline on Admission of Misconduct
(a) An attorney who is the subject of an investigation into, or a pending proceeding involving, allegations of misconduct may resign as a member of the bar of this Court, or may consent to discipline, but only by delivering an affidavit and five copies to the Supreme Court Administration Office and providing a copy to the Commission. The affidavit shall state that the respondent desires to resign or to consent to discipline and that:
(1) The respondent’s consent is freely and voluntarily rendered; he or she is not being subjected to coercion or duress; he or she is fully aware of the implications of submitting his or her consent;
(2) The respondent is aware that there is a presently pending investigation into, or proceeding involving, allegations that there exist grounds for his or her discipline the nature of which shall be specifically set forth;
(3) The respondent acknowledges that the material facts so alleged are true; and
(4) The respondent submits his or her resignation or consent because the respondent knows that if charges were predicated upon the matters under investigation, or if the proceeding were prosecuted, he or she could not successfully defend himself or herself.
(b) Upon receipt of the required affidavit in support of resignation, this Court may enter an order approving the resignation. In the case of consent to discipline, the Commission and the respondent may file a brief regarding an appropriate sanction within thirty (30) days of delivery of the required affidavit. The Court shall then enter an order imposing a disciplinary sanction on consent.
(c) An order entered under (b) above shall be a matter of public record. However, the affidavit required under the provisions of (a) above shall not be publicly disclosed or made available for use in any other proceeding except upon order of this Court.
That provision in (c) causes some concern, since an affidavit confessing the violation of the rules ought to carry some weight in other matters, if admissible.
Also, a distinction (without much difference) may exist between “resignation” and “permanent withdrawal” as Rees and Conour are eligible to petition for reinstatement in 5 years, while those withdrawing must get in through the Bar Exam or under another provision.
It seems a lawyer who offers to withdraw the law license, and is without a pending problem, should have less trouble seeking reinstatement. Practically, Rees and Conour will never practice again.
Epidemic of Suicides in KY
Half a dozen suicides by lawyers in Kentucky has prompted increased concern. The Indiana Law Blog excerpted a story from the Louisville Courier Journal on the issue.
All were men, most were trial lawyers, and the average age was 53.
I have not seen a current table or story on Indiana lawyers, but know of too many who have used a permanent solution for a temporary problem. The 2010 Legal Education Conclave focused a session on Resiliency in the Face of Stress, for law students and the practicing bar and bench. More still needs to be done.
Poll Question Result: The Georgia Supreme Court rejected a public reprimand and suspended Kapoor for six months from the practice of law.
Not too much time this week, with the Indiana Solo and Small Firm Conference in French Lick. Proud to be a part of the planning for this event, and this year we have record attendance with lawyers.
Also this year for the first time we are bringing law office staff to the Conference, and a Staff Track day of education for the staff members, be they secretaries, legal assistants, paralegals or office managers. Those registered as ISBA Paralegals will be able to receive their 6 hour CLE requirement at the conference.
John Conlon and I are leading one staff session on “Ethics for Staff and the Lawyers Who Employ Them.” And just in time, the Indiana Supreme Court issues its Order in Godshalk.
Godshalk either allowed his assistant to accept clients and file appearances in his name, or did not adequately supervise an assistant who did that very act, causing a conflict of interest between two clients.
Good language in the Order about the need to have protections in place that will show a conflict between a criminal client and the witnesses who may testify against the client.
Other Cases on the agenda:
John and I will discuss Guideline 9 and Rule 5.3 of the RPC, and other supervision cases that ended up biting the lawyer:
Godshalk got a public reprimand, no harm was suffered by either person involved.
The 2014 Solo and Small Firm Conference is already filing up with great speakers and break out leaders. Put it on the calendar today for June 5-7, 2014 in French Lick. Plan to bring your staff and your family. A great time will be had.
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)
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.
I know this lawyer, and the nice things the hearing officer reported to the Supreme Court about her are true, from my experience. But she got reprimanded. I must admit, the facts are hard to decipher from the recitation of events in the opinion, but it appears that the lawyer took on a big case, apparently too big for a single lawyer to take on in the manner she did. She created a class of 64 plaintiffs who may not have had similar interests (since some had settled their claims before becoming part of the class), and they gave her authority to settle without getting further input from the clients, which is power that a lawyer should not have. The Court says that they insisted on it, and she accepted the authority. During mediation, she had a short period of time to accept or reject an offer that seemed appropriate for all 64 clients. She exercised the authority to settle rather than to leave the offer on the table. (Thanks OC and mediator).
It is not clear who reported the matter, but it does not sound (from the opinion) that any of the clients were upset with the settlement, offended by her actions, or thought any inappropriate action had occurred, but that is not the test under Rule 8.4. Lawyers must let the clients make the decisions to settle, as painful as that can be from time to time (Rule 1.2(a)). Aggregate settlements are tricky creatures, and must be handled with care and with the informed consent of each client (Rule 1.8(g)). When lawyers fail to get informed consent, it usually leads to the failure to explain a matter so the client can make an informed decision (Rule 1.4(b)).
Although the Disciplinary Commission lawyer argued for and sought a suspension from the practice, the public reprimand seems right.
The National Law Journal reported that a Chicago lawyer and blogger got caught up in a legal matter that prompted her to make allegations that the IL probate process is “a sleazy world of probate” and that there is “malpractice and malfeasance by attorneys and the court.” Amazingly someone took offense at that. The lawyer Joanne Denison now faces an ethics complaint.
It seems to stem from the court rejecting an application by Denison to serve as a guardian, after the court found that Denison had notarized the signature of a woman who might have been suffering from dementia at the time of the signature, and that the document favored the woman’s daughter, a client of Denison, over others in the family. They thought that was worthy of disqualification from serving as guardian in this matter. Denison went ballistic, created a blog in the name of the potential ward, and started blasting away at the judges and lawyers alike. She named names and recounted allegations, apparently without due regard to the facts underlying the matters.
The ethics allegation is that the blog contains “comments that are false or made with reckless disregard for the truth.” Oops.
I will take that into consideration as I write and edit this blog, and invite others to do likewise in their own writings. As one reply to the NLJ article mentions, Rule 8.3(a) states: “A lawyer who knows that another lawyer has committed a violation of Rule 8.4(b) or Rule 8.4(c) shall inform the appropriate professional authority.” That is not an invitation to inform via blog.
H/T Patrick Olmstead
Indy Ponzi scheme convict Tim Durham, the subject of a previous post here, was suspended from the practice of law based on his finding of guilt in the $200M fraud case of Fair Finance. Durham was sentenced to 50 years, so unless he was planning a jail-house lawyer routine, this finishes his legal career. The Order is here.
The Indy Star claimed [login required] it was the Disciplinary Commission that suspended him, but we know that the Supreme Court keeps that power to itself. Durham still has a challenge to the suspension, but…
BTW, this is Durham’s second suspension, the first was due to failure to pay his annual registration fee last October. Kirkland & Ellis, one of the biggest of BigLaw firms in Chicago, has decided to provide a pro bono appeal for Durham, according to the Indiana Business Journal. If you cannot pay registration for your license, you probably qualify for indigent services.Good to see the poor getting adequate legal representation to protect their rights. It worked so well for Mike Tyson.
Parenting Time changes
Two lawyers in my office have produced a short video on the changes in the Indiana Parenting Time Guidelines. The changes go into effect on March 1.
You may want to watch, or link to it. Andy Perkins and Rachel Arndt did a nice job, here.
Indy lawyer Stephen Terrell will be interviewing me this coming Tuesday, Feb. 26 at 9:00 pm on his weekly online “radio” show. Steve has been on-line for 3 weeks now, and has had some very interesting interviews. You can listen by tuning your browser to http://www.indianatalks.com/. Steve discusses information of the week, and then conducts his interview for much of the hour.
Don’t know what we will talk about, but Steve and I, while friends for a decade, disagree about most of the important things in life, and this will be my chance to show him the errors of his ways for you all to hear. Plans are to discuss law, politics and religion. Where could we disagree about any of these matters?
I only hope the Hoosiers have put the Gophers away by 9:00.
This is a Win?
The lawyer got sued for malpractice for failure to talk client out of a litigation financing deal. The court ruled that he wins since the lawyer did not refer the client to the lender, did not recommend the use of a litigation financing program, and did not offer an opinion supporting the deal with the lender when the client made the loan.
Elwin Francis suffered a personal injury. He filed suit, but found himself needing funds up front, So, he borrowed funds from Law Bucks, who submitted a lien for $96,000 on the settlement.
The law firm representing Mr. Francis settled the personal injury matter for $150,000, with consent, and when all the expenses were paid, Mr. Francis got a check for $111. He did not think that was enough, so he sued his lawyers. [Apparently the client forgot the $$ he got from Law Bucks]. The NY court looked at the documents, at the duty that the lawyer took on in representing Mr. Francis, and at the facts to see if there was conflicting duties that extended to Law Bucks, and found there was no endorsement or contacts between the firm and Law Bucks.
Getting sued by a client is trouble, but winning is good.
Lesson for us? Stay out of endorsing a lender in a litigation financing program. You may become the guarantor.
Charge for that?
Rule 1.8(j) has been around for a while. It is a pretty straightforward rule: “A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.” Pretty close to a “Thou shalt not ….” with fewer exceptions than the Rule on Hearsay.
Tom Lowe, a lawyer from Minnesota is old enough to have been around when the MN Supreme Court enacted that rule there. Sexual relations rulings in ethics cases have been around for decades, and the Rule changes started popping up in several states in the late 1990s (IL 1997, Kan 1998). The no-sex Rule came about as a part of the McCrate Amendments to the Model ABA Rules of Professional Conduct in 2002. Indiana adopted the current Rule 1.8(j) on Sept. 30, 2004, as part of the comprehensive update of the RPC (at p. 39 of the Order)*
So Lowe not only violated that rule, but, to add insult to injury he added the time he spent with her (a family law client) while he breached the rule to her bill. [insert your inappropriate hourly billing (or quarter-hour or one/tenth hour) or other time based billing quip at this spot – I am trying desperately to leave those and other puns out of the post.]
There are important reasons for the rule about sex with a client, and I am not making fun of those, but his billing for his time? That reminds me of this song…
Lowe got an indefinite suspension of his license, with a minimum period of 15 months before he may apply for renewal. Well done MN.
* I chaired the ISBA subcommittee that reviewed the ABA proposals and led to the addition of 1.8(j) to the Indiana Rules of Professional Conduct. Thanks to my subcommittee.
Client Neglect Stemming from Mental Health Issues
The front page of the Indiana Judges & Lawyers Assistance Program website states: Research has shown that lawyers may suffer from substance abuse and depression at a rate higher than the general population. Experience has shown that lawyers may be more reluctant than others to seek help for their own problems.
One of the critical consequences of mental health problems is the impact on our clients. As stated by JLAP Ex. Dir. Terry Harrell: “When I hear that a good lawyer, with no history of neglecting clients, is not returning telephone calls — my radar goes up and I start looking for other signs of depression.” She shares statistics on the increased level of mental health problems that should cause every lawyer to take a slow look in the mirror. Women lawyers appear to have a 10% greater problem than the general female population, while male lawyers reportedly suffer a problem with depression at a rate more than 200% of the general male population.
When lawyers neglect clients for any reason the clients often get upset. If there is not a good reason for the perceived neglect (such as, “I am in trial all month…”) and the client does not see a way to successfully get the lawyer’s attention, a complaint to the Disciplinary Commission may be their only recourse.
Several cases recently have highlighted the issue of mental health, and I will focus on one. This lawyer (I don’t need to name him) recently stipulated to the following facts: The misconduct includes neglecting clients’ cases, failing to do the work for which he was hired, failing to respond to clients’ requests for information, failing to inform clients of the status of their cases, failing to safeguard unearned fees by placing them in a trust account, and failing to completely refund unearned fees. Respondent knew he was suffering from depression and other health related issues that interfered with his ability to attend to his clients’ needs.”
The lawyer and the Commission agreed that these violations of the Rules occurred: “The parties agree that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct: Rule 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. 1.15(a): Failure to safeguard property of a client. 1.16(a)(2): Failure to withdraw from representation when the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client. 1.16(d): Failure to refund an unearned fee promptly upon termination of representation. 3.2: Failure to expedite litigation consistent with the interests of a client.” That is quite a list.
There is the specific requirement under Rule 1.16(a)(2) that states the affirmative duty that a lawyer “shall not represent a client…if: (2) the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client.”
We need to talk about this situation more. There was this previous post on Age Related Issues in the Law, but it did not tie the violation to 1.16(a)(2). Apparently we need to have more discussion about this. There are 10,000 Baby Boomers hitting 65 every day. They are not all lawyers, but enough of them are for problems to show up.. 65 is not the magic age where age related cognitive disorder hits, but it is one birthday closer to the issue showing up.
Mental illness extends far beyond age related disorder, and beyond depression, bi-polar disorder and other issues. But it hits lawyers in greater numbers than the general population. When it hits, all the suffering lawyer’s clients are affected. Be aware.
The 2004 case of In Re Michael Kendall (see 3-24-04 entry) is a landmark case among Indiana’s legal fee cases.
Kendall’s law firm went bankrupt, and several clients’ fees could not be refunded, having been deposited into his general account. The issue was whether those funds should have been safe in a trust account. In a 13 page opinion. the Supreme Court expounded on the proper use of “flat fees” “non-refundable retainers” and how lawyers can protect their livelihoods.
The hearing officer had found violations of Rule 1.4 on communicating with clients, but on the big fee issues, Rules 1.5 & 1.15, found no violation. The Disciplinary Commission appealed those findings, and the Supreme Court found there were violations of Rules 1.5, & 1.15. The court distinguished Kendall’s actions from those found in the In the Matter of Stanton case, when flat fees for criminal matters, deposited in the lawyer’s general account was permissible. Kendall deposited advance fees for hourly work in the lawyer’s general account.
The court’s discussion starts with a helpful paragraph: Advance fee payments are subject to different requirements, depending upon the terms of the agreement between the lawyer and the client. This discussion will distinguish between the advance fees charged by the respondent here (that were to be earned in the future at an agreed rate) and advance fees that are agreed to cover specific legal services regardless of length or complexity (fixed or “flat” fees).
After the discussion the Court held: “We therefore hold that Prof. Cond. R. 1.15(a) generally requires the segregation of advance payments of attorney fees, as discussed below…. Except in the case of flat fees governed by Stanton, a lawyer’s failure to place advance payments of attorney fees in a separate account violates this rule.”
The per curiam opinion, authored by now Chief Justice Dickson, defined a “flat fee” that could be charged, and once collected placed in the firm’s general account, as follows: “As distinguished from a partial initial payment to be applied to fees for future legal services, a flat fee is a fixed fee that an attorney charges for all legal services in a particular matter, or for a particular discrete component of legal services.”
Are you paying attention reader? Flat fees can be charged and put in the general office account. But they must qualify as flat fees. And you must explain, accurately, how that works, so the client is not misled.
UNREASONABLE FEES = NON-REFUNDABLE RETAINERS?
Kendall’s other mistake was to use language in his fee agreement that must have been common (considering how often the issue arises), a provision that fees paid were non-refundable unless otherwise provided by law. That language is a huge red-flag, and while the Supreme Court has not yet said the term “non-refundable retainer” is forbidden, they have not approved it in recent history when addressing the situation. In Kendall they held that even though the Commission never proved he had taken and kept a non-refundable retainer, and never failed to resolve a retainer when he was discharged before the completion of the case, the Court still found the fee agreement that included a threat that the fees paid could not be refunded was unreasonable and in violation of Rule 1.5.
In language that I still find confusing, the court said the following two things: 1) “In discussing [in Thonert] the nonrefundability provision, we observed: We do not hold that unrefundable retainers are per se unenforceable. There are many circumstances where, for example, preclusion of other representations or guaranteed priority of access to an attorney’s advice may justify such an arrangement. But here there is no evidence of, for example, any value received by the client or detriment incurred by the attorney in return for the nonrefundable provision, other than relatively routine legal services. [Thonert] 682 N.E.2d at 524. Where a retainer is thus justified, a lawyer would be well advised to explicitly include the basis for such non-refundability in the attorney-client agreement; and 2) We hold that the assertion in an attorney fee agreement that such advance payment is nonrefundable violates the requirement of Prof. Cond. R. 1.5(a) that a lawyer’s fee “shall be reasonable.”
How clear is that? The non-refundable retainer fee may be permissible, but to say so in the fee agreement violates the reasonable fees requirement.
Word that part of your fee agreement carefully, yet make it clear for the average client.
And remember, even though the Court did not say it out loud, no fee is Non-Refundable.
Michael C. Kendall, in the face of other undisclosed charges recently filed by the Disciplinary Commission, tendered his resignation of his license to practice law. On Jan. 28, 2013 the Supreme Court accepted his resignation, and said that he may not apply for reinstatement for at least five years.
I don’t know Michael C. Kendall, but the 2004 opinion included the following paragraph: The hearing officer received significant evidence of Kendall’s professional reputation. Several highly respected witnesses testified favorably for Kendall, praising his history of ethical practice, his integrity, his significant public service, and his strong dedication, care, and commitment to his clients’ cases. The hearing officer recognized that Kendall “deserves sanction” but noted that the “accolades from the various witnesses were impressive and unchallenged,” and urged that “the penalty needs to be tempered by what seems to be the Respondent’s superior ethical history until this recent period.” Findings at 23.
A few years ago a friend of mine had some troubles, and got a reprimand. Folks tried to help, but a second round of complaints hit. He resigned his license to practice as a lawyer. It was right for him. I hope this was right for Kendall.
Drugs and alcohol are problems for lawyers. The evidence is clear that many problems come from addictions. The Indiana Supreme Court and Disciplinary Commission recognizes that reality with greater frequency. Take Marla Muse’s case as an example. The facts are sketchy in the opinion, but they start with a plea of Guilty to Possession of Marijuana as a Class D Felony.
RPC Rule 8.4(b) states that “It is professional misconduct for a lawyer to: (b) commit a criminal act that reflects adversely on the lawyer’s … fitness…” Ms. Muse agreed that she violated that standard. The court’s sanction is as follows:
For Respondent’s professional misconduct, the Court suspends Respondent from the practice of law for a period of 180 days, beginning February 15, 2013, with 30 days actively served and the remainder stayed subject to completion of at least two years of probation. The Court incorporates by reference the terms and conditions of probation set forth in the parties’ Conditional Agreement, which include:(1) Respondent shall maintain complete abstinence from mind-altering drugs during her probation.(2) Respondent shall have no violations of the criminal law of this state or the Rules of Professional Conduct during her probation.(3) If Respondent violates her probation or the JLAP monitoring agreement, the Commission will petition to revoke her probation and request the balance of the stayed suspension be actively served without automatic reinstatement, and Respondent may be reinstated only through the procedures of Admission and Discipline Rule 23(4) and (18).
It seems that a period of probation, working with JLAP in a well monitored probation program will do more to protect the clients of Ms. Muse than any longer suspension and return to the profession without requiring some assistance. *
How bad can one lawyer get?
Amy McTeer had it bad for the guy. Amy was a criminal defense lawyer, who forgot that you want to be sure at the end of the case it is the client who goes to jail. She worked hard, and got him out of jail, the illegal way – she helped him escape. To compound matters she posted photos on Facebook of her out with the escapee. She was arrested in 2011 for these matters, and the Oklahoma Supremes finally accepted her resignation of her license.
In the matter of Mark J. A. Hughes, the Presiding Disciplinary Judge accepted a consent agreement between Hughes and the State Bar and ordered him disbarred.
In three cases, the State Bar charged that Hughes revealed information relating to the representation of a client without informed consent, engaged in conflicts of interest and failed to take steps to protect his client’s interests upon termination of representation. The State Bar also alleged that Hughes failed to maintain confidences and preserve the secrets of his client, engaged in unprofessional conduct, and made disparaging, offensive, and provocative comments and accusations about his client and client’s family members in their presence. Finally, the State Bar charged that Hughes engaged in the unauthorized practice of law while suspended. Hughes agreed not to contest any of the charges.
As a result of the consent agreement, the Presiding Disciplinary Judge issued an order on May 1, 2012, declaring Mark J. A. Hughes’ disbarment. Hughes must pay $1,202 for all costs and expenses associated with the State Bar of Arizona’s investigation.
The Indiana Supreme Court sent Hughes a Rule to Show Cause why similar treatment should not occur here in Indiana. The standard under the A&D Rule 23(28)(c) is that similar treatment should occur here. No reply as to why it should not.
Wisner v. Laney is an important case on lawyer civility, but an opinion with a problem. First, the issue. As stated in the opinion, counsel for both sides went over the line. Plaintiff’s counsel was ordered to apologize to the jury for comments about the defense counsel.
Defense counsel still thought that the opponent went too far, and the trial court should have either called a mistrial or dismissed the case. That did not happen. As stated by Justice David, “Again, the trial court judge is in the best position to determine when enough is enough and whether or not the behavior of counsel would warrant a new trial.” and “we nonetheless express our displeasure with the conduct of counsel, particularly that of plaintiff’s counsel.” Also the court found: “Although plaintiff’s counsel’s behavior was most troubling, both attorneys should have acted in a manner more becoming of our profession.”
Now the problem: in the conclusion the court says: “The duty to zealously represent our clients is not a license to be unprofessional.” In the 2004 amendments to the Indiana Rules of Professional Conduct the Supreme Court deleted the word and standard of “zealous” representation from the Preamble, in favor of an “effective advocate” standard. The ABA Model Rules still use the term “zealous” three times in the Preamble. Section 2 of the MRPC states in part: “As advocate, a lawyer zealously asserts the client’s position under the rules of the adversary system.” It is also found in Sections 8 & 9 of the MRPC. One example of the change in Indiana’s Rule 8 is: “a lawyer can be a zealous an effective advocate”.
So now the court reintroduces the issue of zealous advocacy in the most recent “civility” opinions issued by the court. Was that intentional by the court, or a lapse to the language lawyers used a decade or more ago?
Alabama State Bar’s ethics committee joined Indiana in banning lawyers from participating in daily deal coupon programs such as Groupon. An issue that has been ruled on by several states, first Indiana and now Alabama have found the deal plans contain too many “ethical landmines” to pass muster.
Indiana’s 2012 opinion was the first to take aim on the practice, calling it fraught with peril, and identifying eight Rules in the Indiana RPC, plus one guideline that were in peril with the proposal. NY, NC and SC looked at fewer issues in approving the proposal. The Legal Examiner in Alabama had an article that hit the highlights of that state committee’s ruling.
WHO IS THE CLIENT?
Ethical questions to the ISBA Hotline panel are often explored in more detail by asking the caller “Who is your client?” A recent Minn. case discussed in the Jan. Minn. Ethics Update takes that question a step further.
In Fredrikson & Byron v. Saliterman the law firm started working with the owner and CEO of “LOS” in an arbitration matter where LOS was one of the parties. Saliterman, the contact and CEO of LOS had separate legal counsel in the arbitration. He received LOS’s engagement letter, addressed to him, and it said, among other things, “Thank you for selecting F&B to represent you in the litigation matter concerning [LOS].”
When the matter was over, and LOS was insolvent, Saliterman was billed for the legal fees due. The question addressed by the trial and appellate courts was “Who was F&B’s client?” The appellate court decided that ambiguity in a fee agreement goes against the law firm, so F&B did not get paid.
The lesson? Make sure your engagement letters identify, by name, the client, such as, “In this matter the firm of XYZ is representing only [client’s name].” If you want a guarantor for payment, get a payment guaranty from the CEO in the CEO’s personal capacity, (or parent in a child’s matter) and not as the representative of the business entity.