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

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Want Fewer Troubles? See a small firm lawyer; Prenda Redux; Township Courts

I had a good week leading up to and at the Indiana Solo and Small Firm Conference June 6-8 at French Lick Indiana. Kudos to Marc Matheny (also of the National SSF Conf. Board and the ABATECH Show Board) who chaired the conference this year and next.

Indiana’s conference was its largest yet, and I chaired the new series of courses called STAFF TRACK, which added to the knowledge and skills of law firm staff members.

Why do I say if you want fewer troubles see a small firm lawyer? Last month AM LAW, a leading legal publisher came out with an article on the latest big law survey by Altman-Weil Co. on where the law and practice is headed.  Steve Harper, an author and blogger interpreted the AM LAW article here.

His topic sentences are “The Troubling Big Picture; Group Stupidity; Lateral Incompetence; Institutional Ineptitude; and, Cognitive Dissonance” finding the focus of the leaders of the big firms as wrongheaded:  When asked to identify their greatest challenges over the next 24 months, most managers cited “increasing revenue.” The rest of the list is, in order: new business, growth, profitability, management transition, cost management, and attracting talent. If you’re wondering where clients fit—other than as a source of revenue and profits in items one, two, and three—“client value” finished eighth.

He summarizes the report of the responses by 250 of the largest 800 firms, as follows:

•Managing partners know that change is coming and clients are demanding it, but firms aren’t revisiting their basic strategies or business models.

•Growth and profits finish far ahead of enhancing client value as most law firm leaders’ top concerns.

•Leaders view aggressive lateral hiring as critical to law firm growth, but when laterals don’t produce, most firms don’t do much about it.

•Succession planning is problematic because senior partners don’t want to relinquish compensation that is tied to their client billings.

•As senior leaders continue to pull up the equity partner ladder on the next generation, morale plummets and managing partners worry about the absence of midlevel talent to serve clients in the future.

Client Value comes in Eighth? (One commentator was surprised the clients made the top ten at Biglaw!)  No wonder the mood at the SSF Conference was upbeat. Our “big” siblings at the Biglaw Firms are now leaving the good clients to those of us who care.

H/T Patrick Olmstead.

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More on Prenda Law.

A few weeks ago, I mentioned a federal judge is ticked-off at the Chicago law firm Prenda, that was pursuing copyright violations against folks it alleged had viewed internet pornography in violation of the copyright law.  Tying the copyright violation with the fear of exposure for that private act, lots of folks were settling the claims, and others who did not do so prior to the suit quickly settled before court notices were out.

In the earlier reports the judge said from the bench that something was not right. Well now he has unloaded on the lawyers, with this Order of the Court.  In an eleven page order he finds violations of Rule 11, (requiring lawyers to know the facts that they are alleging have some basis in fact) and acts of fraud upon the court.  He orders the firm to pay $81,000+ to the Court in 14 days to repay the John Doe defendant in the order for costs and attorney fees. The judge doubled the fees requested by the lawyers, due to the egregious acts of the Prenda firm.

The judge also reports the two lawyers in his case to the Disciplinary Committee of the State of California, plus every other state where they practice, and every court, both state and federal, where the lawyers have cases pending. He says they suffer from a moral turpitude that should not infect the bar.

Just to top things off, he sends his report to the US Attorney’s office to consider RICO charges and to the IRS for investigation of every lawyer in the law firm.

Moral of the story: Federal Judges do not play games with scoundrels.

H/T Vic Indiano

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Marion County Township Courts

More coming on this issue soon. Will the Legislature or Supreme Court do anything? I have recently had a chance to read the Small Claims Task Force Report: Report on the Marion County Small Claims Courts, authored by Court of Appeals Judges John Baker and Betty Barteau, Sr. Judge.

Some solid recommendations that went no place in the Indiana Legislature.  What will the Supreme Court do?  Will the Legislature do anything?

Is it all on WTHR 13 News to push the changes? I had a conversation on fees, ethics, and lawyer and judge discipline with Sandra Chapman this week.  It will be interesting to follow this story.

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.

Lawyers = Icarus?; Hubris?; Conoured

An Icarus moment?

Paul Bergerin, a once prominent NJ lawyer, former state and federal prosecutor and recently a criminal defense lawyer was convicted by a jury on 23 counts, including Conspiracy to Murder – a witness, and Racketeering, in the operation of his law firm. He has been sitting in jail since 2009 on the charges, had one trial declared a mistrial, and faces life in prison now.

When the lede starts “once prominent attorney” you know the Icarus paradox is involved.

H/T Tim Kalamaros

Being the Investigator gets you Suspended

David Schalk made a serious mistake, he forgot his role as a lawyer.  Lawyers are not investigators, and should not make themselves witnesses, or more importantly criminal defendants. One sage said “Whatever you do, make sure the client goes to jail, and you go to lunch.”

Schalk had a client charged with possession of Meth. He apparently did not think that the confidential informant was legitimate, and was selling drugs himself.  So Schalk set up a drug buy by two of his criminal defendant’s friends, plus a juvenile. Schalk provided the funds and a recorder, and told the agents that “it is all legit.”

After the “agents” successfully bought some drugs they smoked some, kept some of Schalk’s money, and gave him a folded newspaper that they said contained the drugs.   Schalk tried to get law enforcement to make arrests, and so they arrested the lawyer Schalk. for Conspiracy to Possess Marijuana, and Attempt to Possess.  That was not his plan.

The court found five facts in aggravation, nothing in mitigation.  The opinion discusses his lack of insight into the misconduct and his attacks on the officers for being vindictive as evidence that Schalk needing disciplined.  So it did the deed.  Schalk got nine months without automatic reinstatement. I will explain the importance of “automatic reinstatement” in a later post.

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Conour

Recent word is that Bill and Jennifer Conour’s names still grace the atrium at the McKinney Law School.  According to the Indiana Lawyer story of Sept. 12, 2012 the law enforcement authorities were actively investigating the matter in December 2011.  That story’s lede is “William Conour, until recently, was one of Indiana’s most respected and powerful personal injury attorneys,…” (see reference above).

I think it is time for Indiana University to figure out how to get those names off the atrium wall.  Whatever it takes.  IU’s new general counsel will surely do a better job to include contract terms that fit with Herman B Wells’ admonition about naming things until five years after the person’s death, or at least have a forfeiture clause if necessary.  Coaches contracts should have morals/NCAA clauses as well.  Good luck Jackie.

Pretend you are a Supreme on DI cases; Duty when depressed; Sign Here Please; Filing Taxes is Timely

As a trial, I will be sharing the facts of a few DI cases, and poll the readers how they think the Court ruled, as punishment for the violations. Later in the blog entry I disclose the Court’s actual decision. Are you tougher than a Supreme?

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William Dittrich neglected several cases over a four-year period. The neglect included failing to do the work, refusing to respond to clients’ requests for information, not placing unearned fees in trust and failing to refund unearned fees.

He knew he had health and depression issues, but did not seek adequate treatment, and placed his interests ahead of his clients’ interests.

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Unsigned document to file with the court, client forgot to sign her name. What do you do? There are several wrong answers: file it unsigned, ask the staff to sign for the client, or worst of all – sign the client’s name to the document. Ray Robison chose the worst of the options.

Sisters were co-personal representatives, one signed all but one document in the stack of papers. Robison signed her name to the unsigned document, then sent them to the sister for her signatures. Sister noticed that the signature was not right.

Robison cooperated, withdrew without a fight, and the court acknowledged that his purpose was to avoid inconveniencing a client. But it was a violation of Rule 8.4 on fraud, dishonesty, deceit or misrepresentation.

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SC lawyer David Flowers failed to file tax returns for 2007-2010. An anonymous complainant reported these facts to the South Carolina Disciplinary Commission, and it got ugly. SC found he violated Rule 8.4 of the RPC, together with two other codes of lawyer conduct.

He admits he wants to give up the practice of law, and suffers from the stress of the practice. He has not yet paid the taxes due.

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Dittrich, got 90 day suspension with automatic reinstatement. Is working with JLAP according to the Opinion.

Robison got an agreement for a public reprimand accepted by the Court.

Flowers got 90 day “definite suspension” meaning that he must file for reinstatement, and he may not file until after he pays the taxes. There must have been some interest in figuring out who the “anonymous source” was, as it made the opinion.

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Tell me if you liked the polls in the body of the blog.

New Rules for Lawyers and Judges: Living with the Rules; What is JLAP?

New Rules to Review

Six new sets of rules are going into effect for Indiana lawyers and judges on Jan. 1, 2013 based on a series of Ind. Supreme Court rulings issued in Sept.  The list of new 2013 orders (plus three effective July 1, 2012), if you have not seen them is here: http://www.in.gov/judiciary/2784.htm

It always pays to read the rules.

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Paying for Disclosure Violation

One hard fast rule in Bankruptcy Court is for the lawyer to disclose any interest, direct or indirect, in representations in the case.  In a recent bankruptcy case in Georgia, the lawyer was required to disclose any interest in any creditor of the bankrupt client before representing the client.  In this case the lawyer forgot to disclose that he and his wife were shareholders in a creditor bank, while her father had been bank president, board member and chair of the bank’s board, and to top it off, the lawyer’s former partner was general counsel to the bank.  Oops.

The opinion, as reported by the Business Reporting Committee, does a nice job of listing the five factors to used in determining if a disclosure misstatement is to be actionable, and here it clearly was an intentional misstatement of reality.  The court cut the law firm’s fees by $20,000 which should get these folks attention. And yours.

H/T Gregory Jordan for the link.

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What is JLAP?

One of the critical pieces of the legal system in Indiana was created in 1997, by adoption of Rule 31 of the Admission and Discipline Rules of the Supreme Court.

JLAP’s purpose “is assisting impaired members in recovery:” of all kinds.  It is designed to “provide assistance to judges, lawyers and law students who suffer from physical or mental disabilities that result from disease, chemical dependency, mental health problems or age that impair their ability to practice;…”

Terry Harrell is the extremely competent and compassionate Executive Director.  If you have questions about your situation, or the situation of a friend or colleague, you should review Rule 31 here and call JLAP for information and assistance.  The program has volunteers around the state, so you may get someone from nearby to provide assistance.

Of course the important thing is, if you or someone you know needs help, you should call. Today, or tomorrow. The impact of the call can be life saving, or might protect the rights and property of a client. Good faith calls get some qualified immunity under Section 9.  Call.  It is better than being required to report misconduct if you don’t call.