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.

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

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

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

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

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

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

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

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Lawyer Arrested for Benefits Fraud…

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

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

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

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

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

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

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

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Jeffersonville INNS of Court meeting

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

Contact me for more information about this important rule.

It had to happen; Blogger Beware – the hand you bite may bite back; Durham Suspended; Parenting Time Changes; Indiana Talks.

I knew it would happen

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.

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Blogger Beware

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

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Durham Suspended

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.

IndianaTalks.com Interview

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.

Zealous Representation?; Alabama joins Indiana on Group Coupon issue; Who is the client?

Zealous? Don’t Talk to me about Zealous! -1-

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?

1. Bad take-off on the Jim Mora Playoffs speech from 2001

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GROUP COUPON OPINION SPREADS

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.

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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.

Happy New Year; New Rules; Be Honest; Tell Your Friends

NEW YEAR’S RESOLUTION.

I wish you and your staff a Happy New Year. If you read this blog I know you also read other blogs, and many of them have offered resolution suggestions for the new year. Here is mine.

I was at a closing last week and the seller asked if I had set any resolutions for 2013. My reply was “Work hard, and keep out of trouble.” Thinking about that later, I need to revise that first one to “Work smarter.” I have reached the age where working harder is not going to do it any longer. And the issues my clients have are not solved by working harder, so I must continue to work smarter.

Good luck to you and your clients, the kind of luck that comes from working smarter.

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NEW RULES (redux)

In the last post I suggested that we all read the new rules issued for 2013. Just in case you got too wrapped up in parties, parades and football, I thought I would remind you to take a look. Stay on top and be ready.  Your judge might be expecting that from you. Your client’s new lawyer will if pursuing a malpractice claim, for any reason.

Don’t forget the new Parenting Time Guideline changes go into effect on March 1, 2013 as well.

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BE HONEST AND EXPLAIN THE REAL BASIS FOR YOUR FEE

Finally a story out of Cincinnati. Kathleen Mezher offered a free consultation to  potential clients coming to her law office. Lots of lawyers do this. But do they follow her improper practice of billing for that time if the client signs up? Do they explain the fees kick in when the client signs up? Do you?

In this case, a potential client came in to discuss her mother’s estate. The meeting was advertised as a free consultation. The potential client showed up, discussed the proceedings with the associate lawyer Espohl and agreed to hire the firm. She then talked in more particulars about the estate proceedings, left some important papers and then waited. Three weeks later the client decided to go someplace else and asked for the papers to be returned. The client got her papers, and a bill for $375, of which $250 was charged for the “Attorney Client consultation” that had been identified as a freebie.

The event was called the “failure to communicate the basis of a fee and misleading communication about a fee” by the Ohio Supreme Court, violating Rules 1.5(b) and 7.1. Mezher and her associate Espohl both got public reprimands for their actions. The court opinion speaks in detail about the need to communicate to the client if a free consultation can turn into a client interview for which payment is required. Here the lawyers did not have a good policy for that change in circumstances, or adequately explain that policy to the clients.

Well worth the read, especially if you offer free consultations. 

Query: If your first engagement is a free consultation, then you start to charge a fee for that meeting, is that a change in fee arrangements that also requires a Rule 1.8 warning under Indiana’s more strict view?  What would the Disc. Comm. think? Do you want to be the test case?

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TELL YOUR FRIENDS

If you enjoy the information you get in this blog, please tell your friends, or better yet forward to you friends, the blog that is about those who might be Lawyers With Troubles. Maybe it will help a fellow lawyer avoid a problem.  They can go to the site www.lawyerswithtroubles.wordpress.com and sign up.

Do Not Bribe a Judge, Ignore the Disciplinary Commission, or Create a Conflict with your Clients

Even Attempting to Bribe a Judge is not Good Conduct

An attempt to bribe a judge is not a good thing for a lawyer to try to do, hiding it and then getting caught makes for the basis for a Slap-down by the subsequent judge.

When the investigating judge uses 123 pages to describe, in part, the evidence of the bribe attempt by the Eaton Corp.’s company lawyer Mark McGuire, it is the beginning of a bad time.  You can read the article here and see the links it has to the ruling.  Bad days start with these kinds of rulings. It will likely get much worse in the coming days for McGuire.

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Cooperate and Respond when you get the Certified Letter

Among the most important days in a lawyer’s life is the receipt of a certified letter from the Indiana Supreme Court Disciplinary Commission’s Executive Director.  Not a pleasant day, but an important one.  This letter means that someone has filed a complaint that you broke the Rules of Professional Conduct and your license is now at risk.  It happened to James Nafe, twice, and he got in trouble for not responding either time. In March 2012, and again in April he was Suspended from the Practice of Law for Noncooperation.

Lawyers must take the disciplinary process seriously, and if they don’t the Disciplinary Commission will ask the Supreme Court to suspend their license to practice. There are few other actions that can be taken at that time.  Nafe got suspended for a complaint that has not yet been made public, so we would not know that there are complaints against him (yet) if he had contacted the Commission. At that time he is to respond with his version of the events, or better yet, hired an experienced lawyer to walk with him through the process.

The suspensions finally got his attention, since on May 15, 2012 the Supreme Court terminated the Noncooperation Suspension by a published Order here for the first case, and here for the second case. Don’t get yourself in a box like this. Even lawyers need lawyers sometimes.

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Who is the Client?

When two people come to see you about a problem the first question must be, can I represent both people as clients? Lawyers like to help people — we want to solve our clients’ problems, but inadequate analysis of the potential clients’ needs can cause real trouble.  Todd Wallsmith tried to help two brothers whose father had disinherited them. After a while the brothers disagreed on case tactics, then case substance, and rather than obtain separate counsel for one of the brothers, he tried to handle both their claims, which diverged even more. The lawyer finally agreed with the other side on an issue, with one of the client’s consents, but without the other’s. As their agent, he had the power to consent, but not the authority for the one. The case blew up between the lawyer and the one client.

The lawyer and Commission agreed to a disposition of the complaint which was submitted to the Supreme Court. It found that there were four Rule violations, and as a penalty it suspended the lawyer’s license to practice law for 180 days, then withheld the full suspension in favor of 45 days suspension and 24 months of probation. A good result due to the circumstances. Also a good lesson for lawyers across the country.

Avoiding conflicts in the interests of each of your clients — when there are multiple clients — is not easy. Clients do not like to be told that you cannot take care of all of them, but sometimes you can’t. In some cases in some states multiple client representation is forbidden, in other cases it is merely a minefield.