PA Judge steals Drugs?; Former VA Bar President gets Disbarred; the Indiana Oath of Attorneys

Another PA Judge goes bad?

Pennsylvania has had a run of bad luck with its judges. In 2011, two judges were sentenced for taking kickbacks for sending kids to a private juvenile prison instead of to juvenile probation. Now a judge is charged with stealing cocaine from the evidence locker on drug cases that had been closed.

Judge Paul Pozonsky resigned abruptly last year, after questions were raised about his residency. Now charges are pending for the alleged theft of drugs from his evidence locker. Pozonsky had changed the local rules for evidence in drug cases, requiring that the actual drugs be brought to court in criminal cases, and placed in evidence. After a while State Police did an inventory of the evidence closet, and found drugs missing and evidence tampered with.

His lawyer calls it “a serious matter, and he [Pozonsky] is treating it as such.” Really serious.
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Former Virginia Bar President Bills Big – Disbarred

With a billing rate of $850 per hour, former Virginia Bar President Glenn Lewis still thought he needed to pad his bill. But there is the padding of a coffee break while on the client’s clock, and then there is Lewis’s padding.

According to the Washington Post, Lewis was “once one of the Washington area’s highest-paid and most-respected divorce lawyers and a former president of the Virginia Bar Association…” See the previous post on the Icarus Rule.

Suing clients over a bill is often a mistake (one PLP defense lawyer reports that 90% of client claims for malpractice against lawyers are, in fact, cross claims filed when the lawyer first sued for unpaid fees), but when the client you sue is also a lawyer, and the suit is for $500,000 more in fees on a divorce case where the client has already paid $382,000, and the case settled during pre-trial work, that should be a concern that was considered before filing the first lawsuit. Among the charges in the suit was a claim $253,000 in interest on the past due legal fees [doing the math, $253,000 interest on $632,000 in fees, more than 1/2 of which had been paid might be a usurious interest rate].

When a smart client gets sued for fees, and the client can afford a billing expert, the lawyer’s time records will get reviewed, very carefully. Lewis’s records could not stand up to a serious challenge, although he did stand by the accounting offered to the court. When the records started showing more than 30 hours a day billed by Lewis, the situation got sticky for him. He blamed “block billing” but that is no excuse, the Virginia Disciplinary Commission decided. The decision is appealable to the VA Supreme Court.

Lewis settled the civil case with the lawyer-client. He had asked for $500K from the client, but Lewis paid out $102K to the client. Then the trouble got worse for Lewis. Two more former clients sued, they claimed that they had paid, but Lewis did not do the work, and refused to refund retainers. Once things started falling in, they fell hard, these two got default judgments and then more claims came in.

Bar Discipline Commissions understand that working with clients can be tough, but taking clients’ money and doing no work, that is just not acceptable. It is hard to understand why the lawyers violate their Oath of Attorneys.

 

Oath of Attorneys

FYI – this is Indiana Admission and Discipline Rule 22.

Upon being admitted to practice law in the state of Indiana, each applicant shall take and subscribe to the following oath or affirmation:

“I do solemnly swear or affirm that: I will support the Constitution of the United States and the Constitution of the State of Indiana; I will maintain the respect due to courts of justice and judicial officers; I will not counsel or maintain any action, proceeding, or defense which shall appear to me to be unjust, but this obligation shall not prevent me from defending a person charged with crime in any case; I will employ for the purpose of maintaining the causes confided to me, such means only as are consistent with truth, and never seek to mislead the court or jury by any artifice or false statement of fact or law; I will maintain the confidence and preserve inviolate the secrets of my client at every peril to myself; I will abstain from offensive personality and advance no fact prejudicial to the honor or reputation of a party or witness, unless required by the justice of the cause with which I am charged; I will not encourage either the commencement or the continuance of any action or proceeding from any motive of passion or interest; I will never reject, from any consideration personal to myself, the cause of the defenseless, the oppressed or those who cannot afford adequate legal assistance; so help me God.”

The Indiana Bar Fellows dinner will join in reciting the Oath of Attorneys this Friday at the annual Fellows Dinner, this time in Chicago.  If you are interested in becoming a Fellow of the Indiana Bar Foundation, call the IBF office.

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IOLTA UPDATE if you accept Credit Cards: Circular 230 Disclosure: CBS Radio v. Emmis = DQ:

Credit Cards and IOLTA – New Problem

If you have been innovative over the past few years and started to accept credit card payments, and then posted them when required, directly to your IOLTA trust account (thanks Dan Reed and LawPay – a great ISBA member benefit) you better check your merchant account now.

Congress added Section 6050W to the code effective Jan 1, 2013.  As reported in LawBizzCoo, a legal business blog, there is a new requirement that if the credit card processor’s information is not exactly as contained in the IRS’s file (i.e. name change of firm, new address) the processor must withhold 28% of each deposit processed by the credit card company, including funds deposited in IOLTA.

The Disciplinary Commission may start getting notices of bounced checks from banks (required under the rules allowing banks to hold IOLTA funds) and lawyers may start getting certified letters from the Commission.  Those funds are not being mis-deposited, so you cannot just move them, they are held for potential taxes. You have to come up with the funds, and answer the grievance, in short order. Take a moment now and check your EIN letter and your Merchant Account Agreement. Fix it ASAP.

The same will happen to your general account, but that will not automatically involve the DC. It may later, but your landlord will not appreciate the rent check bouncing.

I discussed this with my office manager and she has been on top of it for a while, thanks to AffiniPay (a/k/a LawPay and Dan Reed). Whether you are with LawPay or some other provider, it is your skin in the game. Make sure everything lines up as it should.

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Tax abuse schemes are serious! Up to $190M serious for one lawyer.

The IRS issued one of its worst ideas a few years ago, called the Circular 230 Disclosure. Good in theory, to require lawyers to warn clients and potential clients not to construe information in a letter or email as being tax advice from the author to engage in a tax scheme, unless that is the purpose of the letter. Now a majority of lawyers’ posts of recipes or sports commentary carries a long disclaimer at the end that no client lacking an MBA could understand, and that most posters do not understand, or they would not prize their every utterance so highly!

But, sometimes folks should avoid doing what lawyers like Donna Guerin did, and review the tax code before writing tax schemes.

Ms. Guerin wrote a scheme so good she and her co-author claimed that her law firm’s clients could save millions of dollars in taxes. And she was no fly-by-night lawyer. A partner in the once prestigious BIG law firm Jenkins & Gilchrist, she recently pleaded guilt to criminal tax fraud, will go to prison for 8 years and has agreed to a penalty and restitution of $190 Million. Her partner entered his plea early and only has to pay $1.6 Million.

For my lawyer friends, be careful with the indiscriminate use of the Circular 230 language, and for the lawyers who do tax work, go back and read Circular 230 in-depth. Then be careful.

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Great fight, but Ice goes down.

Speaking last week on the Ethics of Developing and Representing Businesses, I was asked to discuss those lawyers who get disqualified from cases for overlooking and violating a Conflict of Interest. Rules 1.7 & 1.9 of the Indiana Rules of Professional Conduct are pretty clear when lawyers must not violate the pledge of loyalty we take to our clients (see Comment 1 to RPC 1.7). But lawyers continue to lose focus of their duty, often when one engagement is completed and a chance to earn a new fee surfaces in a “new” case.

I have had the call on the Ethics Hotline (facts changed to protect the calling lawyers) where a previous client went to a new lawyer, with a similar problem, and the same or similar issues. The old lawyer gets in the case, deciding that things have changed since the first time these folks met. Then that old lawyer just hates getting the call or letter saying “I think you have a conflict and need to get out of the case.”  Take that call seriously!

One of Indy’s premiere big firms, Ice Miller was hired by Walter Berger, an employee of Emmis Broadcasting Co., to help him in a senior management employment contract in 2002. Emmis had suggested Ice Miller to Berger. In 2005 Berger renewed that contract with Emmis, then several months later left Emmis to go to work for CBS Radio, Inc. Emmis did not like that, hired their lawyers, Another of Indy’s top big firms, Barnes & Thornburg to sue CBS for hiring Berger, (USDC, So. IN, Case No. 1:06-cv-0920) then it discharged B&T and hired Ice Miller to represent it in the case.

Ice shows up in the suit, and CBS and Berger demand it get out of the case due to an alleged conflict of interest. Ice, showing an incredible amount of chutzpah, lashed back with several defenses and a couple of accusations (which to an outsider read like they were based on client confidences), including that there is no conflict because “it is clear” that Berger breached the Emmis contract. The facts and issues were well briefed by both sides (materials in the ICLEF book) and Federal Judge Larry J. McKinney wrote a great explanation of the tests and the considerations involved in a DQ motion, in his 14 page Order. It is available on Pacer, or through Westlaw($$$).

Bottom line, loyalty is paramount, the issues are looked at from the client’s POV, and while case dicta and commentary makes it sound tough for the clients to prevail, in reality it is hard for a lawyer to win on this issue. There are a few outlier cases, but from my study, the issue, once raised, should be seen in the practical light of “how much is it worth to fight this issue, plus the possible ethics complaint, if you win? Is there enough in the case to pay all that?”  After looking at that, you should consider the option to prepare that Motion to Withdraw and have a talk with your now ex-client.

Fraud gets 50 years; Mayhem gets jail; Shameless Plug.

Fraud gets lawyer prison time.

Indiana lawyer, now businessman Tim Durham gets 50 years for defrauding about 5,000 depositors in Fair Finance, with their total losses exceeding $200M.  Durham, admitted to practice law in Indiana in 1987, and suspended in June 2012, had what various magazines and stories showed as “the good life.”  It was based on the frauds he committed after he left the practice of law, apparently.

Starting his  legal practice at Ice Miller, he moved on to even bigger and better things. He once was married into one of the most prominent families in Indianapolis, and apparently wanted more. He acquired Fair Finance, and apparently took investment lessons from Bernie Madoff. The lure of cars, yachts and houses led him astray, and the 50-year-old, who must now serve at least 43 years in prison under current federal guidelines, may not get out in this lifetime.

If you get too excited at the chance to “hit the lottery” with someone else’s money, recall the lesson of Tim Durham.

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Don’t Trash the Office Before you are Evicted

Dallas lawyer Thomas Corea was jailed after making a real bad situation even worse.  First he was disbarred for stealing client funds, then he was evicted from his office.  But he was the smart one who showed the landlord.  After getting his eviction notice he trashed the office, doing more than $100,000 in damages.  That got the interest of the police, and he was jailed, and his bond increased to $500,000 for the first four felony charges.

Corea at one time had been host of an “ask your lawyer” TV show, but that turned out bad when he sued the station for $1.4M for not forwarding all calls.

It was the graffiti that got him in the eviction. He (or the vandal) wrote several messages on the wall, including one message that was a derogatory remark about an Arizona judge who had found him in contempt. He included her phone number and an invitation to call her…

Update – Another Dallas PI lawyer has now asked the court to appoint him custodian of the files left by Corea, since he cannot provide legal services to his clients disbarred and jailed.  It sounds similar to Indiana’s Attorney Surrogate Rule that allows this kind of help. No word from the ABA Journal if the help is welcomed by Corea.

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Shameless Plugs on Ethics (and other) Courses I am Presenting

Ted Waggoner, editor/author of this blog presented an hour of Ethics for the General Practice Solo and Small Firm Section of the ISBA on Nov. 29. The course was “Hiring and Training New Law Firm Personnel: How to Avoid Losing $85,000 or your License.”

On February 28, I will also be presenting an hour of Business Law Ethics at an ICLEF program. It has the tentative title of “Developing and Representing the Business Entity.”

On Jan. 23,  I will be presenting a seminar in kicking off the 2013 Ivy Tech Ag Seminar Series, titled “Family Farm Ownership: What is the Right
Solution for You and Your Family?”

For further information about either of these programs, please contact me.