Will Lawyers get in trouble blowing smoke?; Be careful what you share with an Inmate; 3-2 vote on an Agreed Discipline – what does that mean?

Good to see a Bar Association help out the member lawyers on difficult ethics issues. The King Co. Bar Assoc. in Washington State has asked for guidance from the State Supreme Court on how to handle a conflict in the drug laws. Marijuana use will soon be legal under WA state law, but the federal law has not changed. So is it unethical for a state licensed attorney to use dope? Is it unethical to advise companies on how to comply with the state law on selling dope?

There are other issues where state law and federal law are at odds in various states. Voting rights issues come up, gun possession issues, campaign finance, and abortion laws.  Are lawyers at risk for following state laws, and not federal laws?  Will drug laws be different?

Wait and see.

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When will lawyers learn to be careful when visiting inmates?

Lake County lawyer Carl Jones should have followed the rules about sharing information with a jailed client.  He could have sent the inmate’s girlfriend’s letter through the mail, but it would probably be read, and her promise to lie for the inmate at trial would have been found.

More importantly, he could have told the Disciplinary Commission the truth about the matter when first asked.  When he was later testifying he told a different story, and for that he got a suspension for six months, without automatic reinstatement.

Lawyers interactions with inmates are constitutionally protected, up to a point. The inmate is entitled to private conferences so that a legitimate defense can be presented to the court.  But because we have special privileges, we must be extra careful to follow the rules.  Jones is the second lawyer this year to get disciplined for an improper interaction with a prisoner-client.  Earlier this year this blog reported this story.A Google search found: “About 66,000 results (0.31 seconds)”  to that lawyer’s name – most for this event.

Be careful out there, or more especially, when you are visiting someone in there!

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Value of a Conditional Agreement for Discipline

Plea bargains are a way of life for criminal defense lawyers, and negotiated settlements are the rule for civil litigators, it makes sense to try to work out a disciplinary matter as well.  At least today, that is.

In the Matter of Noah Holcomb, Jr. is a case on point.  Holcomb’s opinion shows that he violated several pretty important rules, 1.15 (3 subsections as different violations) on safekeeping of client funds, commingling client and attorney funds; 8.4 fraudulent conduct (hiding cash from the IRS); 1.5 setting and honoring fee agreements, not charging unreasonable fees, 8.4 conversion, and four different A&D Rules on handling trust accounts.  In addition he neglected client files (Rule 1.3).

By the time the matter got to the Supreme Court he still had not made restitution, but — he had cooperated with the Disc. Comm.

The Court starts its discussion with the following:  “This Court has disbarred attorneys who committed the type of misconduct to which Respondent has admitted.”  The important part is next: “The discipline the Court would impose might have been more severe than proposed by the parties had this matter been submitted without the Commission’s agreement.”

Now the agreement did not result in a slap on the wrist – Holcomb got a three-year suspension, without automatic reinstatement – and the  strong language of warning that reinstatement could be hard to come by:

We note, however, that regardless of the date on which Respondent is eligible to petition for reinstatement, reinstatement is discretionary and requires clear and convincing evidence of the attorney’s remorse, rehabilitation, and fitness to practice law. See Admis. Disc. R. 23(4)(b). Moreover, the parties agree that restitution should be a condition for Respondent’s reinstatement. 

The vote to approve the outcome was an unusual 3-2 with Justices David and Rush dissenting with the comment: “believing the Respondent should be disbarred.”

It sounds unlikely that Holcomb will return to the practice, but he might. After reading the opinion, you might wonder, as I do, if we want him back in the profession.

Did the Commission go too light on Holcomb in order to get an agreement, and if so, why? Apparently three justices accepted the reason (assuming it was explained somewhere), although they did not include the reason in their rationale.  Will they accept that next time?  Is this opinion a shot across the Commission’s bow?

Or is it a shot across the bow of those attorneys who stand their ground?

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Hiding Things Brings Trouble: Assets, Evidence and a Court Order.

Hiding Assets

The case started for Washington State lawyer, Thomas McGrath when his wife, a chiropractor, started a fight with her ex-employee.  Forbes reports on his bad actions: first to represent his wife in a case where she lost a judgment of $500,000; and then to do improper asset protection in violation of the RPC.

Shifting assets when the case is going badly is a time honored tactic, but shifting a spouse’s asset through the office trust account in violation of Rule 1.15 is still a forbidden mixture of personal assets with clients’ assets.

Filing bankruptcy is not generally improper, but falsifying the Bankruptcy Petition is a federal felony and an ethical violation.

As Jay Atkisson, the Forbes columnist explains: “This case has nothing to do with legitimate asset protection planning, and everything to do with plain old fraud on creditors.”

What do you think the Washington State Supreme Court did to the husband lawyer, just trying to help his wife?

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Hiding Evidence on Facebook:

Matthew Murray was slow to advise his client about the eternal nature of electronic evidence. Murray’s client lost his wife and filed a wrongful death case.  Among the damages claimed was loss of love, affection and companionship.  After being asked to produce “screenshots” from his client’s Facebook account, Murray told his paralegal to make sure the account had been “cleaned up. ” The plaintiff-client’s photos disappeared from his Facebook wall, but the defense counsel already had 16 of them, including the one that showed him wearing a T-shirt that said “I ♥ hot moms” while holding a beer, soon after the wife’s death.  Since the suit was for the losses he suffered due to the wrongful death of the plaintiff’s wife as caused by the defendant, the photo was thought to be material to damages.

First, the trial court ordered the payment of defendant’s attorney fees against Murray and his client in the amount of $722,000 and slashed the jury’s $8.5M verdict. The VA Supreme Court reinstated the verdict, but allowed the attorney fees order to stand.

It also found Murray violated the RPC and entered a sanction: What would you have ordered?

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Hiding the Court Order?

A busy time for the Washington State Disciplinary Board.
And Tom Kamb was a busy lawyer. He had a criminal law practice, mostly DUI defense work. On the day of the problem, he had 20 case hearings set in the morning.  He got a plea on one case, which was submitted, and approved by the court.  He forgot to get the breath test suppressed, which appears to be a normal event, since suppression of the breath test protects the client’s driver’s license.

Kamb later had a hearing with the Dept. of Licensing’s ALJ about his client’s driver’s license, Kamb reported that he had gotten the breath test suppressed in the criminal charge.  Now he had to find a way to prove that.  Bad idea.  He asked for the closed file from the clerk, and penciled a note about the test being suppressed on the signed order. The now suspicious clerk refused to provide him with a certified copy of the newly forged order, and sent him to the prosecutor.  The prosecutor agreed to a retroactive suppression, not knowing that Kamb had lied to the DOL’s ALJ, and forged the court’s order.  When Kamb returned with the note from the prosecutor, the clerk sent him to the presiding judge who was not pleased.

The judge files disciplinary charges, and after the investigation by bar counsel, there was a finding of Kamb’s guilt on three counts:

Count 1 charge[d] Kamb with misrepresenting the existence of an order suppressing his client’s breath test to the hearing officer in violation of RPC
3.3(a)(1). Count 2 charge[d] Kamb with changing Judge Svaren’s order in violation of RPC 8.4(b ), 8.4( c), and 8.4( d). Count 3 charge[d] Kamb with violating RPC 1.3 which  requires a lawyer to act diligently and promptly, by failing to discuss suppression of the breath test with [prosecutor] Johnson before the DOL hearing.
Kamb challenged the Hearing Officer’s findings. The court found his version of facts lacked credibility.  The transcript of the ALJ’s hearing proved the timeline and his misstatement of facts about the existence of a court order that helped his client.
What did the WA Supreme Court do in this case?

Poll Results:

1. Washington Supreme Court disbarred the lawyer after 40+ years of practice – citing the filing of false filings and claims, and lack of remorse.

2. Murray got a five-year suspension from the practice of law.

3. The opinion cites as authority: “The American Bar Association’s Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992)” as the guide for lawyer discipline in Washington State.   Kamb got disbarred.

Neglecting Clients Here and There: Indiana; & New Jersey

Neglecting clients is a bad thing to do. Let’s learn the lesson at someone else’s experience, and not do it ourselves:

Indiana:

In 1997 Biomet, Inc. a worldwide ortho manufacturer from Warsaw IN hired Kent Frandsen, of Parr Richey law firm, to file a legal malpractice claim against Barnes & Thornburg for the way it handled a patent infringement case.  The firm filed the suit followed by, as you can imagine, lots of intrigue, including an interlocutory appeal decided in 2003.  After the Court of Appeals opinion approved the case moving forward, nothing happened on the case.

In 2006 B&T sought a Rule 41(E) dismissal that was heard, with an honest discussion of the delay at the hearing:

THE COURT: What has happened ? Why has nothing
happened since transfer wasn’t granted, sir?
COUNSEL: That’s a fair question, Your Honor. First of
all, I was stunned personally when the Court of Appeals
issued the decision it made. I was extremely busy in my
practice. This case takes a lot of time to put together. It has been one (1) of those cases where I couldn’t bring myself to dig into it enough to be ready to do what needs to be done. This is not an automobile accident case, Your Honor.This involves difficult issues that were involving patent litigation that frankly has been very uncomfortable for me and I don’t know that I’ve ever felt competent to deal with the underlying merits of the judgment that is at issue in this case. *** When that did not come, … I simply could not get to where I could take or have anyone else take the time to get into the merits of the case. I take full responsibility for it and we were in communication with Biomet. We indicated to our client that we would do things but we simply didn’t do them. We would get going on the case. Biomet seriously wants this case pursued and resolved on its merits. We’ve not been able to get that done. ***
THE COURT: … The question is if we talk about the
judicial system, why should I penalize this Defendant ?
Why should I penalize this Defendant because of what you have described as your inaction, sir ? I guess I want to try to understand that.
The court did not understand that, and the client did not either, later filing a malpractice case after the case vs. B&T was dismissed.  Biomet got a partial summary judgment v. the law firm and lawyer, and then Parr Richey appealed. The question was whether there was a duty and a breach, and it was decided (in a NFP opinion*) there was.  Other issues remained for trial.
*While NFP opinions have no precedential value in a court of law, they are great teaching tools in the hands of a blogger! 
Be careful taking on more than you and your firm are capable of handling.  Stay on the case even when things get busy or you get distracted.  The client is still counting on you.
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New Jersey
“They are pestering me!” “Their calls got nastier and nastier, and quite frankly I did not need that.” “I fired them [the client], told them to get a new lawyer!”  NJ’s Disciplinary Review Board did not take kindly to Victor Azar’s attitude about people who had hired him, paid him money and then got neglected.  The board objected to his defensive responses to the clients’ seemingly legitimate complaints.  He also withheld their files.
The report was complimentary about his skills in getting clients and their retainers, but suggested that the follow through lacked a lawyerly precision, and he “neglected, if not grossly neglected” the client’s interest and “engaged in a pattern of failing to communicate” with his clients.
Azar is facing a reprimand at DRC’s recommendation.
h/t Vic Indiano

Ogden is a fighter, but…; Voils forgot to fight; Disabled and out of the fight

Okay, Paul…it’s your fight

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.
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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.

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Disability Suspension

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.

When you, a lawyer, are in trouble, hire a competent lawyer; NY Times on Billing Troubles Abound with Fraud Allegation; More on Fee issues – what is a “document review” billing entry worth?

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)

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The other end of the Canada case.

Last week we discussed the Canada case, where the fees, though flat, were earned, and upon the client’s demand did not need to be returned.  Octavia Snulligan did not understand that rule before Canada was decided.

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.

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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.

Hourly Billing leads to Suspension; How Much is Too Much?: Know the Battles to Fight

Billing is one of the toughest things lawyers do.

The legal field is struggling with the proper method of billing for legal services.  There are a number of ways, mostly broken down into the following styles: Contingency, Hourly, Value Pricing and some hybrids such as menu billing or flat fee billing.

Each method has its critics, and the Indiana State Bar Association recently held a session at its Annual Meeting on “The Future of Legal Fees.”  MS lawyer and ABA bestselling author Mark Chinn was the presenter.  One fear expressed there was that Value Pricing fees could run afoul of ethics issues.

Any system of billing can run afoul of ethical issues. The primary breach is in the lawyer, not the system. “But lead me not into temptation…” Michael Murphy, a Massachusetts lawyer, learned the hard way.  He was a salary lawyer for an unnamed law firm.  On at least two cases he “knowingly spent more time than necessary” in order to increase his billables. He reviewed materials multiple times, often for hearings that had not been scheduled yet. He billed for time performing tasks that “should have been delegated” to lower cost lawyers at smaller billing rates. He billed for performing tasks that others had performed. Author John Conlon regularly writes about the problem for clients about misallocation of duties between higher priced lawyers and the lower priced associates or non-lawyer staff.

Murphy’s firm refunded the fees, and wrote off unpaid bills, but Murphy got a Year and A Day suspension.  Rumor has it that this kind of billing problem occurs with enough frequency that it should be discussed in biglaw and small firm settings, and forbidden by policy. The Mass. Court found the fees charged was a violation of Rules 1.5(a) and 8.4(c).

H/T Andy Perkins

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106 Paragraphs in the Ethics Complaint => Suspension

Illness does not give you a “Free Pass” card.  Kjell Engebretsen, a Boone County, IN lawyer appears to have struggled for years in representing his clients.  The battles may have had to do with depression or other illnesses, but were manifested in his refusal to do the clients’ legal work, or to cooperate with the Disciplinary Commission.

The charges included: neglecting clients’ cases, failing to do the work for which he was hired, failing to communicate with clients, failing to inform clients that medical problems would severely limit his ability to represent them, failing to inform clients of court orders and hearings, failing to appear at hearings and a pretrial conference, unilaterally terminating his representation of clients without protecting the clients’ interests, failing to refund unearned fees, and failing to cooperate with the Commission.

This is the fifth action against the respondent filed by the DC, and there may have been others not filed before the 2008 matter. At the time of this Order he was on two other suspensions (failure to pay costs, and non-cooperation with a show cause order), and did not respond to the charges filed here.

The Court found violations of the following Rules of Professional Conduct:

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.

1.16(d): Failure to protect a client’s interests upon termination of representation.

1.16(d): Failure to refund an unearned fee upon termination of representation.

3.2: Failure to expedite litigation consistent with the interests of a client.

8.1(b): Failure to respond in a timely manner to the Commission’s demands for information.

8.4(c): Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.

For all that, the result may surprise you.  Read the opinion, and J. David’s dissent.
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Pick your Battles Carefully, Especially When You get the Lede

Vikrant Pawar, a NYC lawyer had to file the suit. His honor apparently was tested by the allegation.  Then the slap-down hits.  As reported in the New York Law Journal [full story behind a paywall]:

“The charge of stealing a $6.95 order of chicken wings, hardly constitutes that of a serious crime,” Manhattan Supreme Court Justice Louis York wrote, holding that Vikrant Pawar had not made a sufficient case that the charge amounted to slander.

So an event that merited the attention of Pawar’s family and staff, and the owner of the Wings Shop, has now been made a record in the courts, and in the popular legal media.  Now we know he was accused of stealing chicken wings, and that the court does not find that charge to be an insult to his integrity.

Maybe the better resolution was to pay the tab, tip the waiter and stay quiet.  H/T Patrick Olmstead.

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