Breathing Space – IND lawyers and 1st Amendment Rights; Lawyers and Child Porn – Problem in CA; Rule 1.8(a) will be Enforced.

CONGRATULATIONS TO SUPREME COURT

Faced with a tough question about the interplay between the rights of a group of defendants to a fair trial, and the feelings of a trial court judge, when her possible bias is pointed out, the Court, in one of two disciplinary cases filed against the lawyers who were trying to protect their clients, under the Rules, found no violation of the Rules of Professional Conduct. This issue was raised here a couple weeks ago.

Thomas M. Dixon, of Osceola, outside of South Bend, together with David A. Wemhof, of South Bend, was accused of violating Rule 8.2(a) for the contents of his Motion for Recusal.   The Rule  says;  “A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge.”  The Hearing Officer found a violation, and Dixon submitted that ruling to the full Court.  The Court in a 4-1 opinion held no violation occurred. 

The concern of lawyers in representing clients who fear a biased judge would have been palpable if the court said that an allegation of bias is proof of “a statement..false… concerning the qualifications or integrity of a judge.”  Rule 11 requires that the lawyer endorse the statements, but most are statements of opinion, most often the opinion of the litigant, who is the one with the right to a fair hearing.

In this case, the judge who was asked to recuse was also the judge who ruled on the request, and who filed the complaint.  And Dixon did good legal work here. The Court distinguishes this case from the Wilkens case of 2003, showing the efforts Dixon put into supporting the statements that were made about the need for the trial judge to recuse herself.

Good for the Court.  There are some limits on the authority of the Disciplinary Commission to protect judges from the rights of litigants through the attacks on their lawyers.

Let’s see if this portends any outcome in the Wemhof or Ogden cases now in the process.

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Child Porn, and other automatic disqualifiers 

Gary Grant, a Cal lawyer, was found by the ICE (Immigration and Customs Enforcement) to have used email to register for a PayPal account, in order to purchase and download child pornography.  With over 100,000 images deemed pornographic, ICE found 19 photos and one video of youths who appeared to be between the ages of 14-16.

Grant pleaded “innocent” but later admitted that a few photos of underage girls were downloaded, and promptly deleted.  Such a deletion does not remove the photo from the computer.  He pleaded guilty to one charge of felony possession, and the prosecutors dismissed two other charges: the sentence was 90 days served three years probation and sex registration for life.  Grant later violated his probation, and spent an additional 183 days in jail.

The Cal State Bar automatically suspended Grant’s license, pending hearing. The Bar Court trial judge recommended disbarment, but the Bar Review Department later recommended a suspension for a period. Bar Counsel appealed the recommendation to the state Supreme Court, which at this time has not ruled.

The question before the court is the “moral turpitude per se standard” California has for lawyers.  If a lawyer is convicted of a crime that qualifies as moral turpitude per se, the disciplinary proceedings are a summary disbarment.

The article on this in the California Lawyer (callawyer.com) describes the hearsay evidence problems, since the Bar Counsel did not have access to the images, but had a computer analyst “describe the images” she had viewed. The appeal is from the Review Department panel’s conclusion that felony possession of child pornography meets the moral turpitude per se standard.  As Grant was charged with having 2 out of 100,000 images that qualified, and there was no “proof that Grant sought out child pornographic images, displayed a sexual interest in children, or otherwise intended to harm a minor” according to Judge Catherine Purcell, and it was a case of first impression, the decision was for suspension.

The history of Cal discipline for child pornography cases is described in the article.  The conclusion, in the 18 cases since 2007, none of them have been summarily disbarred.  There have been 33 summary disbarment actions in the 2011-2013 period, most for forgery, grand theft or other frauds.

The question arises: What is the purpose of the Bar Disciplinary Process?  To punish bad people who hold licenses to practice, or to protect the public?

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AUTOMATIC FEE INCREASES ARE SUBJECT TO RULE 1.8(a)

Ellen Corcella started working on a case in 2009, with a written fee agreement providing for hourly fees of $175 per hour.  When the case concluded in 2011, she billed the clients more than 60 hours at her then rate of $200 per hours.  Client files grievance, she refunds the excess of $1580 and all is well, right?

Not quite.  During the representation, the Court found that Corcella changed the fee agreement twice. The first time to a contingent agreement, then to a blended contingent and hourly fee agreement.  At no time did she give the Rule 1.8(a) warning.*

Let’s go over this again.  If you change a fee agreement, written or not, that does, or may favor you as the lawyer, you must give a Rule 1.8(a) advisory to the client.  Tell the client to take time to obtain an independent professional legal opinion that the transaction is fair and reasonable to the client.  You also must determine that the modification is fair and reasonable, and is understood by the client.  Finally, get the approval of the change in writing.  Follow the rule, with due regard for that part of the Comment as applies.  See below.

*  Rule 1.8. Conflict of Interest: Current Clients: Specific Rules

(a)    A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

(1)    the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;

(2)    the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and

(3)    the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

Comment 1 to Rule 1.8(a), in part:

…It does not apply to ordinary initial fee arrangements between client and lawyer, which are governed by Rule 1.5, although its requirements must be met when the lawyer accepts an interest in the client’s business or other nonmonetary property as payment of all or part of a fee. Paragraph (a) applies when a lawyer seeks to renegotiate the terms of the fee arrangement with the client after representation begins in order to reach a new agreement that is more advantageous to the lawyer than the initial fee arrangement…

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“Causing grief to clients” = slapdown by judge; Learn from your neighbor lawyers’ mistakes; attend your clients.

Fee Shifting is no Reason to Mishandle a Case

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]

The judge was just getting warmed up.  He continued through 169 Findings of Fact and Conclusions of Law, never letting up on Shere.  On page 96 he found that the Fee Agreement Shere had with his clients violated Rule 1.8(i) of the Indiana Rules of Professional Conduct which states:

(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.

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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.

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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

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

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.

Ethics and Conflict Issues in Business Representation; Conour Questions –

BUSINESS ETHICS FOR LAWYERS

I will be doing a seminar on Feb. 28 for ICLEF, the legal education provider created by the Indiana State Bar Association in the 1970s to help get lawyers better prepared to handle their clients’ legal matters. Now a stand-alone not for profit corporation ICLEF is the leading provider of Continuing Legal Education in Indiana..

The seminar title is Developing and Representing the Business Entity, and my portion is Ethics in a Business Practice. We will be discussing the Rules of Professional Conduct, the Traps of working with businesses and the Remedies for lawyers and businesses if unethical events occur.

In focusing on the Rules of Professional Conduct, we will discuss recent cases in state and federal courts where the clients complained that their lawyer had jumped sides, and how the courts and lawyers handled that issue. Motions to Disqualify some of the biggest law firms you know will be reviewed, and we will review how the courts’ findings and orders, when presented with valid conflict issues protect the business or the lawyers.

We will also review other events that may prompt a client to think that the loyalty obligation discussed in comment 1 to Rule 1.7 has been violated.

Program chair, Jeffrey Nickloy (a lawyer I have sent clients to for complex issues) has brought together a faculty of some of the brightest lawyers in Indiana to present on various topics that day. The Business Law Section and the Ethics Committee of the ISBA will be well represented.

Registration materials are available here.

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Bill Conour

The Indianapolis Star had a long story about Bill Conour on Sunday, here.  I never worked with Bill, but you could not be a lawyer in the state for the past 30 years and not know about him, his practice, or his atrium.

I will do a more thorough analysis of his fall, his plea, and his resignation in a few weeks, but I would like a few comments about Bill from those of you who knew him, worked with him, did or did not get cheated by him.

I will say (treading carefully as a Maurer grad, talking about our friends and fellow IU law siblings at McKinney) that the first time I walked into the Inlow Hall atrium, and saw the decor, I overheard a comment (it has been years ago, maybe it was my comment) that “the decor looks like a 1950s prison cell block,” with the metal wrapped columns to the ceiling.  So long as it carries Bill Conour’s name (together with that of his ex-wife Jennifer), the image will fit.

Please share comments on Bill and his situation, if you will.

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

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Lying to the Bar Exam Board – Bad idea; Legal Fees pay for Legal Work, not Housekeeping; Age Related Issues in the Law

Liar, Liar, License on Fire

Leah Harmuth, a Calif. lawyer former lawyer, lost her license when the Board of Examiners found that she had lied about her alleged disability and need for extra time to take the Bar Exam. She said that she suffered a disability and needed extra time, and a quiet place to take the exam. She took it, passed and later moved to NY, where she tried it again. The NY examiners checked her story, found she lied to them and they reported the information to CA.

Oops. Honesty in your bar application is critical. After nearly three years as a lawyer, including time at one of San Francisco’s premiere law firms, known as MoFo, she now is not a lawyer.

I have served on the Indiana Supreme Court Character and Fitness Board, and have spoken at three of Indiana’s four (soon five) law schools about the Bar Admission process. One more horror story to share with the students. These pop up occasionally. Kind of like Coach O’Leary. You have to be scrupulously honest in a job application. A lie on the application can cost you your license to practice law at any time. No statute of limitations on that offense.

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What can you do for lawyer’s fees? Get Suspended

Katherine Guste was a nice woman, she helped an old man with his legal needs, by preparing a Power of Attorney for the client. Then the client, who suffered a debilitating disease needed some additional legal help. He had an accident, and was charged with hit and run. She handled the criminal matter. Then Guste started helping him with personal matters, driving him places, helping him move from one nursing home to another. Nice things, but he had agreed to pay her normal hourly rate as a lawyer for performing those non-legal services. Eventually she claimed she had provided 220 hours of service, after he decided he had been hoodwinked, and complained to the Louisiana Disciplinary Commission. But she was paid for over 250 hours.

That did not matter. The LA Supreme Court decided that lawyers’ hourly fees are unreasonable for general labor work and she could not mix the two types of work for the same fee. Rule 1.8 prohibits mixing work like this. She had other discipline matters too, and ultimately she got her license suspended for two years. Ouch.

Be careful charging lawyers fees for standing at the copy machine.

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“What do we do with a General, when he stops being a General…”*

[*words and lyrics by Irving Berlin] In the movie musical White Christmas, Bing Crosby’s character sings about what to do with General Waverly after the war and he is no longer in charge. Lawyers see this dilemma as well with our older members of the Bar.

The Ohio Supreme Court this week issued an “age-associated cognitive disorder” opinion for a 71-year-old lawyer who was charged with an ethical violation during the handling of a couple of estate matters, and was confused in his explanation to the disciplinary commission. Raymond O’Neal complained about his memory problems during his testimony, so the commission had him submit to a psychiatric exam by a medical professional. The doctor found age-associated cognitive disorder, and recommended some age-appropriate strategies for minimizing the effects of the disorder.

The Ohio Supreme Court suspended O’Neal for two years, withheld 18 months, but started off with a six month suspension. During the six months before return, he must undergo a thorough geriatric psychological assessment and prove that he will be fit to return to the competent, ethical and professional practice of law. Not sure how he will do that based on the problems he exhibited to the court and outlined in the 9 page opinion.

Congratulations to the Bar and Bench in Ohio. This is a difficult area of enforcement, but the duty to protect the clients is important. I invite older lawyers to discuss this issue with family and partners.

What causes Trouble for Lawyers? Fee Increases w/o Following the Rules: Ranting about the Judge: Dope in Court

Changing the Flat Fee – Oops

Fees are a difficult issue for lawyers, how much to charge and how to get paid are on the lawyer’s mind in nearly every engagement.  More flat fees are being used, as objections to the scope and nature of an hourly fee basis are growing. Indiana’s rule on increasing a firm fee that is to be charged to a client is the minority rule. But it is the rule.

It appears the purpose of Indiana’s rule is to protect the client during a change in the relationship, and in theory it does just that. Changing a relationship and fee during the midst of a matter could lead to overreaching or abuse. The rule attempts to alert the client to that possibility.

The lawyer needs to know how to protect herself as well as the client, and while the fees are governed by Rule 1.5 of the Rules of Professional Conduct, the change in relationship rule is in Rule 1.8 of the RPC.

The lawyer is to tell the client, in writing: “You are advised of the desireability of seeking, and be given a reasonable opportunity to seek, the advice of independent legal counsel on the change in our legal fee transaction; and you (the client) are to give informed consent, in a writing signed by the client, to the essential terms of the transaction, and to the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.”

How often a client will seek an independent opinion in a timely way is doubtful. But the file must have these two written documents.

Indiana and at least two other states consider a modification of the fee agreement to be a new business arrangement with the client, and so the Rule 1.8 business warnings are required. Prominent Indianapolis lawyer Bob Hammerle found out the hard way.

Hammerle took on defense of a criminal case for Ed Blinn Jr., and they agreed on a flat fee plus an hourly fee after five days of trial. So far, so good.  As the case went on, the outcome must have looked grim for getting paid after the case was over for the hourly part of his fee. That is for the part billed after the services were rendered, and Blinn might be jailed. The client was refusing to negotiate for a plea.  So, Hammerle orally offered to change the hourly billing portion to a flat fee, no matter how long the trial took.  He forgot to check the rule on the change in the fee. Blinn verbally agreed, paid the fee (which is considered earned when paid, as a flat fee), then changed his mind, took a plea and wanted his extra fee back.

After Blinn sued and the courts decided that case Hammerle’s way (statute of limitations was missed by Blinn, but in addition the Court of Appeals went out of its way to say that no malpractice or unjust enrichment occurred), the Supreme Court Disciplinary Commission took over. The parties agreed to a Public Reprimand, for violation of Rule 1.5(a) charging an unreasonable fee, and Rule 1.8(a) entering a business transaction with a client without giving written notice of the desirability of seeking the advice of independent counsel on the change, and securing a written consent to the essential terms of the transaction.

Lawyers — changes to your fee agreements that could be considered to favor you, the lawyer, instead of your client, will be subject to the double whammy of 1.5/1.8.  The Supreme Court said that the fee charged to Blinn was not unreasonable, if properly vetted by the Rule 1.8(a) standards. Without the 1.8 warnings, it was unreasonable (per se?).

Indiana, New York and New Hampshire have this 1.8 rule interpretation, no other reports are in the ABA Annotated Model Rules (6th Ed.).  Is this the future of Rule 1.8 around the nation, or a misstatement of what the law ought to be?  I think the later, but I give written 1.8 warnings, and get written consents  anyway. You should too.

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Calling the judge a pedophile cannot be a good thing

Outbursts at judges make you eligible for a contempt citation, and some deserve the action.  Carlos Romious apparently missed the “civility day” lessons in law school. After one session where Romious asked sitting judge Mountjoy “if the proceeding is a joke” and stating that the judge was “corrupting and stinking up the case” and “corrupting the system” Romious was told to appear to answer to Contempt of Court charges. Normally the smarter lawyer cools off, apologizes to the court and to the judge, and hopes for a fine.  Not Romious.

He appeared ready to fight.  As reported in the Wall Street Journal law blog, he worked himself up to the point where he finally asked Judge Mountjoy: “Are you a pedophile?” 

A four month sentence is a pretty long time to spend in jail for a lawyer trying to keep an office open. I think it would crimp the style, and cause some clients grave concern. But here it sounds about right.  When in the heat of battle, a suggestion: Do not accuse the judge of anything, much less being a pedophile.

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Dope Should Remain in the Pocket

More than one type of dope showed up in Court in New Orleans.  The assistant city attorney for New Orleans had a bit  of dope in his pocket when he appeared in court. That was a dopey thing to do, and he was the dope when a joint of marijuana fell on the floor in front of the two police officers he was chatting with, and who arrested him there.  Not a serious crime, but Jason Cantrell lost his job and was publicly criticized by his wife, a candidate for city council. Lawyers, don’t be a dope.