Slap for not Following Trial or Appellate Rules; CFAF & Attorney Surrogate Issues: Outing your Client, not a good thing: Let’s Party

Lawyers Need to Know (or read) and Follow Rules

It seems to be painful to be a stickler for rules (which appellate judges often are) and read some appellate submissions.  From time to time the Court of Appeals will send a subtle message to the Bar about the quality of advocacy, but subtly was not the tool used in Judge Bradford’s opinion in Duensing v. Johnson.  The appellate lawyer was 3 for 3 in footnotes admonishing him for rules violations or for confusing the court. A couple other chiding comments come through over the weakness of the arguments submitted.

Appellee lawyer also took a shot for citing a NFP opinion as authority for an argument as well.

Read the case and remember that some trial judges also expect the lawyers to know the difference between different kinds of motions made at different times in the trial.

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Hamilton the Birdman – Two Lessons in One Headline:  What do you know about CFAF? How are you with the Attorney Surrogate Rule?

Bradley Hamilton, a Kokomo lawyer appears to have closed shop and fled to Australia.  He had some notoriety in the Howard County area for his willingness to “flip the bird” to news cameras.  The story reports that several clients had paid funds to Hamilton, and may have lost their retainers.  No criminal charges have yet been filed.

Local Kokomo lawyer Brent Dechert is stepping up to help the clients of Hamilton.  He filed a Petition for Appointment of an Attorney Surrogate* to allow him to access the files and trust account of Hamilton.  The Petition was granted and Dechert has given public notice of the appointment.  This results in the clients getting their files back, or transferred to a new lawyer who will work with them on their matters. Dechert said that he does not handle the kinds of cases Hamilton did, so there is little likelihood that he will take over many of the cases.

Not reported in the article is the existence of the Clients Financial Assistance Fund, of the Indiana State Bar Association.**  The fund, created by the  ISBA several decades ago, provides a partial remedy to those clients who have had funds stolen from them by their lawyer.  An individual client can recover up to $15,000 with a standing cap of $50,000  total reimbursement for all client losses due to the acts of a single lawyer.

The CFAF committee meets as needed (and fortunately it is not needed too often) to consider and investigate claims.  The funds in the CFAF are a part of the annual dues of ISBA members. The claim application is available.at the ISBA website here.

*  I am chair of the ISBA Special Committee on Attorney Surrogate Rule

**  I served more than ten years as a member of the Clients Financial Assistance Fund Committee for the ISBA.

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Sharing evidence on YouTube can get you suspended.

An IL lawyer thought his client was entrapped by police in a drug bust, so he posted the undercover video taken by the police online.  He titled the video  “Cops and Task Force Planting Drugs.”

By doing so he exposed a confidential informant of the police department, and he violated the client’s confidentiality without informed consent. The Disciplinary Counsel also accused Jesse Raymond Gilsdorf of Mount Sterling, IL with implying police wrongdoing without evidence to back up the charge.

Apparently he watched the video on a small monitor and thought it showed entrapment, but after posting the video, and then seeing the recording on a large screen monitor realized it proved the client’s guilt. She took a plea, he got charged.

The IL Hearing Board recommended a five month suspension of Gilsdorf’s license.  We will see what happens.

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Party in Rochester, courtesy of PWP

This Friday, the Peterson Waggoner & Perkins law firm will host “A Grand Night for Music III.” It is an occasional celebration for clients and friends of the law firm  The Atlanta Music Hall Band, straight from Atlanta Music Hall in Atlanta IN, will perform Swing and Jazz standards, and the dance floor will be out. Love to have you here. Call the office for tickets.

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How Stupid is that Other Party?; Should I Push that Client?; Extra Punishment for Public Officials; Ogden Update

Legal writing experts tell lawyers to be careful with tone and expressions of disdain or dismissive attitudes towards opponents in motions and briefs.  And lawyers understand (usually) that what might work in traffic court should not be tried in Federal Circuit Courts of Appeals.  And lawyers who represent big clients, like State Farm Auto ought to expect extra scrutiny from courts and judges (mostly due to the respect courts often are suspected of giving to the biglaw lawyer types who represent the big companies.

Imagine what the discussion with General Counsel for State Farm was for the lawyers in Bennett v. State Farm earlier this week.  The Sixth Circuit Court of Appeals (one level below the US Supreme Court in the judicial hierarchy) mocked the insurance company’s lawyers for their brief opposing the efforts of the Bennetts to get what they had coming from Mrs. Bennett being struck while walking her dog.

The opening sentence of the opinion states:

There are good reasons not to call an opponent’s

argument “ridiculous,” which is what State Farm calls Barbara Bennett’s principal argument here. The reasons include civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief); and that, even where the record supports an extreme modifier, “the better practice is usually to lay out the facts and let the court reach its own conclusions.”[citations omitted]  But here the biggest reason is more simple: the argument that State Farm derides as ridiculous is instead correct. (emphasis is added).

Oops.  That qualifies as a slapdown.  Now we don’t know which lawyer of the team of Richard M. Garner or Gregory H. Collins, both Ohio lawyers, gets credit for the brief, but the other probably had an opportunity to say “maybe we ought to read our client’s insurance policy before we ask the court to ignore the definition plaintiff is asking for.”

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Clients in dissolution cases can be difficult. they are going through a stressful time in their lives. They often have to deal with their lawyer, the spouse, the spouse’s lawyer, and maybe the kids.  you expect them to lose their cool on occasion.

Lawyers are to be the professionals, even when our client is not dealing well with matters.as well as we want.  Kokomo lawyer Dan May, a long time practitioner, forgot for a moment.

The details are sketchy, but include him shoving the client over the courtroom railing, a battery charge, a diversion agreement, and now a 60 days suspension with automatic reinstatement.

As Sgt. Esterhaus used to say:

http://www.youtube.com/watch?v=Jmg86CRBBtw

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We appreciate our public officials in strange ways.  We pay them less than they could make as practicing lawyers (at least that is the myth – see the SSF Conference Salary Survey report here from 2007).  Then when a public official has a bad moment, we hold her to a higher standard.

Lori Hittle is a part-time deputy prosecutor in Howard County.  She pleaded guilty to OVWI.  Took her punishment in court, got a month suspension from her job without pay, and now gets a public reprimand. That is a bit more than the normal lawyer gets for such an offense, often getting a private reprimand with JLAP provisions.

But we hold public officials to a stricter standard.

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Finally, Paul Ogden update.

I have commented on the Ogden disciplinary case several times, like here, and here. Paul writes about it on his blog with more regularity than most would. Tuesday Ogden said that the Disciplinary Commission is seeking a one year suspension in his post here. He follows up with more commentary in Thursday’s post here.

I will let Paul Ogden speak for himself.  The issues are complex, and important. As a lawyer, you need to think about them.  If you are not a lawyer, you ought to consider where your rights to speak freely are if the lawyers lose their rights.

Lawyer’s Speech and Advertising – Trouble in the Making

Ethnic Slurs Will Not Be Tolerated

“Your client doesn’t understand what laws and court orders mean I guess. Probably because she’s an illegal alien to begin with.”

The lesson of Joe Barker is to not use this method of trying to resolve a parenting time issue. At least I hope that is the lesson, because the only other potentially “burdensome” act is to state that “we’ll be demanding she be put in JAIL for contempt of court.” (emphasis in original).

The Indiana Disciplinary Commission filed charges and the Supreme Court imposed a 30 days suspension from the practice effective Oct. 14, but not allowing Barker to undertake new legal matters between Sept. 6 and Nov. 14.

Costly outburst, for aggressive advocacy.  No prior disciplinary issues, but Barker “has no insight into his misconduct.” Charges filed in 2010, and just now being concluded.  This matter was heard by Judge Kim Brown acting as the hearing officer for the Indiana Supreme Court.  Judge Brown has her own problems now with the Judicial Qualifications Comm. and one of the charges she must answer to related to the length of time she took in completing this matter.

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Faxing Those Canned Newsletters as a Means of Advertising 

Many of us get and a few of us have used the canned newsletters that inform our clients and potential clients that we are current on some legal topic or another.  And 25 years ago the fax machine helped make sharing our knowledge as cheap as the price of a phone call.  Now with the internet, it is even cheaper, unless!

Greg Turza, an IL lawyer got caught up in the practice of faxing newsletters to lots of folk.  He had 200 people or businesses he would fax his newsletters to.  He forgot to read the articles about the Telephone Consumer Protection Act of 1991, 47 USC 227.  But a few of the recipients did not overlook that issue.  The federal law states that senders must have consent to fax advertising materials, and that unwanted faxes must have opt-out provisions on the materials. The penalty is $500 per fax, per recipient. Oops.

$4,215,000 penalty and judgment against Turza for 8,430 faxes was upheld in the 7th Circuit. Will he pay it?  If he does, then the opinion by J. Easterbrook takes on some interesting aspects with what happens to the damage award.  It looks like the lawyers will demand their $1,430,055.90, and lead plaintiff will expect his $7,500 for the 32 faxes (seems like it should have been $16,000).  Who after that will get paid?  Remanded to determine after the $1.437M is paid into the court.

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Lawyer’s Speech and Paul Ogden

Anyone who cares about the boundaries of lawyers’ freedom of speech rights and the consequences of the disciplinary process in Indiana must pay attention to the ongoing saga of Indy lawyer (for now) Paul Ogden and his long battle with the Disciplinary Commission, former Executive Director Don Lundberg, current Executive Director Mike Witte, the Supreme Court, and a Hendrick County judge in a seemly private email.

You can catch up by following this link to Ogden’s blog site, the tagline Disciplinary Commission, where it appears he is telling his side of the story. He also links to the Indiana Business Journal’s editorial on the priorities that the Disciplinary Commission has shown in pursuing Ogden instead of others, including Paul Page, David Wyser and the handling of William Conour.

The current DI matter, criticizing a judge in violation of the rules. has been heard by the hearing officer who will make findings and a recommendation to the Supreme Court.  Ogden predicts that he will lose his law license.

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Seeking Recusal as a Basis for Discipline? 

In a story that has not made local impact, except for Ogden’s blog, a pro-life website Life Site News in 2009 reported that a couple of local lawyers were seeking the recusal of a South Bend judge due to perceived prejudices of the judge’s husband, a noted advocate for abortion rights. The defendants before the judge were pro-life advocates arrested for protesting on the Notre Dame campus when President Obama spoke at graduation.

Ogden reports, and I have verified by the Clerk of the Supreme Court Docket Sheet, that disciplinary charges are on file against Thomas M. Dixon and David A. Wemhoff, the lawyers in the ND88 case.  The docket sheet does not inform the nature of the charge, but Ogden says the recusal issue, as an unwarranted attack on the judge is at the heart of the matter.

This will also bear watching, if you have a tendency to speak the truth to power, or try to protect your clients from a judge who should not hear a particular case for a particular litigant.

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I remembered these matters last week, when I got a call from a lawyer in Indianapolis, to ask about the judicial temperament and other qualities of a certain judge in Northern Indiana.

I apologize to you in advance, but for now, if you call and ask about the character, quality or work ethics of any judge, please understand that my “walks on water” response might be code.  Or it might not.

In my opinion, lawyers must be able to state facts and reasonable (to the reasonable person standard) opinions about judges in pleadings, (especially in recusal motions) and in conversations with clients, lawyers and the courts.  Judge Witte benefitted from those kinds of comments in his time on the bench, and in moving to the Commission. Other judges should have that benefit, or if they are poor judges, that burden.  We do this justice thing for those standing before the bench, not for the one on the bench or the ones at the bar.

It is dangerous if we lawyers cannot protect the rights of our clients, under the rules, by seeking the recusal of judges who are bad fits for the clients’ cases, just like we are duty bound to seek the dismissal of a juror who has some bias or prejudice against our client.

KEEP A WATCH OUT,  as Indy lawyer Patrick Olmstead and I will be speaking on advertising and ethics at the 2014 Solo and Small Firm Conference in June 2014, at French Lick.

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

“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

Report the Claim; Trust Account Abuse

Lawyer Messed Up Deal, Better Report

Koransky Bouwer & Poracky P.C. had an associate mess up. It ended up in Federal Court, then the 7th Cir. <here>.  Lots to put on the back of an associate.

The young associate filed a signed contract rather than send it to the parties as evidence that the deal was completed. The party not represented by the firm withdrew its acceptance before delivery of the contract to all parties, black letter law allows that. Client is justifiably upset.

While this is going on, the law firm that the associate works for, Koransky & Bouwer, renews its malpractice coverage with The Bar Plan, its professional liability carrier. In the process, there is a question that reads something like “are there any claims or potential claims in existence, now or before we renew?”  Firm, which knew about this problem, with one of the name partners being involved in the matter, said “no problem” [or words to that effect].

Client, not happy to have lost the contract sues the firm, who turns the complaint over to the PLP company.  It says something like “wait, from these dates and all, it appears you knew of this claim when you renewed your insurance, and you did not tell us.” Another black letter issue in the law is that a misstatement in an insurance application will void the application. So the Bar Plan says: “We have no duty to defend or pay for the claim!” K&B filed for declaratory judgment on that issue in ND Ind. federal court, the trial court said “sorry law firm, no coverage.” The 7th Circuit agreed.
Lesson? The quick response application often found in policy renewals is not your friend. Your duty to disclose still exists. Does that mean you must report every disgruntled client who might conceivably file a claim? This blog does not offer legal advice, but I recommend you read the underlying policy about when you need to submit a timely claim.

One lawyer has suggested that the insurance company should be required to show that it was prejudiced by the delay in the notice, but that is not the current state of the law, in this Circuit.

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Watch the Trust Account

Edguardo Martinez Suarez is a Hamilton County lawyer, with a pattern of trust account problems. In 2006 he bounced a trust account check, which automatically brought the Disciplinary Commission in via the rule of mandatory reporting of bounced trust checks by a bank holding an IOLTA account. Suarez said “it is a mistake” but could not show how the mistake occurred. In 2009 the Commission demanded a CPA audit of the account, but the CPA reported there was a lack of documents to allow for an audit.

With that, the Commission started an in-house audit. The Supreme Court characterized the findings as many “violations, which took place from 2006 through 2012, includ[ing] at least six instances of paying personal and business expenses from the trust account, 55 instances of disbursing funds in excess of the amount held in trust for each corresponding client, and making 14 cash withdrawals.”

Then to compound problems he committed another violation, keeping more than “a nominal balance of” personal funds commingled to protect the account. But the court, in reviewing the Agreed Stipulation with Suarez, found three good things: no prior discipline history; no selfish motive on Suarez’s part; and, no client lost any funds from his violations.

The parties agreed to a 60 day suspension, stayed with two years probation. For two years he must: 1) maintain his trust account in accordance with the Disciplinary Commission’s 51 page white paper on Trust Account Management: Handling Client and Third Party Funds most recently updated in March 2012; 2) Have the Trust Account monitored by a CPA approved by the Commission, and have quarterly reports made to the Commission; and, 3) Agree that a violation of probation will cause the 60 day suspension to go into effect, and there will be no automatic reinstatement after the suspension. Finally, at the end of probation Suarez will be required to petition for dismissal of the probation. Somehow he was not ordered into the CLE on trust account management.

Seems like an appropriate disposition, as no clients were harmed by the mistakes. Management of the trust account is one of the most critical skills an attorney with trust account duties must have. Failure there is a ticket to Discipline World, and it is tough to get out with your skin intact.

There are CLE courses on Trust Account management, the DC staff often are speakers. Indiana’s Solo and Small Firm Conference has done sessions on this in 2004 and 2007, and likely will do more. ISBA-CLE and ICLEF do sessions annually. A great book is out there by one of the ABA’s most successful writers, Jay Foonberg titled “The ABA Guide to Lawyer Trust Accounts” (my version is dated 1996.)

Protect yourself and your clients and your license. Review Rule 1.15 of the Rules of Professional Conduct, and Admission & Discipline Rule 23 Sec. 29-30, and Overdraft Rule 2.

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.

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.

Fraud is trouble; Theft from Child; Research Issues; Epic Trust Fund Breach

FRAUD LEADS TO TROUBLE
Indianapolis lawyer Paul J. Page has agreed to plead guilty for his scheme to defraud a bank. Hard to tell whether this is a business deal gone bad (which even by a lawyer is not a big concern of this blog) or a bad thing done in his role as a lawyer.

More interesting is all that is written about his friend and colleague, former Indy Prosecutor Carl Brizzi.  Too early to tell if Page’s fraud leads to Brizzi trouble, but I smell smoke in the air.

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ELKHART LAWYER STEALS FROM CHILD’S FUND

Juan Garcia Jr., an Elkhart In. lawyer has pleaded guilty to stealing the funds of a child, whose funds from a personal injury settlement were placed in trust with Garcia by the child’s guardian. When the guardian noticed some discrepancies, she met with Garcia who tried to bribe her to remain silent. The bribe money also came from the child’s funds. The guardian took the bribe money to the police, and the charges followed.

One interesting aspect is to read the subscribers’ comments to the news story on this case from the Elkhart Truth.

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UPDATE YOUR RESEARCH

The lesson from the Thul case out of ND IL federal court is to update your research.  Biglaw firm Skadden Arps lawyers filed Motion to Dismiss (as usual), but did not cite the recent (2012) 7th Cir. case on the basis for their motion. Trial judge went ballistic.  Their action he said “likely amounted to conduct sanctionable under FRCP 11(b)(2) and 28 USC 1927.”  The judge has set a hearing for Jan 17, but by today, Jan. 10,  all three lawyers from Skadden shall “show cause in writing … why they should not be sanctioned” in any of four ways set out in the opinion, and must “appear in person” for what sounds like a slap down by the judge.  Ouch.

Just a reminder that the best daily blog for keeping up with legal issues in Indiana is still the Indiana Law Blog, written by Marcia Oddi.  I owe her my thanks for many of the cases I can give you a bit different look at.

I check ILB regularly, and so should you.

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BUYING TRUST ACCOUNT TROUBLES?
A trust account is a serious matter. Written about before here, it is not a personal checking account, not a place for your funds, not a line of credit for your office and not something to be taken lightly. You never want the Supreme Court to call your handling of your trust account an “ethical failure of epic proportions” as the Wisconsin court did for Joe Weigel.

The now former lawyer found out the hard way. It started with a seemingly innocent act. Weigel worked for a lawyer in Wisconsin, and eventually bought his practice (permitted under IN RPC 1.17) in 1999. While working there he “knew of a deficit in the trust account” but did not research that until after he and his new partners bought Alvin Eisenberg out.  He said he thought the problem was only $200-250 thousand. In reality, the deficit was near a million dollars. But he had bought the practice anyway.

He did not report Eisenberg to the WI Disciplinary Commission at the time that he worked there or when he bought the practice. When asked, Weigel responded, “I thought of it but just made a moral decision not to do that.”

Not the kind of “moral decisions” that lawyers should make. For 13 years Weigel juggled the books, borrowing from one client to pay another, or holding the funds due a third-party to pay someone in a different case. Finally his luck ran out, he got caught and now is out of the profession.

If you have a trust account problem, fix it immediately. This is a place where self-reporting with counsel at your side should be considered.

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.