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January 2008

2007: The Year in Ethics and Bar Discipline

Constance V. Vecchione, Bar Counsel

To start the new year, this column offers a review of some important cases decided and rules changes made in 2007 that involve professional ethics and bar discipline.

Full bench disciplinary decisions

The Supreme Judicial Court issued 16 full-bench opinions in bar discipline matters in 2007, a significantly higher number than in previous years. Several cases required consideration of presumptive or mandatory sanctions.

The presumptive sanctions for misuse of client or fiduciary funds announced in Matter of the Discipline of an Attorney and Two Companion Cases, 392 Mass. 827 (1984), and Matter of Schoepfer, 426 Mass. 183 (1997), were again reaffirmed in four cases, Matter of Grossman, 448 Mass 151 (2007; Matter of Hilson, 448 Mass. 603 (2007); Matter of LiBassi, 449 Mass. 1014 (2007); and Matter of McBride, 449 Mass. 154 (2007). Although there were other significant issues in each case, the disposition—indefinite suspension in Grossman and Hilson, disbarment in LiBassi and McBride—was largely determined by applying the Schoepfer standards for intentional misuse of trust funds with deprivation resulting to the intended recipient. Of special import in this respect is the Court’s holding in LiBassi that “[r]ecovery obtained through court action ‘is not ‘restitution’ for purposes of choosing an appropriate sanction,’” and does not act to reduce what would otherwise be disbarment to indefinite suspension.

The Schoepfer standards—in this case, the presumptive sanctions for negligent, rather than intentional, misuse of trust funds—and the lawyer’s state of mind were also central to the public reprimand ordered in Matter of Franchitto, 448 Mass. 1007 (2007). The lawyer’s client, a lender, funded mortgage loans that it had engaged him to close with checks that, unknown to the lawyer, did not satisfy the good funds statute. The lender then stopped payment on the checks, but the lawyer was unaware of the resulting deficit in his IOLTA account until after the closings had occurred. While attempting, at great length but unsuccessfully, to recover the missing funds, the lawyer conducted two additional closings for different clients but failed to inform the participants of the risk, which was realized, that there would be insufficient funds in his IOLTA account to pay disbursements. The lawyer was a victim of his lender client’s fraud, self-reported the problem to the Board of Bar Overseers, and committed the misconduct as a result of lapses of judgment under stressful circumstances.

The Court also addressed presumptive sanctions in connection with felony convictions in the practice of law. In Matter of Driscoll, 447 Mass. 678 (2006), the lawyer pleaded guilty to making false statements to a federally-insured lender in connection with a refinance closing he handled for his long-time secretary. The basis of the charge was that the lawyer notarized the signature of the secretary’s husband on the loan documents when the husband had not signed them in the lawyer’s presence. He did so in reliance upon his secretary’s (false) statement that her husband had signed the papers. Recognizing that disbarment is the standard sanction for felonies committed in the practice of law but that improper notarizations without intent to defraud have generally resulted in admonitions, the Court imposed a one-year suspension.

In a related vein, Matter of Moore, 449 Mass. 1009 (2007), addressed the mandatory (as opposed to standard or presumptive) sanction prescribed by S. J. C. Rule 4:01, § 17(8), for engaging in legal work while suspended. In Moore, a suspended attorney gave legal advice in an immigration matter and was found in contempt of his suspension order. The Court, as required by § 17(8), doubled the original two-year suspension from the date of the order of contempt.

Conflicts of interest were the subject of three full bench disciplinary decisions. In each of these cases, the Court determined the sanction by assessing the attorney’s intent as well as the harm or potential for harm caused by the breach. Thus, in Matter of Wainwright, 448 Mass. 378 (2007), two attorneys who practiced together and represented two clients with adverse interests in a transaction received public reprimands. The clients were aware of the dual representation, and the lawyers’ violations in failing to make full disclosure were errors of “omission rather than commission.” In Matter of Discipline of an Attorney, 449 Mass. 1001 (2007), the lawyer received an admonition for a conflict of interest between father and son clients. The violation involved an isolated incident not motivated by self-interest. And in Matter of Carnahan, 449 Mass. 1003 (2007), the lawyer received a public reprimand for a conflict of interest between an elderly client and another client who owed the elderly client money. The violation did not involve self-dealing or substantial harm and the lawyer thought that he was doing what the elderly client wanted.

Lawyers who write references for candidates for admission to the bar should take note of Matter of Slavitt, 449 Mass. 25 (2007). The Court imposed a two-month suspension on an attorney for false statements in a letter of recommendation to the Board of Bar Examiners and “underscore[d]…the importance of the integrity of the system for keeping from membership in the bar applicants who have demonstrated their unfitness.”

Related civil cases

Two civil cases decided in 2007 clarified critical issues relating to attorney-client privilege. In Suffolk Construction Co, Inc.. v. Division of Capital Asset Management, 449 Mass. 444 (2007), the Court stated explicitly that “confidential communications between public officers and employees and governmental entities and their legal counsel, undertaken for the purpose of obtaining legal advice or assistance, are protected under the normal rules of the attorney-client privilege” and that the Legislature did not intend to extinguish the privilege by the enactment of the public records law.

In the other case, Hanover Ins. v. Rapo & Jepsen Ins. Services, Inc., 449 Mass. 609 (2007), the Court formally recognized that joint defense (or joint prosecution) agreements may create an exception to the waiver of attorney-client privilege under the common interest doctrine. The Court adopted the principle set forth in the Restatement (Third) of the Law Governing Lawyers, § 76(1) (2000), that when lawyers representing clients with a common interest agree to an exchange of information that otherwise qualifies as privileged, the communication is privileged as against third persons.

Rules changes

By order dated November 28, 2007 and effective January 1, 2008, the Court amended Mass. R. Prof. C. 1.13 (“organization as a client”) to be consistent with the current version of the ABA model rule. Many of the changes are stylistic or grammatical and do not reflect changes in substance. However, paragraph (c) of the revised rule now creates an additional exception to the confidentiality requirements of Rule 1.6 by permitting a lawyer for an organization to reveal information relating to a violation of law if the lawyer believes that the violation is reasonably certain to result in a substantial injury to the organization. Paragraph (f) clarifies the scienter requirement when a lawyer for an organization is obligated to explain the client’s identity to constituents of the organization (such as employees), changing the language of the rule from “when it is apparent” the interests of the constituent and the organization are adverse to “when the lawyer knows or reasonably should know” this is so. And revised comment [9] is designed to reflect more accurately the law regarding the identity of a government client.

One final matter of interest to the bar is the follow-up to an order issued by the Court effective September 2006, amending S.J.C. Rule 4:02 to require that lawyers certify in their annual registration statements to the BBO whether or not they are covered by professional liability insurance. After collecting this information for a full one-year registration cycle, the Board as of September 2007 is now posting the data online at For each registered attorney on active status, the website indicates that the attorney has certified either that the attorney does maintain malpractice insurance coverage, does not maintain malpractice coverage, or does not maintain malpractice coverage because the attorney is solely employed either as a government lawyer or by an organizational client. Statistics for FY 2007 suggest that approximately 78% of active lawyers in private practice maintain malpractice insurance.

Rule 4:02 also requires lawyers to notify the Board in writing within 30 days if coverage lapses or terminates for any reason without substitute coverage. It further provides that failing to comply with these provisions or providing false information will subject lawyers to administrative suspension and appropriate disciplinary action.

The full text of the bar discipline decisions and summaries of important cases addressing the rules of professional conduct are found at the Office of Bar Counsel website, Keep current and have a happy new year.

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