OBC/BBO HIGHLIGHTS
May 21, 2008
Index
OBC/BBO News
Rules Changes
Bar Discipline Cases
Ethics-Related Decisions
[Highlights Archive]
- Amendment to Mass. R. Prof. C. 1.13 (“organization as a client”)
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. It now permits 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). It changes 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. In addition, the revised comment [9] is designed to reflect more accurately the law regarding the identity of a government client.
- Supreme Judicial Court Requires Registration Of In-House Counsel
By order dated February 4, 2008, the Supreme Judicial Court amended S.J.C. Rule 4:02 to require annual registration with the Board of Bar Overseers by lawyers who are resident and employed as in-house counsel in Massachusetts but not admitted here. The effective date of the amendment is June 1, 2008.
The amendment applies to any such attorneys admitted in another United States jurisdiction, who provide on behalf of a single organization (including a governmental entity) or its organizational affiliates any legal services that constitute the practice of law. The attorney must undertake to limit legal practice in Massachusetts to employment as in-house counsel.
The change is consistent with the 2006 amendments to Rule 5.5 of the Massachusetts Rules of Professional Conduct, subparagraph (d)(1), which now permits a lawyer admitted in another jurisdiction to provide legal services in Massachusetts in-house to an employer, as long as the services do not require pro hac vice admission in a forum.
The amendments to Rule 4:02 will require such in-house counsel to file the annual registration statements and pay annual registration fees. The annual registration statements must identify and be signed by an authorized representative of the organizational employer. The statements must also disclose whether the lawyer is in good standing in each jurisdiction where the lawyer is admitted and, if not in good standing in any such jurisdiction, explain the circumstances. Any attorney registered under this section who changes or terminates his or her employment shall be required to file a supplemental statement of change in information regardless of whether he or she wishes to continue to engage in the practice of law in the Commonwealth as in-house counsel for another organization. Click here for a full copy of the rule. Comparable rules requiring registration of in-house counsel have been adopted in at least 21 other jurisdictions.
Bar Discipline Cases
The following case summaries were compiled by Assistant Bar Counsel Jeffrey D. Woolf.
- The Supreme Judicial Court Affirms Contempt For Lawyer Practicing Law While On Suspension
March 28, 2008
In Matter of Kafkas, 451 Mass. 1001 (2008), the Court affirmed a judgment of contempt against a lawyer and disqualified him from applying for reinstatement for four years from the date of the judgment. The respondent was previously suspended for a term of two years. Matter of Kafkas, 18 Mass. Att’y Disc. R. 342 (2002). While on suspension, the respondent applied for leave to work as a paralegal, which was denied. After two years had passed, the respondent applied for reinstatement. While the petition for reinstatement was pending, the respondent prepared some divorce pleadings for a friend to be filed pro se. In ruling on bar counsel’s contempt petition, the Single Justice held that the respondent’s conduct was either “engaging in the practice of law, or “performing paralegal work,” either of which constituted a violation of the term suspension order. On the respondent’s appeal, the Court affirmed and held that his work constituted both “the practice of law as well as paralegal work” in violation of the term suspension. The Court rejected the respondent’s argument that the papers he prepared could have been completed by a lay person without engaging in the practice of law.
- Lawyer Receives Admonition for Falsely Claiming to Have a Statutory Lien and For Failing to Notify Client Promptly of Receipt of PIP Funds
April 11, 2008
In Matter of the Discipline of an Attorney, 451 Mass. 131 (2008), a lawyer concentrating in plaintiffs’ personal injury litigation and motor vehicle accident cases received an admonition for two specific acts of misconduct: first, falsely claiming to insurance companies in two cases that he had a “statutory” lien (see G.L. c. 221, §50) on any recovery when none existed, because he had been discharged before suit was filed; and second, failing to notify a client promptly of the receipt of motor vehicle “no-fault” benefits (also called “Personal Injury Protection,” or “PIP”; see G.L. c. 90, §34M). As to the latter issue, the respondent unilaterally made the decision to pay all the PIP funds received to medical providers, thus precluding the client from instead allocating a portion of the funds to his lost wages.
On appeal by bar counsel to the full bench of the Supreme Judicial Court from an order of the single justice that had reversed the Board of Bar Overseers and dismissed the complaint, the Court concluded that the respondent’s assertion of a “statutory” “lien on a client's potential recovery when the lawyer knows he has no right to do so plainly constitutes a misrepresentation and is dishonest.” The Court held that the respondent’s conduct violated Mass.R.Prof.C. 8.4(c) and (h). The Court also concluded that the respondent violated Mass.R.Prof.C. 1.15(b), and Rules 1.4(a) and (b), in failing to notify the second client promptly of the receipt of the PIP funds.
The Court also addressed issues raised by bar counsel arising from the fact that the respondent’s contingent fee agreement varied materially from the form contained in Mass.R.Prof.C. 1.5(f). Specifically, the respondent’s standard fee agreement contained clauses not included in the form CFA, including that it purported to give the attorney, if discharged, quantum meruit or one-third of any settlement offer made before discharge, whichever was greater; it gave the attorney a “contractual lien” after discharge on the client’s recovery; and it required the client to arbitrate any unresolved dispute with the respondent concerning fees. In addition, the respondent had clients sign a separate “client authorization form” that, in advance of any recovery or offer, “allowed the attorney to (1) execute documents, including PIP benefit applications and medical payment forms, on the client's behalf; (2) endorse the client's name on any checks received for PIP or medical payments; and (3) hold the funds in the attorney's interest on lawyers' trust account (IOLTA) pending a final settlement or trial of the client's case. The client authorization form also allowed the attorney to charge and take a fee determined at the respondent’s sole discretion from any PIP or medical payments received on behalf of the client.”
While not sanctioning the respondent for using any of the foregoing clauses, the Court said that a lawyer is now “required to explain specifically the meaning of any terms that differ from the model [contingent fee agreement set forth in Mass. R. Prof. C. 1.5(f)] and to obtain the client's written consent to those provisions.” The Court also referred the issues concerning fee agreements to the Standing Advisory Committee on the Rules of Professional Conduct.
- The Supreme Judicial Court Affirms The Suspension Of An Attorney For Not Recording A Mortgage He Gave
December 21, 2007
In Matter of Firstenberger, 450 Mass. 1018 (2007), the Supreme Judicial Court affirmed the order of a single justice suspending the respondent for the term of six months and a day, with reinstatement conditioned on the respondent’s passing the multistate professional responsibility examination. For the single justice decision, see http://www.mass.gov/obcbbo/bd07-014.htm.
The respondent was employed by a mortgage company as vice-president/general counsel. His employer held a second mortgage the respondent had granted on his house. To accommodate the respondent’s refinancing of his first mortgage, the employer agreed to discharge its second mortgage on the condition that the respondent record a replacement second mortgage after the refinancing. The respondent thereafter intentionally and dishonestly failed to record a replacement second mortgage to the employer, giving second and third mortgages to relatives instead. The board recommended a suspension of six months and a day. The single justice agreed and the full bench affirmed the single justice.
On appeal, the respondent argued that the petition for discipline did not provide him with adequate notice of the charges and that he was disciplined for conduct not alleged in the petition. The Court rejected both arguments, concluding that the “basic factual allegations” were “sufficiently alleged in the petition.” The Court also noted that the respondent failed to raise his due process claims before the hearing committee or the board, which were therefore waived, citing Matter of Cobb, 445 Mass. 452, 477 (2005).
- The Supreme Judicial Court Affirms Disbarment Of An Attorney And Rejects Challenges To The Disciplinary Process
December 7, 2007
In Matter of Barbara Johnson, 450 Mass. 165 (2007), the Supreme Judicial Court affirmed the orders of the single justice disbarring the respondent and holding her in contempt of the disbarment order. For the disbarment order of the single justice, see http://www.mass.gov/obcbbo/bd06-039.htm.
A special hearing officer (SHO) found that the respondent engaged in misconduct in three separate matters, and the Board affirmed his findings. In Count I, the respondent posted confidential information on her website that had been impounded by the Juvenile Court and later by the Family and Probate Court. The respondent refused to comply with court orders to remove all references to the materials from her website. In Count II, the respondent improperly deposited an advance fee payment in her personal account, rather than in a trust account. When the clients discharged the respondent and challenged the sufficiency of the amount of the refunded retainer, the respondent failed to place the disputed amount in a trust account. The respondent thereafter posted on her website, without permission, the identities of the former clients and their daughter, “details of [] sexual abuse allegations, and information regarding the fee dispute.” When the clients requested removal of the information from the respondent’s website, “the respondent said that she might remove the information but only if the clients withdrew their complaint with bar counsel.” In Count III, the respondent was found by a court to have filed motions in a wrongful termination case in bad faith, and the respondent or her client were ordered to pay opposing counsel’s legal fees. When no payments were made, the respondent and her client were held in contempt. The respondent then refused to file a proper appeal but later filed a frivolous appeal from subsequent orders and was jailed for contempt for continued failure to pay the outstanding fees and penalties.
In affirming the disbarment of the respondent, the full Court addressed various procedural and substantive bar discipline issues. First, it rejected the respondent’s selective prosecution equal protection challenge, reiterating that “[w]hether bar counsel pursues discipline of others is irrelevant. . . to the respondent’s current disciplinary action.” Second, it upheld the propriety of the SHO’s actions in the hearing to the public when the respondent repeatedly violated a protective order by using various individuals’ real names, instead of pseudonyms as ordered. Third, the Court rejected the respondent’s claims that her posting of confidential information on her website was protected under the First Amendment. Fourth, the Court held that the respondent was not free to ignore lower court orders and challenge them for the first time in disciplinary proceedings.
The Court also upheld the order of the single justice holding the respondent in civil contempt for failing to comply with the terms of the judgment of disbarment, including closing her IOLTA account, giving notice of her disbarment, and submitting an affidavit of compliance. The respondent was “jailed until she purged herself of contempt.” The Court rejected the respondent’s argument on appeal that the Single Justice lacked jurisdiction to find her in contempt where she had appealed the separate disbarment judgment.
All recent bar discipline decisions of the Board of Bar Overseers and the Supreme Judicial Court can be found at Recent Disciplinary Decisions.
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The following case summary was compiled by Assistant Bar Counsel Jeffrey D. Woolf.
- The Supreme Judicial Court Adopts the Common Interest Doctrine and Formally Recognizes Joint Defense Agreements
In Liss v. Studeny, 450 Mass. 473 (2008), the Supreme Judicial Court affirmed the dismissal of a suit by an attorney against his former client, wherein the attorney sought recovery of his fees on a contingent fee case, despite the fact that client was ultimately unsuccessful. Attorney Liss represented Studeny in an employment termination suit. Their fee agreement provided that Liss was not to receive any fees “otherwise than from amounts collected for [Studeny] by [Liss].” After Studeny had advanced $6,500 toward expenses, Liss requested an additional $4,000 for expert and trial expenses. Studeny declined to pay the additional advance for expenses. Liss said he could not properly prepare the case without more funds and moved to withdraw, which was allowed. Studeny proceeded pro se. He defeated the employer’s summary judgment motion but lost at trial.
Liss then filed suit against Studeny, seeking $39,360 in fees for a breach of the contingent fee agreement (CFA) and in quantum meruit. Liss’s suit was dismissed on summary judgment. On appeal, the Court affirmed dismissal of the contract claims, noting the CFA did not require Studeny to advance additional funds except as jointly determined. Therefore, Liss’s claims of breach of contract and breach of the implied covenant of good faith and fair dealing both failed.
The Court also rejected Liss’s claim for quantum meruit. It found that Liss had conferred a benefit on Studeny in that his efforts allowed Studeny to take his case to trial. The Court, however, rejected Liss’s argument that the right to recover in quantum meruit accrued at the time of the client’s breach of the CFA and agreed with Studeny’s argument that the right to recover on a contingent fee case does not occur until the contingency is realized, i.e., a recovery in the underlying case. The Court noted that quantum meruit is based upon unjust enrichment and the defeat of a person’s reasonable expectations. Here, because the CFA explicitly said that Studeny would not be liable to pay compensation “except from amounts collected,” the reasonable expectation would be that no fee would be paid unless there was a recovery. Moreover, the Court noted that, since the CFA did not state that Studeny would owe an attorney’s fee even if the case was unsuccessful, requiring compensation “would run counter to Mass.R.Prof.C. 1.5(c)(4),” which requires a contingent fee contract to state “whether and to what extent the client is to be liable to pay compensation otherwise than from amounts collected for him or her by the lawyer.” Therefore, “as a general rule,” there can be no quantum meruit recovery in a contingent fee case “where the contingency has not occurred.” The Court also noted, as a practical matter, the difficulty in valuing an attorney’s fee, in the absence of a recovery for the client. The Court expressly declined to decide whether an attorney could ever collect on a CFA after being discharged by the client or after the attorney had withdrawn because of the client’s breach.
- The Supreme Judicial Court Declines To Review Decisions Of The Clients’ Security Board In Two Cases
The Supreme Judicial Court recently decided two cases, Indeck v. Clients’ Security Board, 450 Mass. 379 (2008), and Audoire v. Clients’ Security Board, 450 Mass. 388 (2008), concerning awards made by the Clients’ Security Board. In both cases, the Court held that decisions of the CSB are not subject to judicial review.
Indeck involved a claim of misappropriation by a former client of Morris Goldings (disbarred in 2001, see http://www.mass.gov/obcbbo/bd01-005.htm). The CSB awarded Indeck $150,000 of a claim for reimbursement of $569,000 (the amount of Indeck’s claim as recognized by the Bankruptcy Court in a related proceeding). After the CSB denied Indeck’s request for reconsideration, she filed suit, seeking certiorari review under G.L. c. 249, § 4. Under S.J.C. Rule 4:05, §1, all CSB payments are “a matter of grace, not right, and no client . . . or other person [has] any right or interest in the Fund.” Therefore, Indeck had no “justiciable right” to challenge the decision of the CSB and no right to certiorari review.
Audoire arose from misappropriation by Shirley Hoak (disbarred in 2001, see http://www.mass.gov/obcbbo/bd01-048.htm). A settlement trust was formed to settle claims against Hoak and to distribute the proceeds of her malpractice insurance. The trust initially paid the claimant $50,853.50. Audoire then filed a claim with the CSB, which awarded Audoire $152,560.50. Pursuant to Rule 4:05(4), the CSB award was expressly conditioned on the claimant’s execution of an assignment to the CSB of future distributions from the settlement trust, up to the amount of the CSB award. Audoire signed and returned the assignment to the CSB, and thereafter received payment from it. When the settlement trust decided to make an additional distribution to Audoire, the CSB claimed it pursuant to the assignment agreement. Audoire objected to the CSB’s claim, alleging that execution of the assignment agreement was “induced by threat of delayed distribution” of the CSB award and that it was secured “without the advice of counsel.” The Court concluded that the CSB’s decision to condition reimbursement on the execution of an assignment agreement was not subject to judicial review. It also held that the complaint, seeking a declaration that the assignment was invalid, failed to state a claim upon which relief could be granted and was properly dismissed.
- The Supreme Judicial Court Adopts the Common Interest Doctrine and Formally Recognizes Joint Defense Agreements
In Hanover Ins. Co. v. Rapo & Jensen Insurance Services, 449 Mass. 609 (2007), the Supreme Judicial Court, in a case of first impression, 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 reversed a discovery order by the Superior Court and adopted Section 76(1) of the Restatement (Third) of the Law Governing Lawyers pertaining to joint defense agreements. The “common interest doctrine” extends the attorney-client privilege to privileged communications, shared in confidence, with another party’s counsel in furtherance of a common legal interest. After tracing the history of both the attorney-client privilege and the common interest doctrine, the Court noted that joint defense arrangements had in fact been used in criminal cases in Massachusetts and the federal court for many years. The Court stated there “is no reason to treat confidential client communications differently when shared with an attorney representing a client having a common interest where the purpose for sharing is to provide a free flow of information essential to providing the best available legal services to the client.” 449 Mass. at 616. The Court also held that the ignorance of two of the clients that their attorneys were sharing information did not violate Mass.R.Prof.C. 1.6(a), although securing a client’s consent before sharing such information was preferable. It noted that comment [7] to the rule permits a lawyer to disclose information “when appropriate in carrying out the representation,” and that when “attorneys share privileged client information in order to provide the best legal services to their respective clients in the matter at hand,” this constitutes the assertion of the joint defense privilege “under the common interest doctrine.”
The Court also rejected other arguments against the asserted privilege. It held that the common interest doctrine does not require a written joint defense agreement. The Court endorsed an expansive view of the “common legal interest,” saying the interests of the clients do not have to be identical but only “a sufficiently similar interest.” Finally, it held that the narrative portion of counsel’s legal bills might contain the attorney’s work product (mental impressions or legal theories) and therefore might be covered by the joint defense agreement. The case was remanded to permit the Superior Court to determine whether the defendants had entered into a valid joint defense agreement and whether the bills contained work product.
- The Supreme Judicial Court Holds That the Public Records law Does Not Preclude the Attorney-Client Privilege for Government Agencies and Employees
In Suffolk Construction Co., Inc. v. Division of Capital Asset Management, 449 Mass. 444 (2007), the Supreme Judicial Court held that the public records law, G.L. c. 66, §10 and G.L. c. 4, §7, did not abrogate the attorney-client privilege for public officers and governmental employees, and that confidential communications for the purpose of legal advice or assistance “are protected under the normal rules for attorney-client privilege.” Id. at 450. Suffolk Construction, the general contractor for the John Adams Courthouse renovation, sued DCAM over payment of construction costs and made two public records requests. When DCAM withheld certain documents on the grounds of attorney-client privilege, Suffolk sued for declaratory relief under the public records law. The Superior Court reported the question of whether the public records law precludes the protection of the attorney-client privilege, and the Supreme Judicial Court took direct appellate review.
In answering the question in the negative, the Court held that the attorney-client privilege applies in the public sector. The Court distinguished General Elect. Co. v. Department of Environmental Protection, 429 Mass. 798 (1999), where it held there was no implied exemption in the public records law for information otherwise covered by the attorney work-product protection, in part because the public records law expressly provides for a more limited immunity for work product. It rejected the argument, based on legislative history, that the affirmative elimination of a proposed exemption for attorney-client privilege from the final version of the public records law supported the argument that no such privilege existed. The Court likewise rejected the argument that unsuccessful attempts to amend the public records law to include an explicit attorney-client privilege exemption meant that no such privilege existed.
The Court also noted that, in the absence of an attorney-client privilege for government officers and agencies, their attorneys would not be able to act competently (by providing advice on how to meet their obligations to the public), as required by Mass.R.Prof.C. 1.1, and to maintain the confidentiality of information, as required by Rule 1.6. Id. at 450. The Court also declined to interpret comment [6] to Rule 1.13 (Organization as a Client) as limiting the attorney-client privilege when the client is the government, stating instead that different laws and regulations may be adopted concerning client confidentiality.
All recent bar discipline decisions of the Board of Bar Overseers and the Supreme Judicial Court can be found at Recent Disciplinary Decisions of the Supreme Court.
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