Washington Lawyer

Bar Counsel: Got Conflicts?

From Washington Lawyer, December 2006

By Asma Naeem

barcounsel Conflict of interest is one of those legal terms that has successfully entered the vernacular. Everybody seems to have one.

We in the Office of Bar Counsel frequently encounter members of the public complaining to our office that their attorneys are unethical because of conflicts of interest. And even though we all “get” conflicts—we can explain the meaning of the term with great ease—the concept is much more difficult to recognize when we ourselves are immersed in a situation that requires us to disclose the potential conflict, obtain informed consent, or withdraw, as discussed in Rules 1.7 through 1.13 of the D.C. Rules of Professional Conduct.

Conflicts don’t just happen in big firms with poor conflict check strategies in place. They happen to the solo practitioner and to the government lawyer—to any attorney who fails to act reasonably in a situation. The cases below, dealing specifically with Rule 1.7, suggest that conflicts often occur because of lack of forethought, emotional attachment, self-delusion, or just plain old greed.[1]

A case in point is In re Hager,[2] in which the attorney argued that he did not engage in a conflict of interest by secretly accepting $225,000 (to be shared with co-counsel) from the opposing party, a head lice shampoo manufacturer, because he was able to secure for his plaintiff clients, inter alia, full purchase price refunds and changes in the labeling of the product.[3] The covert fee was part of a settlement agreement that contained many other terms that the respondent and co-counsel agreed not to share with their clients. Specifically, the settlement agreement provided that the attorneys were to keep confidential any information about the product that was gained during their representation, cease litigating against the manufacturer on behalf of their current clients, and refrain from representing anyone with similar claims against the manufacturer in the future.[4]

Following the acceptance of the settlement agreement, the attorneys wrote a misleading letter to the 90 consumers disclosing only those terms permitted by the settlement agreement and claiming that “the inherent scientific and legal difficulties in successfully prosecuting such a class action, together with the willingness of Warner-Lambert to make what we consider to be reasonable changes in its marketing of [the shampoo], have led [us] to the decision to abandon any further efforts. . . .”[5] Because of the disingenuous nature of this statement and other representations to the clients, the District of Columbia Court of Appeals found that the respondent was dishonest and failed to keep his clients informed, in violation of Rules 8.4(c) and 1.4(a), respectively.[6]

In fact, the court rejected all of the respondent’s various explanations for his behavior, finding that he had violated eight rules in all and suspending him for one year, with reinstatement conditioned on the disgorgement of his share of the fee.[7] Regarding his obligations under Rules 1.7(b)(4) and 1.8(e), the court stated, “The respondent faced a classic conflict of interest—his interest in maximizing his fee versus his clients’ interest in maximizing the amount paid to them.”[8] Specifically, Rule 1.7(b)(4) prohibits a lawyer from representing a client if “[t]he lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interests in a third party or the lawyer’s own financial . . . interests.”

This prohibition does not apply across the board, however. Rule 1.7(c), and to some extent Rule 1.8(e), allow for such conflicts to be waived if the lawyer fully discloses the nature of the potential conflict to his or her client and obtains consent. This makes complete sense in light of an attorney’s other ethical obligations, such as the duty to communicate and be honest, and the overall presumption of the rules to safeguard the rights and interests of the client.

In Hager the respondent’s refusal to disclose the fee offer to his clients was not only a deliberate withholding of critical information about the case, but also a direct contravention of the ethical relationship between attorney and client. An attorney acts on behalf of clients, not without their knowledge. Indeed, this tenet vitiates the respondent’s main argument that he obtained the best possible outcome for his clients, for, as the court put it, “[i]t is the client, not the attorney, who decides whether full or acceptable relief has been obtained.”[9]

In this same vein, the attorney in In re Shay[10] attempted to determine unilaterally what was best for two clients who had children together when the interests of the clients were not wholly aligned. The two clients, identified as J.C. and E.Y., lived together for a number of years, even though J.C. was legally married to someone else. Upon J.C.’s falsely telling E.Y. that he was divorced from his first wife, the two were married, and ultimately had two children.

The respondent knew of the fraudulent marriage, yet, at J.C.’s behest, drafted a will for the two clients, without disclosing to them the potential conflict of interest and other ethical problems.[11] Furthermore, during a time when E.Y. and J.C. were estranged from each other, E.Y. began to receive notices of delinquent loans that she knew nothing about in both her and J.C.’s name. E.Y. contacted the respondent, whom she believed to be her attorney, for guidance, and though the respondent helped to reduce and/or eliminate the outstanding debts, the respondent never disclosed to E.Y. that she was not acting as her attorney or that the marriage to J.C. was a fraud.

In her defense the respondent maintained that she could not have informed E.Y. of her actual rights and interests in the event of J.C.’s death because she would have revealed a client confidence in violation of Disciplinary Rule 5-105(A), the pre-1991 equivalent of Rule 1.6. Yet, as the Board on Professional Responsibility noted in its report, “[i]f the information cannot be disclosed, it is not an option for the lawyer to persist and to undertake both representations.”[12] In other words, as soon as the respondent realized that she could not be forthcoming with E.Y., she should have sought J.C.’s permission to make full disclosure of the relevant facts or withdrawn from the representation. As for the respondent’s handling of the delinquent loans, the court upheld the board’s finding that she violated Rule 1.7(b)(2), for, as the board stated in its report, “[t]he conflict of interest rules do not permit a lawyer to be the judge of whether a . . . client should be kept in the dark about information that could compromise the lawyer’s goal in pursuing the client’s interest.”[13]

Despite the vastly different facts of Hager and Shay, both cases share a common message: when you find yourself attempting to act in the best interest of multiple parties in violation of Rule 1.7, someone is getting short-changed. The lawyers in both cases would have been well advised of the first rule in conflict resolution: do not decide your own conflicts.

If you have concerns, get independent advice from D.C. Bar legal ethics counsel, your firm’s or agency’s ethics committee, or an outside expert. To modify an old adage, an attorney who counsels him- or herself on conflicts has a fool for a client.

Notes
[1] Depending on the presence of other rule violations, the sanctions for conflicts range “from informal admonitions to lengthy suspensions.” In re Hager, 812 A.2d 904, 922 (D.C. 2002).
[2] Id.
[3] The co-counsel was not a member of the D.C. Bar and therefore not subject to disciplinary proceedings here.
[4] During the hearing, the respondent admitted that if the legal fees had been waived, the manufacturer “would not have insisted on confidentiality and would have agreed to the other terms provided in the Settlement Agreement.” Id. at 910, 912 n.8.
[5] Specifically, the hearing committee found that the respondent engaged in both dishonesty and deceit or misrepresentation under Rule 8.4(c), and on the basis of this and other violations recommended a three-year suspension. Id. at 911 n.6.
[6] Id. at 916.
[7] Id. at 922–23. See generally id. at 912–21 (court’s detailed analysis of each rule violation). The respondent also claimed that the contingent fee agreement signed by his clients articulated the possibility of attorney fees being directly paid by the defendants. Dismissing this line of argument, the court noted that the language in the agreement was vague: “While clients are allowed to waive future conflicts of interests such as third-party compensation, for such a waiver to ‘to be effective . . . [it] must contemplate that particular conflict with sufficient clarity so that the client’s consent can reasonably be viewed as having been fully informed when it was given.’ ” Id. at 915 (quoting D.C. Bar Legal Ethics Comm. Op. 289 (1999)).
[8] Id. at 912–13. Rule 1.8(e) states, “A lawyer shall not accept compensation for representing a client from one other than the client unless: (1) The client consents after consultation; [and] (2) There is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship. . . .”
[9] Id. at 914.
[10] 756 A.2d 465 (D.C. 2000).
[11] In the wills the respondent referred to J.C. as E.Y.’s “husband” even though she knew otherwise.
[12] Id. at 476 (citing In re Shay, BDN 54-96 (Board on Prof’l Responsibility May 19, 1999)).
[13] Id. Rule 1.7(b)(2) states, “[A] lawyer shall not represent a client with respect to a matter if . . . [s]uch representation will be or is likely to be adversely affected by representation of another client.”

Asma Naeem is an assistant bar counsel.

Disciplinary Actions Taken by the Board on Professional Responsibility
Original Matters
In re Serguei Danilov. Bar No. 475622. August 3, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Danilov by consent.

In re Robert E. Miller. Bar No. 465792. August 23, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Miller by consent.

In re Clarence F. Stanback Jr. Bar No. 960740. September 12, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals reinstate Stanback.

In re John A. Turner Jr. Bar No. 193920. September 12, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals reinstate Turner with the following conditions: (1) Turner meet with the Practice Management Advisory Service (PMAS) at least one month prior to resuming the private practice of law or the practice of law in any other setting in which he is responsible for the funds of clients or third parties, and follow PMAS’s recommendations; (2) Turner shall certify to the court, with copies to the board and the Office of Bar Counsel, that he has enrolled in and completed a course in financial management within the first year after his reinstatement; (3) Turner should be required to continue making monthly restitution payments of at least $75 each to the Hartford Insurance Company and the Old Republic Insurance Company until he has made full restitution; (4) Turner should file annual reports regarding restitution with the Court of Appeals, with copies to the board and Bar Counsel; (5) at least annually, Turner review his financial condition and inform the insurance companies in writing whether he can accelerate his payments and, if so, by what amount; and (6) Turner is required to certify to the court, with copies to the board and Bar Counsel, and provide evidence that he has completed at least two hours of continuing legal education (CLE) courses in the area of legal ethics within the first year after his reinstatement. If Turner resumes the private practice of law or enters into a legal practice in which he will have responsibility for the funds of clients, he shall first certify and present evidence that he has completed a legal ethics CLE course devoted substantially to trust accounts and an attorney’s responsibility for entrusted property and funds.

In re Eric C. Yim. Bar No. 481158. August 3, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Yim by consent.

In re Seth B. Zimmerman. Bar No. 319566. September 28, 2006. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Zimmerman. Zimmerman was convicted of first-degree theft, a crime that involved moral turpitude per se, for which disbarment is mandatory under D.C. Code § 11-2503(a) (2001).

Reciprocal Matters
In re Joseph Nathaniel Baron. Bar No. 238899. September 15, 2005. In a reciprocal matter from Florida, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose identical reciprocal discipline and disbar Baron. The Supreme Court of Florida disbarred Baron on the basis of his misconduct in two litigated cases. In one case Baron lied to his client about the status of the case, settled the case without telling the client, kept and used the entire settlement as a fee, lied about the status of the settled case, and failed to refund the fee. In the second case Baron requested a hearing on an administrative appeal and then failed to attend the hearing, falsely advised his client that he had requested a continuance, and never told the client that the appeal was dismissed because neither Baron nor the client attended the hearing. Baron was found to have committed multiple violations of the Florida Rules of Professional Conduct including misappropriation.

In re John V. Buffington. Bar No. 179028. September 25, 2006. In a reciprocal matter from Pennsylvania, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose identical reciprocal discipline and suspend Buffington for six months, effective immediately. The Supreme Court of Pennsylvania suspended Buffington for six months for practicing law following his administrative transfer to inactive status for failure to fulfill continuing legal education requirements. During this period Buffington represented at least two clients, failed to terminate his legal practice, and maintained listings advertising his services in the White Pages and the Philadelphia Legal Directory. Further, Buffington continued to act as an arbitrator in the Philadelphia Court of Common Pleas and failed to inform the court that he was no longer eligible to serve in that capacity.

In re Thomas J. Coleman III. Bar No. 430126. September 19, 2006. In a reciprocal matter from Pennsylvania, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose identical reciprocal discipline and suspend Coleman for two years with fitness. The Supreme Court of Pennsylvania suspended Coleman for two years for violating a number of rules of the Pennsylvania Rules of Professional Conduct and Pennsylvania Rules of Disciplinary Enforcement arising out of his unauthorized practice of law while on inactive status, including signing numerous pleadings and other court filings.

In re Michael H. Ditton. Bar No. 436463. September 22, 2006. In a reciprocal matter from Virginia, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose reciprocal discipline and suspend Ditton for five years with fitness, effective immediately. The Circuit Court for the City of Alexandria, Virginia, suspended Ditton for five years for violating the Virginia Code of Professional Responsibility and the Virginia Rules of Professional Conduct in knowingly making a false statement to a tribunal; violating the Rules of Professional Conduct; committing a criminal or deliberately wrongful act; engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; violating a disciplinary rule; committing a crime or other deliberately wrongful act; knowingly making a false statement of law or fact; and knowingly engaging in illegal or unethical conduct.

In re Steven R. Hook. Bar No. 430542. September 12, 2006. In a reciprocal matter from Maryland, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose identical reciprocal discipline and suspend Hook for 90 days, effective immediately. The Court of Appeals of Maryland suspended Hook based on a joint petition for suspension by consent. As set out in the joint petition, Hook was charged with failing to complete his client’s legal matter, failing to respond to his client’s requests for information regarding his failure to file the quit-claim deed he was retained to do, failing to supervise his nonlawyer assistants who may have contributed to the failure, and failing to respond to a lawful demand for information from a disciplinary authority. Hook stipulated that, had a hearing been held, sufficient evidence existed to support violations of Rules 1.3 (diligence), 1.4 (failure to communicate), 5.3 (inadequate supervision of nonlegal employees), 8.1(b) (failure to respond to a lawful demand for information from a disciplinary authority), and 8.4(d) (conduct prejudicial to the administration of justice) of the Maryland Rules of Professional Conduct.

Disciplinary Actions Taken by the District of Columbia Court of Appeals
Original Matters
In re Frederic M. Brandes. Bar No. 466789. August 24, 2006. The D.C. Court of Appeals disbarred Brandes by consent.

In re Serguei Danilov. Bar No. 475622. August 24, 2006. The D.C. Court of Appeals disbarred Danilov by consent.

In re Irwin J. Fredman. Bar No. 392066. August 24, 2006. The D.C. Court of Appeals disbarred Fredman by consent.

In re Robert E. Miller. Bar No. 465792. September 21, 2006. The D.C. Court of Appeals disbarred Miller by consent.

In re Maryrose O. Nwadike. Bar No. 455695. August 10, 2006. The D.C. Court of Appeals ordered the Office of Bar Counsel to issue Nwadike an informal admonition. Nwadike failed to serve a client with the skill and care commensurate with that generally afforded to clients by other lawyers in similar matters. Specifically, while retained to represent clients in a medical malpractice matter, Nwadike failed to file a timely and adequate Rule 26(b)(4) statement. Rule 1.1(b).

In re Alan S. Toppelberg. Bar No. 230185. September 21, 2006. The D.C. Court of Appeals suspended Toppelberg for 60 days, with 30 days held in abeyance in lieu of one year of supervised probation. During the probationary period Toppelberg shall consult with the D.C. Bar Practice Management Advisory Service (PMAS), implement its recommendations, and submit a compliance report to the Board on Professional Responsibility and the Office of Bar Counsel. The report shall be prepared and certified by Toppelberg and signed by a PMAS representative. It shall detail the management reforms implemented and describe the purposes to be achieved by each reform. Toppelberg failed to disburse funds to two providers after a personal injury case he was responsible for had settled. Specifically, Toppelberg failed to keep appropriate trust account records, to notify and promptly pay third parties, to supervise employees, to cooperate with a disciplinary authority, and to comply with an order of the court, and he interfered with the administration of justice. Rules 1.15(a), 1.15(b), 5.3, 8.1(b), and 8.4(d) and D.C. Bar R. XI, § 2(b)(3).

In re Eric C. Yim. Bar No. 481158. August 24, 2006. The D.C. Court of Appeals disbarred Yim by consent.

Reciprocal Matters
In re Michael W. Coopet. Bar No. 392884. August 3, 2006. In a reciprocal matter from California, the D.C. Court of Appeals imposed identical reciprocal discipline and suspended Coopet for one year, stayed in favor of probation for two years and an actual suspension of 60 days, subject to compliance with the order of restitution and the continuing legal education requirements imposed by the California Supreme Court. Coopet’s suspension is effective immediately. The California Supreme Court suspended Coopet for failing to provide competent representation, failing to render an accounting, failing to communicate, violating other professional and business codes, and holding himself out as entitled to practice law.

In re John W. Hermina. Bar No. 421790. September 21, 2006. In a reciprocal matter from Maryland, the D.C. Court of Appeals imposed functionally identical reciprocal discipline and publicly censured Hermina. The Maryland Court of Appeals publicly reprimanded Hermina for making a false statement of material fact to a tribunal; knowingly disobeying his obligation under the rules of the tribunal; making a false statement as to the qualification or integrity of a judge; violating the rules of professional conduct; engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; and engaging in conduct prejudicial to the administration of justice.

Informal Admonition Issued by the Office of Bar Counsel
In re Reginald L. May. Bar No. 455177. August 10, 2006. The Office of Bar Counsel issued May an informal admonition for failing to provide his client with a writing stating the basis or rate of the legal fee and failing to communicate while representing a client in a personal injury matter. Rules 1.4(a) and 1.5(b).

The Office of Bar Counsel compiled the foregoing summaries of disciplinary actions. Reports and recommendations issued by the Board on Professional Responsibility, as well as informal admonitions issued by the Office of Bar Counsel, are posted on the D.C. Bar’s Web site at www.dcbar.org/for_lawyers/ethics/discipline/index.cfm. Court opinions are printed in the Atlantic Reporter and, for decisions issued since mid-1998, are also available online. To obtain a copy of a recent slip opinion, visit www.dcappeals.gov/dccourts
/appeals/opinions_mojs.jsp
. Please note that in some cases Bar members may have the same name. To confirm the identity of individuals who have been subject to discipline, contact the D.C. Bar Member Service Center at 202-626-3475 or memberservices@dcbar.org.