Bar Counsel’s Page: Taking Care of Business: Vicarious Liability Traps
From Washington Lawyer, July/August 2001
By Joyce E. Peters
The disciplinary summaries this month highlight an area of the Rules of Professional Conduct not often the subject of disciplinary action: the imputed or vicarious liability that a lawyer has for the conduct of subordinate attorneys, paralegals, investigators, and other staff members under the lawyer’s supervision. Rules 5.1, 5.2, and 5.3, in the section of the rules dealing with law firms and associations, set out the responsibilities of partners or supervisory lawyers, the responsibilities of subordinate lawyers, and the responsibilities regarding nonlawyer assistants, respectively. The bottom line of these rules is that a lawyer may have imputed responsibility for violations of the rules that are committed by persons under his or her supervision, and these violations can occur not only in a solo or small firm practice but also in large firms and organizations.
Rule 5.1 provides pertinently:
(a) A partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.
(b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.
(c) A lawyer shall be responsible for another lawyer’s violation of the Rules of Professional Conduct if:
(1) The lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or
(2) The lawyer has direct supervisory authority over the other lawyer or is a partner in the law firm in which the other lawyer practices, and knows or reasonably should know of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
Rule 5.1 is intended to provide guidance to supervisory lawyers, whether they are in large firms, legal departments, or government agencies, and includes not only the top layer of lawyer supervisors but also intermediate lawyer supervisors as well. With the exception of Rule 5.1(c)(1), there is a common thread of reasonableness that permeates this rule, so that firms and legal organizations have great flexibility in designing what works best within their particular organization. The reasonableness standard also requires analysis of specific factual circumstances to determine what measures or efforts are necessary to provide reasonable assurance that the actions of the members of the organization conform to ethical rules.
Large firms often have ethics committees to help sort out thorny ethical problems; small firms may use less formal procedures, employ consultation procedures internally or with other more experienced practitioners, or use other methods to ensure that ethical issues are raised and addressed. Many firms and legal departments use continuing legal education as part of their programs.
The comments to Rule 5.1 provide insight into the many factual questions raised by the language of this rule. For example, who is the direct supervisor for an attorney in a particular matter? How much knowledge is required? Should the supervisory lawyer reasonably have known about the conduct? What is "reasonable remedial action?" None of these questions can be answered in a vacuum, as they are all fact-specific.
In a case reported this month, In re Chris H. Asher, the District of Columbia Court of Appeals disbarred the respondent, who, among other things, induced a Maryland lawyer over whom he had supervisory authority to violate ethical rules in connection with a Maryland case so that the respondent (who was not licensed in Maryland) could appear pro hac vice. Both the supervisory attorney (the respondent) and the Maryland subordinate attorney had to face disciplinary authorities for their individual acts of ethical misconduct. The Maryland attorney in Asher had entered an appearance ostensibly as cocounsel with the respondent (with no intent to appear), but never appeared, made misrepresentations to the Maryland court regarding the cause for her absence (at respondent’s urging), and never withdrew from the representation. The Maryland lawyer faced discipline for her own ethical misconduct under the Maryland rules, even though she had acted at the direction of her supervisor. The same result would have occurred in the District of Columbia under Rule 5.2.
Rule 5.2 addresses the responsibilities of subordinate lawyers:
(a) A lawyer is bound by the Rules of Professional Conduct notwithstanding that the lawyer acted at the direction of another person.
(b) A subordinate lawyer does not violate the Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer’s reasonable resolution of an arguable question of professional duty.
This rule does not let the subordinate lawyer escape disciplinary consequences simply by "following the orders" of the supervisory attorney. The subordinate is expected to exercise independent judgment in determining what ethical duties he or she may have. Rule 5.2(b), however, does recognize that professional experience can be a factor; and if different views could halt effective action, a "reasonable" resolution of the matter would shield the subordinate from being held accountable for a disciplinary infraction. Once again the applicability of Rule 5.2 will depend heavily upon the facts of the case. In Asher the Maryland attorney apparently never questioned the improper direction given by her superior, and essentially she surrendered her license to his care to her detriment.
In contrast with Rules 5.1 and 5.2, which deal with lawyer-to-lawyer relationships, Rule 5.3 concerns nonlawyer assistants-paralegals, investigators, clerical personnel, and similar staff members-employed or retained by or associated with a lawyer. With respect to these individuals, Rule 5.3 provides:
(a) A partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person’s conduct is compatible with the professional obligations of the lawyer;
(b) A lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer; and
(c) A lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) The lawyer requests or, with the knowledge of the specific conduct, ratifies the conduct involved; or
(2) The lawyer has direct supervisory authority over the person, or is a partner in the law firm in which the person is employed, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
Although this rule also contains reasonableness qualifiers at several points, it is aimed at making sure that lawyers who use nonlawyers provide appropriate training and instruction concerning the ethical aspects of the lawyer’s practice. Because the disciplinary rules do not cover these nonlawyers, the effect of this rule is to hold the lawyer responsible vicariously if ethical misconduct occurs. Because of Rule 5.3, it is difficult for a lawyer to successfully claim, "My secretary did it, not me!"
In the cases summarized this month, the shortcomings of nonlawyer personnel under Rule 5.3 involved clerical personnel in In re Gary S. Silverman, a reciprocal case from Maryland in which nonlawyer employees did not maintain adequate financial records concerning trust account matters, and clerical staff in In re Harris-Smith, also a reciprocal case from Maryland, in which the attorney failed to ensure that members of her clerical staff did not reveal client confidences.
In another reported matter, a lawyer was disbarred for misappropriation when his spouse, who assisted in his office and had authority to write checks on his accounts, failed to maintain records or keep client funds separate, and the trust fund dropped below the amount required to be held. In re Moore, 704 A.2d 1187 (D.C. 1997). In another case a lawyer faced discipline when his overzealous investigator caused him to enter into a relationship with an already represented opposing party in a direct conflict of interest. In re Roxborough, 692 A.2d 1379 (D.C. 1997) (per curiam). In Roxborough the Court of Appeals accepted the recommendation of the Board on Professional Responsibility that the attorney had failed both to manage the assistant consistent with Rule 5.3(a) and to mitigate the consequences of the investigator’s actions under Rule 5.3(c)(2).
As noted earlier, it is unusual that there are three cases this month that involve the application of the superior-subordinate responsibility rules. What is clear, however, is that a lawyer must be cautious in entrusting his or her license to others, whether to superiors, subordinates, or nonlawyers. In particular, nonlawyers must be carefully trained to understand a lawyer’s ethical responsibilities and abide by them. This is simply an important part of the business of being a lawyer. A failure to recognize the reach of these provisions can be costly, as the long arm of the Rules of Professional Conduct may cause the unsuspecting or careless lawyer to suffer discipline for the errors of others.
Disciplinary Actions Taken by the Board on Professional Responsibility
In re Rena V. Atkinson. 5501 40th Avenue, Hyattsville, Maryland. May 10, 2001. In a reciprocal matter from Maryland, the board recommends that the court suspend Atkinson indefinitely, with the right to apply for reinstatement after one year by demonstrating fitness to practice law or vacation of the fitness requirement if she is summarily reinstated in Maryland. The Maryland court suspended her indefinitely for engaging in criminal conduct that reflects adversely on her fitness as a lawyer, conduct involving dishonesty, and conduct prejudicial to the administration of justice in connection with her failure to pay federal or state income taxes for eight years or to file federal or state income tax returns for two years.
In re Michael A. Ceballos. 200 East Forsyth Street, Jacksonville, Florida. April 30, 2001. In a reciprocal matter from Florida, the board recommends that the court suspend Ceballos for 30 days, followed by two years of probation with conditions, including restitution. Ceballos admitted that he had failed to represent clients diligently, to keep clients informed about the status of their cases, or to respond to requests for information from clients in five separate matters. The Florida court found that during the time period when his misconduct occurred, he was suffering from the effects of alcohol addiction, from which he has since been rehabilitated, and suspended him for 30 days, to be followed by two years of probation with conditions.
In re Demetrios C. Kirkiles. 200 SE 6th Street, Fort Lauderdale, Florida. May 10, 2001. In a reciprocal matter from Florida, the board recommends that the court publicly censure Kirkiles. Kirkiles admitted that he had failed to provide competent representation or to act with reasonable diligence and promptness, made an agreement prospectively limiting his malpractice liability with a client who was not independently represented, and engaged in conduct prejudicial to the administration of justice in connection with an immigration matter. The Florida court issued him a public reprimand, the functional equivalent to a public censure in this jurisdiction.
In re Glenn M. Rocca. Rocca, Ahl, Pena & Dario LLC, 1590 Anderson Avenue, Fort Lee, New Jersey. May 2, 2001. In a reciprocal matter from New Jersey, the board recommends that the court disbar Rocca. The New Jersey court found that Rocca had assisted another person in running a bar, notwithstanding that that person had been prohibited from such activities following conviction of a crime. Rocca entered into a sham contract of sale and sham lease showing purchase of the bar by another corporation from the true owner’s girlfriend, when in fact the owner and his girlfriend retained a one-half interest; misrepresented himself and his law partners to New Jersey regulatory authorities as bona fide purchasers in an arms-length transaction in order to obtain approval for the transfer; and suborned perjury in a civil matter related to the transfer. The New Jersey court disbarred Rocca for engaging in conduct involving fraud, dishonesty, and misrepresentation and conduct prejudicial to the administration of justice. Because disbarment is imposed in New Jersey without possibility of reinstatement, a sanction that is not imposed in this jurisdiction, the board recommends that the court allow Rocca to apply for reinstatement after five years.
In re Robert J. Sheridan. 800 North Charles Street, Baltimore, Maryland. April 25, 2001. In a reciprocal matter from Maryland, the board recommends that the court disbar Sheridan. Sheridan misappropriated funds entrusted to him to discharge a debt to a client that had employed Sheridan to collect the debt; commingled entrusted funds with his own; failed to notify a client of his receipt of funds in which the client had an interest, to disburse the funds to the client, or to hold in trust funds over which there was a dispute; engaged in conduct involving dishonesty; and violated a provision of the Maryland Code that prohibits a lawyer to use trust funds for any purpose other than the purpose for which they were entrusted. Sheridan pursued collection activities for his client even after the client entered into bankruptcy proceedings, failed to notify the client of a judgment that he had obtained or of his receipt of funds to satisfy the judgment, converted some of the funds to his personal use, and continued collection efforts after being directed to cease his activity by the client’s bankruptcy counsel. The Maryland court suspended Sheridan indefinitely with the right to apply for reinstatement after one year. The board, in recommending a sanction greater than that imposed in Maryland, concluded that misappropriation, other than for simple negligence, warrants the substantially greater sanction of disbarment in this jurisdiction. Sheridan was previously sanctioned by the District of Columbia Court of Appeals in a reciprocal matter from Virginia, in which his license was revoked, and he has not yet been reinstated in this jurisdiction.
In re Gary S. Silverman. Silverman & Associates Chartered, 11300 Rockville Pike, Rockville, Maryland. May 10, 2001. In a reciprocal matter from Maryland, the board recommends that the court suspend Silverman for 30 days, nunc pro tunc to April 13, 2000. Silverman consented to a 30-day suspension in Maryland, admitting that he had commingled entrusted funds with his own and had failed to make reasonable efforts to ensure that the conduct of his nonlawyer employees (in maintaining adequate trust account records) was compatible with his professional obligations.
In re Winston S. Taylor. Address unknown. April 26, 2001. The board reprimanded Taylor for failing to respond to Bar Counsel inquiries or to a board order compelling his response and engaging in conduct that seriously interfered with the administration of justice. Taylor failed to respond to a disciplinary complaint alleging misconduct in connection with his handling of an immigration matter or to a board order compelling his response until after he was served with Bar Counsel’s petition instituting formal disciplinary proceedings and a hearing had been scheduled. The board, in imposing reprimand rather than recommending a more severe sanction, noted that Taylor’s failure to respond was caused, in part, by a series of calamities, including a hurricane and an office move that resulted in a loss of files.
Disciplinary Actions Taken by the District of Columbia Court of Appeals
In re Chris H. Asher. 5309 Georgia Avenue NW, Washington, D.C. May 24, 2001. The court disbarred Asher, with the requirement that he make restitution prior to reinstatement. In connection with personal injury, criminal, and civil matters on behalf of four clients, Asher misappropriated entrusted funds; commingled entrusted funds with his own; failed to deposit entrusted funds into a properly designated trust account; engaged in criminal acts (theft, forgery, and fraud) that reflect adversely on his fitness as a lawyer; engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation and conduct that seriously interfered with the administration of justice; made material misrepresentations to courts; engaged in the unauthorized practice of law in Maryland; directed a lawyer over whom he had supervisory authority to violate ethical rules; engaged in a conflict of interest in making unsolicited sexual advances toward a client; and failed to represent clients diligently, to communicate with clients, to communicate a settlement offer to a client, or to provide written notice of the rate or basis of a fee or a written contingent-fee agreement; intentionally failed to seek clients’ legal objectives; and intentionally prejudiced a client during the course of a representation.
In re John L. Beaman. 4660 Martin Luther King Jr. Avenue SW, Washington, D.C. April 12, 2001. The court suspended Beaman for 30 days for engaging in conduct that seriously interfered with the administration of justice and for failing to comply with board orders. Beaman, who was the subject of three separate disciplinary complaints, failed to respond to Bar Counsel’s inquiries or to comply with board orders compelling his response.
In re Charles H. Bowser. 5704 Vassar Drive, College Park, Maryland. April 19, 2001. The court suspended Bowser for one year, nunc pro tunc to July 3, 2000. Bowser was convicted in the United States District Court for the Eastern District of Virginia of aiding and abetting the making of a false statement to a federal agency in violation of 18 U.S.C. §§ 1001 and 2. A hearing committee of the Board on Professional Responsibility concluded that he had made a false statement of material fact to a tribunal; assisted a client in engaging in conduct that he knew was criminal; committed a criminal act that reflects adversely on his fitness as a lawyer; engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation; and failed to withdraw from representation when to continue the representation would result in a violation of the ethical rules. Bowser failed to disclose (by leaving a question blank) on an Immigration and Naturalization Service (INS) application submitted on behalf of a client that the client previously had been arrested. When the application was rejected, he submitted a second application to a different INS office, stating specifically that the client had never been arrested. After the District of Columbia Court of Appeals temporarily suspended Bowser following his conviction, he failed to withdraw from a representation that he had undertaken on behalf of a second client.
In re Bridgette M. Harris-Smith (a.k.a. Bridgette M. Smith). 7603 Georgia Avenue NW, Washington, D.C. May 10, 2001. In a reciprocal matter from the United States Bankruptcy Court for the District of Maryland, the court suspended Harris-Smith indefinitely, with the right to apply for reinstatement after she is reinstated in the bankruptcy court or after the expiration of five years, whichever occurs first. Harris-Smith consented to an indefinite suspension in the bankruptcy court for engaging in a continuing pattern of misfeasance and nonfeasance that put her clients’ cases in jeopardy. The court accepted the Board on Professional Responsibility’s recommendation that no additional reciprocal discipline be imposed in connection with a second reciprocal matter from the Maryland Court of Appeals, where she was suspended for 30 days. Harris-Smith, who is not licensed to practice law in Maryland, engaged in the unauthorized practice of law by maintaining an office in that state, advertising her services in Maryland without stating that she was not licensed to practice there, and providing advice to clients that was not specifically limited to the bankruptcy practice in which she was authorized to engage. She also failed to refund unearned fees, to ensure that her staff did not reveal client confidences, or to notify clients of her receipt of funds belonging to the client.
In re Alan E. Koczela. 1761 Rochelle Court, Woodbridge, Virginia. May 17, 2001. In a reciprocal matter from Virginia, the court revoked Koczela’s license to practice law, with leave to apply for reinstatement after the expiration of five years or after he is reinstated in Virginia, whichever occurs first. The Virginia court revoked Koczela’s license for engaging in deceit and theft and for failing to maintain complete records of entrusted funds, to deposit entrusted funds into a trust account, to communicate, or to respond to a subpoena for client files improperly removed from his former law firm.
In re Joseph A. Lopes. 940 Mill Ponds Court, Mitchellville, Maryland. April 12, 2001. The court suspended Lopes for six months, nunc pro tunc to July 29, 1998, followed by a two-year period of probation with conditions to be determined by the Board on Professional Responsibility. Lopes, in connection with three matters, engaged in conduct involving dishonesty and conduct that seriously interfered with the administration of justice; made false statements of material fact to a tribunal and to third parties; and failed to provide competent representation, to act with diligence or promptness, to communicate with clients, to explain matters to the extent necessary to permit clients to make informed decisions, to provide a written statement of the rate or basis of his fee, to withdraw from representations due to physical impairment, to return unearned fees, or to comply with discovery requests. In a separate reciprocal matter from Maryland, Lopes consented to a 90-day suspension with the requirement that he be supervised by a practice monitor approved by the Maryland disciplinary authority for two years following reinstatement and that he satisfy other conditions. Lopes acknowledged in Maryland that he had neglected a legal matter, failed to respond to requests for information from a client, misrepresented the status of the legal matter to the client and to the disciplinary authority, and failed to cooperate with the disciplinary investigation. After Lopes had been reinstated in Maryland, he was suspended again for failure to comply with the conditions imposed in the original suspension.
In re Mohammad P. Saboorian. Saboorian & Associates, 9107 Wilshire Boulevard, Beverly Hills, California. April 5, 2001. In a reciprocal matter from California, the court suspended Saboorian for two years, stayed imposition of the suspension, and placed him on probation for two years with conditions. Saboorian consented to similar discipline in California following his plea of nolo contendere to misdemeanor sexual battery, a conviction that was vacated after he fulfilled the terms of probation.
In re Michael H. Stone. 1818 N Street NW, Washington D.C. April 5, 2001. The court suspended Stone for four months, stayed execution of all but two months of the suspension, and placed him on unsupervised probation with conditions for one year. Stone admitted that, in connection with six criminal matters in which he was appointed appellate counsel, he engaged in conduct that seriously interfered with the administration of justice and failed to provide competent representation, to serve clients with skill and care commensurate with that offered by other lawyers in similar matters, to represent clients diligently, to act with reasonable promptness, to keep clients reasonably informed about the status of their cases, to comply with requests for information, or to explain matters sufficiently to enable clients to make informed decisions.
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 Web site at www.dcbar.org. 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.dccourts.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 firstname.lastname@example.org.