Transcript Question No. 1 (10 points) Stealing from Clients

2009 Houston Bar Association
Civil District/Appellate Bench Bar
Conference
By Scott Rothenberg ([email protected])
Ethics Jeopardy – Where the only thing in jeopardy
is your law license. And your reputation. And your
career. And, well, you get the picture.
• April 25, 2009
• San Luis Resort and Conference Center
• Galveston, Texas
Truth in Advertising Notice
• My name is Ben Rothenberg. I am 17
years old. My dad is your presenter. He
will probably give you some song and
dance about “coming into the 21st Century”
by using a PowerPoint presentation rather
than those cheesy overhead
transparencies. Don’t be fooled. *I*
prepared the PowerPoint slides, not him.
Question No. 1 (10 points)
Stealing from Clients
According to the Texas Disciplinary Rules of
Professional Conduct, it is permissible for an
attorney to steal from his or her client:
a.
b.
c.
d.
always;
never;
only with informed consent;
depends upon the client.
Question No. 2 (50 points)
Compulsory Discipline
• Attorney accepts deferred adjudication for shoplifting a
$0.75 pack of gum. According to the Supreme Court of
Texas, when an attorney successfully obtains
DEFERRED ADJUDICATION for a misdemeanor theft
conviction, the punishment imposed by the Board of
Disciplinary Appeals (BODA) is:
• A. Fully probated suspension for the duration of the
probation only;
• B. Active suspension for the duration of the probation;
• C. Active suspension for the duration of the probation
or disbarment at the discretion of BODA;
• D. Mandatory disbarment only.
Case Authority
In re: Roland Caballero, 272 S.W.3d 595 (Tex. 2008)
7-2 decision
December 19, 2008
Applies to any conviction for a “Serious Crime”
“Serious crime” includes misdemeanor theft.
Question No. 3 (30 points)
Which controls, TRDP or TRCP?
A.
B.
C.
D.
Grievance is being prosecuted in state district court for
conduct that occurred more than four years before the
grievance was filed. Attorney is entitled to a mandatory
4-year limitation on prosecution under TRDP 15.06. On
judgment for disbarment, CLD contends that attorney
waived 4-year limitation by failing to plead it.
Reverse; TRDP controls procedures in grievance cases.
Reverse because TRDP provision is mandatory.
Affirm because TRCP controls procedure in trial court
except where varied by the TRDP.
Affirm only if CLD fails to show surprise or prejudice.
Case Authority
• Beard v. Commission for Lawyer
Discipline,
• 05-07-00428-CV (Tex. App.– Dallas March
17, 2009, no petition history).
Question No. 4 (30 points)
Attorney Disqualification
A.
B.
C.
D.
TDRPC 1.09 states that “without prior consent, a lawyer who
personally has formally represented a client in a matter shall not
thereafter represent another person in a matter adverse to the
former client. . . .” John Jones seeks legal advice from Attorney to
evaluate for representation in a divorce case but does not hire
him. Jane Jones subsequently hires Attorney. Upon the filing of a
timely motion to disqualify Attorney from representing Jane Jones:
Attorney should be disqualified because John Jones was “a
client.”
Attorney should not be disqualified because John Jones never
became “a client.”
Attorney should not be disqualified because he did not “formally
represent” John Jones.
Attorney should not be disqualified if John Jones interviewed him
with the specific intent of disqualifying Attorney from representing
Jane Jones.
Case Authority
• In the Interest of Z.N.H.,
• No. 11-07-00232-CV (Tex. App.– Eastland
• February 26, 2009, no pet. history).
Question No. 5 (40 points)
TRDP Time Deadlines
TRDP 3.07 states: "Disciplinary Actions shall be set for trial
not later than 180 days after the date the answer is filed,
except for good cause shown.” Grievance trial is set 243
days after answer is filed. CLD makes no showing of
“good cause shown.” The grievance conviction should
be:
• A. Reversed unless CLD met its burden to show “good
cause shown.”
• B. Affirmed unless Attorney affirmatively negated any
showing of “good cause shown.”
• C. Affirmed because TRDP 3.07 is advisory and not
mandatory.
• D. Affirmed because TRDP time deadlines are trumped
by TRCP deadlines for trial.
Case Authority
• Hudson v. Commission for Lawyer
Discipline,
• No. 05-07-00775-CV (Tex. App.– Dallas
February 2, 2009, no pet. history).
Question No. 6 (20 points)
Fee Sharing Agreements and Disbarred Lawyers
• Lawyer A enters into a legal fee sharing agreement with Lawyer
O’Q, agreeing to accept joint responsibility for handling the file. 85%
of the way through the handling of the lawsuit, Lawyer A is
disbarred. Case is settled. Lawyer A sues Lawyer O’Q for his share
of the fees.
• A. Lawyer A recovers nothing. FSA is void as against public
policy under circumstances presented.
• B. Lawyer A recovers 85% of the fees owed under the FSA.
Quantum meruit.
• C. Lawyer A recovers 100% of the fees owed under the FSA.
Enforceable contract.
• D. Lawyer A recovers 85% of the fees owed under the FSA but
only with fully informed consent of the client with full knowledge of
Lawyer A’s disbarment.
Case Authority
• Cruse v. O’Quinn,
• 273 S.W.3d 766 (Tex. App.– Houston [14th
Dist.] November 25, 2008, pet. filed).
Question No. 7 (40 points)
Fee Sharing Agreements, Part Deux
• Attorney 1 hires Attorney 2 to help him prosecute Client’s
lawsuit. FSA gives Attorney 2 10% of the total recovery
for her assistance. Client fires Attorney 2 with just cause
toward the end of the representation. In lawsuit to
recover 10% fee interest:
• A. Attorney 2 receives nothing because client’s firing
was done “with just cause.”
• B. Attorney 2 receives full 10% fee because client’s
firing was meaningless– Attorney 2’s contract was with
Attorney 1, not Client.
• C. Attorney 2 receives nothing because all Fee Sharing
Agreements violate public policy as a matter of law.
• D. Attorney 2 receives a “reasonable percentage” of the
agreed fee under the theory of quantum meruit.
Case Authority
• Wilson v. Dovalina,
• No. 04-07-00610-CV (Tex. App.– San
Antonio July 16, 2008, no pet.).
Question No. 8 (30 points)
Aggregate Settlements
• In a mass tort case, counsel for hundreds of plaintiffs negotiates a
total settlement pot worth $45 million and recommends settlement to
individual clients based upon a matrix of factors individual to each
case. Clients challenge the settlement as void against public policy
because it is an aggregate settlement. The clients should:
• A. Lose because apportionment of the settlement was based
upon factors individual to each case;
• B. Lose because aggregate settlements are always an effective
dispute resolution tool;
• C. Win because the clients were not told that their individual case
was settled as a share of an overall global settlement;
• D. Win because an agreement between a plaintiff’s attorney and
defense counsel not to inform the client about the overall value of
the total settlement constitutes a civil conspiracy.
Case Authority
• Authorlee v. Tuboscope Vetco Int’l, Inc.,
• 274 S.W.3d 111 (Tex. App.– Houston [1st
Dist.] August 28, 2008, pet. filed).
• Deeply divided panel – strong dissenting
opinion. Full briefing on the merits and
transmission of the record requested by
the Supreme Court of Texas.
Question No. 9 (50 points) Mandatory
Arbitration of Legal Malpractice Claims
• Which of the following is NOT a factor to be considered
when determining the enforceability of a binding
arbitration clause in a representation agreement
between an attorney and a client:
• A. Sophistication of the client;
• B. Full disclosure by the attorney of the advantages
and disadvantages of arbitration versus litigation;
• C. Whether the client was represented by independent
counsel at the time the representation agreement was
executed;
• D. Information to the client regarding appellate rights.
Legal Authority
• Ethics Opinion 586, Issued October of 2008 by the
Professional Ethics Committee of the State Bar of Texas
• But – legality of arbitration clauses (split).
• Godt (Corpus Christi 2000) versus Taylor (14th 2005),
Miller (Amarillo 2003), and Hartigan (San Antonio 2003).
• Cost and time savings, waiver of significant rights (jury),
reduced discovery, relaxed rules of evidence, loss or
limitation of right of judicial appeal, privacy, method of
selection of arbitrators, payment of arbitrators and
relative cost.
Question No. 10 (20 points)
Appellate Sanctions – Standard to Apply
• The correct standard to be applied by appellate courts in granting
appellate (not mandamus) sanctions is:
• A. no reasonable grounds to believe that an appellate court would
reverse the trial court's judgment, objectively considering the record
from the viewpoint of an attorney representing the appellant.
• B. The appeal be both objectively frivolous and subjectively
brought in bad faith or for purposes of delay.
• C.
The appeal is either objectively frivolous or brought in bad faith.
• D. There is no one recognized standard for the imposition of
appellate sanctions.
Case Authority
• Mallios v. Standard Insurance Co., 237
S.W.3d 778 (Tex. App.– Houston [14th Dist.]
August 30 2007, pet. den.).
• In her dissenting opinion, Justice Kem
Thompson Frost correctly notes: “The Supreme
Court of Texas has not yet addressed the
appropriate legal standard appellate courts
should use to determine whether to assess
appellate sanctions.”
Question No. 11 (40 points)
Punishment for Knowing Misrepresentations
•
An attorney knowingly making a false statement of fact
in a pleading, motion or brief that is filed with the clerk
of a court can result in which of the following:
A.
B.
C.
D.
E.
F.
G.
The filing of a grievance;
Probated suspension from the practice of law;
Active suspension from the practice of law;
Disbarment;
Felony conviction;
A through D only;
All of the above.
Case Authority
• State of Texas v. Vasilas,
• 253 S.W.3d 268
• (Tex. Crim. App. May 7, 2008).
• TPC 37.10 Tampering with a Government
Record.
Question No. 12 (30 points)
Necessity of Expert Testimony in Grievance
•
Attorney offers expert testimony that his conduct did not breach the
disciplinary rule at issue. CLD fails to offer any rebuttal expert testimony
and did not offer any expert testimony during its case in chief. A motion for
directed verdict by the attorney should be:
•
a.
Granted if his expert testimony was clear, positive, direct and could
have been readily controverted, but was not.
•
b.
Granted because expert testimony establishing a violation of the
applicable disciplinary rule is an essential part of any disciplinary
prosecution as a matter of law.
•
c.
Denied because expert testimony is not necessary to establish a
violation of the disciplinary rule in question.
•
d.
Denied because an attorney facing disciplinary charges is not a
competent witness in his own disciplinary trial.
Case Authority
• McIntyre v. Commission for Lawyer
Discipline, 247 S.W.3d 434 (Tex. App.–
Dallas March 6, 2008, pet. denied 4-1709).
Question No. 13 (50 points)
Recoverability of Appellate Atty’s Fees
•
Lawyer represents Client, but loses at the jury verdict stage
due to acts of legal malpractice. Client fires Lawyer and hires
Second Lawyer to handle post-judgment and appeal, which end up
adverse to Client. Client sues Lawyer for legal malpractice. In the
legal malpractice lawsuit, may Client seek to recover from Lawyer
attorney’s fees Client paid to Second Lawyer in an effort to mitigate
damages caused by Lawyer’s legal malpractice?
• a.
Yes.
• b.
Yes in Dallas, but no in San Antonio.
• c.
No in Dallas, but yes in San Antonio.
• d.
No.
Case Authority
• Compare:
• Akin, Gump, Strauss, Hauer & Feld, L.L.P., v.
National Dev. & Research Corp., 232 S.W.3d
883 (Tex. App.– Dallas August 29, 2007, pet.
granted, argued 12-08) with:
• Parenti v. Moberg, No. 04-06-00497-CV (Tex.
App.– San Antonio May 30, 2007, pet. denied 48-08).
Question No. 14 (30 points)
Atty Fee Contract Language
• Attorney and Client both sign Representation Agreement
with the following essential terms:
– You have requested that I assist with the writing of the
Appellant's Brief and any reply. My rate for this particular matter
will be $200.00 per hour. Paralegals are $75.00 per hour. You
are responsible for all costs and expenses in the case as
incurred.
• Client refuses to pay Attorney’s $30,000+ invoice.
Attorney sues and files summary judgment seeking
payment. Client responds that Attorney never told him
he would have to pay over $30,000. Summary judgment
granted for attorney.
Question No. 14 cont’d
• On appeal:
– A.
affirm because Client was responsible for inquiring how much
the maximum fee might be;
– B.
affirm because in the absence of a stated maximum,
attorney’s fees contracts are open accounts to bill and collect for the
stated number of hours of work times the stated rate;
– c.
reverse because the language in question is ambiguous
since it does not state that the contract is an “open account”;
– d.
reverse because the contract must state a reasonable good
faith estimate of total fees and expenses and this contract fails to do so.
Case Authority
• Sacks v. Haden, 266 S.W.3d 447 (Tex.
September 26, 2008).
Question No. 15 (20 points)
•
Lawyer represents Client in a contingent fee lawsuit in which Lawyer
accepts a 1/3 attorney’s fee. Case results in a take-nothing judgment.
Client sues Lawyer for legal malpractice claiming Lawyer should have
recovered $3 million in damages. Lawyer contends Client is limited to
recovering $2 million because Client would have had to pay Lawyer a 1/3
contingent fee:
•
a.
Client may only recover $2 million because Client would only have
had a net recovery of $2 million in the underlying litigation;
•
b.
Client may recover $3 million from Lawyer’s insurer, but must pay
Lawyer $1 million pursuant to the contingent fee contract;
•
c.
Client may recover the full $3 million, because Lawyer failed in the
attempt to obtain a favorable result for the Client;
•
d.
Client may recover the full $3 million and also recover the Client’s
attorney’s fees in the legal malpractice lawsuit.
Case Authority
• Akin, Gump, Strauss, Hauer & Feld,
L.L.P., v. National Dev. & Research Corp.,
232 S.W.3d 883 (Tex. App.– Dallas
August 29, 2007, pet. granted, argued 1208).
Question No. 16
•
Client hires attorney to sue a Ferrari dealership for damages caused
by a defective vehicle. The final judgment awards the client $900,000 in
damages, but provides the dealership with a $300,000 offset for past due
car payments that Client refused to make. Attorney’s fee contract states
that attorney recovers “one-third of any amount received by settlement or
recovery.” Attorney charges client a fee of $300,000. That fee should be:
•
a.
reduced to $200,000 because the client only “received” $600,000 “by
settlement or recovery”;
•
b.
subject the attorney to possible discipline and fee forfeiture because
the attorney charged an illegal or unconscionable fee;
•
c.
a. and b;
•
d.
paid because it accurately reflects the terms of the contract.
Case Authority
• Levine v. Bayne, Snell & Krause, Ltd., 40
S.W.3d 92, 95 (Tex. 2001).
Question No. 17 (10 points)
Legal Malpractice Statute of Limitations
•
Client files suit against attorney for legal malpractice two years and
two months after the conclusion of all litigation and all appeals that are the
subject of the representation. Which of the following is false:
•
a.
cause of action for legal malpractice should be dismissed because the
statute of limitations is two years for legal malpractice;
•
b.
cause of action for legal malpractice may be considered under four
year statute of limitations for breach of contract if the attorney and client
have entered into a written contract;
•
c.
cause of action for legal malpractice should be dismissed, cause of
action for breach of contract should be subject to dismissal on special
exceptions, but a fraud claim arising out of the representation would be
subject to a four year statute of limitations;
•
d.
a. and c.
Question No. 18 (30 points)
Attorney-client confidentiality
•
Client requests that the attorney turn over his/her written notes to the
client. Which of the following is true?
•
a.
the attorney may withhold the notes or portions thereof when
required by court order;
•
•
•
•
b.
the attorney may never withhold the notes from the client;
c.
the attorney may withhold the notes or portions thereof when
failing to do so would risk causing serious harm to the client;
d.
a. and c.
Ethics Opinion No. 570
Question No. 19 (40 points)
Insurance Companies
•
May a lawyer, who is retained by an insurance company to
defend its insured, ethically comply with litigation/billing guidelines
which place certain restrictions on how the lawyer should conduct
the defense of the insured?
•
a.
yes, because the insurance company is paying for the representation;
•
b.
yes, with prior informed consent of the client (the insured);
•
c.
no;
•
d.
yes, because the standard insurance policy gives the insurance
company the right to control the manner of the defense.
•
•
Ethics Opinion 533
Question No. 20 (100 points)
Non-Refundable Retainers
• In Texas, a non-refundable retainer:
– a.
falls in the same category as Santa Claus, the Easter
Bunny, and snowy days in August in Houston, Texas– there is no
such thing;
– b.
can be accepted from a client and is fully earned when
received, provided it is expressly intended to remunerate the
attorney for the loss of the opportunity to accept other
employment that will probably be lost;
– c.
can be used as a prepayment for professional legal
services rendered by an attorney;
– d.
is fully earned a the moment it is received if accepted by
the attorney as a prepayment for professional legal services
rendered by the attorney.
Case Authority
• Cluck v. Commission for Lawyer
Discipline, 214 S.W.2d 736 (Tex. App.–
Austin 2007, no. pet.).
Answer Key
1(b)
2(c)
3(c)
4(a)
5(c)
6(a)
7(b)
8(a)
9(c)
10(d)
11(g)
12(c)
13(c)
14(b)
15(c)
16(c)
17(d)
18(b)
19(c)
20(d)