Category Archives: Lawyer unreasonable fee

Louisiana lawyer suspended for submitting false billable hours because he believed his partnership status required them

Hello everyone and welcome to this Ethics Alert which will discuss the recent Louisiana Supreme Court Opinion suspending a lawyer for 30 months with all but one (1) year deferred for false billable hours that he believed were necessary to maintain his partnership position and “in an effort to make himself look better on paper each month.”   The disciplinary case is:  In re: Kenneth Todd Wallace, Case No. 2017-B-0525.  The disciplinary opinion is dated September 22, 2017 and is here:  http://www.lasc.org/opinions/2017/17B0525.OPN.pdf

According to the opinion, the lawyer “joined the law firm of Liskow & Lewis as an associate attorney in 1998. After his promotion to shareholder in 2005, he served as the firm’s hiring partner and head of recruiting. He also chaired the firm’s diversity committee as the firm’s first minority recruiting and retention partner. In 2012, respondent was elected to the firm’s board of directors and served as the board’s junior director through April 2015.”

The lawyer stated that he made the false billing entries because he was concerned that his correct billable hours (along with an insufficient number of clients) were not adequate for a partner with his status.  “When his practice began to decline, (the lawyer) gave in to his own internal pressures and began to submit false time on a dismissed contingency fee matter, and eventually other matters, in an effort to make himself look better on paper each month.”

After the law firm became aware of his false billing in some client matters, the lawyer assisted the firm in conducting a full investigation.  The firm’s investigation showed that, between 2012 through 2015, the lawyer submitted 428 billing entries that the firm believed were “certainly false” and another 220 entries that the firm believed could be false or inflated; however, the law firm concluded that none of the false billing entries adversely affected any of the firm’s clients.

The lawyer had received $85,000.00 in merit bonuses between 2012 through 2015 and the firm concluded he would have received some or all of the bonuses even if he had not inflated his billable hours. The lawyer had also spent significant time with his firm management and committee responsibilities and had also met or exceeded billable targets during the years in question.  The lawyer resigned from the firm in 2015 and gave up his available bonus.

The disciplinary opinion imposed a 30 month suspension with all but one-year deferred.  The suspension was also made retroactive to January 2016, when the lawyer had been suspended on an interim basis pending the outcome of the matter.

Bottom line:  This is a very clear and unfortunate example of a lawyer who most likely destroyed his legal career after succumbing to the stress and pressure of a law partner’s need for large billable hours and a large number of clients (book of business).  I would imagine that, if asked, this lawyer would tell you that it was not worth it.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

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Proposed Virginia Bar ethics opinion finds that AVVO and similar lawyer matching services are unethical

Hello everyone and welcome to this Ethics Alert which will discuss the recent approval of a Virginia ethics opinion which finds that AVVO and similar matching services unethical.  Proposed Legal Ethics Opinion 1885 is here: http://www.vsb.org/site/regulation/leo_1885

On October 27, 2017, the Virginia State Bar voted to approve a draft ethics opinion regarding online attorney-client “matching services”, such as AVVO, which are called “attorney-client matching services” (ACMS),. The opinion finds that a lawyer’s participation in the matching services would violate the Virginia Rules of Professional Conduct.

The opinion does not name any specific services; however, the description of the is similar to the business model of Avvo Legal Services, which allows consumers to purchase legal services for a flat fee.  The opinion describes a business model that it calls an “attorney-client matching service” (ACMS), which it describes as a for-profit entity that provides an online platform for matching attorneys and clients.  An ACMS gives a client a limited scope fee agreement, and the client pays the full fee to the ACMS.

The lawyer does not negotiate the scope of services or the fee or receive any of the client’s money until the services have been performed. Under ACMS’s terms, the lawyer agrees to provide flat fee legal services.  When the matter is completed, the attorney receives the full amount of the legal fee paid by the client.  ACMS then debits the attorney’s account for a “marketing fee” which varies depending upon the amount of the legal fee received.

The opinion identifies five problems with the ACMS business model:

  1. The lawyer is not properly handling the client’s advanced fee because it is allowing a third party to hold the funds. Thus, the funds are not being held in an IOLTA account as required.
  2. Since the lawyer has no access to the client’s money until he is paid in full by the platform, he is unable to fulfill his obligation to refund any unearned fees at the conclusion of the matter.
  3. Without being in control of the definition of the scope of legal services or negotiation of the fee, the lawyer may well be undertaking representation which violates any number of ethics rules. The services may not be appropriate to the client. The fee may not be commensurate with the value of the services provided. The services may be inadequate for the client’s needs. And so on.
  4. The payment of the marketing fee to ACMS constitutes the sharing of legal fees with a non-lawyer.
  5. The payment of the marketing fee constitutes payment for recommending the lawyer’s services.

The opinion criticizes the fact that Avvo holds the fee between the time that the prospective client pays for the services until the lawyer completes the services and states that “the ACMS collects advanced legal fees from a prospective client before the prospective client has had any contact with the lawyer whom she might engage” and that this is a violation of the Bar rules which require that advance fees be held in an the lawyer’s trust account until services are completed.

Under lawyer trust account rules, unearned fees are to remain in trust. As an ACMS is not a law firm, it cannot have an IOTA trust account or hold client fees in trust. Since the fees are not paid to the lawyer, the lawyer is unable hold the funds in trust if same is required under the Bar rules. In addition, under the Bar rules, a lawyer has an to refund any unearned fees at the end of the representation.

The opinion also discusses some potential solutions to the problems with the current model.  Regarding the issue of the lawyer not having control over the fee and the scope of the representation, the opinion did not flatly state that lawyers are prohibited from participating in the ACMS model. It concluded that a lawyer could participate if the lawyer consults with the client and is satisfied that the services can be performed competently and in compliance with the ethical rules before accepting a matter.  The lawyer would also have to exercise independent professional judgment to insure that the fee is not unreasonable or excessive.

The opinion held that the arrangement results in unethical fee sharing with the matching service and “(t)he fact that the ACMS executes a separate electronic debit from the lawyer’s bank account for its ‘marketing fee’ following the firm’s electronic deposit of the full legal fee to the lawyer’s bank account does not change the ethically impermissible fee-sharing character of the transaction.”  The opinion left the possibility that fee splitting might be avoided if the lawyer’s fee was based upon the number of clients received through the platform or the number of inquiries or clicks on their profile.

Bottom line: If this opinion is approved by the Virginia Supreme Court, Virginia will join five other states, New York, New Jersey, Ohio, South Carolina, and Pennsylvania, in disapproving or criticizing the AVVO business model. The New York and New Jersey opinions, which were issued this year, determined that the “marketing fee” taken from the lawyer’s account involves improper fee splitting.

Be careful out there…and stay tuned.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

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Florida Supreme Court adopts Bar Rules defining retainer, flat fee and advance fees and clarifying deposits of fees

 

Hello and welcome to this Ethics Alert which will discuss the recent opinion of the Supreme Court of Florida which adopted Bar Rules which define retainer, flat fee and advance fees and clarifying deposit of fees.  The opinion is In Re: Amendments to Rules Regulating The Florida Bar 4-1.5—Fees and Costs for Legal Services, No. SC14-2112 (September 17, 2015) and the opinion is here: http://www.floridasupremecourt.org/decisions/2015/sc14-2112.pdf  The amendments will become effective on October 1, 2015.

The opinion adopted amendments filed by The Florida Bar adding subdivision (2) to Florida Bar Rule 4-1.5, which defines the terms retainer, flat fee and advance fee.  The amendment also adds language to the Comment under “Terms of payment” stating that nonrefundable flat fees and nonrefundable retainers should not be deposited into the lawyer’s trust account; however, advance fees must be held in trust until earned.  The Comment also states that nonrefundable fees can still be excessive.

The amendment also moves the language in the Comment regarding contingent fees in criminal and domestic relations cases under the header “Prohibited contingent fees.”

Bottom line: these amendments to Rule 4-1.6 resulted from recommendations made by the ABA Ethics Commission 20/20.  As I pointed out in a previous Ethics Alert, the current amendments were drafted after an earlier attempt by The Florida Bar to place definitions in the Comment to Rule 4-1.5 was rejected by the Florida Supreme Court in an opinion stating that any definitions should be in the rule.

Be careful out there.

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

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Illinois Disciplinary Board upholds lawyer’s 6 month suspension for, inter alia, keeping fees and “indefensibly outrageous” statements

Hello everyone and welcome to this Ethics Alert which will discuss the recent Illinois Disciplinary Review Board report which recommended a 6 month suspension (with no automatic reinstatement) of a lawyer who failed to perform legal services for which he was retained, failed to return unearned fees, failed to communicate with clients and failed to reduce fee agreements to writing, and making “indefensibly outrageous” statements about lawyers and a court deputy in litigation cases.  The case is In the Matter of: David Alan Novoselsky, Commission No. 2011PR00043, SC No. 2069881 (April 10, 2015).  The link to the Board recommendation is here: http://www.iardc.org/HB_RB_Disp_Html.asp?id=11701

The Review Board of the Illinois Attorney Registration and Disciplinary Commission upheld a Hearing Board’s findings that the lawyer failed to perform legal services for which he was retained, failed to return unearned fees, failed to communicate with clients, and failed to reduce fee agreements to writing.  According to the Board’s report, the lawyer also called a female lawyer derogatory names, including “b—-,’ ‘‘asshole,” “slut,” “c—,” “pervert,” “whore” and “child molester”.  He called another lawyer an “idiot” and a “cokehead,” and he also called a deputy a “dumbbell” after she asked him to lower his voice.

“(The lawyer) denied making some of the statements and could not remember if he had made other statements. However, he admitted making several of the statements.  He often claimed he was provoked by undocumented personal attacks against him or claimed that the parties were “ribbing” each other, although witnesses confirmed (a witness’s) testimony that she did not provoke, react, or respond to these statements.”  “His attacks on opposing counsel and a court deputy displayed an utter disregard for the integrity of the courts…(w)hile he may still believe that he was provoked, the record indicates otherwise.  We find his conduct to be indefensibly outrageous.”

“Because we find (the lawyer’s) actions to be egregious and because respondent lacks any remorse or understanding of his misconduct, we recommend to the court that he be suspended for six months and until further order of the court.”  The hearing board had recommended a six-month suspension with automatic reinstatement.  The review board also recommended that the lawyer be ordered to return $30,000 in restitution of unearned fees.

The Board noted in mitigation that the lawyer had practiced law for 40 years without being disciplined, he had performed pro bono work, and had been active in bar associations.  There was no mention of any other mitigation, such as substance abuse or other personal issues.

Bottom line:  This case involved an Illinois lawyer who apparently went off the deep end and made outrageous derogatory statements in highly contested litigation cases.  He also apparently kept unearned fees, failed to perform legal services, failed to obtain written fee agreements, and failed to communicate with clients.  The Illinois Supreme Court will review the recommendation and it will be interesting to see if the Court agrees or increases the recommended sanction.  Stay tuned…

Be careful out there (and of course don’t do this).

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Ethics Alert – Iowa Supreme Court reprimands lawyer who billed corporate client for costs of sanctions which “resulted from his own lack of diligence and communication”

Hello everyone and welcome to this Ethics Alert blog which will discuss the recent Iowa Supreme Court opinion which adopted a disciplinary report and imposed a reprimand on a lawyer who billed his corporate client for costs of attorney’s fee sanctions which “resulted from his own lack of diligence and communication”. The disciplinary opinion is: Iowa Supreme Court Attorney Discipline Board v. Cameron Davidson, Case No. 14-0878 (August 18, 2014). The disciplinary opinion is online here: http://www.abajournal.com/images/main_images/Davidson.pdf and here: https://www.iacourtcommissions.org/ViewLawyer.do?id=2704

According to the court opinion and discipline report, the lawyer represented Deere & Co. as a defendant in defending an employment discrimination lawsuit filed in federal court. The plaintiff was a former Deere employee who was terminated for allegedly violating Deere’s employee travel expense policy; however, she claimed that the termination was a result of age discrimination.

The lawyer responded to the plaintiff’s interrogatories and request for production requesting the names of all Deere employees who were investigated during the same time period (2005-2012) for travel expense violations and identified 4 employees; however, he did not provide the requested birth dates. The plaintiff’s lawyer filed a motion to compel which was granted and attorney’s fees sanctions of $700.00 were imposed. The lawyer ultimately self-reported and stated that the client had informed him it wanted to object to the plaintiff’s discovery requests, which resulted in the initial discovery dispute and the $700.00 sanction. The lawyer stated “I believed that I had discussed this matter with my client, however, my file does not reflect that I sent the motion (to compel and for sanctions) or the order to the client.”

The plaintiff filed a second motion to compel and for sanctions on another discovery issue. The lawyer stated that he was unsure how to respond to the second motion and admitted that he “ultimately missed the deadline to file a resistance or a reply.” The court granted the second Motion to Compel and imposed a sanction of $1,750.00 in attorney’s fees. “I again failed to send the motion or the court’s order to the client, which was not aware of the seriousness of the discovery dispute.”

The plaintiff filed a third motion to compel and for sanctions, which was also granted and sanctions of $1,050.00 in attorney’s fees were imposed. The lawyer also failed to send the plaintiff’s third motion and the court order imposing sanctions to the client. According to the report: “Despite these Orders (the lawyer) continued to delay providing complete interrogatory answers (and) failed to arrange for two of the employees to be deposed, as requested by the plaintiff.”

The lawyer billed the client for the costs of all three sanctions. In the billings, the lawyer called the first $700.00 sanction “Miscellaneous; Penalty on Discovery; Doug Stephens Law Firm”, the billing for the second $1,750.00 sanction “Misc(ellaneous Costs)”, and the billing for the third $1,050.00 sanction “Miscellaneous; Attorneys’ Fees; B. Douglas Stephens.” According to the disciplinary report, “(o)nly after your former partners learned of the sanctions orders was the client fully informed.”

The lawyer was found to have violated Iowa disciplinary rules related to lack of communication, lack of diligence, and charging an unreasonable fee or expense and was reprimanded.

Bottom line: This lawyer was found to be negligent in timely responding to discovery related matters, which resulted in three separate attorney’s fee sanctions and, not only did he fail to tell the client about the negligence and the sanctions which resulted from his negligence, but he also had the audacity to bill the client for the costs of the sanctions. That certainly was not a good decision and it is somewhat surprising that the lawyer only received a reprimand.

Let’s be careful out there!

Disclaimer: this Ethics Alert is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.
Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
jcorsmeier@jac-law.com
http://www.jac-law.com

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