Disciplinary Case Opinions
| Publication year | 2011 |
| Pages | 125 |
2011, September, Pg. 125. Disciplinary Case Opinions
September 2011
Vol. 40, No. 9 [Page 125]
Colorado Disciplinary Cases
The Colorado Supreme Court adopted a series of changes to the attorney regulation system, including the establishment of the Office of the Presiding Disciplinary Judge (PDJ), pursuant to C.R.C.P. 251.16. The Court also made extensive revisions to the rules governing the disciplinary process, repealing C.R.C.P. 241 et seq., and replacing those rules with C.R.C.P. 251 et seq. The PDJ presides over attorney regulation proceedings and, together with a two-member Hearing Board, issues orders at trials and hearings. The Rules of Civil Procedure and the Rules of Evidence apply to all attorney regulation proceedings before the PDJ. See C.R.C.P. 251.18(d). Disciplinary Opinions may be appealed in accordance with C.R.C.P. 251.27.
The Colorado Lawyer publishes the summaries and full-text Opinions of PDJ William R. Lucero and the Hearing Board, whose members are drawn from a pool appointedby the Supreme Court. For space purposes, exhibits, complaints, and amended complaints may not be printed. Disciplinary Opinions are printed as submittedby the Office of the?PDJ and are not editedby the staff of The Colorado Lawyer.
Case No. 09PDJ042
(consolidated with 09PDJ092)
Complainant:
THE PEOPLE OF THE STATE OF COLORADO
Respondent:
JOHN FREDERIC HEAD
July 20, 2010
DECISION AND ORDER IMPOSING SANCTIONS
PURSUANT TO C.R.C.P. 251.19(b)
On May 18, 2010, a Hearing Board composed of F. Stephen Collins and Terry F. Rogers, members of the Bar, and William R. Lucero, the Presiding Disciplinary Judge (PDJ), held a half-day hearing pursuant to C.R.C.P. 251.18. Charles E. Mortimer, Jr., appeared on behalf of the Office of Attorney Regulation Counsel (the People), and John Frederic Head (Respondent) appeared pro se. The Hearing Board now issues the following "Decision and Order Imposing Sanctions Pursuant to C.R.C.P. 251.19(b)."
A lawyer must hold property of others with the care required of a professional fiduciary. In one matter, Respondent admits he failed to reduce a flat-fee agreement to writing and deposited the fee into an operating account, refunding the sum eight months after his client requested the return of her money. In an unrelated matter, Respondent acknowledges he collected money from clients to pay their costs related to service of process but failed to timely remit those funds to the third-party vendor. What Rules of Professional Conduct have been violated, and what is the appropriate sanction?
As regards the first matter, the Hearing Board finds clear and convincing evidence that Respondent violated Colo. RPC 1.5(b), 1.15(a), 1.15(c) and 1.16(d), but that he did not violate Colo. RPC 1.4(a)(3). In the second matter, the Hearing Board concludes Respondent violated Colo. 1.15(a) and 1.15(b), but we cannot conclude he violated Colo. RPC 8.4(c). In light of the substantial mitigating factors presented, the Hearing Board determines a public censure is warranted in this instance.
On May 20, 2009, the People filed a Complaint in case 09PDJ042, alleging Respondent had violated Colorado Rules of Professional Conduct 1.5(b), 1.15(a), 1.15(c), 1.16(d) and 1.4(a)(3). Respondent filed an Answer on July 8, 2009. On October 20, 2009, the People filed a Complaint in case 09PDJ092, alleging Respondent had violated Colorado Rules of Professional Conduct 1.15(a), 1.15(b) and 8.4(c). Respondent filed an Answer on November 30, 2009. The PDJ consolidated the two cases on January 11, 2010. On March 9, 2010, the parties filed a stipulation, setting forth certain facts and law. During the May 18, 2010, hearing, the Hearing Board heard testimony and considered the People's exhibits 1-5, to which Respondent stipulated.
The Hearing Board finds the following facts and rule violations have been establishedby clear and convincing evidence:
Respondent took the oath of admission and was admitted to the Bar of the Colorado Supreme Court on September 27, 1972. He is registered upon the official records, Attorney Registration No. 03077, and is thus subject to the jurisdiction of the Hearing Board in these disciplinary proceedings. Respondent's registered business address is 1860 Blake Street, Suite 300, Denver, CO 80202.
In September 2007, Barbara Fox (Fox), acting pro se, filed a lawsuit for $12,000.00 in damages in Arapahoe County Court against Mortgage Planning and Lending Specialists (Mortgage Specialists), a mortgage brokerage company, arising from false representations it had allegedly made when granting Fox a loan. Fox also filed suit against two of the company's principals, Leo Shifrin (Shifrin) and Mathew Green (Green). Fox had personally served a summons and complaint on Green, but she was having difficulty prosecuting her case and did not have the funds available to hire a lawyer on an hourly basis.
On January 11, 2008, Fox met with Respondent, a solo practitioner, who was litigating similar claims against Mortgage Specialists, Shifrin and Green, and who had completed substantial amounts of discovery that would be germane to Fox's case. Because Respondent recognized another lawyer would likely not assist Fox, given that the damages she sought were limited, and because Respondent had work product available and relevant to Fox's claims, Respondent agreed to represent Fox.
Respondent proposed the following arrangement: Respondent would charge Fox a flat fee of $5,000.00. An hourly rate of $425.00 per hour would be quoted in the fee agreement, but that rate would only be used in an application for statutory attorney's fees if Fox prevailed. Respondent would be entitled to any attorney's fees awarded, and he would be reimbursed for all costs he advanced during the litigation. Fox agreed with this arrangement and gave Respondent a check for $5,000.00, which Respondent deposited into his operating account. Due to a looming trial date in federal court, however, Respondent neglected to memorialize this understanding in a written fee agreement. Respondent stipulated to a violation of Colo. RPC 1.5(b) for failing to reduce his fee agreement with Fox to writing.
Following the engagement, Respondent incurred costs and performed some work in Fox's case; he amended her complaint, re-filed it in district court, and arranged for service of process on the named defendants. Through no fault of Respondent, however, service could not be effected quickly, and Fox grew tired of delays. In early August 2008, Fox directed Respondent to halt the litigation and requested return of her $5,000.00 fee. After negotiations with Fox, Respondent agreed to refund the entire amount, but due to a "cash crunch," he delayed in doing so until April 2009-eight months after Fox sought return of her money.
The Hearing Board concludes Respondent violated Colo. RPC 1.15(a), which mandates an attorney hold property of clients apart from the lawyer's own propertyby depositing the client's property in a separate trust account.(fn1) Respondent contends these funds were earned on receipt to compensate him for the bank of knowledge, experience and work product he amassed in litigating prior cases. But all fees deemed "earned on receipt" must be fully documented in writing, including a detailed description of the benefit being conferred on the client.(fn2) Because there was no such writing here, the Hearing Board views Respondent's arrangement with Fox as a flat-fee agreement and concludes the $5,000.00 advanced to Respondent was Fox's property. As such, Respondent was required to hold these funds in a separate trust account until he performed legal services on Fox's behalf.
We likewise find Respondent violated Colo. RPC 1.15(c). This rule provides that client property heldby a lawyer must be kept separate in a trust account until there is an accounting of funds earned, and that the lawyer must provide a periodic accounting regarding portions of the fee that are consumed. Contrary to the rule, Respondent deposited the $5,000.00 in his operating account, and he testified he never sent Fox a bill accounting for the work he performed or the fees associated with that work prior to the time she terminated the representation. Respondent's failure to keep these funds separate and provide a periodic accounting is a violation of Colo. RPC 1.15(c).
Further, we conclude Respondent violated Colo. RPC 1.16(d), which makes clear a lawyer is required to timely return to his client any advance payment of fees or expenses that has not been earned or incurred. On September 9, 2008, Respondent agreed to refund all of Fox's money, but Respondent also concedes he did not do so until April 2009 because he did not have the funds available. Since the Colorado Supreme Court has found comparable delays violated Colo. RPC 1.16(d),(fn3) the Hearing Board must likewise find Respondent violated the rule when he waited more than eight months to refund Fox's $5,000.00.
The Hearing Board does not find, however, that the People presented clear and convincing evidence of a violation of Colo. RPC 1.4(a)(3), which requires a lawyer to keep his client reasonably informed about the status of his or her matter. Although Respondent testified he did not provide Fox a bill summarizing his work and related fees, he also stated he could not recall whether he discussed these issues with Fox more informally. The People adduced no other evidence concerning this claim. The Hearing Board finds and concludes this vague and indefinite testimony, unsupportedby any other evidence, is not sufficient to meet the People's burden of proof.
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