January 2001, pg. 50. BOARD OF OVERSEERS OF THE BAR.

Maine Bar Journal

2001.

January 2001, pg. 50.

BOARD OF OVERSEERS OF THE BAR

Maine Bar Journal January 2001 BOARD OF OVERSEERS OF THE BAR Orders of the Supreme Judicial Court of Maine Docket No. Bar996

Board of Overseers of the Bar

v.

Karen M. Burke

This matter was heard by the court on February 23, March 1, and March 2, 2000, pursuant to an information filed by the Board of Overseers of the Bar. The Board was represented by Assistant Bar Counsel, Geoffrey S. Welsh. Karen M. Burke, Esq., Maine Bar #2940, was present and represented by Philip P. Mancini, Esq.

The information filed by the Board alleged violations of the Maine Bar Rules occurring in the course of Burke's representation of three separate clients. Specifically, the Board charged Burke with violating Bar Rules 3.1(a), 3.2(f)(2)(4), 3.3(a), 3.4(f)(2)(i), 3.6(a)(1), (2) & (3), and 3.7(b) & (e) (1)(i).

During the hearing, both sides submitted a number of exhibits and the court heard testimony from Burke's former clients, Gail and Robert Beesley, Carolee Weglarz, and Stephen Weston; attorneys Waldemar Buschmann, Daniel Petersen, and Donald Gasink; Heidi Pushard; Rhonda Cook and Cheryl Cutliffe, as well as testimony from Burke, herself. Based on this testimony and the record evidence the court finds the following facts and draws the following conclusions:

I. FINDINGS AND CONCLUSIONS

1. Karen Burke, a sole practitioner, operates a law practice in Winthrop, Maine.

   A. THE BEESLEYS

2. In May 1996, Gail and Robert Beesley sought the services of Burke with regard to their financial situation.

3. Burke was relatively experienced in the bankruptcy field having clerked for the United States Bankruptcy Court following law school.

4. After contacting Burke and meeting with her in person, the Beesleys were under the impression that Burke would handle all matters associated with their Chapter 7 bankruptcy for a flat fee of $750, in addition to the filing fee of $175. Supporting the Beesleys' belief that a flat fee arrangement had been agreed upon is Burke's own Rule 2016(b) statement (FED. R. BANKR. P. 2016(b)) dated June 13, 1996, in which Burke represented that the $750 was to cover all the routine tasks associated with what proved to be an unremarkable Chapter 7 bankruptcy.

5. The Beesleys paid $750 to Burke the day of their first meeting and paid the $175 filing fee roughly a month later.

6. Burke filed the bankruptcy petition on behalf of the Beesleys in June 1996.

7. Burke believed that the $750 was merely a retainer to be applied toward her fees and expenses, and she billed the Beesleys monthly for her services on an hourly basis. Although Burke was unable to produce a fee agreement signed by the Beesleys, she did produce an addendum to the fee agreement signed by the Beesleys agreeing to hourly charges for work done by a newly hired paralegal.

   Burke billed the Beesleys for $903.24 in addition to the original $750, and was paid $478.24 beyond the $750.

9. The Beesleys paid the monthly bills for a period of time and, as the bills mounted, worked out a payment plan with Burke which allowed them to pay $25 a month and thereby avoid interest charges on the remaining balance due.

10. The Beesleys received their bankruptcy discharge in October 1996.

11. Eventually, however, the Beesleys retained other counsel because they felt they had been misled about the nature of their fee arrangement with Burke.

12. Through their new attorney, the Beesleys sought to reopen their bankruptcy case and sought an order compelling Burke to disgorge the fees they had paid to her up to that point in time.

13. As a result, it came to the attention of the Bankruptcy Court that Burke's Rule 2016(b) fee disclosure statement to the court either did not accurately state the terms of her fee arrangement with the Beesleys, or Burke had billed her clients not in accordance with that arrangement.

14. Burke's response to the Beesleys' motion to reopen was aggressive. She claimed that the additional charges were entirely appropriate pursuant to her fee agreement with the Beesleys and that her Rule 2016(b) statement accurately disclosed this fee arrangement.

15. The Bankruptcy Court made short but painful work of this "first line of defense." In addition to concluding that Burke "abused her clients badly" and "misled the court" with her Rule 2016(b) statement, the Bankruptcy Court wrote:

    Were I to conclude, as Attorney Burke contends, that she and her clients agreed to an "hourly against retainer" fee arrangement, she would be left to explain why her Rule 2016(b) statement misrepresented that arrangement to the trustee, to creditors, and to the court. As it stands, her situation is little different. Having undertaken the Beesleys' representation for a flat fee, and having disclosed that arrangement to the court in plain English, she deliberately proceeded to bill the debtors on an altogether different basis.

    Beesley u. Burke (In re Beesley), Case No. 96-10686 (Bankr. D. Me. Aug. 15, 1997) (footnote omitted).

16. The court granted the Beesleys relief ordered that Burke disgorge all fees paid to her by the Beesleys ($1139.42); and determined that the Rule 2016(b) disclosure statement described a flat fee arrangement that was inconsistent with the hourly charges for which Burke had been billing the Beesleys.

17. The court also ordered that Burke discharge the Beesleys' remaining balance ($425) and pay their attorney fees associated with the disgorgement petition ($1776.04).

18. Finally, the court ordered that Burke appear at another hearing, pursuant to 11 U.S.C.A. § 105(a) (1993) and FED. R. BANKR. P. 9029:

    to show cause why additional sanctions, including suspension from practice in this court and enjoining collection of postpetition fees from clients similarly situated to the Beesleys, should not be ordered.Beesley, Case No. 9610686.

19. Between the show cause order and the hearing, Burke...