Justia Legal Ethics Opinion Summaries
Articles Posted in Legal Ethics
Zente v. Credit Mgmt.
This case arose from Credit Management's debt-collection phone calls to plaintiff. On appeal, plaintiff's attorney challenged the district court's referral of his conduct to the disciplinary committee. Credit Management filed a motion to dismiss by requesting sanctions against the attorney under Rule 11, claiming that the attorney knew that the allegations in the complaint were false and frivolous. The district court denied the request for Rule 11 sanctions, holding that sanctions were unavailable because the attorney filed the motion to dismiss first, and thus obviously within twenty-one days of knowing that Credit Management was seeking Rule 11 sanctions. The district court, however, referred the allegation to the Admissions Committee for further review. The court concluded that neither plaintiff nor his attorney has standing to appeal that referral, which was not accompanied by any finding of misconduct. Accordingly, the court dismissed the appeal. View "Zente v. Credit Mgmt." on Justia Law
Posted in:
Legal Ethics, Professional Malpractice & Ethics
Baker Botts L.L.P. v. ASARCO LLC
ASARCO hired the law firms to assist it in carrying out its duties as a Chapter 11 debtor in possession, 11 U.S.C. 327(a). When ASARCO emerged from bankruptcy, the law firms filed fee applications requesting fees under section 330(a)(1), which permits bankruptcy courts to “award . . . reasonable compensation for actual, necessary services rendered by” professionals. The Bankruptcy Court rejected ASARCO’s objections and awarded fees for time spent defending the applications. The district court held that the firms could be awarded fees for defending their fee applications. The Fifth Circuit reversed. The Supreme Court affirmed. Section330(a)(1) does not permit bankruptcy courts to award fees to section 327(a) professionals for defending fee applications. The American Rule provides the basic point of reference for attorney’s fees: Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise. Congress did not depart from the American Rule in section 330(a)(1) for fee-defense litigation. The phrase “reasonable compensation for services rendered” necessarily implies “loyal and disinterested service in the interest of” a client, Time spent litigating a fee application against the bankruptcy estate’s administrator cannot be fairly described as “labor performed for”—let alone “disinterested service to”—that administrator. Requiring bankruptcy attorneys to bear the costs of their fee-defense litigation under section 330(a)(1) creates no disincentive to bankruptcy practice. View "Baker Botts L.L.P. v. ASARCO LLC" on Justia Law
In Re: Commonwealth’s Motion
The Criminal Justice Act, 18 U.S.C. 3006A, requires each federal district court to establish a plan to furnish representation to indigent persons charged with federal crimes. In seven different Post-Conviction Review Act cases in various Pennsylvania counties, hearings were initiated to disqualify the Federal Community Defender (FCD) as counsel, based on that organization’s alleged misuse of federal grant funds to appear in state proceedings. FCD acknowledges that it sometimes appears in PCRA proceedings without a federal court order directing it to do so, but claims that it uses federal grant funds only for preparatory work that will be relevant to a federal habeas petition and only if it has received a federal court order appointing it as counsel for federal habeas proceedings or is working to obtain such an appointment. FCD removed the motions under the federal officer removal statute, 28 U.S.C. 1442(a)(1), (d)(1). The Commonwealth moved, under 28 U.S.C. 1447(c), to return each to state court, claiming lack of subject matter jurisdiction. FCD argued that the Commonwealth lacked a federal private right of action and that federal law preempted the motions. The district courts split. The Third Circuit held that FCD properly invoked removal jurisdiction and that the Commonwealth’s attempts to disqualify it as counsel proceedings are preempted. View "In Re: Commonwealth's Motion" on Justia Law
City of Milwaukee v. Stadtmueller
The City of Milwaukee is defending several lawsuits brought by scores of plaintiffs alleging that its police officers conducted unconstitutional stops and searches, including strip‐searches and body‐cavity searches. Judge Stadtmueller was assigned to preside over several cases. Milwaukee, asserting that some of the judge’s comments in opinions and conferences in the related cases raise questions about his impartiality, moved for recusal under 28 U.S.C. 455(a). The judge declined. Milwaukee sought a writ of mandamus. The Seventh Circuit denied the motion. The five challenged statements were made during the course of litigation; “opinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep‐seated favoritism or antagonism that would make fair judgment impossible.” Judge Stadtmueller is presiding over several of these cases. It is not surprising that he might draw conclusions about the nature of the issue or problem. He is expected to look for and consider common threads and possible systemic problems to manage the cases effectively and decide them fairly. Even considering all the challenged statements together, nothing reasonably suggests deep-seated antagonism. View "City of Milwaukee v. Stadtmueller" on Justia Law
FIA Card Servs., N.A. v. Pichette
In three separate debt collection cases, three attorneys authored pleadings on behalf of three pro se defendants without disclosing their respective identities or entering his or her appearance in the cases. In separate orders, two hearing justices sanctioned each attorney for drafting, but not signing, answers and objections to dispositive motions on behalf of the pro se defendants. The Supreme Court vacated the sanctions, holding (1) the “ghostwriting” conduct of the three nonsignatory attorneys did not violate Rule 11 of the Superior Court Rules of Civil Procedure; and (2) under the Supreme Court Rules of Professional Conduct, an attorney shall not assist a pro se litigant with the preparation of pleadings, motions, or other written submission unless the attorney signs the document and discloses on the document his or her identity. View "FIA Card Servs., N.A. v. Pichette" on Justia Law
Posted in:
Legal Ethics
Bass v. Leatherwood
Plaintiffs filed a pro se complaint on behalf of two estates, claiming that financial institutions fraudulently transferred real estate in Shelby County, Tennessee, and failed to follow proper procedures for selling properties encumbered by outstanding liens. The district court dismissed on the ground that a non-attorney cannot appear in court on behalf of an artificial entity such as an estate, even though plaintiffs claimed that they were the sole beneficiaries of their respective estates. Each signed the notice of appeal as the “Authorized Representative” of the estates. Federal law allows parties to “plead and conduct their own cases personally or by counsel,” 28 U.S.C. 1654. The Sixth Circuit denied a motion to dismiss the appeal, holding that the sole beneficiary of an estate without creditors may represent the estate pro se. The purpose of protecting third parties is not implicated when the only person affected by a nonattorney’s representation is the nonattorney herself. The tradition that “a corporation can only appear by attorney,” has not been extended to estates. View "Bass v. Leatherwood" on Justia Law
Frazier Trebilcock Davis & Dunlap, P.C. v. Boyce Trust 2350
Plaintiff Fraser Trebilcock Davis & Dunlap, P.C. provided legal services to the defendants, a group of trusts, in connection with the financing and purchase of four hydroelectric dams. Dissatisfied with the representation they received, defendants refused to pay the full sum of fees billed by Fraser Trebilcock. To recover these unpaid fees, Fraser Trebilcock brought the underlying suit against defendants for breach of contract. Pursuant to MCR 2.403, the matter was submitted for a case evaluation, which resulted in an evaluation of $60,000 in favor of Fraser Trebilcock. Fraser Trebilcock accepted the evaluation, but defendants rejected it. The case proceeded to trial, resulting in a verdict for Fraser Trebilcock and a judgment totaling $73,501.90. Throughout the litigation of this breach-of-contract action, Fraser Trebilcock appeared through Michael Perry (a shareholder of the firm) and other lawyers affiliated with the firm. At no point did Fraser Trebilcock retain outside counsel, and there was no indication that the firm entered into a retainer agreement with its member lawyers or received or paid a bill for their services in connection with the litigation. After receiving the verdict, the parties filed posttrial motions: defendants moved for a new trial, and Fraser Trebilcock moved for case-evaluation sanctions under MCR 2.403(O), seeking to recover, inter alia, a “reasonable attorney fee” under MCR 2.403(O)(6)(b) for the legal services performed by its member lawyers. The trial court denied the defendants’ motion for a new trial, and granted Fraser Trebilcock’s motion for case-evaluation sanctions, ruling in particular that Fraser Trebilcock could recover an attorney fee as part of its sanctions. The issue on appeal to the Supreme Court was whether the plaintiff law firm could recover, as case-evaluation sanctions under MCR 2.403(O)(6)(b), a “reasonable attorney fee” for the legal services performed by its own member lawyers in connection with its suit to recover unpaid fees from defendants. Contrary to the determinations of the trial court and the Court of Appeals majority, the Supreme Court concluded it could not. Accordingly, the Court of Appeals was reversed in part, the trial court's award of fees was vacated, and the case remanded for further proceedings. View "Frazier Trebilcock Davis & Dunlap, P.C. v. Boyce Trust 2350" on Justia Law
Kumaraperu v. Feldsted
Plaintiff filed suit alleging that her attorneys negligently advised her to draw a check on an account that she owned but on which she was not a signatory and deposit the funds into another account she owned. Plaintiff alleged that doing so exposed her to a criminal forgery prosecution. The trial court sustained the attorneys' demurrer without leave to amend on the grounds that plaintiff bore unclean hands and failed to allege she had been found factually innocent of forgery. The court held that transferring one's own funds from one account to another cannot be the basis of a forgery prosecution absent intent to defraud, even if the
transfer is effected by means of a false signature. In this case, plaintiff's criminal
prosecution could not reasonably have been foreseen by defendants, and any damages she
incurred defending against it were not caused by them. Accordingly, the court affirmed the trial court's decision based on a different ground. View "Kumaraperu v. Feldsted" on Justia Law
Posted in:
Legal Ethics
Coffman v. Williamson
Morgan Drexen was described as a "legal software and legal software development company" owned and operated by nonlawyers but provided paraprofessional and administrative support to attorneys. The company provided debt-management services nationwide in conjunction with contracting attorneys, known as "engagement counsel." Morgan Drexen referred to engagement counsel as its "clients" and paid them a minimal fee that passed through the engagement counsel's (or engagement law firm's) trust accounts. Parties Donald Moore and Lawrence Williamson, Jr. served as engagement counsel. Moore was a Colorado-licensed attorney, and Williamson was a Kansas attorney who represented Colorado clients by association with Moore. In 2011, Morgan Drexen applied in Colorado to be registered as a debt-management service provider under the Debt Management Services Act (DMSA). The DMSA Administrator denied the application and issued a cease-and-desist order instructing Morgan Drexen to stop providing its services to Colorado residents and collecting fees. Morgan Drexen, Moore and Williamson filed a complaint seeking a declaration that :(1) they did not provide debt-management services under the original DMSA; and (2) the amended DMSA was unconstitutional. In its review of Morgan Drexen's appeal, the Supreme Court determined the trial court erred in concluding that Morgan Drexen's services fell within the scope of the legal services exemption in the original DMSA. Further, the amended DMSA was constitutional. The Supreme Court reversed the trial court's order and remanded the case for further proceedings. View "Coffman v. Williamson" on Justia Law
Posted in:
Consumer Law, Legal Ethics
Lee v. United States
Humphrey sued under the Federal Tort Claims Act on behalf of her daughter Teniscia, alleging that medical malpractice during Teniscia’s 2008 birth left her permanently disabled. Teniscia’s father, Lee, participated in the litigation, but did not ask to be joined as a party. Humphrey and Lee are not married; Teniscia lives with Humphrey, but both are Teniscia’s legal custodians. The case was settled for $13 million, used to buy an annuity to provide care over the course of Teniscia’s life. Porter, who represents Lee, demanded a share of the 25% contingent fee that had been negotiated between Humphrey and her lawyer, who opposed this request, arguing that Lee was not a party and that Porter had not performed any of the legal work that led to the settlement. After the settlement Lee moved to file an amended complaint naming himself as a plaintiff. The district court denied Lee’s motion, stating that Lee not only had approved the settlement but also had not filed an administrative claim, as the FTCA requires. Lee then moved to intervene. The court denied that motion as untimely. Porter unsuccessfully sought fees notwithstanding Lee’s non-party status. The Seventh Circuit affirmed, concluding that the district court could not have allowed intervention even on a timely motion. View "Lee v. United States" on Justia Law