Attorney Placed On Involuntary Inactive States For Unconscionable Bankruptcy Fees

An attorney who had charged “unconscionable” fees in a bankruptcy matter has been ordered on involuntary inactive status by the California State Bar Court Review Department

In 2005, a federal bankruptcy court found that Mansfield Collins collected $258,000 in fees to which he was not entitled and charged an additional $226,213.77, also in unwarranted fees. Arising from this judgment, in 2010, Collins stipulated in the State Bar Court to culpability for charging and collecting unconscionable fees and voluntarily agreed to a one-year stayed suspension and a three-year probation with conditions, including a three-month actual suspension and that he pay his former clients $258,000 in restitution plus interest accruing from 2005. Further, he agreed to pay restitution on a schedule: $100,000 by February 2012; another $100,000 by February 2013; and the remaining principal plus interest by January 2014.

 Collins received a modification to delay the first $100,000 payment deadline to February 2013. By that date, he had paid only $2,500, and by August 2013, he had made only five payments totaling $22,500 in restitution. Thus, the Office of Probation of the State Bar (Probation) moved to revoke his probation. Finding that Collins had violated his probation, a hearing judge granted the motion and recommended discipline, including that the stay of execution of the one-year suspension be lifted and that Collins should be actually suspended for six months and until he makes restitution.

 Collins seeks review and argues that the hearing judge abused his discretion and committed numerous errors of law. In particular, he contends the judge should have required Probation to prove that he had the ability to pay restitution. He requests that we reverse the judge’s order and conduct an independent review of his ability to pay restitution. Probation generally supports the judge’s recommendation and does not seek review, but asks us to impose the full one-year actual suspension that was earlier stayed.

We have independently reviewed the record (Cal. Rules of Court, rule 9.12), and conclude that the hearing judge properly granted the motion to revoke. We agree with Probation, however, that Collins should be actually suspended for the longest period available, one year. Collins agreed to timely pay the six-figure restitution that the bankruptcy court found due. Yet he failed to adhere to his agreement—all the while remaining eligible to practice law but for a three-month period in 2011. These facts warrant a full revocation and cause us to exercise our discretion and order Collins placed on involuntary inactive status effective three days after service of this opinion.

Also, in light of facts occurring after the evidentiary hearing, we find that Collins should not be required to make any further payment in restitution because he has since settled the debt owing to his former clients.

(Mike Frisch)