Unconscionable

The District of Columbia Board on Professional Responsibility has recommended an informal admonition as reciprocal discipline for a sanction imposed in California.

There is a problem – the California sanction was disbarment

The Court referred this matter to the Board to recommend whether reciprocal discipline should be imposed on Respondent following his disbarment in California. Disciplinary Counsel argues that reciprocal discipline should be imposed and that Respondent should be disbarred. Respondent argues against the imposition of reciprocal discipline and argues that no discipline is warranted. The Board has reviewed Respondent’s Response to the Court’s Order to Show Cause why reciprocal discipline should not be imposed and Disciplinary Counsel’s Statement Regarding Reciprocal Discipline (“ODC’s Statement”). None of Respondent’s arguments are well-taken, and reciprocal discipline should be imposed.

However, the Board finds on the face of the record that the misconduct established in California warrants substantially different discipline in the District of Columbia. See D.C. Bar R. XI, § 11(e). As discussed below, Respondent was disbarred in California pursuant to a procedural rule that requires disbarment when a respondent is in default, and the facts deemed admitted pursuant to California’s default procedures show that he engaged in some misconduct, but not misconduct that would be sufficient to warrant disbarment in the District of Columbia. Thus, the Board recommends that the Court not impose identical reciprocal discipline, but instead should order Disciplinary Counsel to issue an informal admonition to Respondent.

The misconduct found in California

The Hearing Department found that, based on the facts it deemed admitted, Respondent charged an unconscionable fee of $735,481.25 in the underlying client matter (in violation of California Rule of Professional Conduct 4-200(A)) and willfully violated Business and Professions Code § 6068, subdivision j, by failing to notify the State Bar of a change in his address. See April 21, 2015 Order at 4-5. The Hearing Department found that the State Bar had not proven a violation of Rule 3- 700(D)(2) (failure to return unearned fees) because the record was insufficient to determine what portion of the fees had been earned.

On default

We recognize that the underlying facts here were not decided in California in a contested evidentiary hearing, where the proof offered could have been challenged. Rather, the facts were deemed admitted because Respondent did not participate, was in default, and never moved to have the default set aside. The difference is immaterial to the question of whether reciprocal discipline should be imposed.

The above-quoted statement pays lip service respect to the default but rejects any meaningful sanction

we recommend a sanction based on the fact that Respondent charged an unconscionable fee. As discussed above, [the] Martin [precedent] noted that an informal admonition is the typical sanction for charging an unreasonable fee unaccompanied by other Rule violations. We do not think that the failure to maintain a current address with the California Bar (the other California violation) is sufficient to aggravate the sanction above an informal admonition. We do not lightly find an exception to the rebuttable presumption that an identical reciprocal sanction should be imposed, but are constrained by the current parameters of the consequences for defaulting in a disciplinary proceeding in the District of Columbia. Disbarment imposed in California because of Respondent’s procedural default is substantially different than an informal admonition.

The Martin decision states in pertinent part

Under our case law, Martin‟s unreasonable fee in violation of Rule 1.5 (a), comingling funds in violation of Rules 1.15 (a) and (c), and failure to promptly return client funds in violation of Rule 1.16 (d), standing alone, do not warrant a severe penalty such as a lengthy suspension or disbarment. For example, sanctions for charging an unreasonable fee range “from informal admonition to suspension,” and suspension is usually imposed only in combination with violation of other rules. In re Shaw, 775 A.2d 1123, 1125 n.5 (D.C. 2001) (per curiam). See also In re Roxborough, 675 A.2d 950, 952 (D.C. 1996) (per curiam) (noting attorney received informal admonition for charging an excessive fee).

The unreasonable fee in the cited Shaw case was $800. The Roxborough decision does not specify the amount but notes that full restitution was paid.

When it comes to unconscionable fees, size matters. 

A case involving $800 is a weak precedent for one involving a near three quarter of a million dollars.

So let’s see.

The attorney charges an unconscionable fee of nearly 3/4 of a million dollars. He gets disbarred in California under a procedural rule that mandates disbarment for the default. In D.C. , the BPR really does not like defaults so they give him a total free pass. 

This result – a disbarment that magically transforms into a slap on the wrist – is what is really unconscionable.

I’m shocked that no one dissented – a unanimous opinion. I’ll be more shocked if the Court of Appeals affirms this result.

The case is In re Timothy Naegele.

The BPR cites a case of mine that is more comparable than they might think. In In re Shieh, the then-BPR asked that a disbarment in California for maintaining frivolous litigation be reduced to a two-year suspension.  

The Board agreed with Bar Counsel that respondent’s “disregard for the administration of justice surpasses our disciplinary experience”;  its refusal to recommend disbarment stemmed chiefly from what it considered to be a lack of “unequivocal direction from th[is c]ourt” as to the proper sanction for conduct prejudicial to the administration of justice unaccompanied by other misconduct such as dishonesty or neglect of client affairs.   If our decision that follows does not supply that direction for most, or even many, future disciplinary matters of this kind, it is only because respondent’s abuse of the legal system in California may well be in a class by itself.   Not to disbar him would defile that system and bring deserved discredit upon the authority by which he has been allowed to practice law.

Expect that lesson to be taught again. (Mike Frisch)