Egregious Misconduct Draws Indefinite Suspension

An attorney who – among other things – sold out one set of clients to secure a favorable settlement for another set – has been indefinitely suspended by a justice the Massachusetts Supreme Judicial Court. 

The numerous sins against ethical standards started with his retainer agreements, which provided for a 20% contingent fee for both sets of time-share victim plaintiffs and $1,000 for advanced expenses. 

The attorney treated the advanced expenses as part of his fee which, with respect to the disfavored set of clients amounted to approximately $130,000. 

From the report of the Board of Bar Overseers

This case presents two separate allegations of misconduct arising our of the same litigation. The respondent represented several plaintiffs in a lawsuit against the developer of a time share community on Cape Cod. During the course of that case, he began representing another set of plaintiffs who owned time share units at another development. The defendant was the same in both cases. Without informing the clients in the first case, he settled the second case, and, as part of the settlement, agreed to dismiss the first case and not represent the first set of plaintiffs in the future – a flagrant conflict of interest. Moreover, he refused to refund to the first group of plaintiffs expense retainers that they had paid him at the outset of the engagement, having spent less than $1,000 of the approximately $130,000 he had collected.

His claims were deemed unworthy of belief

At the hearing, the respondent testified that he explained to his clients that the $1,000 payment was a “flat fee” for legal services even if he incurred less than that in expenses and reached no settlement. The hearing committee did not credit this testimony.

The two sets of clients were suing the Breakers and the Soundings. 

The attorney favored the Soundings clients

Although only the Soundings plaintiffs received compensation, the settlement affected the rights of the Breakers plaintiffs as well. The Addendum to the settlement agreement recited that an “express condition” of settlement was that no additional financial obligations be incurred to the Breakers plaintiffs. The Addendum also required that the Breakers case be dismissed without prejudice and that plaintiffs’ counsel (Attorney Reilly) agree to not re-file it and not represent any of the owners in future litigation.

As to the Breakers, no break

The hearing committee found that the respondent did not inform the Breakers plaintiffs of the settlement. He did not inform them or seek their consent before dismissing their lawsuit. He did not tell them that he had agreed to no longer represent them.

Insult followed injury

Having sold out their interests to settle the other case, the respondent had the temerity to keep the retainers paid to him by the Breakers plaintiffs. At trial, he admitted that the, money was not payment for a contingent fee, since the clients received no compensation from the defendants. Instead, he characterized the retainers as advances against hourly legal fees. But, the engagement letters do not provide for an hourly fee, and the respondent produced no records to show that he had earned any hourly fees.

Sanction

We have found no precise precedent for the respondent’s serious and widespread misconduct, and extensive aggravating conduct…we recommend that the Court impose an indefinite suspension.

The court followed the recommendation. (Mike Frisch)