Both Sides Now
The New Jersey Supreme Court sanctioned two attorneys for -among other things – representing both sides in an adversarial transaction.
One received a three-month suspension; the other was reprimanded.
From the Disciplinary Review Board majority report
The facts in these matters, nevertheless, clearly and convincingly establish that Mueller and Chirico were “associated.” They were “of counsel” to each others’ firms; Chirico used Mueller’s office address on his letterhead; they were on each others’ malpractice insurance policies; and Chirico’s name appeared on Mueller’s website. As the DEC properly pointed out, the attorneys held themselves out to the courts, the Bar, and the public as having a professional relationship. Moreover, they each reluctantly admitted that they engaged in a conflict of interest, something neither of them claimed they considered during the pendency of the Patriot application. Their denials are somewhat suspect, however, given the fact that XX [an unnamed associate] was assigned to handle the case, prepared the certification, and appeared in court on Heckel’s behalf. To underscore this point, Judge Wellerson testified that he did not immediately make the association between counsel until after the parties appeared in court. He became suspicious and discovered that the attorneys shared an address. After conducting further research, he discovered their affiliation, eventually leading to the referral to the OAE.
The conflict
Here, the attorneys had an association and represented clients with adverse interests. As the attorneys’ joint expert testified, Patriot’s interest in the transaction was to “get the most money from Mr. Heckel and pay off the least money to him.” By accepting Heckel as a client, and heavily relying on Chirico’s advice in the matter, MLG failed to properly protect Heckel’s interests. As the judge concluded, if he had approved the sale, after Heckel’s anticipated expenditures, he would have been left destitute…
Mueller directed XX to confer with Chirico, who provided XX with the pertinent documentation, which required only that XX fill in several blanks. Neither of the respondents revealed the conflict to XX, or to their respective clients, nor did they obtain informed written consent to the conflict from their clients. It is unlikely, however, that the conflict could have been waived.
Sanctions
We determine that Mueller’s conflict of interest (RPC 1.7(a)) and failure to supervise XX (RPC 5.1 (b)) warrant a reprimand.
Respondent Chirico was also guilty of a conflict of interest. He referred the matter to Mueller. He claimed he did so because he knew MLG was a competent law firm. However, neither Mueller nor XX had experience with sales of structured settlements and, therefore, relied on Chirico’s expertise. Thus, as the OAE speculated, Chirico may have referred Heckel to MLG assuming, or knowing, that Mueller would not “shop around” for a better deal.
Chirico is also guilty of making misrepresentations to the court, to the OAE, and to the DEC. Initially, he denied referring Heckel, then, according to Judge Wellerson, he never rectified the misstatement, despite implying to the OAE that he had done so “off-the-record.” He further asserted that he suffered from confusion over Heckel’s statement that, perhaps, Heckel had used a phone book to locate Mueller himself. It is not credible that Heckel, from Atlantic County, not only chose a Bergen County telephone directory to find a lawyer, but also randomly chose Mueller, an attorney with whom Chirico had a relationship. It is also odd that the case was venued in Ocean County, when Heckel resided in Atlantic County. As the DEC found, Chirico’s testimony was in many respects not credible…
for Chirico’s multiple violations (.RPC 1.7(a), RPC 1.15(d), RPC 3.3(a), RPC 8.4(c), and RPC 8.4(d)), we determine that a three-month suspension is adequate discipline, based on the above precedent.
A dissent views the sanctions as unduly harsh
our view is that (1) the circumstances under which the misrepresentation was made, (2) the mitigating factors (no prior ethics record and strong character evidence), and (3) the lack of any harm to the client from the misconduct, warrant a recommendation of a censure, not a suspension, as to Chirico. For this reason, we dissent from that portion of the majority decision recommending a three-month suspension for Chirico.
(Mike Frisch)