Flat Fees And Conscious Indifference

The level of intent in a matter of proven misappropriation drives the sanction analysis, as demonstrated once again in an opinion of the District of Columbia Court of Appeals

A majority of the hearing committee concluded Mr. Zamora had misappropriated client funds negligently rather than recklessly and recommended a six-month suspension for the negligent misappropriation. On review, the Board on Professional Responsibility agreed with the hearing committee’s findings except for its conclusion that Mr. Zamora acted negligently. The Board determined that he acted recklessly and recommended that he be disbarred. Mr. Zamora urges us to adopt the hearing committee’s conclusions in full. We agree with the hearing committee’s conclusion that Mr. Zamora acted negligently and accordingly adopt the committee’s recommended sanction.

The attorney had charged a flat fee for a matter involving an undocumented man in removal proceedings but withdrew before the services were completed

Mr. Ascensio and Ms. Stiles agreed to the withdrawal and Ms. Stiles asked for a detailed bill to account for the flat fees. Mr. Zamora provided her with a bill, which Ms. Stiles did not initially challenge. She later sought a refund for both matters and filed for fee arbitration in D.C., but was told that she had not exhausted all avenues of relief. Ms. Stiles then filed the underlying bar complaint against Mr. Zamora.

There were two written fee agreements

The fee agreements differed in describing the work to be completed and the fee amount, but both contained a waiver provision stating, “I hereby WAIVE the requirement that the flat fee, given to Pablo A. Zamora, Esq. for work to be performed on my behalf, is to be held in trust.” The waiver provision erroneously referred to “Rule 1.15(d)” as support for this provision because Rule 1.15(d) stated the rule regarding unearned fees until a rule change 2010, when it was renumbered as Rule 1.15(e). See Order, No. M-235-09 (D.C. Mar. 22, 2010). Each agreement also clarified the specific benefits to be conferred upon the client pursuant to the flat-fee agreement, and Mr. Zamora’s obligation to refund any unearned portion of the flat fee should the client terminate the attorney-client relationship. Ms. Stiles signed and initialed all the provisions of both fee agreements, including the waiver provision.

Respondent and Ms. Stiles testified about his oral explanation

the hearing committee determined that Mr. Zamora failed to obtain informed consent from Ms. Stiles, pointing to Mr. Zamora’s own testimony that he did not explain the material risks of the proposed course of conduct because he did not believe any existed. In that regard, it was the view of the majority of the hearing committee that Mr. Zamora mistakenly believed that his actions— putting the waiver language in his agreements, reviewing the agreements with clients to some degree, and having clients initial and sign each provision of the fee agreement—were sufficient to obtain informed consent under Rule 1.15(e). The majority concluded that Mr. Zamora was negligent because he had a “good-faith but incorrect” understanding of Rule 1.15(e)’s requirements, rather than a “conscious indifference” to the obligation of informed consent. The dissenting member of the hearing committee determined that Mr. Zamora acted recklessly because his misunderstanding of the requirements of informed consent—a “long standing” concept defined in the Rules of Professional Conduct—was not reasonable.

The court explains the concept of “conscious indifference”

Ultimately, we conclude that Mr. Zamora’s efforts to obtain informed consent—though obviously lacking—did not demonstrate “conscious indifference” to the security of his clients’ funds or the purposes of informed consent. It was not objectively unreasonable for him to believe that the disclosures in his fee agreement were sufficient to obtain informed consent, particularly given his erroneous belief that his willingness to refund unearned fees mitigated any potential risks to his clients. Though this is a close case, Mr. Zamora’s ignorance of the specific requirements of informed consent is more akin to Mr. Haar’s ignorance of Rule 1.15(e)’s application to flat fees than to Mr. Ponds’s plainly noncompliant fee agreement. Mr. Ponds was familiar with Mance, and presumably knew that Mance required him to refund all unearned fees, and yet his fee agreements stated the opposite; Mr. Zamora knew that he needed to obtain informed consent to his flat-fee arrangement under Rule 1.15(e), but made only some of the disclosures necessary to obtain it. These distinctions reflect the line between “conscious indifference”— recklessness—and negligence. We therefore agree with the hearing committee that Mr. Zamora misappropriated funds negligently.

An eight-month suspension (two additional months added to the presumptive six-month suspension for other violations) was imposed. (Mike Frisch)