Fresh Start
Two bar discipline matters were heard yesterday by the Missouri Supreme Court.
Both arise from relationships between the attorneys and an Arizona-based company.
SC100641
In re: Jennifer Benedict Raines
Jackson County
Attorney discipline
Access the oral argument: SC100641 MP4 file | SC100641 MP3 file
The chief disciplinary counsel, Laura Elsbury, represented her office in Jefferson City; Raines was represented by Anthony Rupp of Foulston Siefkin LLP in Overland Park, Kansas.
Jennifer Raines is a solo practitioner in Independence focusing in bankruptcy, family law, and personal injury. Raines entered into a financing agreement with Fresh Start Funding, an Arizona-based company providing financing and marketing services to attorneys. Fresh Start offers to provide attorneys with training and forms to ensure compliance with the bankruptcy code and ethics rules. Raines then started giving clients two options for the payment of fees – a prepaid fixed amount prior to the filing of the bankruptcy petition or payment of a larger fee after the bankruptcy proceedings were initiated. In bankruptcy law, this delayed payment option is known as bifurcation. Typically, attorneys require all fees for services to be paid before filing the bankruptcy petition because the client’s debts will be discharged as part of the bankruptcy proceedings. In bifurcation, however, the client agrees to have the attorney perform certain tasks, including post-petition services, which then creates debts that survive the bankruptcy proceedings. Bifurcation creates risks for clients, including the possibility of dismissal for the failure to file all required schedules and a greater cost in attorney fees. Bankruptcy courts use a “rights and responsibilities agreement” to identify the duties of attorneys and their debtor clients. When the agreement’s conditions in the rights and responsibilities agreement are not met, attorneys must ask the bankruptcy court to approve their fees. In five cases, Raines certified to the bankruptcy court that she had complied with the rights and responsibilities agreement. The bankruptcy court, however, questioned Raines’ fee arrangement in the cases. The issues were litigated for two years during which one of Fresh Start’s founders represented Raines. Raines eventually reached a settlement in which she agreed the fees and expenses charged in the bifurcated proceedings were unreasonable to the extent they exceeded the customary fees in chapter 7 bankruptcy proceedings; her disclosures were insufficient and misleading; and her service agreements were contrary to the rights and responsibility agreement the bankruptcy court require. Raines reported her conduct to the chief disciplinary counsel and paid full restitution to her clients. The chief disciplinary counsel filed an information alleging Raines violated multiple rules of professional misconduct as a result of her fee-sharing agreements. The parties entered into a joint stipulation of facts and recommended discipline. A disciplinary hearing panel adopted the parties’ joint stipulation and recommended Raines be reprimanded. The parties accepted the panel’s recommendation. This Court, however, ordered briefing and argument.
This case presents two questions for this Court – whether Raines violated the rules of professional conduct and, if so, what discipline, if any, is appropriate.
SC100641_chief_disciplinary_counsel_brief
SC100642
In re: Jovanna Rene’e Bearden
Vernon County
Attorney discipline
The chief disciplinary counsel, Laura Elsbury, represented her office in Jefferson City; Bearden was represented by Mimi Doherty of Rynearson, Suess, Schnurbusch & Champion LLC in Kansas City.
For most of Jovanna Bearden’s legal career, she practiced consumer debt defense and bankruptcy law, but she recently shifted her practice to support the firm’s other attorneys practicing primarily criminal and family law. In 2019, Bearden entered into an agreement with Fresh Start Funding, an Arizona-based company providing financing and marketing services to attorneys. Fresh Start offers to provide attorneys with training and forms to ensure compliance with the bankruptcy code and ethics rules. Bearden then started offering clients the option of not prepaying their fees and, instead, “bifurcating” the bankruptcy representation. Typically, attorneys require all fees for services to be paid before filing the bankruptcy petition because the client’s debts will be discharged as part of the bankruptcy proceedings. In bifurcation, however, the client agrees to have the attorney perform certain tasks, including post-petition services, which then creates debts that survive the bankruptcy proceedings. Bankruptcy courts use a “rights and responsibilities agreement” to identify the duties of attorneys and their debtor clients. When the agreement’s conditions are not met, attorneys must ask the bankruptcy court to approve their fees. In 10 cases, Bearden certified to the bankruptcy court that she had complied with the rights and responsibilities agreement. The bankruptcy court questioned the manner in which Bearden was handling the bifurcated cases and ordered her to show cause why her disclosed fee agreements were not inconsistent with the rights and responsibilities agreement. Litigation as to the fee agreements followed in which one of Fresh Start’s founders represented Bearden. Bearden eventually reached a settlement in which she agreed the fees and expenses charged in the bifurcated proceedings were unreasonable to the extent they exceeded the customary fees in chapter 7 bankruptcy proceedings; her disclosures were insufficient and misleading; and her service agreements were contrary to the rights and responsibility agreement the bankruptcy court required. Bearden reported her conduct to the chief disciplinary counsel and paid full restitution to her clients. The chief disciplinary counsel filed an information alleging Bearden violated multiple rules of professional misconduct as a result of her fee-sharing agreements. The parties entered into a joint stipulation of facts and recommended discipline. A disciplinary hearing panel adopted the parties’ joint stipulation and recommended Bearden be reprimanded. The parties accepted the panel’s recommendation. This Court, however, ordered briefing and argument.
This case presents two questions for this Court – whether Bearden violated the rules of professional conduct and, if so, what discipline, if any, is appropriate.
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