Overhead
The New Jersey Supreme Court has reprimanded an attorney for improperly charging personal injury clients a $150 fee for “overhead.”
The Disciplinary Review Board set out the facts
On October 12, 2023, the OAE conducted a demand audit of respondent’s recordkeeping practices. During the interview, respondent disclosed that he had discovered that his staff was charging and collecting a $150 fee in every personal injury matter to cover firm overhead costs, despite such practice having been stopped, as improper, following a 2017 random audit. He further stated that he would review his files and refund the affected clients for the improper fee.
The OAE directed respondent to identify the affected clients and, no later than November 17, 2023, to provide with OAE with a schedule for the repayments. On November 17, 2023, respondent provided the OAE with a list of the 115 affected clients and indicated that he was beginning to issue refunds to the clients. Following a subsequent request from the OAE, respondent confirmed that his firm’s practice of charging the improper $150 fee began on October 25, 2019 and ended on September 13, 2023.
In April 2024, the OAE directed respondent to produce a copy of all negotiated checks made payable to the 115 affected clients.
Payback
As of the date of the disciplinary stipulation, respondent had provided to the OAE proof that he reimbursed only ten of the 118 affected clients.
Conclusion
On balance, we conclude that the aggravating and mitigating factors are in equipoise and, thus, determine that a reprimand is the appropriate quantum of discipline necessary to protect the public and preserve confidence in the bar.
Additionally, as a condition to his discipline, we recommend that respondent be required, within thirty days of the Court’s disciplinary Order in this matter, to submit proof to the OAE, in the form of canceled checks, that he repaid all affected clients. In the event any of the affected clients cannot be located, respondent shall remit those funds to the Superior Court Trust Fund, as R. 1:21-6(j) requires.
(Mike Frisch)