Report: Trump’s Private Attorney Tells White House Staff Not To Lawyer Up – Talking Points Memo

Report: Trump’s Private Attorney Tells White House Staff Not To Lawyer Up – Talking Points Memo:

This post is not about politics, but it is very important.

Trump hired Marc Kasowitz, an attorney, to defend him.  Kasowitz has told other White House staffers not to get their own lawyers. If you are part of an organization and you are advised not to retain an attorney by an attorney, think long and hard before following this advice.

The other guy’s lawyer (in this case Marc Kasowitz) has no duty to you and, indeed, does not care about you at all. He might be planning to throw you under the bus to save his own client.

In sum, if you had some meaningful conduct that might be questioned, you should seek legal advice immediately.

Being told you don’t need a lawyer, means that you probably need one!

Edward X. Clinton, Jr.

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New Mexico Court Rejects Bare Bones Arbitration Clause in Legal Fee Agreement

Castillo v. Arrieta, NM: Court of Appeals 2016 – Google Scholar:

The Court of Appeals of New Mexico has voided an arbitration clause on the ground that the client did not give his informed consent to arbitration. The clause was bare bones and stated:

“ARBITRATION CLAUSE: Should any dispute arise, Client and Attorney agree to submit their dispute to arbitration.”

The New Mexico Court found fault with this clause because it did not explain to the client that he was waiving his right to a jury trial and possibly waiving his right to broad discovery.  The court’s opinion provides in relevant part:

Plaintiff signed the fee agreement, affirming that he “read the foregoing terms and agree[d] to them without reservation.” There is no other language in the agreement that discusses the scope or meaning of the arbitration clause or provides any explanation of arbitration generally. There is no indication in the agreement that Plaintiff was waiving his right to a jury trial should he sue his attorney for malpractice. Nor is there any suggestion that Plaintiff seek advice of independent counsel before agreeing to such a waiver.
{24} Here, the text of the clause itself is no help. It declares in a single sentence only that client and attorney agree to submit “any dispute” to arbitration. We have already held that this is technically sufficient to apply to malpractice claims. However, it is not sufficient to inform the client “of the material advantages and disadvantages of the proposed course of conduct.” See id. If Plaintiff truly was never warned that he “was waiving [his] right to a trial by jury” if he sued his attorneys for malpractice, as he stated in his affidavit, then inclusion of such a broadly worded and unexplained material term was an overreach by his attorneys that will not be enforced in this Court.

The court remanded the case to determine if the lawyers sufficiently explained the arbitration clause to the client. 

For the practicing lawyer who wishes to use arbitration, this case is instructive. The case suggests that the arbitration clause needs to be more detailed and needs to explain what the client is giving up by agreeing to arbitration. Further, the clause should recommend that the client consult with another attorney before signing.

Edward X. Clinton, Jr.

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Illinois Appellate Court Rejects Referral Fee Claim Because Lawyers Failed to Comply with Rule 1.5

This type of case is, unfortunately, quite common in Illinois. A lawyer refers a case to another lawyer who handles the case and obtains a recovery. The referring lawyer then seeks a portion of the legal fee. The lawyer who received the referral disputes the claim noting that no referral fee agreement was signed.

The referring lawyer, Richard Naughton, then files suit against the lawyer who allegedly received the referral, here Bruce Pfaff.

Rule 1.5 of the Illinois Rules of Professional Conduct requires that any fee-splitting agreement between lawyers be documented in writing. Because Naughton did not obtain a written referral agreement, he was not eligible to collect a referral fee.

Two provisions of Rule 1.5 are pertinent:

(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent
fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
 Subsection (e) provides:
 (e) A division of a fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer, or if the primary service performed by one lawyer is the referral of the client to another lawyer and each lawyer assumes joint financial responsibility for the representation;
(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable.

In Naughton, the court followed the reasoning of a similar case from the 1st Appellate District,  Donald W. Fohrman & Associates, Ltd. v. Marc D. Alberts, P.C., 2014 IL App (1st) 123351  that held that the provisions of Rule 1.5 are mandatory and are designed to protect clients.

In sum, if you refer a case you should not expect to receive compensation unless you have a signed referral agreement with the lawyer who accepts the referral. This rule is appropriate because it makes matters clear for the client who can read the agreement and see who can make a fee claim against him. Further, by requiring a written agreement, the lawyer who wishes to collect a fee must accept professional responsibility for the matter. If an oral agreement is enforced, it becomes easy for the referring lawyer to collect a fee yet avoid professional responsibility if there is a breach of duty.

Edward X. Clinton, Jr.

Naughton v. Pfaff, Ill: Appellate Court, 2nd Dist. 2016 – Google Scholar:

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ARDC Hearing Panel Rejects Claim Against Lawyer Who Drafted A Power of Attorney For A Third Party

This recent decision of the ARDC Hearing Board, In re George Krasnik, 2015 PR 00001, is significant because it holds that an attorney had no attorney-client relationship with the victim of elder abuse.
In recent years the ARDC has made a concerted effort to discipline lawyers involved in elder abuse. In this case a majority of the Hearing Board held that there was no misconduct because the lawyer did not represent the victim of the elder abuse. The facts set forth in the opinion are typical of the elder abuse scenario in which someone obtains the signature of a victim of dementia and then transfers all of the victim’s property to himself.
Factual Summary
Respondent testified that in about late March 2011, Stanislaw Zabielski, a Polish-speaking man in his mid to late sixties, came to his office and asked him to prepare a quit claim deed and a power of attorney for his childhood friend, Jan Muskala who was in the hospital. Zabielski “told him Muskala wanted to give Zabielski his home and wanted Zabielski to have a power of attorney for his property.” The attorney made no attempt to learn why Muskala was in the hospital or why Muskala wanted Zabielski to transfer property or designate a power of attorney.
The attorney, for a legal fee of $200 or $300, prepared a power of attorney for property and a quit claim deed. The attorney admitted that he had entered into an attorney-client relationship with Zabielski.
The attorney prepared a standard Illinois Statutory Short Form Power of Attorney for Property. “At Zabielski’s request, Respondent inserted an additional paragraph to the form which gave Zabielski the right to withdraw all of Muskala’s money from PNC Bank, either in cash or as a check payable to Zabielski, and to close any and all of Muskala’s bank accounts. Respondent did not view Zabielski’s request as being strange.” Page 5.
Another allegation: “At no time did Respondent meet with Muskala or take any other action to ensure that Muskala was competent and had the requisite mental capacity to enter into a contract or sign a power of attorney form.” Page 5.
A few weeks later, Zabielski returned with a signed and notarized quit claim deed. Respondent “took it upon himself to sign the form as agent of both the grantor and grantee.” Page 6. “Respondent took the executed deed to the Cook County Recorder’s office, tendered payment for any fees associated with the transfer, and recorded the deed. Thereafter, Respondent had no further contact with Zabielski.”
An attorney for the Cook County Public Guardian tesitifed that Muskala had a stroke in April 2011, became severely disabled, and was then abused by Zabielski when he went home to recover. On February 2, 2012, Catholic Charities obtained an order of protection prohibiting Zabielski from having any contact with Muskala and from abusing or exploiting him. Page 8. A geriatric psychiatrist determined that Muskala suffered from dementia after his stroke in April 2011. 
The Public Guardian investigated the case and determined that Zabielski took all of Muskala’s money and closed his bank account and spent the money. Further, because of the quit claim deed, Muskala had to be moved out of his house.
The ARDC Complaint
The ARDC’s complaint was premised on the theory that Muskala was not an adverse party but, rather, was an intended third-party beneficiary of the attorney-client relationship between the Respondent and Zabielski. The ARDC pleaded several counts: (1) Failing to provide competent representation in violation of Rule 1.1; (2) failing to explain a matter to the extent reasonably necessary to permit the client to make an informed decision Rule 1.4(b); (3) Representing a client in which he had a conflict of interest Rule 1.7(a); Failing to consult with the client concerning the objectives of the representation in violation of Rule 1.4(a)(2); permitting a person who employed him and paid him to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services in violation of Rule 5.4(c).
The Panel’s Decision
The Panel decided to dismiss the Complaint and all the charges of misconduct because it held that Muskala was not an intended third-party beneficiary of the attorney-client relationship between the Respondent and Zabielski. Page 14. The Panel explained: “Respondent knew that the documents he prepared would not be valid until they were executed by Muskala, notarized and, in the case of the power of attorney, attested to by someone who could confirm Muskala’s sound mind. Respondent had no involvement in the execution or notarization of the documents, and never saw the signed power of attorney until recently. Given these circumstances, we fail to see how the mere creation of documents, which were not signed by Muskala and which were requested by a person who owed no legal or fiduciary duty to Muskala, could have any direct impact on or benefit Muskala. Further, as to the drafting or recording of the quitclaim deed, Respondent’s representation of Zabielski involved a transaction, rather than a fiduciary relationship, for which he could expect Muskala to have his own representation. For these reasons, we find that the duties owed by Respondent to his client Zabielski did not extend to Muskala.” Pages 13-14.
The Dissent
The Majority decision provoked a thoughtful and powerful dissent from Heather H. Harrison. She concluded that Muskala was the intended third party beneficiary of the attorney-client relationship between Zabielski and respondent. Harrison cited the Short Form Power of Attorney which in her view clearly identified Muskala as the intended beneficiary of the relationship. The relationship between the holder of a power of attorney and the principal is that of an agency and the interests of the two persons are aligned. She writes: “Respondent failed to determine, or event attempt to determine, Muskala’s circumstances and objectives, failed to contact him for any information, and failed to explain the provision of the power of attorney or quit claim deed to him.” Page 18. Further the Respondent failed to even consider whether there was elder abuse or other circumstances.
My View
The dissent is correct. The lawyer should have been suspicious when Zabielski explained to him that Muskala wanted to give him his money and real property for nothing. It was obviously not an arm’s length transaction and the Majority opinion is a essentially a legal fiction. Any attorney asked to draft a power of attorney for someone else should be required to confirm that the person is of sound mind and able to executed the power of attorney. In sum, an atrocious decision and the administrator should appeal.
Edward X. Clinton, Jr.