Indiana Suspends Lawyer for 180 Days For Failing to Prosecute Client’s Malpractice claim

IN THE MATTER OF FAIRCHILD, Ind: Supreme Court 2016 – Google Scholar:

This is an opinion from the Indiana Supreme Court suspending a lawyer for failing to prosecute the client’s medical malpractice claim. The lawyer also failed to keep the client informed of the statute of the matter – specifically that the case had been dismissed.


The findings were as follows:


Violations: The parties agree that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct:

1.3: Failure to act with reasonable diligence and promptness.

1.4(a)(3): Failure to keep a client reasonably informed about the status of a matter.

1.4(a)(4): Failure to comply promptly with a client’s reasonable requests for information.

Discipline: The parties propose the appropriate discipline is a suspension of 180 days without automatic reinstatement. The Court, having considered the submissions of the parties, now approves the agreed discipline.
Edward X. Clinton, Jr.

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The ARDC Claims Patent Lawyer Was Not Diligent And Deceived Clients

BEFORE THE HEARING BOARD:

The ARDC has brought a complaint against Jerry Allen Schulman (“Respondent”) and has alleged that the Respondent allowed numerous patent applications and trademarks to become abandoned because he did not respond to correspondence from the United States Patent Office. Unfortunately, the lawyer also allegedly made false representations to the clients that their patent applications were pending and proceeding normally. In Count II of the Complaint, the Administrator alleges as follows:

12. Respondent did not communicate to ASICO that the applications referred to in Count I had been abandoned. Periodically, Respondent would provide ASICO with a document called the “ASICO PATENT DOCUMENT” that purported to give the status of each of the company’s patent applications. These dockets did not show that the patent applications had been abandoned. In fact, many of the patents had been abandoned, and Respondent knew that but did not include that information on the chart, in an effort to conceal his inaction from his client.
13. In many instances, the dockets stated that action had been taken by Respondent and the application was “awaiting action,” presumably by the USPTO.
14. For example, Respondent had a docket dated June 17, 2009 (“Sample Docket”). The Sample Docket falsely stated that patent application number 11/534,573 was “pending.” In fact, that application had been abandoned on June 15, 2007. Respondent knew that his statement that patent application number 11/534,573 was pending was false, because he knew the application had been abandoned.

15. The Sample Docket did not show that patent application 11/864,865 had been abandoned on June 12, 2008. On June 17, 2009, Respondent knew that the application had been abandoned, but chose not to include that with the information conveyed to ASICO.
16. The Sample Docket falsely stated that patent application number 12/050,167 was “undergoing preexam processing.” In fact, the application had been abandoned on December 2, 2008. Respondent knew that his statement that patent application 12/050,167 was undergoing preexam processing was false, because he knew the application had been abandoned.
17. The Sample Docket falsely stated that patent application number 12/263,315 was “undergoing preexam processing.” In fact, Respondent had received a Notice to File Missing Parts on November 18, 2008, a notice to which Respondent never provided a response. Respondent knew that his statement that patent application number 12/263,315 was undergoing preexam processing was false, because he knew that he had received the Notice to File Missing Parts.
18. The Sample Docket falsely stated that patent application number 12/408,715 was filed and awaiting action. In fact, Respondent had received a Notice to File Missing Parts on April 15, 2009, a notice to which Respondent never provided a response. Respondent knew that his statement that patent application number 12/408,715 was awaiting action was false, because he knew he had received the Notice to File Missing Parts.

19. Respondent also prepared another document he titled “ASICO Trademarks.” This charts purported to represent the status” of each ASICO trademark that Respondent handled. The charts do not show that some of the trademark applications had been abandoned. Respondent knew that some of the trademark applications had been abandoned but did not convey that information to ASICO.
20. Respondent knew that the representations he made to ASICO regarding the status of the patent and trademark applications were false because he had received notices from the USPTO advising him that the applications had been abandoned due to his inaction.
21. By reason of the conduct described above, Respondent has engaged in the following misconduct:
conduct involving dishonesty, fraud, deceit or misrepresentation by providing ASICO with charts purporting to show the status of patent and trademark applications that contained false statements, or intentionally omitted truthful information in an effort to conceal his inactivity, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (1990 and 2010).

Comment: these allegations have not been proven and the Respondent has not filed his response to the complaint. What made this case interesting for the ARDC was the repeated efforts to deceive the client that the patent and trademark applications were pending.

Edward X. Clinton, Jr.

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South Carolina Reprimands An Attorney Who Failed to Properly Disburse Funds From a Real Estate Closing

IN THE MATTER OF BRECKENRIDGE, SC: Supreme Court 2016 – Google Scholar:

This case involves allegations that a lawyer failed to properly supervise the distribution of funds from an escrow account after the completion of a real estate closing. The lawyer essentially made a minor error in failing to properly reconcile the account, which then had a negative balance.

What is of more interest is the court’s concern that lawyers are in its words being used as “rubber stamps” in real estate closings. The court explained:

We now clarify that an attorney’s duty to oversee the disbursement of loan proceeds in a residential real estate transaction is nondelegable. To fulfill his or her duty, the attorney must ensure: (a) that he has control over the disbursement of loan proceeds; or (b) at a minimum, that he receives detailed verification that the disbursement was correct. In practice, an attorney may find that utilizing his own trust account and disbursing the funds himself provides the most effective means of fulfilling this duty. We stand by our decision in Richardson, however, and do not require that the funds must pass through the supervising attorney’s trust account.See id. Therefore, we also find an attorney’s verification of proper disbursement, via sufficient documentation or information received from the appropriate banking institution—in addition to the disbursement log itself—to be acceptable in fulfilling his duty to oversee the disbursement of funds.[11]In essence, Respondent was used as a rubber stamp[12] for a non-lawyer, out-of-state organization with no office in South Carolina, whose involvement was not disclosed to Respondent’s clients. This Court has insisted on lawyer-directed real estate closings in order to protect the public. Respondent’s method of handling his client’s business provided no real protection to his clients and no attorney record of the transaction by which to verify the details of the closing if problems developed after closing.

The case illustrates the pressures affecting lawyers who do real estate closings.

Edward X. Clinton, Jr.

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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.

Tenessee suspends lawyer who was sanctioned in a civil case

Mabry v. Board of Professional Responsibility, Tenn: Supreme Court 2014 – Google Scholar:

Sanctions can lead to disciplinary cases. In this matter the lawyer was sanctioned for failing to withdraw a frivolous claim. That, in turn, led to a 45 day suspension from the practice of law. The key mistake was failing to withdraw a civil conspiracy claim.
“In 2008, Mr. Mabry filed suit on Ms. Shore’s behalf against Maple Lane Farms, LLC in the Chancery Court for Blount County. The lawsuit arose out of a disagreement between Ms. Shore and Maple Lane Farms regarding the use of Maple Lane Farms’ property for concerts and other outdoor events. The Chancery Court action sought a declaratory judgment, injunctive relief, and abatement of a nuisance.
[4] On August 19, 2008, Mr. Mabry filed a second action on Ms. Shore’s behalf in the Circuit Court for Blount County seeking damages against Roger Fields, a Building Commissioner for Blount County, and Robert Goddard, the attorney for Blount County. The complaint alleged the existence of a civil conspiracy, involving Mr. Fields, Mr. Goddard, and Blount County Mayor Jerry Cunningham, to require Ms. Shore, rather than Maple Lane Farms, to appeal a decision by Mr. Fields to the Blount County Board of Zoning Appeals. Mr. Cunningham was not named as a defendant. Within a month after filing this lawsuit, Mr. Mabry, on behalf of Ms. Shore, voluntarily dismissed Mr. Goddard, leaving Mr. Fields as the sole defendant.
On September 19, 2008, Mr. Fields moved to dismiss the complaint for failure to state a claim upon which relief could be sought. He sent Mr. Mabry a proposed motion for sanctions and a safe harbor letter pursuant to Tenn. R. Civ. P. 11. Mr. Mabry took no action. On October 24, 2008, Mr. Fields filed an amended motion seeking dismissal of the suit and Rule 11 sanctions against Mr. Mabry and Ms. Shore. Mr. Mabry did not respond to this motion to dismiss. Meanwhile, Ms. Shore fired Mr. Mabry as her attorney. On December 31, 2008, Mr. Mabry filed a motion to withdraw as Ms. Shore’s counsel.
On January 25, 2011, the Blount County Circuit Court heard Mr. Fields’ motion to dismiss and to impose sanctions. In a memorandum of law filed with the trial court, Mr. Mabry stated that the civil conspiracy claim against Mr. Fields became moot once Mr. Goddard was dismissed from the case. In an order issued March 4, 2011, the Blount County Circuit Court found that Mr. Mabry had more than ample opportunity—from the time he dismissed the case against Mr. Goddard, his receipt of the safe harbor letter from Mr. Fields, and being terminated by his client—to dismiss and/or correct by amendment the civil conspiracy claim. The Blount County Circuit Court imposed Rule 11 sanctions against Mr. Mabry for attorney’s fees in the amount of $5,000.”
The Tennessee Supreme Court held that the attorney demonstrated a lack of diligence, Rule 1.3.
“Upon review of these facts, we find that the Panel did not act arbitrarily or capriciously in determining that Mr. Mabry violated RPC 1.3 and RPC 8.4(a). On the contrary, Mr. Mabry’s failure to take any action in response to Mr. Fields’ safe harbor letter, motion to dismiss, and motion for sanctions was neglectful, unprofessional, and exposed his client to the very real possibility of monetary sanctions. We find there was substantial and material evidence supporting the Panel’s findings that Mr. Mabry violated the duty of diligence required of attorneys by RPC 1.3, and in doing so, that he violated RPC 8.4(a).”
Edward X. Clinton, Jr.

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ARDC Brings Charges Against A Lawyer be For Poor Legal Work

More and more often poor legal work is becoming the subject of attorney discipline complaints. A client can, of course, bring a legal malpractice case for legal work that breaches the standard of care. However, legal malpractice cases can be difficult to bring because the plaintiff must show that, but for the lawyer’s negligence he would have won the underlying case. Then the plaintiff must prove damages. Thus, there are many case where a lawsuit cannot be brought even where the lawyer’s work did not meet the standard of care.  These types of legal malpractice cases are increasingly being brought by the ARDC and other state regulatory bodies.

One case that fits this trend is In Re Laurel Sue Hickman, 2014 PR 145, where the respondent lawyer was alleged to have missed discovery deadlines leading to the dismissal of a client’s EEOC case.  In that complaint, the ARDC alleges that a client, Queshaun Daniels retained Ms. Hickman to represent him in his EEOC matter. Daniels claimed that she had been the victim of discrimination by the United States Postal Service. Daniels matter was complicated because, before she filed the EEOC claim, she had filed a bankruptcy case.

The factual allegations of the complaint read like a typical motion to compel. Ms. Hickman allegedly failed to answer certain discovery requests that were due on February 8, 2013. The hearing officer then granted a motion to compel, ordering the attorney to answer the written discovery by March 1, 2013. The hearing officer further issued a rule to show cause “by March 15, 203 as to why she did not timely answer the USPS’s discovery requests…” Complaint at ¶10. The respondent answered the discovery requests by March 15, 2013.

On March 22, 2013, the attorney for the USPS “filed a motion to hold the EEOC matter in abeyance based on Daniels’ January 31, 2012 Chapter 7 bankruptcy filing so that the hearing officer could determine the real party in interest. Complaint ¶12.  According to the complaint, paragraph 13:

“13. On April 17, 2013, [the Hearing Officer] ordered Respondent to provide her by April 26, 2013, with five documents that had been filed in Daniels’ bankruptcy, by April 26, 2013.  [The Hearing Officer] specified the documents that Respondent was ordered to provide: 1) a filed copy of the bankruptcy petition; 2) the Schedule B – Personal Property filing; 3) the Statement of Financial Affairs; 4) the name and contact information of the Trustee; and 5) the name and contact information of the Trustee’s representative. [The Hearing Officer] noted on her order that two of the documents requested, the bankruptcy petition and Schedule B filing, had already been provided by Rosen, and if they were correct, Respondent did not need to resubmit them. A copy of the order was sent to Respondent by the Clerk of Hearings or other EEOC staff, and Respondent received the order shortly thereafter. Respondent failed to provide [the Hearing Officer] with any of the five documents by April 26, 2013, as ordered.

15. On May 7, 2013, [the Hearing Officer] ordered Respondent to show cause as to why Respondent had not complied with her April 17, 2013 order, and to provide the five required documents related to Daniels’ bankruptcy, by May 10, 2013. [The Hearing Officer]’s order restated that failure to comply with the order could result in sanctions, including default or dismissal of the request for hearing. A copy of the order was sent to Respondent by the Clerk of Hearings or other EEOC staff, and Respondent received the order shortly thereafter.

16. Respondent did not provide [the Hearing Officer] with the documents by May 10, 2013, as ordered. Those documents were either in Respondent’s possession or publicly available as part of the filings in Daniels’ bankruptcy proceedings. On June 20, 2013, [the Hearing Officer] issued an order dismissing Daniels’ hearing request as a result of Respondent’s non-compliance with her April 17, 2013 and May 7, 2013 orders. A copy of the dismissal order was sent to Respondent by the Clerk of Hearings or other EEOC staff, and Respondent received the order shortly thereafter.”
Additionally, the ARDC alleged that the respondent failed to inform the client that the case had been dismissed “because of Respondent’s failure to comply with [the Hearing Officer’s] April 17, 2013 and May 7, 2013 orders requiring Respondent to provide [the Hearing Officer] with documents relating to Daniels’ bankruptcy.
The Rules at issue are 1.3 (failure to act with diligence) 1.4(a)(c) (failure to keep the client reasonably informed about the status of the matter), and 3.2 (failure to expedite litigation).
In Count II, the ARDC accuses Ms. Hickman of accepting a child support case and failing to take any action to transfer the case to Tennessee so that the order could be modified. The ARDC alleged in particular that:
“29. Respondent did not, at any time between January 10, 2013 and April 2, 2013, take any steps to modify Steven’s child support order, request the transfer of case number 2004F277 to Tennessee, or send the Reyeses a certified copy of the July 20, 2005 child support order.

30. On April 2, 2013, Dawn emailed Respondent a request for a refund of the $1,000 Bock had paid Respondent. In the email, Dawn stated “…because you have done nothing, Steve is in contempt at the moment, which is a very big inconvenience for me and my family…” From the time Dawn requested a refund on April 2, 2013, to May 18, 2014, the date this matter was referred to Panel C of the Inquiry Board, Respondent has not taken any action to have case number 2004F277 transferred or modified. Although Respondent did not do enough work to justify retaining the entire $1,000 fee paid, she has not refunded any portion of the $1,000 fee paid by the Reyeses.”

The charges include Rule 1.3 (lack of diligence) 1.4(a)(c) (failure to keep client reasonably informed about the status of the matter), 1.16(d) (failure to refund an unearned fee), and 8.4(c).

In sum, this is a classic negligence case that no lawyer would take because it would be difficult to prove that the underlying matters could have been won absent the lawyer’s negligence and because damages would be difficult to prove.

Edward X. Clinton, Jr.