ENTRY ORDER
2015 VT 101
SUPREME COURT DOCKET NO. 2015-258
AUGUST TERM, 2015
In re PRB Docket No. 2015.002 } ORIGINAL JURISDICTION
}
} Professional Responsibility Board
}
} DOCKET NO. 2015.002
In the above-entitled cause, the Clerk will enter:
¶ 1. Upon review of the hearing panel decision in this matter, the Court concludes as
follows: The decision presents a well-reasoned discussion and resolution of a problem common
in legal practice, particularly for small firms and solo practitioners. Accordingly, the Court
orders review of the decision on its own motion, adopts the hearing panel decision in its entirety
as a final order of this Court, waives briefing and oral argument, and orders that the decision be
published in the Vermont Reports. The order of publication does not alter the hearing panel’s
decision granting the parties’ request for confidentiality of the amended stipulation and the
filings in this matter.
STATE OF VERMONT
PROFESSIONAL RESPONSIBILITY BOARD
In re: PRB File No. 2015.002
Decision No. 189
The parties filed a Stipulation of Facts together with Recommended Conclusions of Law
and a Recommendation for Sanctions. In response to this panel’s request for more information,
the parties filed an Amended Stipulation of Facts. The parties also filed a request for a protective
order to maintain confidentiality of matters detailed in the amended stipulation. Respondent has
waived certain procedural rights including the right to an evidentiary hearing.
The panel accepts the stipulated facts and conclusions and orders that Respondent be
admonished by Disciplinary Counsel for failure to reduce a contingent fee agreement to writing
in violation of Rule 1.5(c) of the Vermont Rules of Professional Conduct.
Since the hearing panel has accepted the recommendation for admonition, the matters
before the panel are confidential under Administrative Order 9, Rule 12 (A). To the extent that
the filings are not protected by this rule, the parties’ request for a protective order to maintain
confidentiality is granted.
Facts
R.P. first became of client of Respondent in 2005 when he suffered serious injuries in a
fall from a roof. Respondent also represented R.P. in numerous other matters over the years.
Respondent last represented R.P. for injuries sustained while being transported to a medical
facility. In early 2012, the matter was settled at mediation for $1,000,000. At the conclusion of
the mediation Respondent gave R.P. a breakdown of the settlement funds, which included
attorney’s fees in the amount of $333,333.33 (one third of the settlement). Respondent also gave
R.P. a copy of a letter to Medicare that detailed the settlement and disbursements, including
attorney’s fees.
While Respondent discussed his one-third contingency fee with R.P. on numerous
occasions, Respondent failed to reduce the agreement to writing. This failure was the result of
oversight due, in part, to the continuing nature of his representation of R.P. over the years.
The final payout of the settlement was made in May of 2012 and included the
$333,333.33 payment to Respondent.
In June of 2014, more than two years later, R.P. spoke with an attorney about the
handling of his case by Respondent. The attorney contacted Respondent and asked for a copy of
the fee agreement. Respondent then realized for the first time that he had failed to obtain a
written agreement and self-reported the violation to the Office of Disciplinary Counsel. At no
time prior to June of 2014 did R.P. indicate that he was dissatisfied with the settlement or with
Respondent’s fee.
2
R.P. subsequently file a legal malpractice suit against Respondent and Respondent’s firm
alleging that because Respondent did not have the contingency fee agreement in writing, he was
not entitled to any fee, or alternatively, that there was an oral agreement for a hourly fee. R.P.
also alleges other claims that are not relevant to this disciplinary matter.
The following mitigating factors are present: Respondent has no disciplinary record, he
had no selfish or dishonest motive, he made a full and free disclosure to disciplinary counsel and
has cooperated with the disciplinary proceedings. The only aggravating factor is Respondent’s
substantial experience in the practice of law.
If, after the conclusion of the malpractice action, R.P.is awarded some or all of the fees
he paid to Respondent, this forced restitution would be considered neither aggravating nor
mitigating. ABA Standards for Imposing Lawyer Sanctions, §9.4(a). The fact that R.P. has sued
Respondent for malpractice is not in and of itself an aggravating factor.
Conclusion of Law
Rule 1.5(c) of the Vermont Rules of Professional Conduct provides that:
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 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 or 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.
Respondent violated this rule when he failed to put his contingency fee agreement in
writing.
Sanctions
3
In determining the appropriate sanction in this matter we look to both the ABA Standards
and Vermont case law. Under the ABA Standards we consider the duty violated, the lawyer’s
mental state, the injury or potential for injury and the presence of aggravating or mitigating
factors.
Respondent violated his duty as a professional to insure that his fee agreement with his
client was reduce to writing. The parties have stipulated, and we concur, that the evidence
shows that Respondent’s mental state was one of negligence. He had a prior, lengthy and diverse
relationship with R.P. Prior work had been billed on an hourly basis. After the automobile
accident, Respondent immediately began to protect R.P.’s interests. Because of the nature of
their on-going relationship, general office policies were not followed with respect to the fee
agreement. This oversight was inadvertent, not intentional. R.P. was orally advised as to the
contingency nature of the fee agreement and had seen a written breakdown of all the fees and
expenses that were being deducted from the settlement. R.P. had seen and approved without
objection the attorney’s fees and expenses before accepting and negotiating his portion of the
total settlement proceeds.
Whether or not there was actual injury to the client is unknown at this time. There is
substantial evidence that the client had been aware of the contingency agreement and had seen
documents indicating the amount or Respondent’s fee and had raised no objection until more
than two years after the funds had been disbursed. The fact that R.P. is suing Respondent
alleging that he is entitled to a return of the entire fee is not sufficient evidence to establish actual
injury. If evidence of a further violation of the Rules of Professional Conduct is developed in the
course of the malpractice suit, that can be the subject of an additional investigation by
Disciplinary Counsel.
4
Even if the client should prevail in his suit to recover all or part of the fee paid, the facts
may not support a claim of misconduct. There can be malpractice in the absence of misconduct.
In Re PRB Docket No. 2006-167, 2007 VT 50, 181 Vt. 625 (mem.).
The ABA Standards provide that admonition is “generally appropriate when a lawyer
engages in an isolated instance of negligence that is a violation of a duty owed as a professional,
and causes little or no actual or potential injury to the client, the public or the legal system.” §7.4.
The presence of a number of mitigating factors and only one aggravating factor, support
the conclusion that admonition is the appropriate sanction in this matter. Respondent has no
prior disciplinary offenses, ABA Standards §9.32(a), he had no selfish or dishonest motive, ABA
Standards §9.32(b), he self-reported the violation to the office of Disciplinary Counsel, ABA
Standards §9.32(c), he has cooperated with the disciplinary proceedings, ABA Standards
§9.32(e), and has expressed remorse, ABA Standards §9.32(l). The only aggravating factor is
Respondent’s substantial experience in the practice of law, ABA Standards §9.22(i), but this is
not sufficient to raise the level of sanction in this matter.
There is only one Vermont case that addresses the violation of Rule 1.5(c), In re Fink,
2011 VT 42, 189 Vt. 470. Attorney Fink represented the client in connection with his divorce.
Another attorney represented the client in a personal injury suit against multiple defendants. The
client had a written one-third contingency fee agreement with this lawyer. The client asked
Attorney Fink to assist the other attorney. The other attorney was not a party to this conversation
and did not intend that Attorney Fink would take on any substantive role in the personal injury
matter, but it was agreed that Attorney Fink would assist in communication between the client
and his personal injury lawyer. Attorney Fink negotiated a contingency fee agreement with the
client for 12% of his recovery over and above the amount to be paid to the other attorney.
Attorney Fink’s role in the personal injury suit was not defined and the fee agreement was not
reduced to writing.
5
The hearing panel found, and the Supreme Court affirmed, a violation of Rule 1.5(c) for
failure to put the contingency fee agreement in writing and also for charging an unreasonable fee
and ordered that Fink be publicly reprimanded.
In Fink there was no understanding of the nature of the work to be done other than the
facilitation of communication and that did not take the skills of an experienced lawyer. In the
present case there was no misunderstanding of Respondent’s role. He undertook to represent
R.P. in the personal injury case and brought the case to conclusion, which at the time of
settlement seemed acceptable to R.P.
For this reason, and also because of the presence of the mitigating factors noted above,
we accept the parties’ recommendation of admonition by disciplinary counsel.
Order
Respondent shall be admonished by Disciplinary Counsel for violation of Rule 1.5(c) of
the Vermont Rules of Professional Conduct.
BY THE COURT:
Paul L. Reiber, Chief Justice
Publish
John A. Dooley, Associate Justice
Do Not Publish
Marilyn S. Skoglund, Associate Justice
Harold E. Eaton, Jr., Associate Justice
6