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Maryland Legal Malpractice Attorney

legal malpractice

Maryland attorney is disbarred for excessive billing

In Attorney Grievance Commission of Maryland v. Framm, 449 Md. 620 (2016), the Maryland Court of Appeals disbarred Rhonda I. Frame for excessive billing (among other reasons).  Framm was retained by her client to vacate a $55,000 judgment entered in a divorce case.  Framm was successful in having the $55,000 judgment vacated, but she charged $58,748.77 in attorney’s fees and collected $54,000 in fees.

There were several reasons why Framm’s charges were disproportionate to the amount in dispute, including (a) she engaged in abusive discovery tactics; (b) she charged the client “for her work in procuring [the expert]’s testimony despite the fact that her discovery misconduct caused his testimony to be excluded”; and (c) she charged the client for her numerous defective filings.

In disbarring Framm, the Court of Appeals found that Framm violated her ethical duty to advise the client that the cost of continuing with the litigation may nullify any benefit.  Secondly, Framm’s fees were unreasonable, because the excessive amount of time she expended on the case was largely due to her own litigation mistakes and misconduct.   The Court of Appeals concluded that although the client obtained the result he wanted, that outcome “was not because of Respondent’s efforts, but rather despite the Respondent’s misconduct”.

Practice Pointer for clients: (1) An attorney’s fees must be reasonable.  Your attorney’s fees usually should not exceed the amount in controversy; and (2) when an attorney commits a mistake, you should not be billed for the time and effort that it takes the attorney to correct the mistake.  In other words, the client should not be charged for the attorney’s defective work or the time  that it takes the attorney to correct his or her mistakes.

Securities litigation malpractice

I recently represented a client who had a legal malpractice claim against his former securities litigation attorneys.  The client had retained securities attorneys to pursue a claim against a national bank for breach of its fiduciary duty as an indentured trustee for mortgage backed securities.  The client had loss his entire investment in high interest promissory notes backed by mortgages when the issuer filed for bankruptcy. Unfortunately, the client’s securities litigation case was dismissed by the court due to the attorneys’ failure to prosecute the lawsuit in a diligent manner.

I was able to obtain a favorable settlement for the client against the former attorneys.  The client recovered from his legal malpractice case and a prior case about 25% of his losses from the mortgage backed securities.  A 25% recovery of losses in a securities case far exceeds the national average of the recovery of 2.2% of losses in the settlement of class action securities cases in 2014.

 

 

Court of Special Appeals’ unreported decision vacating a dismissal of a legal malpractice complaint on the grounds that the allegations in the complaint raise a question of fact as to whether the statute of limitations was tolled.

On December 1, 2016, the Court of Special Appeals in an unreported decision found that Stewart A. Sutton’s client had pled sufficient facts in her legal malpractice case against Baltimore lead paint attorney, Saul Kerpelman and his law firm, Kerpelman & Associates, to create a question of fact as to whether the statute of limitations had been tolled.  In vacating the dismissal of his client’s legal malpractice lawsuit, Judge Deborah S. Eyler stated that based upon “the facts alleged by Natashia, reasonable jurors could find that her cause of action against Kerpelman for legal malpractice did not accrue until the firm ceased representing her, on December 3, 2012, under the continuation of events doctrine”.  The appellate court further found that “Reasonable jurors could find that Natashia could not have discovered the existence of her claim by ordinary diligence because she relied on Kerpelman to advise her of all information that is significant and matter to the matter that is the subject of the relationship, including the existence of a potential malpractice claim for the handing of the 1986 lead paint lawsuit”.

Stewart A. Sutton was interviewed by the Daily Record about the Court of Special Appeal’s decision. Stewart A. Sutton was quoted as saying: “My client, Natashia Woods, had the misfortune of retaining the one attorney in all of Maryland who had the motivation to conceal from her the fact that her 1986 lead paint case against the same landlord had been settled by Mr. Kerpelman for the inadequate amount of $1,000”.

 

 

When does a legal malpractice cause of action accrue in Maryland?

For a client to sue his or her former attorney in Maryland for legal malpractice, the client must first have suffered damages.  This usually means that the client must wait until the underlying case is concluded to determine whether in fact the attorney’s malpractice caused the client to suffer damages.

A cause of action “does not accrue until all elements are present, including damages”.  Baker, Watts & Co. v. Miles & Stockbridge 95 Md.App. 145, 187 (1993); Owens-Illinois v. Armstrong 326 Md. 107, 121 (1992) (holding that a cause of action arises “when facts exist to support each element”); Rounds v. Maryland-National Capital Park & Planning Commission 441 Md. 621, 654 (2015) (“For any statute of limitations analysis, the operative date is the date that a claim accrues”).

Damage is a necessary element of a legal malpractice count.  Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A. 152 Md.App. 698, 717 (2003) (legal malpractice requires “duty, breach, causation, and damage”).  “The absence of any one of those elements will defeat a cause of action in tort”.  Id.   Thus, the accrual of a tort claim requires a party “first sustains compensable damages that can be proven with reasonable certainty”.  Edmonds v. Cytology Serv. of Maryland, Inc. 111 Md.App. 233, 270 (1996); Rounds, 441 Md. at p. 654 (holding that a “claim accrues when the plaintiff suffers the actionable harm”).

Maryland courts have uniformly held that the “mere possibility of an injury in a negligence action does not rise to a cause of action”.  Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A. 152 Md.App. 698, 719 (2003); 65 C.J.S. Negligence § 56 at 353 (2000) (“The possibility of injury is not injury itself . . . possibility is insufficient to impose any liability or give rise to a cause of action”) (citing Resavage v. Davies, 199 Md. 479 (1952)).

In professional malpractice cases, there may be a long time interval between the negligent act and the resulting harm.  Edmonds,111 Md.App. at 257 (holding that the injury does not always occur simultaneously with the negligent act).  For a cause of action for professional malpractice to accrue, “there must be not only the negligent act, but a consequential injury, and the injury is the gravamen of the charge”.  Supik, 152 Md.App. at 719 (quoting 65 C.J.S. Negligence § 56 at 352 (2000)).

The rationale that the accrual of a legal malpractice claim requires damages is consistent with the public policy of fostering the attorney-client relationship: “It would be detrimental to the traditional attorney-client relationship to suggest that a client, each time a disagreement arose, should expect to be damaged and be required to consult yet another counsel to review the actions of the attorney earlier retained”.  Supik, 152 Md.App. at 722.

When does the 3-year statute of limitations to sue a Maryland attorney for legal malpractice begin to run?

The most common question that I’m asked is how long does a client have to sue his or her former attorney in Maryland for legal malpractice.  The general answer is that the 3-year time period to sue a former attorney for malpractice begins to run when the client discovered or should have discovered the malpractice by the exercise of reasonable diligence.

There are many situations in which a client will not discover the attorney’s legal malpractice until many years have passed.  In such situations, Maryland recognizes three doctrines that toll the statute of limitations: (a) the discovery rule; (b) the “continuation of events” theory; and (c) the “fraud exception” of Courts & Judicial Article § 5-203.

  1.    DISCOVERY RULE

After a legal malpractice cause of action arises, the “discovery rule tolls the accrual of the limitation period until the time the plaintiff discovers, or through the exercise of due diligence, should have discovered the injury”.  Frederick Road Limited Partnership v. Brown & Sturm 360 Md. 76, 95-96 (2000); Penwalt Corp. v. Nasios 314 Md. 433, 579 (1988) (holding that the statute of limitations does not begin to run until a plaintiff knows or reasonably should know the nature and cause of his or her harm); Litz v. Maryland Department of Environment 434 Md. 623, 641 (2013) (holding that the discovery rule “tolls the accrual of an action until the plaintiff knows or should have known of the injury giving rise to his or her claim”); Poffenberger v. Risser 290 Md. 631, 634-635 (1981) (“the cause of action accrues when the wrong is discovered or when with due diligence it should have been discovered”); O’Hara v. Kovens 305 Md. 280, 302 (1986) (holding that notice to trigger the statute of limitations “means having knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged” claim).

Discovery or inquiry notice “is notice implied from ‘knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry (thus, charging the individual) with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued’”.  Windesheim v. La Rocca 443 Md. 312, 327 (2015) (quoting Poffenberger v. Risser 290 Md. 631, 637 (1981)). “Simply stated, inquiry notice is ‘circumstantial evidence from which notice may be inferred’”.  Id.

Maryland “has long applied [the discovery rule] in all manners of malpractice litigation”.  Frederick Road, 360 Md. at 97.  In such cases, the statute of limitations is tolled until the plaintiff has sufficient “knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged cause of action”.  Round v. Maryland National Capital Park & Planning Comm. 441 Md. 621, 654-55 (2015) (internal quotations omitted).

Maryland was the first state to adopt the “discovery rule” in both medical and legal malpractice cases.  Hahn v. Claybrook 130 Md. 179 (1917); Poffenberger v. Risser 290 Md. 631, 634 (1981) (noting that a commentator claimed that Maryland was first to adopt the concept); Mumford v. Staton, Whaley & Price, 254 Md. 697 (1969); 3 Ronald E. Mallen, Legal Malpractice § 23.55 (2016 ed.) at  593.  California was the second state to adopt the “discovery rule”.  Id. at 594.  The adoption of the discovery rule did not alter the requirement that a cause of action would not accrue until the client suffers actual damages.  Id. at § 23:24 at p. 457; Budd v. Nixen 6 Cal.3rd 195, 198 (1971) (“We hold that a cause of action for legal malpractice does not accrue until the client suffers damage and that the determination of that date raises an issue of fact”).

  1.    “CONTINUATION OF EVENTS” THEORY

“Maryland has also recognized the ‘continuation of events’ theory, a corollary accrual doctrine, which serves to toll the statute of limitations where a continuous relationship exists between the parties”.  Frederick Road, Md. 360 at 97.

This tolling doctrine avoids the unnecessary disruption of the attorney-client relationship: “The continuous representation rule is consistent with the purpose of the statute of limitations, which is to prevent stale claims and enable the defendant to preserve evidence.  When the attorney continues to represent the client in the subject matter in which the error has occurred, all such objectives are achieved and preserved.  The attorney-client relationship is maintained and speculative malpractice litigation is avoided.”  3 Ronald E. Mallen, Legal Malpractice § 23.44 (2016 ed.) at 533.

The “continuation of events” theory is based on the equitable principal of detrimental reliance: “When a relationship develops between two parties, built on trust and confidence, the confiding party may rely upon the “good faith of the other party so long as the relationship continues to exist”.   This is especially true in fiduciary relationships such as the attorney-client relationship where a “client has the right to rely on his or her lawyers’ loyalty and to believe the accuracy and candor of the advice they give”.  Supik, 152 Md.App. at 714 (quoting Frederick Road, 360 Md. at 98 & 103).

The rationale for tolling the statute of limitations when there is a continuation of services by an attorney is that the attorney-client relationship is based upon “mutual trust and confidence” and the client “has the right to relax his or her guard and rely on the good faith of the other party so long as the relationship exists”.  Frederick Road, Md. 360 at 98 & 102.  The client’s right to rely upon an attorney’s advice is “founded upon public policy, because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantage by availing himself of the client’s necessities, credulity, and liberality”.  Id., at 102 (quoting Hughes v. McDaniel 202 Md. 626, 633 (1953)).

It is “well settled that trust and confidence are basic to the attorney-client relationship”.  Frederick Road, Md. 360 at 101; Bar Association of Baltimore City v. Marshall 269 Md. 510 (1973) (“The relationship existing between an attorney and his client is one that of necessity requires mutual trust and confidence”).  Accordingly, “a client has the right to rely on his or her lawyer’s loyalty and to believe the accuracy and candor of the advice they give”.  Frederick Road, Md. 360 at 103.

As a result of their confidential relationship, the client “is under no duty to make inquiries about the quality or bona fides of the services received, unless and until something occurs to make him or her suspicious”.  Id. at 98; Desser v. Woods 266 Md. 696, 709 (1972) (“Nor is the confiding party under any duty to make inquiry to discover that the confidential relationship has been abused during the continuation of that relationship”).

Nevertheless, the statute of limitations will begin to run during an attorney-client relationship when “the confiding party knows, or reasonably should know, about a past injury”.  Supik, 152 Md.App. at 714-15.   However, it would normally take “extraordinary diligence”, not the required “ordinary diligence”, for client to discover an attorney’s legal malpractice during the representation, because the foundation of the attorney-client relationship is built upon trust and confidence in the attorney’s advice.  Frederick Road, 360 Md. at 105-06.

  1.    THE “FRAUD EXCEPTION”

When “the knowledge of a cause of action is kept from a party by the fraud of an adverse party, the cause of action shall be deemed to accrue at the time when the party discovered, or by the exercise of ordinary diligence should have discovered the fraud”.  Courts & Judicial Article § 5-203; Frederick Road, 360 Md. at 98-99.

When there is an attempt to fraudulently conceal a cause of action, “a person is said to be on inquiry notice when a reasonable person would have used due diligence to investigate the fraud or underlying injury”.  Supik, 152 Md.App. at 715; Frederick Road, 360 Md. at 98-99; Dashiell v. Meeks 396 Md. 149, 169 (2006) (holding whether the statute of limitations is tolled “is ordinarily a question of fact as to whether the plaintiff failed to discover the cause of action because he failed to exercise due diligence or whether he was unable to discover it and, as a result, unable to exercise due diligence, because the defendant concealed the wrong”).

The “fraud exception” begs the question that “if a party is perpetrating fraud in such a manner as to obfuscate the confiding party, would a reasonable person be otherwise attuned to the fraud”?  Supik, 152 Md.App. at 715.  The logical answer is that the discovery of an attorney’s fraud by the client would normally take “extraordinary diligence”, as opposed to the required “ordinary diligence”.  Frederick Road, 360 Md. at 105-06.

Expulsamiento de La Abogacía en Gaithersburg, MD. de la Abogada Jennifer V. Landeo y El Acuerdo de la Desviación Condicional de Suzanne Capriotti

Por años, abogados de inmigración en Maryland creían que eran inmunes  a ser demandados  por negligencia profesional o de ser disciplinados por violar las reglas de conducta de abogados en Maryland.   Los abogados de inmigración creían que sus clientes tenían miedo de quejarse cuando no recibían los ajustes prometidos a su estado de inmigración, especialmente si habían entrado al país sin una visa.

Esto cambió unos años atrás, cuando abogados, incluyendo a Stewart A. Sutton, empezaron a representar clientes de inmigración en casos legales de negligencia profesional estableciendo quejas en su nombre con el Procurador Comisión de Quejas de Maryland.  Como resultado, los miembros del Colegio de Abogados, extendiendo su mano para proteger extranjeros  vulnerables, no documentados,  del tratamiento sin ética de abogados de inmigración .  Muchos de estos abogados han sido suspendidos y expulsados de la abogacía  por el Tribunal de Apelaciones en los últimos años.  Attorney Grievance Commission v. Gayton J. Thomas , Jr. 440 Md. 523 (2014)(disbarred); Attorney Grievance Commission v. Sudha Narasimhan, 438 Md. 638 (2014) (suspendido por 60 días) , Attorney Grievance Commission  v. Alexander  M. Chanthunya, 446 Md. 576 (2016) suspensión indefinida); y Attorney Grievance Commission v. Richard W. Moore, Jr., 447 Md. 253 (2016)  (supensión indefinida).

La firma (bufete de abogados) de Landeo y Capriotti es un ejemplo de como dos abogados de inmigración tomaron ventaja de la vulnerabilidad de sus clientes.

A.     JENNIFER V. LANDEO

En enero 2015, el Procurador Comisión de Quejas puso una queja disciplinaria  contra Jennifer V. Landeo por el mal manejo de múltiples casos de inmigración y por no depositar los honorarios legales y tasas de representación en la cuenta de fideicomiso de la firma.  El Procurador Comisión de Quejas de Maryland v.  Jennifer Vetter Landeo , Condado de Montgomery, Corte de Circuito, Caso No. 30653-M.

En septiembre 2015, un juéz de la corte de circuito de Montgomery presentó su encuentro de Hechos y Conclusiones de Ley en el caso disciplinario contra Jennifer Landeo.  La Corte de Circuito encontró que Ms. Landeo había cometido las siguientes violaciones del reglamento de conducta profesional de abogados en la representación de tres clientes de inmigración.  Regla 1.3 (diligencia); Regla 1.4 (comunicación);  Regla 1.15 ( protección de propiedad); Regla 1.16 (terminación de representación); y 8.4 (mala conducta).

En febrero 19, 2016,  el tribunal de Apelaciones  de Maryland indefinidamente  suspendió a Jennifer V. Landeo de la práctica de leyes , porque ella se envolvió en un patrón de mala conducta.  Vea;  Maryland Court of Appeals opinion, Attorney Grievance Commission v. Landeo, 446 Md. 294 (2016).  Estamos de acuerdo con la Comisión de que la sanción apropiada para la mala conducta de Landeo sea una suspensión indefinida de la práctica de leyes en Maryland con el derecho a pedir la reintegración después de noventa días.  Entre otra mala conducta Landeo falló en proveer diligente representación, falló en la comunicación con sus clientes y falló en poner pagos en una cuenta de fideicomiso para abogados , falló en entregar a tiempo los records de sus clientes al terminar su representación, y se envolvió en una conducta que era perjudicial para la administración de justicia.

En mayo 19, 2016, la profesión como abogada de Jennifer V. Landeo terminó abruptamente cuando ella consintió a ser expulsada del colegio de abogados cuando nuevos cargos disciplinarios fueron presentados contra ella, incluyendo la violación de reglas: 1.3 (diligencia), 1.4 (comunicaciones), 1.15 (protección de propiedad de clientes), y 8.4 (a) y (d) (envolvimiento en una conducta que es perjudicial para la administración de justicia) de las Reglas de Conducta Profesional de  Abogados de Maryland.  Attorney Grievance Commission v. Landeo, 447 Md. 592 (2016).

B.     SUZANNE L. CAPRIOTTI

En agosto 2015, en el juicio disciplinario contra Jennifer V. Landeo, Suzanne L. Capriotti testificó que ella era la que manejaba los records financieros de la firma de abogados Landeo & Capriotti.  De acuerdo al encuentro de hechos y conclusiones de ley dictado por el juéz en su audiencia,  Ms. Capriotti “testificó que desde 2010, ninguno de los pagos de abogado, ni pagos de tasas de presentación para la firma fueron depositados en una cuenta de fideicomiso.  Ella testificó que “nosotras creíamos que el lenguaje del acuerdo de retención era suficiente para mantener [fondos de clientes] en la cuenta de explotación”.   Ms. Capriotti reconoció que ella no sabía que el lenguaje en su acuerdo de retención actualmente no permitía los depósitos de fondos de clientes  (que no habían sido ganados)en la cuenta de explotación hasta que recibió el aviso del Procurador Comisión de Quejas en 2014.

En julio 2015, Ms. Capriotti entró en un Acuerdo de Desviación Condicional con el abogado de barra de Maryland.  Ms. Capriotti accedió a que las cuentas de banco de la firma fueran revisadas periódicamente por un contador público certificado para asegurar que la firma estuviera depositando  cobros a sus clientes y tasas de presentación en la Cuenta de Fideicomiso.

El hecho que Ms. Capriotti entró en un Acuerdo de Desviación Condicional no fué un factor mitigador en el proceso  disciplinario de su  socia de firma.  El Tribunal de Apelaciones declaró que ella no entró en el Acuerdo de Desviación Condicional hasta julio del 2015-varios años después de ocurrir la mala conducta de Landeo .  Esto indica que Landeo no tomó medidas a tiempo para corregir los problemas de contabilidad que existían en su firma.

Antes de que Jennifer V. Landeo consintiera a ser expulsada del colegio de abogados en mayo 2016,  Ms. Capriotti cambió el nombre de su firma de abogados, de “Landeo & Capriotti, LLC”  a  “Oficinas de Ley de Suzanne L. Capriotti, LLC”.  Ms.Capriotti continúa representando clientes en asuntos de inmigración.

Lo siguiente son diéz “banderas rojas” que indican que su abogado de inmigración puede ser incompetente, no diligente y hasta deshonesto:

El abogado no provee recibos escritos demostrando que su aplicación ha sido presentada;

  1. No provee recibos ni cheques cancelados de todas las aplicaciones  hechas a inmigración;
  2. Cuando le dice que su expediente de inmigración está siendo      procesado  por  Ciudadanía e Inmigración  de Estados Unidos  sin darle prueba de que su aplicación ha sido actualmente recibida por  Ciudadanía   e Inmigración  de Estados Unidos;
  3. Cuando le dice que la razón por la cual  Ciudadanía  e Inmigración  de
  4. UU. no ha confirmado el haber recibido su aplicación ni le ha      mandado la Forma I-797C (Nota de Acción) porque están atrasados;
  5. No le provee  cuentas detalladas mensualmente;
  6. No le provee a usted con información corriente o con el estado de su  caso;
  7.  Le cobra a usted más dinero por discutir  el estado de su caso;
  8. No contesta sus llamadas de teléfono;
  9. No contrata a un traductor a tiempo completo;
  10. Hace declaraciones vagas en relación a cuando su estado de       inmigración  será ajustado.

 

 

Genuine respect: the secret key to a satisfactory attorney-client relationship

gladwellMalcolm Gladwell wrote in his book, Blink, about an analysis of medical malpractice lawsuits. In the medical malpractice analysis, it was determined that there are doctors who make many mistakes and never get sued while there are highly skilled doctors who get sued quite often. Most people who sustain an injury due to doctor negligence never file a lawsuit. Gladwell found that patients file suits because they’ve been harmed by medical negligence and because something else happens to them. That something else is how the patient was treated by his or her doctor on a personal level. Gladwell noted the results of a researcher’s study of hundreds of conversations that were recorded between a group of physicians and their patients. About half the doctors had never been sued; the other half had been sued at least twice.

The researcher found that just on the basis of the conversations, clear differences between the groups could be observed. The doctors who had never been sued spent more than three minutes longer with each patient than those who had been sued. The doctors who had never been sued were more likely to engage in active listening, encouraging their patients to expand on what they were saying. Those doctors were far more likely to laugh and be funny during the visit. There was no difference between the groups in the quality or quantity of the information they gave their patients. The difference was in how they spoke and the extra three minutes the doctors who never were sued devoted to their patients. The doctor whose tone was dominant tended to be in the sued group; the doctor whose voice sounded less dominant and more concerned tended to be in the non-sued group. Gladwell concluded that it came down to a matter of respect and that the simplest way that respect is communicated is through tone of voice. A doctor’s dominant tone will likely place that doctor in the sued group.

Gladwell suggested that when you next meet a doctor in his office and he begins to speak, if you sense that he’s talking down to you or isn’t treating you with respect, listen to that feeling–you have found him wanting. Finally, Gladwell quotes a medical malpractice lawyer, who observed that in all the years in the business she never had a potential client who said, I really like this doctor, and I feel terrible about doing it, but I want to sue him.

Likewise, I cannot recall a single client who ever told me that his/her attorney always treated him/her with the utmost respect, but nevertheless want to sue the attorney for legal malpractice.

Practice pointer for lawyers: Treat your clients with genuine respect.

Practice pointer for clients: Find a lawyer who will treat you with genuine respect.

Adapted from an article found at the Maryland Attorney Grievance Commission website

 

 

Six most common problems with Retainer Agreements in Maryland

Each year, I review dozens of retainer agreements drafted by Maryland law firms.  Here’s my list of the six most common problems I find in Retainer Agreements:

1.     The language in the Retainer Agreement is ambiguous: I reviewed a contingency fee agreement which was so poorly drafted that it was impossible to determine whether the client owed a 1/3rd or a 40% contingency fee.

2.   The Retainer Agreement contains an unenforceable provision:  I have encountered quite a few retainer agreements that state that if the law firm sues the client for fees owed, then the law firm is entitled to an award of attorney’s fees in the amount 15% of the amount due.  Such a provision is unenforceable.

3.   The Retainer Agreement has a provision that violates the Maryland Lawyers’ Rules of Professional Conduct: Many law firms state in their Retainer Agreement that some or all of the initial retainer paid by the client is “earned when paid”.  Such a provision is unenforceable, unless the law firm has explained in writing the disadvantages of depositing the retainer into the law firm’s business account as well as the advantages of depositing the retainer into the Attorney Trust Account.

4.    The Retainer Agreement contains repugnant language:  I recently encountered a Retainer Agreement that states that the client will be charged double the specified hourly rate if the client telephones the attorney at his or her phone number, even if the attorney had requested that the client call him or her at home.

5.    The Retainer Agreement states the law firm will bill in fifteen minute intervals:  Most law firms bill in 6 minute increments.  With a 15 minute interval, a law firm can bill a client for 1 hour of time, even if the lawyer performed four discrete 2 minute tasks in the course of a day.  It is patently unfair for a client to be charged for one hour of work when the attorney has actually spent less than 10 minutes rendering legal services.

6.   The Retainer Agreement is signed “under seal” by the client: Most Retainer Agreements in Maryland request that the client sign it “under seal” without explaining the significance of signing the agreement “under seal”.   By having the client sign the Retainer Agreement “under seal”,  the law firm has extended the time for it to sue the client for fees owed from 3-years to 12-years.

 

Earned when paid retainers violate Rule 1.15(c) of the Maryland Lawyers’ Rules of Professional Conduct

When you hire an attorney, it is common that you will pay a retainer.  The attorney is obligated to deposit the entire retainer into the law firm’s Attorney Trust Account (also called an IOLTA Account).  The attorney may only withdraw fees as they are earned.

I have encountered several Maryland law firms with Engagement Agreements that state a portion of the initial retainer is “earned when paid”.    This means that a portion of the initial retainer will be deposited into the Attorney Trust Account, but that the balance will be deposited into the law firm’s operating account.

There is no reason for a law firm’s Retainer Agreement or Engagement Agreement to state that a portion of your retainer is “deemed earned when paid”, except to deceive you into believing that you will forfeit part of your retainer if you were to terminate the attorney.

It is also a violation of Rule 1.15(c) of the Maryland Lawyers’ Rules of Professional Conduct for an attorney not to deposit a client’s retainer into the law firm’s Attorney Trust Account without the informed, written consent of the client.

Rule 1.15(c) of the Maryland Lawyers’ Rules of Professional Conduct states: “Unless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred”.

“Informed consent” is defined in Rule 1.0(f) as “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct”.   An attorney “must make reasonable efforts to ensure that the client or other person possesses information reasonably adequate to make an informed decision”, including “any explanation reasonably necessary to inform the client or other person of the material advantages and disadvantages of the proposed course of conduct and a discussion of the client’s or other person’s options and alternatives”.  Note 6 to Rule 1.0.

In the recent case of Attorney Grievance Commission of Maryland v. Chapman, 430 Md. 238 (2013), the Court of Appeals held that an attorney had violated Rule 1.15(c) by failing to explain to the client in writing the disadvantages of a non-refundable “engagement fee” and the advantages of depositing the retainer amount into the attorney’s Trust Account: “The retainer agreement in the instant case purported to justify the fee being “earned upon receipt” because Chapman was precluded from, or limited in, representing other clients by virtue of undertaking representation and because of the need to engage consultants. There is no evidence, however, that the retainer agreement explained the risks associated with paying a fee that would not be held in trust—namely that the fee would be considered earned upon receipt, no matter the level of effort undertaken by the lawyer, and that return of any portion of the fee, thus, could be precluded.  Although we have not decided a case involving whether a writing was sufficient to constitute informed consent, the definition in Rule 1.0(f) makes clear that an attorney must communicate the risks associated with a fee arrangement that varies from the standard escrow arrangement.  As the hearing judge noted, the retainer agreement only contained a small section informing the client that the fee was earned upon receipt.  Neither the retainer agreement, nor Chapman personally, explained the material risks associated with entering into an “earned upon receipt” fee agreement, in violation of Rule 1.15(c)”. Id. at 276-77 (emphasis added)

With respect to “earned when paid” retainers, “the burden falls on the attorney to prove that the client not only consented to the arrangement but that he or she was properly informed of the risks associated with the arrangement and that the consent of the client was confirmed in writing”.   Maryland Bar Journal, “Attorney Grievance Commission: Does a Retainer Have to be Deposited in Trust?”, July 2013, p. 54.

In addition to the risks outlined by the Court, it seems reasonable that an attorney should also advise a client of the benefit of depositing the client funds in trust which include, inter alia, [a] the funds cannot be removed from the trust account until earned by the attorney which guarantees that any unearned funds will remain available to immediately refund the client at the termination of the representation; [b] records of receipt, deposit, and maintenance of the funds will be created and maintained for 5 years; [c] the funds deposited in a trust account will not be subject to attachment by the attorney’s creditors; and [d] the funds cannot be used by the attorney or the law firm as collateral for loans, to pay expenses unrelated to the representation or for the attorney’s personal benefit. Id.

An attorney’s failure to disclose in writing to a client the disadvantages and risks of a non-refundable “engagement fee” is a serious ethical transgression.  Mr. Chapman received an indefinite suspension for violating Rule 1.15(c) and other rules. Attorney Grievance Commission of Maryland v. Chapman, 430 Md. 238, 278 (2013).

In the past two years, numerous attorneys have been disciplined for not obtaining their clients’ informed written consent to withdraw fees from the Attorney Trust Account before they were earned.   Attorney Grievance Commission of Maryland v. Zimmerman 428 Md. 119, 130 (2012) (“Rule 1.15(c) requires that a lawyer deposit advance payments of legal fees and expenses in an escrow account and prohibits the lawyer from withdrawing the funds for her own benefit until earned, absent the client’s informed consent confirmed in writing”); Attorney Grievance Commission of Maryland v. Tanko 427 Md. 15, 32-33 (2012) (holding that provision that “clients consents to the deposit of any funds paid hereunder into the personal account of the attorney, rather than a Client Trust Account, pursuant to Rule 1.15 of the Maryland Rules of Professional Conduct” did not constitute “informed consent” due to the attorney’s failure to “include the necessary explanation of the material risks or alternatives”); Attorney Grievance Commission of Maryland v. Stinson, 428 Md. 147, 164 (2012)  (“Respondent asserts that because the contract was clear and unambiguous, the $5,000.00 fee did not have to placed in an attorney client trust fund since the payment was non-refundable and therefore did not belong to the client. This court rejects Respondent’s contention”); Attorney Grievance Commission of Maryland v. Lewis 437 Md. 308 (2014) (“Respondent violated Rule 1.15(a) when he failed to deposit and maintain Ms. Slosser’s retainer fee in trust until earned without receiving informed consent, confirmed in writing, to a different arrangement from Ms. Slosser”).

 

 

Family Law Legal Malpractice

Family law cases are the most common cases handled by Circuit Courts throughout Maryland.   Many attorneys erroneously believe that the practice of family law is easy, because it is dominated by two equitable principles, namely (1) the determination of custody and visitation is based upon what is in the best interest of the child; and (2) marital property is equitably divided between the spouses.

In actuality, the practice of family law is as complex as anti-trust law or  tax law, because there are so many permutations involving the family unit and ownership of property (homes, businesses, personal property, and retirement accounts).

In April 2014, a Montgomery County jury returned a verdict against Rockville family law attorney in a legal malpractice case, because he mishandled his client’s contempt proceeding.  The former client alleged that her attorney did not properly prepare for the contempt hearing and failed to raise the appropriate arguments.

Practice pointer for clients: No matter how simple your case may appear, your attorney can commit legal malpractice.  Make sure that you meet with your attorney prior to a hearing to remind him or her of the relevant facts as well as to prepare your testimony.   You should also discuss the adverse party’s expect testimony and arguments with your attorney.

 

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Article by Stewart A. Sutton featured in the Maryland Bar Journal:
Emotional Distress Damages - Recoverable in Legal Malpractice Actions
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