DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY

Transcription

1 DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY In the Matter of: : : N. FRANK WIGGINS, : : Respondent. : Bar Docket No : A Member of the Bar of the : District of Columbia Court of Appeals : (Bar Registration No ) : REPORT AND RECOMMENDATION OF THE BOARD ON PROFESSIONAL RESPONSIBLITY Respondent, N. Frank Wiggins, advised another lawyer, Jill Pennington, that she could conceal from her clients, Denise and Hayes Butler, that their personal injury case had not been accepted for filing prior to the expiration of the statute of limitations and that it was permissible to pay the Butlers from her own funds an amount equal to the settlement figure they had authorized, thus leading them to believe that the case had settled and that the payment was from the defendant insurer. Bar Counsel charged Respondent with violations of District of Columbia Rules of Professional Conduct 1.1(a) (competent representation); Rule 1.2(e) (counseling fraudulent conduct); Rule 8.4(a) (knowingly assisting or inducing another to violate the Rules), and Rule 8.4(c) (dishonesty, fraud, deceit or misrepresentation). Hearing Committee Number Six (the Committee ) reviewed 11 exhibits and heard the testimony of Respondent, who was called by Bar Counsel and testified on his

2 own behalf, Ms. Pennington, also called by Bar Counsel, and one character witness, who testified for Respondent. The Hearing Committee concluded that Respondent violated all the Rules charged by Bar Counsel. The Committee recommended that Respondent be suspended from the practice of law for 60 days. Bar Counsel noted an exception to the Hearing Committee s recommended sanction. Bar Counsel asks the Board to recommend a six-month suspension with a requirement that Respondent take a course in legal ethics and take and pass the Multistate Professional Responsibility Examination ( MPRE ), as a condition precedent to his reinstatement, and that once Respondent resumes the practice of law, he do so under the supervision of a practice monitor for one year. Respondent maintains that he violated no Rule and seeks dismissal of the Specification of Charges. If the Board finds a violation, Respondent asks the Board to consider an informal admonition or a Board reprimand and, at most, a public censure by the Court. We have closely examined the record and the detailed and comprehensive Report and Recommendation of the Hearing Committee. We conclude that the findings of fact and conclusions of law made by the Hearing Committee are supported by substantial evidence in the record, viewed as a whole. Board Rule 13.7; In re Micheel, 610 A.2d 231, 234 (D.C. 1992). Under these circumstances, we adopt and incorporate the Hearing Committee s Report as our own with respect to the findings of fact and conclusions of law. A copy of the Hearing Committee s Report is appended hereto. We also agree with the Hearing Committee s recommended sanction of a 60-day suspension, which, as the Hearing Committee explained, is more consistent with the seriousness of the violations than the six-month suspension recommended by Bar 2

3 Counsel. Further, we concur that there is no need for a practice monitor to supervise Respondent when he resumes the practice of law or to require him to pass the MPRE, since we find that Respondent s misconduct was largely the result of his clouded judgment in attempting to help a friend. However, unlike the Hearing Committee and in light of the findings regarding Respondent s failure to provide competent representation, we believe that Respondent would benefit from a Continuing Legal Education ( CLE ) course in legal ethics. We thus recommend that 30 days of the 60-day suspension be stayed and that Respondent be placed on unsupervised probation for a period of one year, with the condition that he take and certify that he has completed a CLE course in legal ethics. Respondent should file the necessary certification with the Court, with copies to the Board and Bar Counsel, during the one-year period of probation. If he fails to do so, Respondent would be subject to the imposition of the underlying 30-day stayed suspension. Conclusion For the foregoing reasons, the Board finds that Respondent violated Rules 1.1(a), 1.2(e), 8.4(a) and 8.4(c) and recommends that the Court suspend Respondent for 60 days, stay 30 days of the suspension and place him on probation for a period of one year, with the condition that he take and certify his completion of a CLE course in legal ethics during the period of probation. The failure of Respondent to file the required certification would subject him to imposition of the underlying 30-day stayed suspension. 3

4 If this recommendation is adopted, Respondent's attention should be drawn to the requirements of D.C. Bar R. XI, BOARD ON PROFESSIONAL RESPONSIBILITY By: ~oler A. Klein Vice Chair Dated: ljul 3 f C. All members of the Board concur in this Report and Recommendation except Mr. Mercurio, who has filed a concurring statement, and Mr. Baach who is recused.

5 DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY HEARING COMMITTEE NUMBER SIX In the Matter of ) ) N. FRANK WIGGINS, ESQ. ) (D.C. Bar No ), ) BDN ) Respondent. ) ) REPORT AND RECOMMENDATION OF HEARING COMMITTEE NUMBER SIX Respondent in this matter advised another lawyer, Jill Pennington, Esq., that it would be permissible for Ms. Pennington to conceal from her clients the failure of their personal injury case, pay the clients out of her own funds a sum corresponding to the settlement figure they had earlier authorized, and thus lead them to believe that the case had been settled and that the funds provided were the proceeds of a settlement with the defendant and his insurance carrier. Ms. Pennington followed Respondent s advice and was recently disbarred by the Maryland Court of Appeals in connection with this matter. See Attorney Grievance Commission of Maryland v. Pennington, 876 A.2d 642 (Md. 2005). Bar Counsel has charged Respondent with violations of D.C. R. Prof. Cond. 1.1(a) (competence), 1.2(e) (counseling fraudulent conduct), 8.4(a) (assisting or inducing another to violate Rules), and 8.4(c) (dishonesty), and has recommended a six-month suspension with reinstatement conditioned upon his completing a CLE course, passing the Multistate Professional Responsibility Examination (MPRE), and resuming practice under a one-year monitorship. The Respondent acknowledges that he rendered flawed legal advice to Ms. Pennington but contends that he did so in good faith, had no personal interest in the matter, and violated no ethical rule. We find that Bar Counsel has sustained his burden of proof with respect to each of the above charges and recommend that Respondent be suspended from the

6 practice of law for 60 days. For reasons set forth below, we do not recommend adoption of the additional conditions of reinstatement urged by Bar Counsel. I. FINDINGS OF FACT 1. Respondent is a member of the Bar of the District of Columbia Court of Appeals, having been admitted by examination on July 1, 1974, and subsequently assigned Bar number BX A (registration statement); BX B, 1 (Specification of Charges); BX D, 1 (Answer); Tr. at 17 (Respondent). Respondent is not licensed to practice law in Maryland. Tr. at (Respondent); BX 3 (Respondent s deposition testimony in Maryland disciplinary proceeding) at 4; BX 4 (Respondent s testimony before P.G. County Circuit Court) at 221. A. Respondent s Relationship With Jill Johnson Pennington 2. Between the late 1970s and early 1990s, Respondent practiced law in the District of Columbia as a partner with the firm of Cohn & Marks. BX B, 2-3; BX D, 2-3. Between approximately 1981 and 1985, Jill Johnson Pennington was an associate with Cohn & Marks. Respondent had interviewed Ms. Pennington for that position and worked with her on some matters once she joined the firm. BX 1 (Sworn Statement of Pennington) at 25-27, ; Tr. at 20 (Respondent); Tr. at 111 (Pennington); BX 3 at 3-4, 6-7; BX 4 at In or about 1986, Ms. Pennington left Cohn & Marks and opened her own law office. In or about 1991, Ms. Pennington moved her law office to Upper Marlboro, Maryland, where she has practiced law primarily as a sole practitioner. Tr. at 21 (Respondent); Tr. at 112 (Pennington); BX 3 at Respondent left Cohn & Marks in the early 1990 s, and joined the firm of Venable as a partner. Respondent practiced law with Venable until March 2004, when he was asked to leave the firm. BX B, 5; BX D, 5; BX 3 at 2, 8 (Respondent s testimony that he got 2

7 fired from Venable in mid-march 2004); Tr. at , 169 (testimony of Ian Volner, Esq.). 5. Respondent and Ms. Pennington continued to be in contact with each other after each left Cohn & Marks. On occasion, they would seek legal advice from one another. BX B, 6; BX D, 6; Tr. at 21 (Respondent); Tr. at 112, 113 (Pennington); BX 3 at 16; BX 4 at In the late 1990s, Respondent represented Ms. Pennington in a disciplinary matter in Maryland in which the Maryland Court of Appeals reprimanded Ms. Pennington for violating Rule 1.8 of the Maryland Rules of Professional Conduct. See Pennington, 733 A.2d at 1029; see also BX B, 7; BX D, 7; Tr. at 22, 24 (Respondent). B. Ms. Pennington s Representation of the Butlers 7. Ms. Pennington s clients Denise Haynes Butler and Gary Butler were involved in an automobile accident on September 15, 1999 and retained Ms. Pennington the following day to pursue their claims against the driver of the other automobile, Mr. James Tidd. The Butlers agreed to pay as legal fees one-third of any recovery made prior to the filing of an action and 40% of any recovery after the filing of an action. Tr. at (Pennington); BX 1, Exh. I (p.1 after testimony); BX 4 at 40-43; BX 5 at Ms. Pennington attempted to negotiate a settlement with Mr. Tidd s insurance carrier. The insurer offered $9,500. Ms. Pennington rejected that offer. According to Ms. Pennington and Respondent, the Butlers did not wish to settle for less than $10,000. The insurer offered to settle for $9,500 plus any lost wages for which Mrs. Butler could provide documentation. The lost wages, according to Ms. Pennington, would have been in the range of $500 (Tr. 115, 148) and thus presumably would have closed the gap and allowed for settlement. Unfortunately, because of ownership and/or personnel changes at the company that had formerly employed Mrs. Butler, the necessary documentation was delayed. Tr

8 9. On August 12, 2002, approximately one month before the expiration of the statute of limitations, Ms. Pennington attempted to file a civil complaint against Mr. Tidd on behalf of the Butlers with the Circuit Court for Prince Georges County, Maryland, seeking $100,000 in damages. On that same date, she filed a civil action on behalf of another client. The clerk s office apparently assigned the same case number to both complaints, and its records reflect that only the other client s complaint was processed as a properly filed case and docketed. Further, the check that Ms. Pennington states she provided to the court to pay the Butlers filing fee was never negotiated. Tr. at (Respondent); Tr. at , 116 (Pennington); BX 1 at 62, 65-66; BX 4 at 62; BX 5 at Meanwhile, Ms. Pennington had finally received documentation of Mrs. Butler s lost wages and had submitted them to the defendant s insurer in October Tr In response, on October 28, 2002, more than one month after the statute of limitations period, the insurer advised Ms. Pennington that the case number she was using did not correspond to the plaintiffs and defendants in the Butlers matter. Tr. at (Pennington); BX 1 at , 94-95; BX 4 at 72, 73, Ms. Pennington called the Clerk s office and was advised that she needed to submit a file-stamped copy of the Butlers complaint and proof that the filing fee had been paid. Ms. Pennington testified that she then realized that her check for the filing fee in the Butlers case had never been negotiated. Tr. at (Pennington); BX 4 at 76-77; BX 5 at On November 9, 2002, Ms. Pennington sent opposing counsel a letter stating that the statute [of limitation] had passed on the Butlers claim before the error was brought to her attention and that he could close [his] file on this claim. BX 1, Exh. 8 (p.14 after transcript); 1 There was no evidence that the summons and civil complaint Ms. Pennington attempted to file on behalf of the Butlers on August 12, 2002 were ever served on the defendants. See BX 1 at (Pennington s testimony that she did not receive a return of service in the Butlers case). 4

9 Tr. at (Pennington); BX 1 at 19, 90; BX 4 at 86; BX 5 at Sometime after November 9, 2002, Ms. Pennington executed a Joint Line of Dismissal for presentation to the Circuit Court in Maryland. This line of dismissal was eventually filed with the court on January 9, BX 1 at ; BX 1, Exh. 10 (p.18 after transcript); BX 4 at 88; BX 5 at 5. C. Ms. Pennington s Request for Legal Advice From Respondent 13. Ms. Pennington called Respondent requesting his legal advice in connection with the Butler matter in early November Tr Ms. Pennington informed Respondent that the civil complaint she had attempted to file on behalf of the Butlers had not been properly docketed or recorded by the Maryland court and that the statute of limitations had since run. Tr She advised Respondent that she wanted to pay the Butlers from her own funds the amount they had authorized her to accept in settlement of their personal injury claims. Tr. 29. She told Respondent that it would be too time-consuming to contest the determination of the clerk s office that the complaint could not be deemed filed without proof of filing and payment of the filing fee. 2 Tr. 31, , 127. Ms. Pennington requested Respondent s legal advice as to whether she could pay the Butlers from her own funds without disclosing the source of those funds and without disclosing the true status of their claims, i.e., that the civil complaint had not been docketed and that the statute of limitations possibly barred their claims. Tr. at (Respondent); Tr. at , 121, (Pennington); BX B, 9; BX D, 9; BX 1 at ; BX 3 at 12-13, 29-30, 48; BX 4 at 89-90; BX 5 at 6. According to Respondent, Ms. Pennington believed it would be unsettling to Mrs. Butler to learn that Ms. Pennington was paying her with Ms. Pennington s own money, as the two had developed a friendship during the course of 2 Respondent and Ms. Pennington testified that Mrs. Butler had recently been diagnosed with cancer. Tr. 85, (Respondent), 155 (Pennington). 5

10 the representation. Tr. 29; BX 3 at 22 (Respondent s testimony that Ms. Pennington told him Mrs. Butler would feel sort of guilty or out of sorts or wrong taking money from Ms. Pennington as opposed to... a nameless, faceless insurance company ); id. at 61 (confirming that it was the Butlers expectation that they would be getting money from an auto insurance carrier as a result of the accident and Ms. Pennington wished not to tell them that she was the source of the funds ). 14. Respondent agreed to provide the legal advice Ms. Pennington requested. See Tr. at (Respondent); Tr. at 128 (Pennington); BX 3 at 14, 27-28, 30, 35, 46; BX 4 at 203, 205; BX B, 10; BX D, 10. D. Respondent s Inquiries and Research Prior to Rendering Legal Advice 15. Respondent testified that he advised his firm, Venable, of his representation of Ms. Pennington and sought and received the consent of the firm s pro bono committee for the representation, presumably sometime after Ms. Pennington s initial call and the following day when Respondent provided her the advice she sought. Tr. at (Respondent); BX 3 at 13, 35; BX 45 at Respondent s only experience in ethics matters was his prior representation of Ms. Pennington in the Maryland disciplinary proceeding in which she received a reprimand and occasional consultations at Cohn and Marks regarding conflict of interest issues. Tr. at (Respondent); BX 3 at 24; cf. Tr (Respondent would have a beer and tell war stories with co-teacher of state and local government course and would sometimes discuss ethics issues). Although there are a number of lawyers at Venable with training and experience in the field of ethics, Respondent did not consult with anyone about Ms. Pennington s matter, but rather undertook to investigate and research the matter himself. Tr. at (Respondent). 6

11 1. Factual Inquiry. 17. During their first communication, Respondent contends that he spent some time interrogating [Ms. Pennington] to satisfy [him]self that she had a clear direction from the clients as to how to resolve the matter. BX 3 at Respondent did not ask Ms. Pennington any questions about the Butlers accident or their personal injury claims. Tr. 35. He did not know about the injuries the Butlers had sustained in the accident or about their medical bills. Tr. at 35, (Respondent); Tr. at (Pennington); BX 3 at 27-28, , 34, 45-46; BX 4 at 203, Respondent had limited information about the settlement negotiations based on his communication with Ms. Pennington. He knew that early on... before the civil action filing was attempted the Butlers had instructed Ms. Pennington to seek a gross amount of $10,000 in settlement. Tr. at 36-38, 58 (Respondent); BX 3 at 10, 28, 32; BX 4 at 205; Tr. at 148 (Pennington). He also knew that prior to the attempted filing of the Butlers complaint Ms. Pennington had rejected an offer on behalf of the Butlers of $9,500 plus any documented lost wages to settle. Respondent did not ask Ms. Pennington what sum the Butlers had sought in the civil complaint or what amount Ms. Pennington had demanded from the insurance company in settlement. Tr. at 36-38, 58 (Respondent); Tr. at 124 (Pennington). Respondent contended that these amounts were not relevant, including in determining the value of any malpractice action that the Butlers might have against Ms. Pennington. Tr. at 41, (Respondent); BX 3 at 43-45; BX 4 at Respondent knew that Ms. Pennington was representing the Butlers pursuant to a contingency fee agreement but did not ask about the terms of the agreement. Tr ( Q: What was your understanding of the terms of th[e] contingency fee agreement? A: I don t 7

12 believe that I then had any understanding of the terms of the agreement.... Q: So this isn t something that you explored with Ms. Pennington in order to give the advice? A: No. ). Respondent did not know and did not inquire about the amount that Ms. Pennington intended to deduct from the gross amount of $10,000 as her fee, or the net amount that she contemplated paying the Butlers with her own funds. Tr. at 38-39, 50-51, 86, 88-89, 92 (Respondent); Tr. at 125 (Pennington). 21. Respondent did not discuss with Ms. Pennington her possible malpractice exposure or inquire whether she had advised her malpractice carrier about the matter. Tr. at 41 (Respondent); BX 3 at Nor did he discuss with Ms. Pennington the possibility that a conflict of interest arose from such potential liability. 22. Respondent did not ask Ms. Pennington whether she had told the Butlers that she had filed a civil action on their behalf. Tr. at 40 (Respondent); see also Tr. at (Pennington). 3 Nor did Respondent ask Ms. Pennington whether she had taken any steps to serve the defendants with the complaint. Tr. at 40 (Respondent). 2. Legal Research and Analysis 23. Respondent s legal research consisted of reviewing the annotated Maryland Rules on Professional Conduct in the firm s then-current version of Michies Maryland Rules Annotated (most likely the 2002 edition) and reading the cases cited under Rule 1.4. Tr. at (Respondent); BX 3 at 16, 34-35, 39; BX 4 at Respondent could not recall the names of any of the cases that he read. Tr. at 44 (Respondent); BX 3 at 14-15, 16 (Respondent s previous 3 In fact, Ms. Pennington had advised the Butlers that she had filed a civil complaint on their behalf. Tr. at 130 (Pennington). 4 Respondent testified that he may also have looked at ABA BNA model rule and the District of Columbia s Rule 1.4. Tr. at (Respondent). 8

13 testimony that he could rediscover the 6-10 cases he reviewed); BX 4 at Based on his reading of Rule 1.4 and the Maryland cases cited in the annotations, Respondent understood that a lawyer must communicate important case developments to clients. BX 2 at 6. However, he concluded and advised that Ms. Pennington had no duty to disclose to the Butlers that their case had not been docketed, that the limitations period had run, and that the insurer for the other driver was refusing to negotiate because it viewed the action as time-barred. 5 Respondent also concluded that Ms. Pennington had no duty to disclose to her clients that she was providing her own funds to pay their share of the $10,000 settlement. According to Respondent, Ms. Pennington had no duty to disclose these facts because she did not stand to benefit by concealing information from her clients and because the clients would not benefit from learning the truth about their case. Tr. at 45-46, 48, 62-64; BX 3 at (Respondent s previous testimony that disclosure was required in order to assist the client in making decisions about the forward progress of a case, and no disclosure was necessary here, because there wasn t technically a case ); BX 4 at Other than Rule 1.4, Respondent looked fleetingly at Rule 7.1, the rule governing a lawyer s communication about his or her services. However, he concluded that Rule 7.1 did not apply to Ms. Pennington s situation. Tr. at 49 (Respondent). 26. Respondent concluded that there was no conflict of interest and thus did not research or advise Ms. Pennington regarding the applicability of Rule 1.7 or the need to make full disclosure of conflicting or potentially conflicting interests to her clients. Tr. at 57-60, (Respondent); BX 3 at 23,43; BX 4 at 205, 216, 218; Tr. at (Pennington testimony that 5 At the hearing, Respondent conceded that the expiration of the statute of limitations for the clients claims and the refusal of the other party s insurer to negotiate after the statute s expiration would, in the ordinary course, qualify as important case developments. Tr. at 47 (Respondent). 9

14 Respondent did not discuss conflict of interest with her). Respondent recognized that the Butlers had a financial interest in recovering as much money for their claims as possible. See Tr. at 99 (Respondent acknowledges that Butlers would of course have taken more than $10,000 if the negotiations had yielded more). Nevertheless, Respondent reasoned that the Butlers authorization of Ms. Pennington to accept $10,000 in settlement, by determining the Butler s own valuation of their claims, muted any conflict that might otherwise arise. Tr. at 49, (Respondent); BX 3 at 23, Respondent considered that in failing to ensure that the Butlers civil action was properly filed and docketed prior to the expiration of the statute of limitations, Ms. Pennington may have committed malpractice. Tr. at 60. However, he did not research or discuss issues of malpractice with Ms. Pennington at the time. Tr. at 60, 89 (Respondent); Tr. at 136 (Pennington); BX 3 at 22, 25; BX 4 at In researching and analyzing the ethical issues, Respondent did not consider that Ms. Pennington s payment to the Butlers could be viewed as, in effect, settling a malpractice claim of the Butlers against her (albeit one the Butlers did not know they had because they did not know the status of their case). Tr. at 61-62, (Respondent); BX 3 at 1-52, Respondent understood that if Ms. Pennington did not disclose the true facts to the Butlers, they would continue to believe (incorrectly) that they still had viable claims against the other driver and that the funds they were receiving in the settlement were from the other driver s insurer in compromise of their personal injury claims. Tr. at (Respondent); BX 3 at 6l. Respondent acknowledged that concealing such information from clients may constitute dishonesty. Tr. at 98; cf. id. at 93, 97. Yet, he concluded that, because Ms. Pennington had no duty to disclose to the Butlers the true status of their personal injury claims and the source of the 10

15 settlement funds, her concealment of this information was not dishonest. Tr. at (Respondent); Tr. at 98 ( I didn t characterize that in my mind... as dishonesty because I really thought that [if] Rule 1.4, as I had misanalyzed it, did not require disclosure, that was kind of an immunity bath. ) (Respondent); Tr. at (Pennington). Respondent evidently reached this conclusion without researching the ethical rules dealing with dishonesty. See Tr. 45 (Respondent s testimony that he only reviewed decisions applying Rule 1.4 and a case or two under Rule 7.1). E. Respondent s Advice to Ms. Pennington and Her Actions Consistent Therewith 30. Based on his review of the Maryland rules, specifically Rule 1.4, and his interpretation of the Maryland cases discussing Rule 1.4, Respondent advised Ms. Pennington that she did not have to disclose to the Butlers that their civil complaint had not been docketed and that the statute of limitations potentially barred their claims. Respondent further advised Ms. Pennington that she could pay her clients the amount they were willing to accept in settlement of their claims without disclosing that she was the source of those funds. See BX B, 11; BX D, 11; BX 1 at , ; BX 2 at 4; Tr. at 45-46, (Respondent); Tr. at , (Pennington); BX 3 at 12-13, 30, 35, 48, 59; BX 4 at 209, 211, , 225; see also BX 5 at Consistent with and in reliance on Respondent s advice, Ms. Pennington eventually paid the Butlers what she calculated was their share of the gross recovery of $10,000, without disclosing that their case had not been docketed, that the statute of limitations now potentially barred their claims, that the defendant s insurer had broken off negotiations, and that she herself was funding the putative settlement. Tr. at 93 (Respondent admits Pennington acted in conformity with his advice); BX4 at ; Tr. at 129, (Pennington); BX 4 at 99, 111, , ; BX 5 at 5. 11

16 32. In February 2003, when Ms. Pennington gave the Butlers checks totaling $4,028.43, she also provided them a Statement of Settlement setting forth how she calculated their share of the $10,000 settlement for their personal injury claims. See BX B, 12; BX D,1-12; BX 1 at , ; BX 1, Exh. 9 (p.5 after transcript); BX 4 at The Statement of Settlement reflected that Ms. Pennington received a contingency fee of $4,000 the 40% authorized by her retainer agreement after suit is filed. BX 1, Exh. 1 (p.1 after transcript) (emphasis added). 6 The balance was allocated to the Butlers medical expenses. 7 There is no evidence that Respondent was aware of the Settlement Statement provided to the Butlers by Ms. Pennington. F. The Disciplinary Proceedings Against Ms. Pennington 33. In or about 2003, an ethical complaint was filed against Ms. Pennington with the Attorney Grievance Commission of Maryland arising out of her conduct as counsel for the Butlers. See BX B, 13; BX D, Respondent represented Ms. Pennington during the investigative stage of the Maryland Attorney Grievance Commission proceeding, including in September 2003, when Ms. Pennington appeared pursuant to subpoena to provide sworn answers to questions concerning her actions as counsel for the Butlers, and at the Peer Review Panel proceeding. See BX B, 14; BX 6 As noted, the contingency fee agreement entitled Ms. Pennington to one third of any recovery made prior to the filing of a lawsuit and 40% of any recovery thereafter. By deducting 40% of the settlement as her legal fee, Ms. Pennington evidently treated the suit as having been filed prior to the recovery, even though the case had not been processed by the court as properly filed and had not been docketed. In doing so, Ms. Pennington gave the Butlers less than they would have received if they had settled for $9,500 before Ms. Pennington attempted to file an action on their behalf. The Butlers net recovery from a $9,500 settlement with attorney fees of one third would have been $6,333.33; their net recovery from the $10,000 settlement with a 40% deduction for fees was $6, Ms. Pennington sent letters to the Butlers medical providers seeking a reduction of their bills contending that [u]nder the terms of the settlement offered by the third party, Ms. Butler will receive virtually no compensation for her injuries if the subject invoice is not reduced. BX 5 at 7-8. There is no evidence that Respondent reviewed or approved the misrepresentations in these letters. 12

17 D, 14; BX 1; Tr. at 65 (Respondent); Tr. at 140 (Pennington). 35. During the investigation and later in defending against the charges arising out of the events described herein, Ms. Pennington asserted that she had relied on the advice of counsel, i.e., Respondent. See BX B, 16; BX D, 16; BX I at , ; BX 5 at 16; BX 6 at Respondent also gave sworn testimony in the Maryland proceeding consistent with that of Ms. Pennington stating, among other things: (a) that Ms. Pennington consulted him as a lawyer; (b) that she sought his legal advice concerning her ethical obligations to make disclosures to her clients, the Butlers, concerning the status of their claims and concerning the source of the purported settlement funds; (c) that after researching the applicable Maryland law, he advised Ms. Pennington that no disclosure was required; and (d) that Ms. Pennington relied on and acted in a manner consistent with his advice. BX 3 at 12-14, 27-28, 30, 34-35, 38, 46,48, 59; BX 4 at 203, 205, , , 225; BX 5 at 6; BX 6 at The Circuit Court for Prince George s County, Maryland ( Circuit Court ), held a hearing in the disciplinary matter against Ms. Pennington and in January 2005 issued its findings and conclusions. The court found that Ms. Pennington had violated Maryland Rules of Professional Conduct 1.1, 1.2(a), 1.3, 1.4(a) and (b), 1.7(b), 1.16(a), and 8.4(c) and (d). See BX 5 at In February 2005, shortly after the Circuit Court s decision, Respondent went to work for Ms. Pennington in her office in Upper Marlboro, Maryland. Tr. at (Respondent); Tr. at 112 (Pennington). 39. Ms. Pennington appealed the Circuit Court s decision, and Respondent argued the appeal on her behalf before the Maryland Court of Appeals. Ms. Pennington s principal defense on appeal continued to be that she had relied on the advice of her counsel. BX 6 at 27 13

18 ( Respondent s overarching defense before this Court, and underlying the most serious of her exceptions, is that she relied on the advice of counsel and that all charges should be dismissed. ). 40. Respondent argued before the Maryland courts that Ms. Pennington should not be held accountable for misconduct because she had relied on the advice of counsel. In this matter, Respondent contended that he should not be held responsible for that advice because as a matter of law legal advice to a client cannot serve as a basis for disciplinary action. Tr. 10; BX 2 at 4 (Respondent s response to Bar Counsel) (stating that Maryland Bar Counsel is wrong, as a matter of law, in asserting that my legal advice to Ms. Pennington can serve as a basis for a disciplinary action against me. ); cf. id. (arguing that advice cannot give rise to discipline absent total inattention or incompetence ) (citing In re Stanton, 470 A.2d 281, 287 (D.C. 1983)). 41. In a decision filed on June 22, 2005, the Maryland Court of Appeals ordered Ms. Pennington disbarred. See Pennington, 876 A.2d at 642. The Court stated that Ms. Pennington s failure to provide the Butlers with the information regarding the dismissal deprived them of the information necessary to determine if they wished to pursue a malpractice claim against her in violation of Md. R. Prof. Con Id. at 658. The Court rejected Ms. Pennington s argument that her reliance on the advice of counsel negated the requisite intent to violate the rule, stating that [e]very lawyer in this State should know that the misrepresentation to the client that occurred in this case was a violation of the Rules. Id. at 656. The Court added that Ms. Pennington s consultation with Mr. Wiggins, an attorney with offices in Washington, D.C., and who is not admitted in Maryland, smacks of a lack of good faith in seeking an objective and reliable ethics opinion, and seems rather to reflect a hope for ratification, from an uninformed, but friendly, source, of a course of conduct already selected. Id. at Chief Judge Bell filed a dissenting opinion concluding that indefinite suspension rather than disbarment is the appropriate sanction in view of Ms. Pennington s remorse and lack of any selfish or dishonest motive. Id. at

19 II. CONCLUSIONS OF LAW We have no trouble finding that Bar Counsel has sustained his burden of proving the asserted violations of the Rules by clear and convincing evidence. Respondent advised Ms. Pennington that it was permissible for her to pay the Butlers from her own funds without disclosing to them either the true source of the funds or the events that had led her to this course of action, i.e., the failure of the Butlers personal injury case and consequent breakdown of negotiations with the defendant and his insurer. Respondent clearly understood that the Butlers would be led to believe (i) that their case and/or claims remained viable up to the time of putative settlement, (ii) that Ms. Pennington had settled the case with the defendant and its insurer, and (iii) that the funds provided to the Butlers came from the defendant s insurer through the settlement. Respondent also understood, of course, that each of these propositions was false. We find it impossible to gainsay the Maryland Court of Appeals statement that [e]very lawyer in this State should know that the misrepresentation to the client that occurred in this case was a violation of the Rules, id. at 656, and we have no doubt that the same is true in the District of Columbia. We conclude that the rendering of this counterintuitive advice violated Respondent s ethical duties relating to competence and honesty under the Rules. A. Competent Representation Rule 1.1(a) provides that [a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. We acknowledge at the outset that Rule 1.1(a) is a somewhat awkward prism through which to view the conduct at issue in this matter. The core of the conduct relates to Respondent s role in counseling Ms. Pennington in respect of a dishonest course of conduct that she wished to undertake. Dishonesty connotes a knowing violation, while 15

20 incompetence suggests negligence. Nevertheless, on the particular facts of this case which reflect Respondent s willful blindness, in providing legal advice, to a glaringly obvious risk of an ethical violation we believe that both the dishonesty-related charges and the incompetence charge can be sustained. On its face, the course of action proposed by Ms. Pennington was fundamentally at variance with the ethical responsibilities of a Maryland lawyer. See, e.g., Pennington, 876 A.2d at 652; Attorney Grievance Comm n v. Clements, 572 A.2d 174 (1990); Attorney Grievance Comm n v. Pinkney, 532 A.2d 1367, 1369 (1987) (attorney suspended for preparing fictitious pleadings to make client believe case had been filed). As the matter was presented to Respondent, the Butlers complaint had not been docketed with the court, the limitations period had run, and opposing counsel had rejected further negotiations on account of these developments. The Butlers had a right to know these facts. Respondent s advice to the contrary per se raises a grave question about his competence. The fact-gathering and analytical process that led to Respondent s conclusion were correspondingly flawed. Although there was no emergency, Respondent investigated and researched Ms. Pennington s matter over the course of a single day, spending only 3.5 to 4 hours on it. Tr. 78. Although there were attorneys at Respondent s law firm with experience in professional responsibility matters with whom he could have consulted, he chose not to do so. Respondent also chose not to pursue a number of factual and legal inquiries germane, or potentially germane, to the questions presented: ٠ Respondent knew that the valuation of the Butlers claims was critical to his analysis, but he made no effort to understand the nature of the Butlers injuries, the amount of their medical bills, the quantum of damages sought in the complaint, or the history of demands and counteroffers made in the settlement negotiations. He focused solely on the Butlers authorization of Ms. Pennington to accept $10,000 in settlement. Tr. 39 ( Q: Other than 16

21 learning from Ms. Pennington that the clients wanted early on $10,000 gross, what, if anything else, did you understand about the facts and value of the client s case? A: Nothing. ). ٠ Although Respondent knew Ms. Pennington was representing the Butlers pursuant to a contingency fee agreement and knew that she intended to substitute her own funds for the defendant s settlement funds which would have been payable to the Butlers pursuant to that agreement, Respondent did not review the agreement or inquire with Ms. Pennington regarding its terms. Tr He did not know and did not inquire about the amount Ms. Pennington intended to deduct from the gross amount of $10,000 as her fee or how much she intended to pay the Butlers with her own funds. Tr. 39 ( Q: So you didn t ask Ms. Pennington any questions about the terms at the time because you didn t consider that important? A: No, that s correct. ). ٠ Although the course of action contemplated clearly involved Ms. Pennington s deceiving her clients about critical developments in their case, Respondent did no research on the Rules governing dishonesty, fraud, deceit, and misrepresentation. Tr ٠ Although Respondent considered that Ms. Pennington had potential malpractice exposure to the Butlers for failure to ensure the proper filing and docketing of their complaint within the limitations period, he did not raise the issue of malpractice with her at the time and did not address it in rendering his advice. Tr ٠ Despite his awareness of Ms. Pennington s potential malpractice exposure to the Butlers, Respondent did not examine the conflict of interest rules or advise Ms. Pennington to alert the Butlers to the conflict so that they could consider seeking other counsel. See Tr. 60, 62, 89-90; Md. R. Prof. Con. 1.7(c), 1.8(g). 9 Respondent failed to make adequate inquiry into the foregoing areas at least in part because he framed the questions so narrowly at the outset as to make the exclusion of relevant information all but inevitable. See D.C. R. Prof. Con. 1.1 cmt. [2] (recognizing skill of determining what kind of legal problems a situation may involve as fundamental to competent lawyering). Respondent reasoned, in essence, that because Rule 1.4 exists to ensure informed 9 Respondent did not recall asking Ms. Pennington whether she had told the Butlers that she had filed a civil action on their behalf. Tr. at 40 (Respondent); see also Tr. at (Pennington). (In fact, Ms. Pennington had advised the Butlers that she had filed a civil complaint on their behalf. Tr. at 130 (Pennington)). Nor did Respondent ask Ms. Pennington whether she had taken any steps to serve the defendants with the complaint. Tr. at 40 (Respondent). 17

22 client decision-making in the conduct of litigation, and because there was no litigation left to conduct, there was no obligation to disclose. See Tr. 64 ( This was a situation in which the client could not benefit from information, core case information, as you correctly point out, that could have been disclosed. ); BX 3 at ( [D]isclosure [i]s required in order to assist the client in making decisions about the forward progress of a case, and there wasn t technically a case. ); BX 2 at 7. Further, Respondent reasoned that a nondisclosure plainly calculated to mislead Ms. Pennington s clients was permissible if disclosure of the withheld information was not required by Rule 1.4. Tr. at 98 ( I didn t characterize that in my mind... as dishonesty because I really thought that [if] Rule 1.4, as I had misanalyzed it, did not require disclosure, that was kind of an immunity bath. ). Because Respondent considered that there were effectively no options available to the Butlers in the litigation, he concluded that Rule 1.4 did not require disclosure of the case status. Because he concluded that Rule 1.4 did not require disclosure of the case status, he concluded that Ms. Pennington was free to mislead her clients regarding that status. To be sure, this line of reasoning greatly simplified and limited the scope of the inquiry. It did so, however, at the expense of premising the entire exercise on an assortment of critically flawed assumptions. First, Respondent assumed that the Butlers case was beyond any possibility of salvation, but this was never true. As the Maryland Court of Appeals has observed, [t]he complaint had been timely filed; it was erroneously docketed by the Clerk s office and, as such, the statute of limitations may well have been tolled.... Pennington, 876 A.2d at 662 n.10 (emphasis in original). Respondent was aware that the clerk s determination might be subject to challenge. See Tr ; compare Res. Pre-Hrg. Stmt. 5 (stating that Respondent advised Ms. Pennington to challenge clerk s determination that action was barred absent 18

23 evidence of filing and payment of fee); Res. Amended Pre-Hrg. Stmt. 5 (Respondent advised Ms. Pennington to consider challenging clerk s determination). Given that there was at least a possibility of redeeming the case, it follows that the Butlers had an important decision to make, i.e., whether to pursue the matter with the court, arguing for excuse of the technical defect in filing, possibly in conjunction with a claim of ineffective assistance of counsel. If successful in such an effort, the Butlers would have had their personal injury action seeking $100,000 in damages placed on the court s docket. Yet, the Butlers were never made aware of this option. Instead, Ms. Pennington unilaterally executed a joint line of dismissal that may have foreclosed their ability to pursue the litigation. A second erroneous assumption is that Ms. Pennington s payment of $10,000 less fees and medical costs mooted any potential malpractice liability issue by providing the Butlers with everything they might have gained through a malpractice action against her. The Maryland Supreme Court flatly rejected this contention. See Pennington, 876 A.2d at 657 ( [T]he Butlers willingness to settle for $10,000 is not determinative of the value of their claims. ); see id. (observing that Ms. Pennington, acting on the Butlers behalf, sought a settlement of $20,000, rejected a $9,500 settlement offer, and filed a lawsuit seeking $100,000. ). In arguing for this position, Respondent contended that Ms. Pennington had not been merely authorized but actually directed to settle the case for $10,000, suggesting that she was bound to obtain only that amount and that a larger recovery at that point became impossible. See, e.g., Tr. 39. Upon questioning, however, Respondent backed away from this position, acknowledging that [o]f course the Butlers wanted Ms. Pennington to obtain more than $10,000 in settlement if she could. Tr Respondent s argument that the malpractice claim could have had no value beyond the amount paid to the Butlers by Ms. Pennington is therefore unavailing, and it is clear that the non- 19

24 disclosure to the Butlers deprived them of information necessary to consider and evaluate at least potentially valuable claims against Ms. Pennington over and above that amount. 10 See Pennington, 876 A.2d at 651 ( This cannot represent the amount that would have been recovered in a malpractice claim. ). Third, we are troubled by Respondent s apparent reliance on the notion of an immunity bath (Tr. 98) whereby an attorney may mislead a client knowingly in matters (purportedly) not subject to required disclosure. A cursory review by Respondent of the Maryland Rules and decisions rendered thereunder as of late 2002 would surely have cast grave doubt on this notion. See, e.g., Attorney Grievance Comm n v. Zdravkovich, 762 A.2d 950 (Md. 2000) (finding no merit in Respondent's assertion of no harm, no foul and all is well that ends well. ); Attorney Grievance Comm n v. Willis, 705 A.2d 1121, 1127 (Md. 1998) ( Rule 8.4(c) is broad enough to include intentionally deceptive or misleading testimony, even if it does not relate to a material matter. ); Pinkney, 532 A.2d 1369 ( Respondent violated DR 1-102(A)(4) by misrepresenting to [the client] that she had filed suit... and giving [the client] a false docket reference for that suit. ); Attorney Grievance Comm n v. Parsons, 527 A.2d 325, 330 (Md. 1987) (imposing 90- day suspension in reciprocal case where attorneys re-filed identical complaint over forged attestation to replace properly attested, dismissed complaint); Attorney Grievance Comm n v. Maxwell, 516 A.2d 570, 572 (Md. 1986) (holding that deliberate falsification of notary 10 As set forth above, Ms. Pennington deducted a 40% fee from the $10,000 based on the questionable notion that the $10,000 represented a recovery made after the filing of an action. If the $10,000 was not the product of a recovery or was not made after the filing of an action, Ms. Pennington was only entitled to take a one third fee. Hence, at a minimum, the Butlers may have been entitled to recover the difference between a one third fee and a 40% fee from Ms. Pennington (i.e., $666.67). The Butlers were not able to evaluate this issue because they were kept in the dark regarding the fate of the case and the source of the putative recovery. Respondent, though suspecting that the contingency fee arrangement was probably for one third before and 40% after filing, Tr. 81, chose not to inquire about the terms of the contingency arrangement or the sum Ms. Pennington planned to pay to her clients even as he rendered advice about Ms. Pennington s substitution of personal funds for the defendant s funds as the net monetary recovery from a sham settlement. Tr ,

25 certificate violates rules even where no harm done, intent was to help client obtain bail, and attorney did not benefit). These cases, all available as of late 2002, make it clear that a Maryland lawyer who knowingly engages in deception may violate the Maryland Rules of Professional Conduct even where the deception is not material and/or causes no harm. Fourth, we see no basis for Respondent s conclusion that Rule 1.4 did not require disclosure of the Butlers case status. Respondent stated at the hearing that he found support for his advice in the Maryland Rule 1.4 decisions [i]n a negative fashion, meaning that cases he reviewed involved situations in which the failure to disclose benefited the attorney or harmed the client, whereas, in his view, Ms. Pennington s situation involved neither of these factors. Respondent did not, however, point to any case in which benefit to the attorney or harm to the client was held to be a requirement for a Rule 1.4 violation, and we have found no such authority. 11 It is true that Md. R. Prof. Cond. 1.4(b) requires a lawyer to explain matters to the extent reasonably necessary to permit the client make informed decisions regarding the representation, and we can understand how this informed decisions language might be construed as importing a harm or materiality requirement if it stood alone. But subsection (a) of the Rule states categorically that a lawyer shall keep a client reasonably informed about the status of a matter. We do not see how this part of the Rule could be viewed even charitably as permitting the misleading non-disclosure of core case information (Tr. 64) contemplated by Ms. Pennington and carried out by her with Respondent s blessing. 11 Indeed, the authority we have found on the subject tends to the contrary. In Attorney Grievance Comm n v. Dietz, 629 A.2d 678, 681 (Md. 1993), the Maryland Court of Appeals imposed discipline in part based on a Rule 1.4 violation where the attorney failed to pursue a meritless case and failed to inform the client that he was taking no action. The respondent attorney had raised no exceptions before the Court, the Rule 1.4 violation was grouped with others and viewed by the Court as part of a mishandled withdrawal, and the lack of harm to the client did weigh in the court s assessment of the appropriate sanction. Id. at 683. Nevertheless, this case fairly read suggests that even a harmless failure to communicate may be sanctionable. Cf. Attorney Grievance Com'n of Maryland v. Pinkney, 532 A.2d 1367, 1370 (Md. 1987) (Attorney had an obligation to advise her client if she did not believe that there was a valid claim, and she was not going to file suit on her client's behalf. ). 21

26 For the same reason, we cannot accept Respondent s and Ms. Pennington s explanation that Ms. Pennington ruled out further litigation and further disclosure to the Butlers in view of the likely delays in obtaining relief for her clients, one of whom (Mrs. Butler) had been diagnosed with cancer. Tr. 80, 84-85, The implication is that, to the extent Ms. Pennington engaged in deception toward her clients, she did so to advance and protect their financial and emotional interests. This argument, however superficially appealing, misses the point. A lawyer s duty to keep her client informed of major case developments does not exist to promote some general notion of information sharing with the client; it exists because the client is the principal in an agency relationship and is alone empowered to make fundamental decisions about the direction of the case. See THE LAW OF LAWYERING (3d ed.), Vol. 1, 7.2 (Because relationship is one of agency, a lawyer must receive instructions from the client, report back on progress, and seek further direction as new options become available. The nature of the relationship requires communication. ). 12 Even assuming that Ms. Pennington acted with only the Butlers interests at heart, the decision to abandon or pursue the litigation was the Butlers to make, not Ms. Pennington s. 13 Within the ordinary parameters of the attorney-client relationship, the client is the principal and must receive sufficient information about the status of the case to act as such. Finally, we fault Respondent for assuming that there was no conflict of interest when he 12 The comment to ABA Model Rule 1.4 states that a lawyer may be justified, for humanitarian reasons, in not conveying certain information, for example, where the information would merely be upsetting to a terminally ill client. ABA M.R. 1.4 cmt. [5]. Here, although learning of the failure of the case might have been somewhat upsetting to Mrs. Butler, it would not merely be upsetting, i.e., would not serve only to cause her distress without good cause. On the contrary, the Butlers needed to know the status of their case in order to be in a position to make informed decisions about it. The comment goes on to state that [a] lawyer may not withhold information to serve the lawyer s own interest or convenience. Id. 13 We note that nearly three years had passed since the Butlers had engaged Ms. Pennington in the personal injury matter. Tr