What to Do When the Office of Lawyer Regulation Calls

WSSFC Quality of Life/Ethics Track Session 5 What to Do When the Office of Lawyer Regulation Calls Moderator: J. David Kreker Krekeler Strother S.C., Madison Panelists: Dean R. Dietrich Ruder Ware L.L.S.C., Wausau Alice O Mahar Office of Lawyer Regulation, Madison Thomas W. Shellander Neider Boucher S.C., Madison

WISCONSIN STATE BAR SOLO AND SMALL FIRM CONFERENCE October 23-24, 2014 Kalahari Resort Wisconsin Dells, Wisconsin What To Do When The Office Of Lawyer Regulation Calls Presented by: Dean R. Dietrich, Esq. Ruder Ware, L.L.S.C. P.O. Box 8050 Wausau, WI 54402-8050 ddietrich@ruderware.com Wausau Office: 500 First Street, Suite 8000 Wausau, WI 54403 715.845.4336 Eau Claire Office: 402 Graham Avenue Eau Claire, WI 54701 715.834.3425 {W0876878.DOC/1} www.ruderware.com

I. Be Familiar with the Rules of Professional Conduct A. Know the conflict of interest rules and how they apply to representation of clients. B. Use your conflict checking procedures to ensure there is no conflict in the initiation of a new client matter. C. Use your conflict checking system for insuring that you do not pursue discovery against a current client. II. Decision to Self-Report to Office of Lawyer Regulation. A. The decision to self-report is a very important decision that should not be made lightly and should involve communication with others for a second opinion. B. Consultation with malpractice insurance company should occur immediately upon a threat of a malpractice claim by a client. C. Be aware of potential insurance coverage for representation before the Office of Lawyer Regulation D. A decision to self-report to the Office of Lawyer Regulation should only apply in very unique circumstances. E. The duty to self-report criminal convictions is paramount and must be recognized by the lawyer. III. Phone Conversation with Office of Lawyer Regulation Investigator A. You should not engage in a conversation with Investigator without taking the time to prepare an outline of your comments and reviewing your file before discussing matter with OLR Investigator. B. If you are anticipating contact from Office of Lawyer Regulation, it is better to communicate with individuals to get background information regarding the OLR procedures before deciding whether to handle the matter yourself. C. OLR will generally ask for documents and background information this information can be released under SCR 20:1.6 Confidentiality. D. Control your emotions when talking with OLR Investigator because first impressions are very important to initial decisions by Investigator. {W0876878.DOC/1} -2-

IV. Responding to the Formal Investigation Letter A. This means that OLR has made a preliminary decision that this is an important matter that requires a more detailed and fact-intensive investigation. B. Remember that you are writing initially to an Investigator but the matter may be presented to a group of 12 lawyers who will be judging whether or not there is probable cause to file a complaint with the Supreme Court. C. Cooperation with OLR Investigator is critical both from a defense perspective and avoidance of a second Count for failure to cooperate. V. Remember to Use the Right Language A. OLR Investigators work with the Rules of Professional Conduct on a daily basis so they are familiar with and use the language from the Rules. B. It is important to communicate using the professional responsibility speak to make sure you are communicating directly with the Investigator and OLR staff. VI. Negotiating with OLR? A. There is very little opportunity to negotiate with the OLR Investigator or OLR Council. B. This may change in the future but for now, any consideration of plea bargaining is not an option for discussion with OLR staff. VII. Recognize Your Risk A. Have some idea what the potential sanctions could be for the alleged conduct. B. Remember that OLR staff see many cases and some involve inappropriate conduct of lawyers so there is a natural suspicion that needs to be overcome. {W0876878.DOC/1} -3-

APPLICABLE REGULATIONS SCR 21.12 Roles of office of lawyer regulation, grievant, and district committees. In the investigation process and in the prosecution of complaints alleging attorney misconduct and petitions alleging attorney medical incapacity, the director of staff of the office of lawyer regulation and the district committees do not represent the complaining person, the attorney against whom a grievance has been made, the bar generally, or any other person or group. The director, staff of the office of lawyer regulation, and district committees represent the interests of the Supreme Court and the public in the integrity of the lawyer regulation system in its search for the truth. A grievant is not a party to a misconduct or medical incapacity proceeding brought by the office of lawyer regulation. SCR 21.15 Duties of attorneys. (1) Pursuant to SCR 20:8.5(a), an attorney admitted to practice law or practicing law in Wisconsin is subject to the lawyer regulation system, whether he or she practices in Wisconsin or in other jurisdictions and regardless of where the attorney s conduct occurs. (2) A license to practice law authorizes a person to practice law and to participate in the administration of justice. It is the duty of every attorney to act in conformity with standards imposed upon attorneys as conditions of the privilege to practice law set forth in SCR chapter 20 rules of professional conduct for attorneys. (3) An attorney has the duty to refer a member of the public who wishes to communicate an inquiry about or a grievance against an attorney to the director. (4) Every attorney shall cooperate with the office of lawyer regulation in the investigation, prosecution and disposition of grievances, complaints filed with or by the director, and petitions for reinstatement. An attorney s willful failure to cooperate with the office of lawyer regulation constitutes violation of the rules of professional conduct for attorneys. (5) An attorney found guilty or convicted of any crime on or after July 1, 2002, shall notify in writing the office of lawyer regulation and the clerk of the Supreme Court within 5 days after the finding or conviction, whichever first occurs. The notice shall include the identity of the attorney, the date of finding or conviction, the offenses, and the jurisdiction. An attorney s failure to notify the office of lawyer regulation and clerk of the Supreme Court of being found guilty or his or her conviction is misconduct. {W0876878.DOC/1} -4-

SCR 21.16 Discipline. (1m) Any of the following may be imposed on an attorney as discipline for misconduct pursuant to the procedure set forth in SCR chapter 22: (a) Revocation of license to practice law. (b) Suspension of license to practice law. (c) Public or private reprimand. (d) Conditions on the continued practice of law. (e) Monetary payment. (em) Restitution, as provided under sub. (2m). (f) Conditions on seeking license reinstatement. (2m) (a) An attorney may be ordered to do any of the following as restitution under sub. (1m) (em): 1. Pay monetary restitution to the person whose money or property was misappropriated or misapplied in the amount or value of such money or property as found in the disciplinary proceedings. 2. Reimburse the Wisconsin lawyers fund for client protection for awards made to the person whose money or property was misappropriated or misapplied. (b) Any payment made as restitution under par. (1) does not limit, preclude or impair any liability for damages in any civil action or proceeding for an amount in excess of the payment. (c) Upon ordering restitution to the Wisconsin lawyers fund for client protection under par. (a) 2., the Supreme Court shall issue a judgment and furnish a transcript of the judgment to the Fund. The transcript of the judgment may be filed and docketed in the office of the clerk of court in any county and shall have the same force and effect as judgments docketed under ss. 809.25 and 806.16, Stats. {W0876878.DOC/1} -5-

SCR 21.18 Limitation. (1) Information, an inquiry, or a grievance concerning the conduct of an attorney shall be communicated to the director within 10 years after the person communicating the information, inquiry or grievance knew or reasonably should have known of the conduct, whichever is later, or shall be barred from proceedings under this chapter and SCR chapter 22. (2) The time during which a person who knew or should have known of the attorney s conduct is under a disability as provided in Wis. Stats 893.16 (1997-98) and the time during which the attorney acted to conceal the conduct from or mislead the person who knew or should have known of the conduct regarding the conduct are not part of the time specified in sub. (1). SCR 22.03 Investigation. (1) The director shall investigate any grievance that presents sufficient information to support an allegation of possible misconduct. (2) Upon commencing an investigation, the director shall notify the respondent of the matter being investigated unless in the opinion of the director the investigation of the matter requires otherwise. The respondent shall fully and fairly disclose all facts and circumstances pertaining to the alleged misconduct within 20 days after being served by ordinary mail a request for a written response. The director may allow additional time to respond. Following receipt of the response, the director may conduct further investigation and may compel the respondent to answer questions, furnish documents, and present any information deemed relevant to the investigation. (3) Staff involved in the investigation process shall include in reports to the director all relevant exculpatory and inculpatory information obtained. (4) If the respondent fails to respond to the request for written response to an allegation of misconduct or fails to cooperate in other respects in an investigation, the director, or a special investigator acting under SCR 22.25, may file a motion with the Supreme Court requesting that the court order the respondent to show cause why his or her license to practice law should not be suspended for willful failure to respond or cooperate with the investigation. All papers, files, transcripts, communications, and proceedings on the motion shall be confidential and shall remain confidential until the Supreme Court has issued an order to show cause. The license of an attorney suspended for willful failure to respond or cooperate with an investigation may be reinstated by the Supreme Court upon a showing of cooperation with the investigation and compliance with the terms of suspension. The director of the special investigator shall file a response in support of or in opposition to the reinstatement within 20 days after the filing of an attorney s request for reinstatement. Upon a showing of good cause, the Supreme Court may extend the time for filing a response. {W0876878.DOC/1} -6-

(5) (a) Except as provided in sub. (b), the director shall provide the grievant a copy of the respondent s response to the grievance and the opportunity to comment in writing on the respondent s response. (b) In limited circumstances when good cause is shown, the director may provide the grievant a summary of the respondent s response prepared by the investigator in place of a copy of the response. (6) In the course of the investigation, the respondent s willful failure to provide relevant information, to answer questions fully, or to furnish documents and the respondent s misrepresentation in a disclosure are misconduct, regardless of the merits of the matters asserted in the grievance. (7) The duty of the respondent to cooperate with the investigation does not affect the respondent s privilege against self-incrimination, but the privilege may be asserted only in respect to matters that may subject the respondent to criminal liability. (8) The director, or a special investigator acting under SCR 22.25, may subpoena the respondent and others and compel any person to produce pertinent books, papers, and documents. The director, or a special investigator acting under SCR 22.25, may obtain expert assistance in the course of an investigation. {W0876878.DOC/1} -7-

SCR 22.05. Disposition of investigation. (1) Upon completion of an investigation, the director may do one or more of the following: (a) Dismiss the matter for lack of sufficient evidence of cause to proceed. (b) Divert the matter to an alternatives to discipline program as provided in SCR 22.10. (c) Obtain the respondent s consent to the imposition of a public or private reprimand and proceed under SCR 22.90. (d) Present the matter to the preliminary review committee for a determination that there is cause to proceed in the matter. (2) The director shall notify the grievant in writing that the grievant may obtain review by a preliminary review panel of the director s dismissal of a matter under sub. (1) by submitting to the director a written request. The request for review must be received by the director within 30 days after the date of the letter notifying the grievant of the dismissal. The director shall send the request to the chairperson of the preliminary review committee, who shall assign it to a preliminary review panel. Upon a timely request by the grievant for additional time, the director shall report the request to the chairperson of the preliminary review committee, who may extend the time for submission of additional information relating to the request for review. (3) The preliminary review panel may affirm the dismissal or, if it determines that the director has exercised the director s discretion erroneously, refer the matter to the director for further investigation. A majority vote of the panel is required to find that the director has exercised discretion erroneously. The panel s decision is final, and there shall be no review of the panel s decision. The chairperson of the preliminary review committee shall notify the grievant and the respondent in writing of the panel s decision. 2014 Ruder Ware, L.L.S.C. Accurate reproduction with acknowledgment granted. All rights reserved. This document provides information of a general nature regarding legislative or other legal developments. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects {W0876878.DOC/1} -8-

WISCONSIN STATE BAR SOLO AND SMALL FIRM CONFERENCE 2014 What to do When the Office of Lawyer Regulation Calls Case Study Mrs. Smith is an eighty-eight year old widow who has resided in Small Town, Wisconsin, for many decades. She recently moved into a Community Based Residential Facility ( CBRF ). Mrs. Smith has two daughters, Angel and Greedy. Mrs. Smith appointed Angel as her attorneyin-fact, and she assisted Mrs. Smith with the transition from her home into the CBRF. The Power of Attorney was drafted by Attorney. It permits Angel to engage attorneys on behalf of Mrs. Smith. Greedy lives in California. She recently informed Angel that she was going to have a friend pick up Mrs. Smith at the CBRF and put her on an airplane bound for California for a visit. Based on conversations she has had with Greedy, Angel is concerned that Greedy intends to take advantage of Mrs. Smith s failing health and gain control of Mrs. Smith s assets. Mrs. Smith s assets consist of approximately $1,000,000 in various cash accounts at the Bank of Small Town, where she has banked for decades. Angel contacted Attorney on behalf of Mrs. Smith to see if there is anything that could be done to protect Mrs. Smith s assets from being misappropriated by Greedy. Angel informed Attorney that she wanted to make sure that Mrs. Smith had access to her wealth in order to pay for her care. She was concerned that Greedy would take all of Mrs. Smith s assets and leave Angel on the hook for paying for Mrs. Smith s nursing home care. Attorney inquired whether Mrs. Smith was mentally competent. Angel informed Attorney that in her opinion, Mrs. Smith was competent. However, Mrs. Smith recently scored 11 out of 28 on a mini mental exam that was administered by Mrs. Smith s physician, although the doctor s notes indicate that Mrs. Smith refused to participate in the exam and didn t finish it. Attorney attempted to contact Mrs. Smith s physician. The physician informed him that it was the policy of her employer not to communicate with attorneys unless required to do so by court order or subpoena. Attorney then contacted the CBRF where Mrs. Smith resided. Two of Mrs. Smith s nursing assistants at the CBRF indicated that they were certain that Mrs. Smith was competent. Attorney informed Angel that because it appears that Mrs. Smith is competent, guardianship proceedings were inappropriate. Attorney suggested that Mrs. Smith could protect her assets by establishing an irrevocable trust, appointing the Bank of Small Town as the trustee. All of Mrs. Smith s assets could then be transferred to the trust. A pour-over will would be also be executed to transfer any assets to the trust that were not transferred prior to Mrs. Smith s death. Under the Trust, the Trustee could make distributions to or for the benefit of Mrs. Smith for her health, education, maintenance and support for as long as she lived. Upon her death, the remaining assets would be distributed to her children in equal shares with the descendants of any deceased child taking the share of the deceased child by right of representation. Angel agreed with the idea and authorized Attorney to draft an irrevocable trust and pour-over will on Mrs. Smith s behalf. Attorney quoted a flat fee of $2,000 for preparing these documents and other documents related to the representation. Small Town Bank agreed to serve as trustee. Angel arranged for 00580492.docx

Mrs. Smith to meet at Small Town Bank to sign the documents at 3:00 the next afternoon. A friend of Greedy was picking up Mrs. Smith the next morning for her visit to California. Attorney and the bank trust officer (who is also an attorney) interviewed Mrs. Smith privately for about 45 minutes and determined that Mrs. Smith had testamentary capacity, that she understood the Trust Agreement and Pour-Over Will, and that she wanted to execute them to safeguard her assets and so that both of her daughters were treated equally upon her death. Mrs. Smith executed the Irrevocable Trust and Pour-Over Will, which Attorney and the bank trust officer witnessed in accordance with Wisconsin Statutes. Mrs. Smith also signed documents transferring title to all of her accounts at Small Town Bank into the name of the trust. Both Attorney and the trust officer made extensive notes of their meeting with Mrs. Smith. As Attorney, Mrs. Smith, and Angel were walking out of the Small Town Bank, Angel said that she had arranged for Mrs. Smith to be meet one of her long-time friends for dinner. The friend was in the parking lot of the Bank. Attorney spoke privately with the friend and explained that Mrs. Smith had just signed some documents and that Greedy may attempt to challenge the documents alleging that Mrs. Smith was incompetent at the time she signed them. Attorney asked the friend to pay attention to her conversations with Mrs. Smith and he would call her the next day. Attorney called the friend, explained the Supreme Courts standard for testamentary capacity, and asked if, in her opinion, Mrs. Smith was competent. The friend said that she had no doubt that Mrs. Smith was competent. The friend signed an affidavit as to her opinion. Attorney also followed up with the nursing assistants at Mrs. Smith s CBRF. They signed affidavits attesting that, in their opinion, Mrs. Smith had testamentary capacity. The next day Mrs. Smith was picked up by an acquaintance of Greedy s. The next week, an attorney from California contacted Small Town Bank and requested that all of Mrs. Smith s funds be transferred to California in accordance with the directions of Greedy, who had been appointed Mrs. Smith s agent under a Power of Attorney that had been executed in California. Small Town Bank refused and sent a copy of the Trust Agreement to the California attorney. The California attorney claimed that Mrs. Smith was incompetent at the time that she signed the Irrevocable Trust and Will and demanded that Small Town Bank comply with the demands of Mrs. Smith s new attorney-in-fact, Greedy. Small Town Bank disagreed and refused to turn over the assets of the Trust. Over the course of the next several weeks, Greedy made a request for a withdrawal from the Trust to purchase Greedy a house in Greedy s name in which she and Mrs. Smith could live. She also demanded money for an around-the-world trip and misspent money that had been put into a small account in Mrs. Smith s name. Upon realizing that she would be unable to obtain Mrs. Smith s money, Greedy checked Mrs. Smith into a nursing home in California, which was paid for from the assets in Mrs. Smith s trust. Six months later Mrs. Smith died. Small Town Bank prepared a detailed accounting of its activities as Trustee and asked Angel and Greedy to execute a Waiver and Consent in which they waived any objections to the accountings and consented to the distribution of the assets of remaining principal and income of the Trust to them equally. Greedy refused to sign it. Small Town Bank filed a Petition with the Court to obtain a court order approving the accountings. Greedy filed a Motion to have the Trust and 00580492.docx

Pour-Over Will thrown out on the grounds that Mrs. Smith was incompetent at the time the documents were signed. Attorney and Small Town Bank produced their notes and the Affidavits of Mrs. Smith s friend and the two nursing home assistants. In court proceedings Greedy was unable to show that Mrs. Smith was incompetent when she signed the documents. In depositions it was revealed that Greedy was in possession of a secret Will that named Greedy as the sole beneficiary of Mrs. Smith s estate that Mrs. Smith had signed two years before she signed the Trust Agreement and Pour-Over Will. The Court upheld the Trust and ordered that the Trust s remaining assets be distributed in accordance with the Trust. After her defeat in Court, Greedy filed a 35-count grievance against Attorney with the Office of Lawyer Regulations. The grievance was eventually dismissed by the OLR, but only after Attorney had spent $10,000 in otherwise billable time defending himself. Discussion Questions: 1. Did Attorney act ethically in this case? 2. What more could Attorney have done to protect himself from ethical grievances? 3. Would Attorney have been ethically justified in walking away from this case if he sensed that he was likely to become embroiled in litigation and receive an ethical complaint if he implemented his plan for safeguarding Mrs. Smith s assets? 4. Attorney spent a substantial amount of non-billable time defending himself in this case. If Attorney senses that he was likely to become involved in a family fight or ethical complaint after a representation is over, would it be appropriate for Attorney to have charged more than his regular $2,000 fee for drafting the Trust, Pour-Over Will and other documents? 00580492.docx