Link to Mo. Sup. Ct. Opinion
The Supreme Court of Missouri held that a lawyer violated rules of professional responsibility by creating an improper fee agreement with his client, improperly accepting a settlement on the client's behalf, failing to provide information to the client after withdrawal, and comingling the client's funds with his own funds. The court stayed execution of a one-year suspension of the attorney's license and placed him on probation for one year.
I. Facts and Holding
The Office of Chief Disciplinary Counsel (OCDC) sought to discipline attorney Larry D. Coleman "for multiple violations of the rules of professional conduct in his representation of a client in three cases and one violation for the improper handling of his IOLTA account."[2] Coleman had previously received discipline on three occasions, most recently in 2008, for failure to communicate with clients, unreasonable fees, and conduct prejudicial to the administration of justice.[3]
The disciplinary action in this case arose from Coleman's representation of Vera Davis in three separate civil cases.[4] For each case, Coleman's fee agreement with Davis required Davis to pay a nonrefundable retainer, $200 per hour for Coleman's time, and Coleman's litigation expenses.[5] From 2001 to 2006, Davis paid at least $38,000 and perhaps as much as $50,000 in response to statements Coleman sent to obtain payment for his work.[6] In July 2006, the state (on behalf of Davis's former employer, Western Missouri Mental Health Center) offered to settle Davis's discrimination claim against the hospital for $20,000.[7] Davis found this offer unacceptable and instructed Coleman to reject it.[8] Two months later, Davis informed Coleman that she could no longer afford his bills.[9] Coleman proposed converting the previous fee agreements into contingency agreements, wherein Coleman would receive one-third of any recovery in any of Davis's three cases.[10] In exchange, Coleman forgave Davis for any fees she then owed to him.[11] Coleman also included in the new fee agreements language that gave him "the exclusive right to determine when and for how much to settle this case."[12] Coleman reasoned this was fair, concluding, "That way, I am not held hostage to an agreement I disagree with."[13] Coleman made no effort to explain this authority to Davis, and Davis signed the new agreements.[14]
In October 2006, the state again offered to settle the discrimination claim for $20,000.[15] Davis again insisted this offer was unacceptable, but Coleman accepted it.[16] Coleman informed Davis he had accepted the state's offer and insisted Davis sign the settlement documents, which were necessary to resolve the claim.[17] Davis repeatedly refused and insisted on going to trial.[18] The following month, Coleman told Davis that, if she would not sign the documents, he would either withdraw from all three cases or file a motion to enforce the settlement.[19] Coleman eventually moved to enforce the settlement, but the court denied the motion and placed the case on the trial docket.[20] Coleman then withdrew from the discrimination case, although Davis did not receive a copy of his motion to withdraw until some time later.[21]
In March and April of 2007, Davis requested and received her files from Coleman.[22] She sought other legal counsel and also asked Coleman whether she needed to retain new counsel and if he intended to seek liens against her for his fees.[23] Davis also asked for advice about how to proceed with her case, and he responded with a letter noting that her files were no longer in his office.[24] Meanwhile, in early March summary judgment was granted against Davis in her wrongful death claim, in which Coleman was counsel of record.[25] Coleman filed an appeal of the summary judgment with the Missouri Court of Appeals, Western District, but then moved to withdraw.[26] Coleman also moved to withdraw from the third case in which he represented Davis and was granted leave to withdraw in June 2007.[27] Davis then filed this complaint with the OCDC in July 2007.[28]
Separate from his conduct with Davis's three cases, Coleman was also investigated by the OCDC in 2008.[29] The Supreme Court of Missouri had ordered Coleman to pay a $750 fine for his third disciplinary matter in April 2008.[30] That June, Coleman paid the fine with a check from his IOLTA account, which caused OCDC to open a complaint and investigate Coleman's handling of funds related to his law practice.[31] OCDC found that Coleman would deposit settlement checks into his IOLTA account, then pay the client's share and sometimes Coleman's personal expenses out of that account.[32] OCDC added a count to its complaint against Coleman, alleging that he comingled client and third-party funds with his own.[33]
The OCDC charged that, in violation of the Missouri Rules of Professional Conduct, Coleman had (1) improperly acted outside the scope of his representation of Davis by accepting the settlement offer without her consent in violation of Rule 4-1.2; (2) charged excessive fees by claiming one-third of Davis's potential recovery without giving her credit for the $30,000 or more she had already paid him in violation of Rule 4-1.5; (3) created a conflict of interest by giving himself the exclusive right to accept settlement offers and then acted against Davis's interest by taking her to court over the offer he accepted in violation of Rule 4-1.7; (4) failed to notify Davis that he had terminated his representation of her and failed to notify her of her rights and obligations in violation of Rule 4-1.16; (5) comingled his personal funds with client funds in violation of Rule 4-1.15; and (6) harmed the judicial system and his clients through his rule violations in violation of Rule 4-8.4(d).[34] A disciplinary hearing panel found that there was only evidence to support charges (1) and (6) and recommended a public reprimand.[35] The OCDC rejected these findings and asked the Supreme Court of Missouri to suspend Coleman's license for one year.[36] The court found that the facts alleged were sufficient to prove violations as to all counts except (2), the charging of excessive fees.[37]
II. Legal Background
"Professional misconduct must be proven by a preponderance of the evidence before discipline will be imposed."[38] The Supreme Court of Missouri reviews a disciplinary panel's findings de novo, treating the panel's recommendations as advisory.[39]
A. Rule 4-1.2: Scope of Representation
Rule 4-1.2(a) requires a lawyer to "abide by a client's decisions concerning the objectives of representation."[40] "A lawyer shall abide by a client's decision whether to accept an offer of settlement of a matter."[41] The rule specifically denies attorneys the authority to accept a settlement offer without a client's consent, even if the client assents to the attorney having that decision-making authority.[42]
Here, Coleman violated Rule 4-1.2 in two ways. First, he improperly expanded his own authority by fashioning fee agreements that purported to give him sole discretion to accept or decline settlement offers.[43] Second, he then acted under the claimed authority of those fee agreements by accepting a settlement offer that Davis had rejected and furthered this violation by asking the trial court to order Davis to assent.[44]
B. Rule 4-1.7: Conflict of Interest
Rule 4-1.7(b) states that "a lawyer shall not represent a client if the representation of that client may be materially limited . . . by the lawyer's own interests."[45] Although a client may consent to certain conflicts of interest, the client may not be asked to waive the conflict unless the conflict will not adversely effect the lawyer's representation.[46]
Here, Coleman's fee agreements created a conflict of interest by "improperly contract[ing] with [Davis] for the exclusive right to settle her cases with or without her consent."[47] This created a strong incentive for Coleman to make decisions based upon his financial interests instead of Davis's legal interests.[48] Coleman's creation of this agreement along with his failure to explain it to Davis constituted one violation of Rule 4-1.7.[49] He further violated the rule by accepting the state's settlement offer in furtherance of his own interests, in spite of Davis's insistence that he not accept.[50] Coleman further offended the rule by not withdrawing when his conflict of interest arose,[51] although that was unlikely at the outset because the conflict was of his own making.
C. Rule 4-1.15: Safekeeping Property
Rule 4-1.15(c) requires an attorney to "hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property."[52] Furthermore, "accurate records must be kept regarding which part of the funds is the lawyer's."[53]
The court found Coleman's actions to be "a classic example of prohibited commingling of attorney and client funds."[54] Although Coleman did not misuse client funds (and it was not alleged that he did), he nonetheless violated the rule by using one account to hold and distribute both his funds and those of his clients.[55] Furthermore, Coleman failed to satisfy the recordkeeping requirement because, "[w]hen questioned about the identity of the owner of specific deposits, Mr. Coleman was unable to say to whom the money belonged."[56]
D. Rule 4-1.16: Declining or Terminating Representation
Rule 4-1.16 requires attorneys terminating representation to take reasonable steps to protect a client's interests, "such as giving reasonable notice to the client, allowing time for employment of other counsel."[57] One required step is notifying the client that the attorney has actually terminated representation.[58]
Coleman plainly failed to satisfy this requirement because he did not notify Davis that he was withdrawing from any of her three cases.[59] He also violated Rule 4-1.16 by failing to provide her reasonable advice or information about her pending cases once he withdrew, despite her requests for such information.[60]
E. Rule 4-8.4: Conduct Prejudicial to the Administration of Justice
Rule 4-8.4 describes the conduct for which an attorney may be disciplined.[61] Not only is it misconduct to violate the rules of professional conduct,[62] but it is also inappropriate to "engage in conduct that is prejudicial to the administration of justice."[63]
OCDC argued that Coleman had violated Rule 4-8.4(d) by wasting judicial resources by filing a motion to enforce a prohibited agreement and negatively impacting the judicial process by not giving Davis sufficient information to retain new counsel once Coleman withdrew.[64] The court agreed.[65]
F. Discipline
Rule 5.225 provides that a lawyer may receive probation for misconduct if he (1) will not likely harm the public; (2) is able to practice law without harming the reputation of the courts or the bar; and (3) has not done anything to merit disbarment.[66]
Even though Coleman's behavior explicitly violated Rule 4-1.2 and he had two prior admonishments and one prior public reprimand, the court found that Coleman's conduct did not warrant suspension of his license, as he did not act with a dishonest motive.[67] Because the court determined that Coleman's mistakes were caused by ignorance – and not intentional violation – of the rules, and because "it is likely that his misconduct can be remedied by education and supervision," the court placed Coleman on one year of probation, required him to attend the OCDC's ethics school, and submitted him to a variety of supervisory, educational, and recordkeeping requirements.[68]
III. Comment
Despite five different violations of the Missouri Rules of Professional Conduct, Larry D. Coleman was allowed to continue to practice law in Missouri. On the one hand, the Supreme Court of Missouri's lengthy description of Coleman's misdeeds makes it appear that Coleman received a very light punishment for behavior that was clearly selfish, harmful to his client, and unbecoming of an attorney. On the other hand, the court's discussion of appropriate discipline paints a different picture of the respondent as an attorney who was simply too zealous for his own good. For now, Coleman continues to serve his remaining probation, during which time the Office of Chief Disciplinary Counsel will seek to educate and supervise Coleman with the hope that he will raise his standards of practice. Given Coleman's previous disciplinary history, time will tell whether the former or the latter impression is correct.
- Cole David Bradbury
[1] No. 89849, 2009 WL 2958869 (Mo. Sep. 15, 2009) (en banc).
[2] Id. at *1. The OCDC operates under the authority of the Supreme Court of Missouri and "serve[s] as counsel for the bar in all disciplinary proceedings." Mo. R. Prof'l Conduct 5.06.
[3] Coleman, 2009 WL 2958869, at *1.
[4] Id. The cases were (1) a claim of wrongful death arising from the death of Davis's sister; (2) a wrongful termination claim against Davis's former employer, Two Rivers Psychiatric Hospital; and (3) a discrimination claim against another employer, Western Missouri Mental Health Center. Id.
[5] Id.
[6] Id.
[7] Id. at *2.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Id. at *3.
[23] Id.
[24] Id.
[25] Id.
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] Id.
[31] Id.
[32] Id. at *4.
[33] Id.
[34] Id. at *4-*5.
[35] Id. at *4.
[36] Id. at *4-*5.
[37] Id. at *5.
[38] Id. (quoting In re Crews, 159 S.W.3d 355, 358 (Mo. 2005) (en banc)).
[39] Id.
[40] Id. (quoting Mo. R. Prof'l Conduct 4-1.2).
[41] Id.
[42] Id. at *6.
[43] Id.
[44] Id.
[45] Id. (quoting Mo. R. Prof'l Conduct 4-1.7).
[46] Id.
[47] Id. at *6.
[48] Id. at *6-*7.
[49] Id.
[50] Id. at *7.
[51] Id.
[52] Id. (quoting Mo. R. Prof'l Conduct 4-1.15).
[53] Id. at *8 (quoting Mo. R. Prof'l Conduct 4-1.15 cmt. 2).
[54] Id.
[55] Id. at *7. The funds withdrawn for Coleman's IOLTA account were, despite their presence in the account, apparently his own. Id.
[56] Id. at *8 (quoting Mo. R. Prof'l Conduct 4-1.16).
[57] Id.
[58] Id.
[59] Id.
[60] Id. at *9.
[61] Id. (citing Mo. R. Prof'l Conduct 4-8.4).
[62] Id. (citing Mo. R. Prof'l Conduct 4-8.4(a)).
[63] Id. (quoting Mo. R. Prof'l Conduct 4-8.4(d)).
[64] Id. at *10.
[65] Id.
[66] Id. at *13 (citing Mo. S. Ct. R. 5.225).
[67] Id. at *12.
[68] Id. Coleman's license was technically suspended by the court, but the execution of the sentence was stayed pending his completion of probation. Id.
