Only following orders
Back in 2007, Cuyahoga County Common Pleas Court Judge Dan Gaul believed that a defendant in a felonious assault case was behind the victim's disappearance just before trial. He stopped jury selection, declared a mistrial, and removed himself from the case, after making a statement to the media and declaring his suspicions about the defendant in open court. That earned him an investigation by Ohio's Office of Disciplinary Counsel, resulting in a recommendation of a one-year suspension, with all of it stayed. Gaul maintains that the disciplinary action was motivated by Gaul's speech at a legal symposium a couple years back, where Gaul criticized chief disciplinary counsel Jonathon Coughlan for going after small-time lawyers and ignoring bigger cases of misconduct in the legal community.
After the Supreme Court's decision two months ago in Disciplinary Counsel v. Smith, the betting here is that Justin Smith thinks that Gaul might be on to something.
In 2002, Smith was two years out of law school and working for the Chapman Law Firm here in Cleveland, when he was assigned a case of a New York couple who'd been seriously injured in an auto accident in Ohio. The defendant had insurance limits of $100,000 per person, and the couple also had an insurance policy with State Farm which gave them "personal injury protection" coverage of $175,000 per person. That's a creature of New York law; PIP coverage is no-fault insurance paid without determination of liablity, and paid directly to medical service providers for medical and hospitalization expenses. Smith did the paperwork necessary to get PIP payments of $33,000 for the husband and the maximum for the wife, and then filed a lawsuit against the defendant. The defendant's insurer paid the limits of $200,000.
And after all that, the couple wound up with a check from the Chapman Law Firm for $8,207.46.
As might be expected, that didn't sit too well with them, and so they squawked to disciplinary counsel and filed a malpractice suit. The latter resulted in them getting about another $100,000, but it was the former action where things got interesting.
The big problem is that the firm had charged the couple attorney fees on the PIP payments -- 40% of $208,000 -- despite the fact that New York law flatly prohibited charging a contingency fee on PIP payments. Ooops, did I say the firm? I meant Smith, because despite being a mere two years out of law school, the firm's decision of what to charge on a six-figure case was left to him.
That's not what he said, of course. According to him, after sending the disbursement sheet to the wife, showing her getting $34,839, he prepared one for the husband, which resulted in a "negative disbursement": the husband would owe the firm money. Chapman nixed this and told Smith to "make it work"; Smith did by combining the two disbursement sheets. Of course, that's if you assume "make it work" means coming up with a distribution to the client of less than 5% of what the law firm collected in fees.
Much of the court's decision is devoted to who gets to wear the jacket for all this, and the court decides it fits Smith quite comfortably. He argued that Chapman was responsible, but the court notes that
Although Chapman was the owner of the law firm, it was respondent who acted as the Reigers' attorney. Respondent signed the contingent-fee agreement, he filed suit on the Reigers' behalf, he submitted PIP claims on their behalf, he was the only attorney for the law firm that had any contact with them, and he prepared the disbursement sheets detailing their recovery and attorney fees.
As for Smith's counsel's claim in oral argument that Smith "prepared the disbursement sheets as a scribe would, following the dictates of his superior," the court harrumphed, "respondent is not a scribe but an attorney, responsible for zealously representing his clients' interests." Smith sought sanctuary in Prof.Cond.R. 5.2(B), which provides that "A subordinate lawyer does not violate the Ohio Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of a question of professional duty." No matter, said the court; for a variety of reasons, "it was unreasonable for respondent to rely on Chapman's directions under the circumstances."
To be sure, Smith wasn't blameless in all this. Curiously unmentioned as a disciplinary violation or a factor in aggravation or mitigation is that Smith endorsed the clients' names on both of the settlement sheets, despite not having a power of attorney to do so. And the defense that "I was only following orders" doesn't have a whole lot of legs.
But what about the guy giving the orders? It may be that the disciplinary process against Smith's superior is proceeding even as I write this, but there's nothing to indicate that. (According to the Supreme Court's web site, the Chapman Law Firm now lists an address in Boca Raton, Florida, and its owner has no discipline or sanction history here in Ohio.) The court determined that Smith had no right to rely on his superior's instructions about what fees to charge and what disbursements to make. That may be, but it was still that superior who decided what fees to charge and what disbursements to make. The court's decision results in the anomaly that the subordinate lawyer has responsibilities to the client while the supervising lawyer gets a pass, even for the things he tells the subordinate lawyer to do.
Here's the thought I took away from this case: of the $165,000 that the Chapman Law Firm sought in fees, how much of that do you think was going to go into the pocket of the 2nd-year associate?