Komar, In re

• Decision Date: 15 December 1988
• Docket Number: No. 65344,65344
• Citation: 532 N.E.2d 801,126 Ill.Dec. 930,125 Ill.2d 427
• Parties: , 126 Ill.Dec. 930 In re Lawrence S. KOMAR, Attorney, Respondent.
• Court: Illinois Supreme Court

Page 801

532 N.E.2d 801

125 Ill.2d 427, 126 Ill.Dec. 930

In re Lawrence S. KOMAR, Attorney, Respondent.

No. 65344.

Supreme Court of Illinois.

Dec. 15, 1988.

Jerome Larkin, of Chicago, for the Administrator of the Attorney Registration and Disciplinary Commission.

Warren Lupel, of Chicago, for respondent.

Justice WARD delivered the opinion of the court:

The Administrator of the Attorney Registration and Disciplinary Commission filed a complaint charging the respondent, Lawrence Komar, with violating the Illinois Code of Professional Responsibility (107 Ill.2d R. 1-101 et seq.) and one of the predecessor codes of professional conduct.

The complaint alleged that the respondent was an officer and owned a one-third interest in Fiscal Management, Inc. (Fiscal), a corporation which, in turn, owned 75% of the stock in Midland Equities, Inc. (Midland). The complaint charged that between July 27, 1978, and September 16 1981, "Midland sent various written communications, including letters and mailgrams, to defendants in foreclosure proceedings advising that Midland had devised a plan to help save their homes and requesting that they contact Midland immediately." It was also alleged that during this same period more than 1,000 persons executed contracts with Midland, pursuant to which Midland would receive a $1,000 fee for performing one of the following services: obtaining a loan commitment to pay the mortgage arrearage; obtaining a purchaser to buy the real estate with an option to repurchase; retaining counsel to determine the legal status of the foreclosure action and negotiate on behalf of the client prior to the foreclosure sale; or obtaining competent counsel to file a bankruptcy petition under chapter 13 of the United States Bankruptcy Code. In most instances, the customer, in exchange for the $1,000 fee, received simply a legal review of his case or was referred to a bankruptcy attorney. Midland never arranged to sell a client's home to another with a repurchase option, and in only a few instances did it obtain refinancing.

The respondent, it was alleged, provided legal services for Midland's customers incident to the contract and received a fee of $200 from Midland per customer. The complaint also alleged that the respondent failed to inform the individuals to whom he furnished legal advice that he had an interest in Midland. The Administrator alleged also that on March 10, 1981, Capital Concepts, Inc., was incorporated, and that until September 16, 1981, Capital, using the respondent's services, handled some of Midland's business.

The complaint charged that the respondent violated disciplinary rules of the Illinois State Bar Association Code of Professional Responsibility (1977) by acts committed prior to July 1, 1980, and rules of the Illinois Code of Professional Responsibility (107 Ill.2d R. 1-101 et seq.) by later conduct. Specifically, the respondent was charged with violating Disciplinary Rule (DR) 2-101 and Rule 2-101 by participating in the use of a form of public communication that included a deceptive statement; practicing under a name which is misleading as to identity, responsibility or status in violation of DR 2-102(B) and Rule 2-101; soliciting professional employment in violation of DR 2-103(B), DR 2-103(D) and Rule 2-103; accepting employment in violation of DR 2-104 and Rule 2-104; violating DR 3-101(A) and Rule 3-101(a) by aiding another in the unauthorized practice of law; violating DR 3-102(A) and Rule 3-102(a) by sharing legal fees with a nonlawyer; violating DR 3-103(A) and Rule 3-103(a) by forming a partnership with a nonlawyer; violating DR 5-101(A) and Rule 5-101(a) by accepting employment when his professional judgment may have been affected by his own financial, business, property or personal interests; violating DR 5-107(B) and Rule 5-107(b) by accepting compensation for legal services from one other than a client; entering into an agreement for, charging or collecting an illegal or excessive fee in violation of DR 2-107 and Rule 2-106; failing to refund promptly any part of a fee paid in advance in violation of DR 2-111(a)(3) and Rule 2-111(a)(3); and engaging in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of DR 1-102(A)(4) and Rule 1-102(a)(4).

Specific counts alleged instances where individuals responded to Midland's or Capital's solicitations, executed a contract after an interview with a Midland or Capital representative, and advanced either the entire $1,000 called for in the contract or a portion of it. Other counts alleged that there were customers who claimed a refund of the fee after one of Midland's or Capital's representatives referred the customer's case to a bankruptcy attorney or the customer obtained financing on his own, but no refund was ever received. The conduct alleged in each of these counts of the complaint constituted, it charged, was a violation of the disciplinary rules set out above.

In addition, there was one count charging the respondent with solicitation of employment in violation of Rule 2-103. That count charged that on or about March 1981, Charles Daniels received a telephone call from a person who identified himself as the respondent and stated that he was aware of a pending foreclosure action brought against Daniels. At the caller's request, Daniels met the respondent at his office and agreed to pay him $1,000 as a fee. The respondent filed an appearance on behalf of Daniels in the foreclosure litigation, and thereafter, Daniels paid the respondent $500.

The respondent filed an answer to the Administrator's complaint on December 2, 1983, admitting all of its factual allegations, but denying that they constituted misconduct warranting discipline. On January 12, 1984, the respondent filed a motion for judgment on the pleadings, which was denied by a panel of the Hearing Board of the Commission. After a hearing, a majority of the panel found that each allegation of misconduct in the complaint had been proved by clear and convincing evidence, and recommended that the respondent be suspended from the practice of law for a period of six months. The panel observed that the solicited group was composed of desperate, unemployed, minimally educated, unsophisticated persons, distraught by the threatened loss of their homes. The dissenting member of the panel considered that only financial counseling was involved and voted that the complaint be dismissed.

The Administrator and the respondent filed exceptions before the Review Board, and on March 2, 1987, the Review Board unanimously approved the report and recommendations of the Hearing Board. The Administrator filed exceptions regarding the sanction recommended by the Hearing and Review Boards, and we allowed the respondent's motion to allow his exceptions to the Hearing Board's report to stand as his exceptions to the report of the Review Board.

The respondent is 44 years of age and was admitted to the bar of Illinois in 1969. In 1976, the respondent and two other individuals, who were nonlawyers, formed Fiscal Management, Inc., whose stated purpose was to arrange financing for commercial borrowers. The respondent owned one-third of the corporation's stock. In July 1978, the respondent and Lloyd Baretz, Norman Behrens and Michael Wichman, who were nonlawyers, formed Midland Equities, Inc. Fiscal acquired 75% of the corporation's stock and Michael Wichman owned the other one-fourth share. The respondent, Baretz, Behrens and Wichman were made directors of the corporation, and the respondent was named as president of Midland.

Between its formation, in July of 1978, and September of 1981, Midland mailed a variety of fliers, ads and other solicitations to owners of single-family dwellings which were the subject of pending mortgage foreclosure actions filed in the circuit court of Cook County. The respondent testified that he was aware of these mailings and had reviewed them prior to distribution. He denied he took part in their drafting or distribution however.

Between July 7, 1978, and December 31, 1980, approximately 2,000 individuals named in foreclosure actions responded to the solicitations and were interviewed by either Gina Miller, an employee of Midland, Baretz, Behrens or Wichman. Approximately 1,000 persons executed contracts with Midland, the terms of which provided that Midland would receive a $1,000 fee if it provided a "solution" to the foreclosure action that would permit the client to remain in his or her home. According to the contract, the proposed solutions included: (1) obtaining refinancing; (2) finding a purchaser for the customer's home who would consent to an option to repurchase; (3) retaining counsel to determine the legal status of the foreclosure action and negotiate on behalf of the client; or (4) obtain counsel to file a bankruptcy petition. Before the contract was signed, the customer was told that in the event Midland's efforts were unsuccessful in avoiding foreclosure, the $1,000 fee would be refunded.

The evidence was that the respondent participated in drafting the form contract and that he interviewed customers after they had signed contracts. The respondent would introduce himself to the customer as an attorney, explain the alternative "solutions" available under the contract and make a "legal analysis" of their case. He testified that he would review the foreclosure petition for legal sufficiency, and in certain instances, he filed an appearance on behalf of the customer. The Hearing Board panel found that Midland paid the respondent $200 from each $1,000 fee received from foreclosure defendants.

The evidence showed that in most instances the "solution" provided the customer was simply a referral to a nonassociated attorney for the filing of a chapter 13 bankruptcy petition. The respondent testified that in less than 15% of the cases did Midland arrange for financing. In no case, it appears, did the...