In re Case No. 23236

• Citation: 728 N.W.2d 254
• Decision Date: 08 March 2007
• Docket Number: No. A06-1400.,A06-1400.
• Parties: In re CHARGES OF UNPROFESSIONAL CONDUCT IN PANEL CASE NO. 23236.
• Court: Supreme Court of Minnesota (US)

728 N.W.2d 254

In re CHARGES OF UNPROFESSIONAL CONDUCT IN PANEL CASE NO. 23236.

No. A06-1400.

Supreme Court of Minnesota.

March 8, 2007.

Allen I. Saeks, Minneapolis, MN, for Appellant.

Martin A. Cole, Director, Craig D. Klausing, Senior Assistant Director, Office of Lawyers Professional Responsibility, St. Paul, MN, for Respondent.

Considered and decided by the court en banc without oral argument.

OPINION

PER CURIAM.

This case presents the issue of whether a supervising lawyer has a duty to disclose to a client that another lawyer at the law firm, working on a matter for the client, had not been authorized to practice law for more than two years. This case also asks whether it is a violation of the Minnesota Rules of Professional Conduct for a law firm to bill a client at a contractually agreed upon rate for lawyer services when the lawyer provided these services during a time when the lawyer was not authorized to practice law.

The following facts were found by a panel of the Lawyers Professional Responsibility Board and are essentially undisputed. Appellant lawyer (hereinafter Appellant) was admitted to practice law in Minnesota in 1977 and currently is a shareholder in a Minneapolis law firm (hereinafter Law Firm). As a lawyer with the Law Firm, Appellant represented a government entity (hereinafter Client). Another lawyer in the Law Firm (hereinafter Restricted Lawyer) worked with Appellant in providing representation to the Client.

On August 27, 2002, Restricted Lawyer, who is not a subject of this disciplinary matter, was placed on CLE restricted status pursuant to Rule 12, Rules of the Minnesota Board of Continuing Legal Education, for failure to comply with Minnesota's CLE requirements.¹ Appellant was unaware of Restricted Lawyer's failure to comply with the CLE requirements or that he was not authorized to practice law. On January 21, 2005, Appellant learned of Restricted Lawyer's status and at that time the Law Firm notified Restricted Lawyer that he was prohibited from engaging in the practice of law or representing any person or entity on behalf of the Law Firm in the State of Minnesota. However, Appellant did not inform the Client of Restricted Lawyer's status. Appellant continued working with Restricted Lawyer as a "non-lawyer assistant" in a supervisory capacity. In late January 2005, the Human Resources Manager of the Law Firm removed the reference in the Law Firm's website that Restricted Lawyer was authorized to practice law.

In late February 2005, the Client discovered that Restricted Lawyer's profile had been changed on the Law Firm's website and that the website no longer indicated that Restricted Lawyer was licensed to practice law in Minnesota. On February 22, 2005, the Client contacted Appellant and asked why Restricted Lawyer's profile had changed on the Law Firm's website. Appellant did not acknowledge that she was then aware that Restricted Lawyer had not been authorized to practice law for almost two and one-half years. Appellant told the Client that she would look into the matter and get back to the Client.

On February 23, 2005, Appellant telephoned the Client and for the first time acknowledged Restricted Lawyer's noncompliance with CLE requirements. However, Appellant did not tell the Client that Restricted Lawyer had been on involuntary restricted status and had not been authorized to practice law since 2002, a period during which Restricted Lawyer was providing legal services to the Client although not authorized to do so.

On April 13, 2005, Appellant submitted a statement for services rendered to the Client by the Law Firm. The statement included charges for work performed by Restricted Lawyer while he was not authorized to practice law, but neither the cover letter nor the bill stated that Restricted Lawyer was not authorized to practice law at the time the services were rendered. Moreover, Restricted Lawyer's services were billed at $205 per hour, the rate charged for work done by lawyers for the Client.

On July 14, 2005, the Client e-mailed Appellant and inquired about the time period that Restricted Lawyer was without a license and whether the Client was billed for Restricted Lawyer's time when he was not authorized to practice law. Appellant responded that Restricted Lawyer had been on involuntary restricted status since August 27, 2002, and sent the Client a second billing statement. In the second billing statement, Appellant removed all of the charges for time she had personally billed to the Client, eliminating accidental double billing for administrative time she had spent supervising Restricted Lawyer. However, the second billing statement continued to reflect a $205 per hour charge for Restricted Lawyer's services.

The Client objected to being billed for Restricted Lawyer's time while he was not authorized to practice law. Eventually, the Law Firm refunded to the Client all fees paid for Restricted Lawyer's time during the period he was not authorized to practice law. The Client then filed an ethics complaint with the Director of the Office of Lawyers Professional Responsibility.

After investigating the complaint, the Director concluded that Appellant had committed ethical violations of an "isolated and non-serious nature" and privately admonished Appellant for violating Minn. R. Prof. Conduct 1.4(b) by failing to inform the Client that Restricted Lawyer was not authorized to practice law and for violating Minn. R. Prof. Conduct 1.5(a) for billing the Client for Restricted Lawyer's time at the Law Firm's lawyer rate during the period that Restricted Lawyer was suspended from the practice of law.

Pursuant to Rule 8(d)(2)(iii), Rules on Lawyers Professional Responsibility (RLPR), Appellant demanded that the Director present the charges to a panel of the Lawyers Professional Responsibility Board for de novo consideration. The panel conducted a hearing and determined that Appellant had violated Rules 1.4(b) and 1.5 and that this violation warranted issuing an admonition. The panel further concluded that the decision of other lawyers in the Law Firm not to disclose the status of Restricted Lawyer's license did not impact Appellant's obligation to comply with the rules.

Findings made in lawyer discipline cases are reviewed under a clearly erroneous standard. In re Panel File Number 99-5, 607 N.W.2d 429, 431 (Minn. 2000); see also In re X.Y., 529 N.W.2d 688, 689-90 (Minn.1995) (noting that since admonitions are a form of attorney discipline, the clearly erroneous standard should be used to review findings). Great weight is given to the recommendations of the panel, but this court has the final responsibility for determining appropriate discipline for violations of the rules of professional conduct. In re Panel File Number 99-5, 607 N.W.2d at 431. Sanctions are imposed according to the unique facts of each case, and when considering appropriate sanctions for misconduct, "we weigh the following factors: (1) the nature of the misconduct, (2) the cumulative weight of the disciplinary violations, (3) the harm to the public, and (4) the harm to the legal profession." Id.

I.

Rule 1.4(b) states that "[a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." Lawyers comply with Rule 1.4 when they provide their clients with "sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued." Rule 1.4 cmt.— 1985; see also In re Keate, 488 N.W.2d 229, 234 (Minn.1992) (noting that Rule 1.4(b) imposes an affirmative duty on lawyers to explain to their clients how they intend to proceed in a matter).

Appellant argues that the Director erroneously disciplined her for failing to disclose that Restricted Lawyer was not authorized to practice law in that Appellant did not have an affirmative duty to disclose information to the Client that lawyers on involuntary restricted status are not themselves required to disclose under either the Minnesota Rules of Professional Conduct or the Rules on Lawyers Professional Responsibility. Appellant also asserts that the requirement under Rule 20, RLPR, that disciplinary proceedings be kept confidential² led her to reasonably conclude that she did not need to disclose Restricted Lawyer's license status to the Client.

The Director counters that under the circumstances of this case, the absence of a rule compelling disclosure is not determinative. Rather, this case concerns a lawyer's duty to disclose information that is reasonably necessary for clients to make informed decisions about their representation. The Director further notes that since Restricted Lawyer was not disciplined until September 2005 and Appellant disclosed that Restricted Lawyer was not authorized to practice law in February 2005, Appellant's Rule 20 argument is more of an afterthought than a rule she relied on to her detriment.

A lawyer on involuntary restricted status does not have the same mandatory disclosure obligations as those imposed upon lawyers who have been disbarred, suspended, or administratively suspended from practice. See Rule 26, RLPR (requiring disbarred, suspended, or lawyers on disability inactive status to inform their clients of their status); Rule 30, RLPR (requiring lawyers on administrative suspension to inform their clients of their status). The absence of such a rule does not mean that a lawyer's involuntary suspension from the practice of law for failure to comply with...