Cincinnati Bar Assn. v. Fehler-Schultz, FEHLER-SCHULTZ

• Decision Date: 02 September 1992
• Docket Number: No. 92-417,FEHLER-SCHULTZ,92-417
• Citation: 64 Ohio St.3d 452,597 N.E.2d 79
• Parties: CINCINNATI BAR ASSOCIATION v.
• Court: Ohio Supreme Court

Page 452

64 Ohio St.3d 452

597 N.E.2d 79

CINCINNATI BAR ASSOCIATION v. FEHLER-SCHULTZ.

No. 92-417.

Supreme Court of Ohio.

Submitted June 2, 1992.

Decided Sept. 2, 1992.

Collection of "subrogation fee" in addition to agreed-upon contingency fee from proceeds of personal injury settlement and authorization for suspended lawyer working as attorney's investigator to engage in activities constituting practice of law warrants indefinite suspension from practice of law. Code of Prof.Resp., DR 2-106(A), DR 3-101(A), DR 7-101(A)(3).

In a complaint filed April 18, 1991, relator, the Cincinnati Bar Association, charged respondent, Richard H. Fehler-Schultz (Attorney Registration No. 0018132), with having violated, inter alia, DR 2-106(A) (collecting an illegal or clearly excessive fee), 7-101(A)(3) (causing client damage or prejudice), and 3-101(A) (aiding a non-lawyer in the unauthorized practice of law). The matter was heard by a panel of the Board of Commissioners on Grievances and Discipline of the Supreme Court on December 18, 1991.

Evidence presented to the panel established that in March 1988, Vickie Andriola Schierloh retained D.C. Schultz Co., L.P.A., for which respondent is a principal, because she had been seriously injured in an automobile collision. At that time, Thomas P. Woods, an attorney who had been suspended from the practice of law in Ohio, ¹ was employed by D.C. Schultz as an investigator. Woods interviewed Schierloh in the hospital where she agreed in writing to pay D.C. Schultz on a one-third contingency fee basis.

Approximately five months later, one of the parties involved in the collision settled with Schierloh for $50,000. Pursuant to the contingency fee agreement, respondent and his firm were paid $16,666.66 of this amount. However, D.C. Schultz also took an additional $8,262.50 of the settlement, which respondent identified as a "subrogation fee" paid by Schierloh's insurance company, University Health Plan ("UHP"). Respondent maintained that the firm was entitled to this fee because Woods had negotiated with UHP to compromise the insurance company's claim for reimbursement of $24,787.51 advanced for Schierloh's medical expenses.

Upon further inquiry as to his justification for D.C. Schultz's receipt of nearly half the settlement proceeds, respondent asserted that the firm had established an attorney-client relationship with UHP and that Schierloh had consented to this arrangement. Respondent provided no documentation of this relationship, and the UHP representative with whom Woods negotiated denied that such a relationship existed. Moreover, the representative testified that UHP had reduced its claim for repayment to $16,000 as a means to increase Schierloh's share of the settlement proceeds, and Schierloh testified that Woods told her that UHP would not compromise its claim for reimbursement. In response to this testimony, respondent characterized D.C. Schultz's receipt of the extra $8,262.50 amount as a "gift" and claimed that the payment of a subrogation fee was an accepted practice in the insurance industry.

The panel concluded from this evidence that although respondent had an obligation to see that Schierloh satisfied UHP's interest in reimbursement from the settlement proceeds, respondent was not entitled to a "subrogation fee" based on UHP's decision to reduce its claim. The panel also concluded that respondent's receipt of nearly $25,000 of the $50,000 settlement violated the written contingency fee agreement with Schierloh and was excessive. The panel therefore found a violation of DR 7-101(A)(3) and 2-106(A).

Other evidence presented at the hearing established that respondent authorized Woods to interview Schierloh and to obtain her signature on an otherwise unsigned contingency fee contract. Woods...