Disciplinary Action Against Strid, In re, C4-88-1993

• Decision Date: 03 July 1996
• Docket Number: No. C4-88-1993,C4-88-1993
• Parties: In re Petition for DISCIPLINARY ACTION AGAINST Dennis W. STRID, an Attorney at Law of the State of Minnesota.
• Court: Minnesota Supreme Court

Page 212

551 N.W.2d 212

In re Petition for DISCIPLINARY ACTION AGAINST Dennis W. STRID, an Attorney at Law of the State of Minnesota.

No. C4-88-1993.

Supreme Court of Minnesota.

July 3, 1996.

Syllabus by the Court

In disciplinary proceedings, the allegations of the Director of the Office of Lawyers Professional Responsibility must be supported by clear and convincing evidence.

The facts of this case do not justify a finding that respondent attorney made false statements or misrepresentations in violation of Minnesota Rules of Professional Conduct 3.3(a)(1), 4.1 and 8.4(c).

Marcia A. Johnson, Director, Craig D. Klausing, Asst. Director, St. Paul, for Appellant.

Dennis W. Strid, Pro se.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action alleging that respondent, Dennis W. Strid, committed professional misconduct. The Director alleges that Strid misrepresented the total amount of his attorney fees to the Department of Labor and Industry and collected fees in excess of the total fees as represented to the Department. After a hearing on the petition, the referee concluded that the Director had failed to show by clear and convincing evidence that Strid had violated the Minnesota Rules of Professional Conduct. The referee recommended that the Director's petition be dismissed. The Director disputes the referee's recommendation and argues that Strid should be indefinitely suspended from the practice of law for a minimum period of two years. We affirm the referee's findings of fact, conclusions of law, and recommendation, and order that the Director's petition be dismissed.

Respondent, Dennis W. Strid, was admitted to practice law in Minnesota in 1962. His practice consisted primarily of workers' compensation cases, employment and business litigation. In 1981, Laurence E. Olson sought Strid's representation in a workers' compensation matter, seeking temporary partial disability benefits for a back injury he sustained in 1979. Olson had previously obtained workers' compensation benefits from his employer; however, in 1981, Olson's employer discharged him and notified him that his workers' compensation benefits would be discontinued. Strid filed a workers' compensation claim on behalf of Olson with the Department of Labor and Industry (DOLI), seeking additional temporary partial disability benefits. After a hearing, Olson's former employer was required to reinstate the disability benefits. Five years later, in October 1987, Strid commenced a suit on Olson's behalf against Olson's former employer alleging that the employer unlawfully conspired to discharge Olson and deprive him of workers' compensation benefits. This wrongful discharge claim is based on Minnesota Statutes section 176.82, which provides that an employee has a civil cause of action for damages resulting from the discharge from employment, threatened discharge or intentional obstruction of the employee who seeks workers' compensation benefits.

In December 1987, the attorney for the employer's workers' compensation insurer submitted discovery requests in the section 176.82 matter, which included two sets of requests for production of documents, a request for production of statements, and two sets of interrogatories. Strid responded to the discovery requests, objecting to the first request for production of documents as cumulative and burdensome, and submitting answers to the first set of interrogatories. In September 1988, the insurer's attorney submitted a proposal to settle both the workers' compensation claim and the section 176.82 action, and in March 1989, both claims were settled by stipulation. DOLI approved the settlement agreement the following month.

This disciplinary action arises out of a dispute over the amount of attorney fees received by Strid for legal services in settling Olson's claims. Strid and Olson had some discussion about the settlement proposals, and this discussion included the matter of Strid's attorney fees ¹. At the disciplinary hearing, Strid introduced a document describing the proposed settlement: $160,300 in periodic payments; $20,000 up front payment to Olson; and $6,500 in attorney fees to Strid for the workers' compensation action. This document also contained the notation that "Larry will pay bal[ance] of $9,200."

The settlement stipulation resolved both the workers' compensation claim and the section 176.82 claim, and provided that the employer and insurer would pay the $6,500 in attorney fees directly to Strid. The stipulation provided that the $6,500 "shall constitute a full, final and complete settlement of any and all claims for attorney's fees pursuant to this Stipulation for Settlement," and further provided that the civil suit would be dismissed. The stipulation was filed with DOLI, and was reviewed by a compensation judge, who determined that it was in accord with the terms and provisions of Minnesota's workers' compensation statute. The judge ordered payment of the $6,500 to Strid for attorney fees.

On March 28, 1989, Olson signed a release of all claims in the section 176.82 action. Neither the stipulation nor the release allocated the settlement proceeds between the workers' compensation claim and the section 176.82 action. The stipulation did not reference the additional $9,200 which Strid claimed as attorney fees for his representation in the section 176.82 action. Strid claimed that Olson had agreed to the $9,200 fee. At the disciplinary hearing, Olson admitted that he had agreed to pay the $9,200 in attorney fees to Strid out of the settlement proceeds. Olson in fact wrote two checks to Strid for attorney fees. The first check, in the amount of $600, is dated March 30, 1989, two days after the date of the stipulation, and it bears the notation "balance due $8,600." The second check, in the amount of $8,600, is dated April 26, 1989.

On February 23, 1995, nearly six years after the settlement and payment of the attorney fees, the Director filed charges of unprofessional conduct against Strid, alleging that Strid charged an unreasonable fee, did not communicate the basis of his fee, failed to have a written contingent fee agreement, provided no written statement showing how the fee was determined, and made false representations to DOLI regarding the fee. The Director charged that Strid violated Minnesota Rules of Professional Conduct 1.4, 1.5, 3.3(a)(1), 4.1 and 8.4(c). A hearing was held before a panel of the Lawyers Professional Responsibility Board, and a petition for public discipline was authorized only on the basis of Strid's alleged misrepresentations violating Minnesota Rules of Professional Conduct 3.3(a)(1), 4.1 and 8.4(c), which relate to false statements and misrepresentation.

On October 12, 1995, a referee appointed by the Minnesota Supreme Court heard testimony from Olson, Strid and from two experts in workers' compensation practice. The Director's expert opined that the stipulation for settlement was misleading regarding the total amount of attorney fees because the compensation judge, in order to determine whether the settlement is fair and reasonable, must look at the total recovery. The Director's expert believed that the stipulation seemed to say that Olson would receive a $20,000 lump sum payment, plus $160,000 in annuity payments, and that Strid's attorney fees would be paid separately by the employer and were in the total amount of $6,500. The Director's expert opined that Olson would not receive all of the $20,000 because he would be obligated to pay Strid additional attorney fees, the $9,200, out of the $20,000. But the Director's expert did testify that the workers' compensation judge could only approve the workers' compensation portion of the settlement, and not the section 176.82 portion.

Strid's expert, on the other hand, testified that there was nothing misleading in the parties' failure to reference the section 176.82 attorney fees in the stipulation. Strid's expert pointed out that DOLI has no jurisdiction over the section 176.82 issues, and also that the reference in the stipulation to the dismissal of the section 176.82 action indicated that the parties contemplated dismissal of that action concurrently with the settlement of the workers' compensation claim.

Strid testified that he and Olson entered into an agreement on March 8, 1989 regarding attorney fees for Strid's representation on the section 176.82 action. Strid understood that there was a separate contingent fee agreement between him and Olson relating to this action, and that his fee was to be one-third of the recovery, exclusive of costs. Strid further testified that he believed that the amount of the settlement should not have been allocated between the two claims because to do so could result in undesirable tax consequences for Olson. Strid noted that workers' compensation payments are specifically excluded from income tax liability, while a recovery in the section 176.82 action might be subject to income tax.

On November 14, 1995, the referee issued his findings of fact, conclusions of law and recommendation for discipline. The referee found that Strid did not knowingly make a false statement of fact or law, nor did he engage in conduct involving dishonesty, fraud, deceit or misrepresentation. Based on these findings, the referee concluded that the Director failed to show by clear and convincing evidence that Strid violated Rules 3.3(a)(1), 4.1 and 8.4(c), and recommended that the petition be dismissed.

The Director appeals the referee's decision and challenges six specific findings, as well as the referee's conclusion and recommendation. The Director maintains that the referee's failure to find violations of Minnesota Rules of Professional Conduct 3.3(a)(1), 4.1 and 8.4(c) was clearly erroneous, and requests that Strid be indefinitely suspended from the practice of law for a minimum period of two years.

The...