Ellis, Matter of

• Decision Date: 27 June 1997
• Citation: 680 N.E.2d 1154,425 Mass. 332
• Parties: In the Matter of James N. ELLIS, Jr. In the Matter of Nicholas J. ELLIS.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1154

680 N.E.2d 1154

425 Mass. 332

In the Matter of James N. ELLIS, Jr. In the Matter of Nicholas J. ELLIS.

Supreme Judicial Court of Massachusetts Suffolk.

Argued June 10, 1997.

Decided June 27, 1997.

Nancy E. Kaufman, Assistant Bar Counsel.

Max D. Stern, Boston, for James N. Ellis, Jr.

Michael Avery, Boston, for Nicholas J. Ellis.

The following submitted briefs for amici curiae:

Fredric N. Halstrom, Boston, and John J. St. Andre, Jr., Framingham, for the Massachusetts Academy of Trial Attorneys.

Cheryl Flax-Davidson, Washington, DC, for the Association of Trial Lawyers of America.

Janice Bassil and Joseph J. Balliro, Boston, for the Massachusetts Association of Criminal Defense Lawyers.

Joel M. Reck and Richard L. Neumeier, Boston, for the Boston Bar Association.

Michael E. Mone, William F. Looney, Jr., and Benjamin Fierro, III, Boston, for the Massachusetts Bar Association.

Before WILKINS, C.J., and LYNCH, O'CONNOR, GREANEY, FRIED and MARSHALL, JJ.

WILKINS, Chief Justice.

James N. Ellis, Jr., and Nicholas J. Ellis, members of the bar of the Commonwealth and the only partners in the law firm of Ellis & Ellis, appeal from orders of a single justice of this court temporarily suspending them from the practice of law, pursuant to S.J.C. Rule 4:01, § 12A, as appearing in 394 Mass. 1110 (1985) (hereinafter § 12A).

On March 3, 1997, a Worcester County grand jury returned twenty-eight indictments against James N. Ellis, Jr., charging tax evasion, conspiracy to evade income taxes, presentation of false statements to insurance companies in violation of G.L. c. 266, § 111A or § 111B, larceny from insurance companies, and conspiracy to commit fraud or steal money from insurance companies. These indictments cover the years 1985 to 1995, inclusive. On the same day, the same grand jury returned twelve indictments against Nicholas J. Ellis charging him with presenting false statements to insurance companies, larceny from insurance companies, attempted larceny from an insurance company, and conspiracy to commit insurance fraud. These indictments cover the years 1990 to 1993, inclusive.

Early in April, 1997, bar counsel petitioned for the temporary suspension of both lawyers. A single justice of this court held a hearing on the petitions on April 24. On April 30 the single justice entered orders of temporary suspension and stayed the effectiveness of her orders to permit the lawyers to seek relief from the full court. We then stayed the effectiveness of the temporary suspensions and heard oral argument on June 10.

The single justice's orders took note of the pending indictments and of the issuance of warrants authorizing the search of the lawyers' law offices. She stated that the indictments and search warrants themselves "suggest probable cause to support the claim of serious criminal conduct" and concluded that the charges against each lawyer were supported by probable cause. As to James Ellis, the single justice also noted that a Federal court judge had enjoined him and Ellis & Ellis from disposing of any firm assets, except in the regular course of business, until a civil action brought by an insurance company was concluded.

The single justice did not explicitly find, by a preponderance of the evidence, that either lawyer had committed a violation of the Code of Professional Responsibility. Nor did she state explicitly that either posed such a threat of substantial harm to clients or prospective clients that, on a balance of considerations, a temporary suspension was called for. We have reviewed the record before the single justice and explicitly reach those conclusions ourselves. ¹ We, therefore, affirm the orders of temporary suspension.

Section 12A of S.J.C. Rule 4:01, which is set forth in full in the margin, ² provides that, if bar counsel files a petition "alleging facts showing that an attorney poses a threat of substantial harm to his clients or prospective clients," this court or a Justice, "after affording the attorney opportunity to be heard, may make such order of suspension or restriction as protection of the public may make appropriate." We conclude that an order of temporary suspension may be entered if (1) facts, established by a preponderance of the evidence, show that the lawyer violated a disciplinary rule of this court and (2), on a balance of the harms and consideration of the public interest, the lawyer poses a threat of substantial harm to present or future clients or in other respects. We decline to adopt the somewhat amorphous standard of "clear and convincing proof," but we do require that the threatened harm be shown to be substantial and that the facts on which any temporary suspension order is based, established by affidavit or otherwise, be explicit and persuasive. Matter of Mayberry, 295 Mass. 155, 167, 3 N.E.2d 248 (1936).

1. First, we set forth the facts in the record before the single justice that lead us to conclude that an order of temporary suspension of each lawyer should be entered. Our decision is based on the cumulative effect of the following facts: (a) the numerous indictments of March 3, 1997, and the earlier issuance of three search warrants in May, 1996; (b) the conclusions of the judge who issued the search warrants that certain documents seized in the searches were not protected by the attorney-client privilege; (c) the deposition testimony of James Ellis that led to the issuance, on December 12, 1996, of a preliminary injunction against him and the law firm; and (d) on the question of the threat of substantial harm to clients and prospective clients, efforts undertaken by the lawyers, after the search warrants were issued, to restructure the law firm's business to protect their interests in their clients' claims.

(a) The indictments, which concern a variety of alleged wrongs, suggest a pattern of unethical conduct in the lawyers' assertion of clients' personal injury claims. The record of the grand jury proceedings is not before us. We do know that a grand jury must at least hear sufficient evidence to establish probable cause to arrest the accused. See Commonwealth v. O'Dell, 392 Mass. 445, 451, 466 N.E.2d 828 (1984); Commonwealth v. McCarthy, 385 Mass. 160, 163, 430 N.E.2d 1195 (1982); Commonwealth v. St. Pierre, 377 Mass. 650, 656-657 & n. 6, 387 N.E.2d 1135 (1979). Probable cause, in the context of a grand jury, means that the grand jury had reasonably trustworthy information sufficient to warrant a prudent person in believing that the accused had committed the offense charged. See Commonwealth v. O'Dell, supra at 450, 466 N.E.2d 828.

Warrants to search the law offices of Ellis & Ellis and its records storage facility were also issued on probable cause, which means that, as to each warrant, the Superior Court judge who authorized their issuance had before her reasonably trustworthy information sufficient to persuade her that a crime had been committed (Commonwealth v. Snow, 363 Mass. 778, 784, 298 N.E.2d 804 [1973]; K.B. Smith, Criminal Practice and Procedure § 193, at 137 [2d ed. 1983 & Supp.1997] ) and that the evidence was probably in the place or places to be searched (Commonwealth v. Upton, 394 Mass. 363, 370, 476 N.E.2d 548 [1985] ).

(b) After the search warrants authorizing the search of the law offices of Ellis & Ellis and its storage facility were executed in May, 1996, the Ellises asserted that certain seized documents were protected by the attorney-client privilege and should not be disclosed to the Commonwealth. In response, the Commonwealth contended that the documents were not privileged because they came within the crime-fraud exception to the attorney-client privilege. The Superior Court judge who had authorized issuance of the search warrants ruled on these contentions. Because the crime-fraud exception focuses not on the attorney's conduct but on whether the client sought the services of a lawyer to enable or aid someone to commit or plan to commit what the client knew or should have known to be a crime (Purcell v. District Attorney for the Suffolk Dist., 424 Mass. 109, 112, 676 N.E.2d 436 [1997] ), the judge's inquiry did not necessarily involve the question of what wrongs, if any, the seized records showed that the lawyers committed.

The judge tested the applicability of the attorney-client privilege by deciding whether, by a preponderance of the evidence, the Commonwealth had produced "facts sufficient to support a belief by a rational fact-finder that the client alone or in conjunction with his attorney was engaged in the perpetration or attempted perpetration of a crime and the communication was made in furtherance thereof." She ruled that the privilege was inapplicable in many instances. The judge also ruled that the seized documents were not protected from disclosure as opinion work product. She rejected the lawyers' arguments because "[h]ere a prima facie showing has been made that James N. Ellis, Jr., and Nicholas Ellis were participants in the fraud."

On the attorney-client privilege issue, the judge stated the following:

"The evidence is sufficient to support a finding by a rational fact-finder that James N. Ellis, Jr., and Nicholas Ellis engaged in a scheme, along with certain of their clients, to file fraudulent personal injury and workers' compensation claims. In particular, the evidence is sufficient to support findings that James Ellis and Nicholas Ellis and certain of their agents and employees (including nurses and claims adjusters): (1) solicited clients to lie to insurance companies about the severity, location and circumstances of injuries; (2) submitted reports and statements to insurance carriers to obtain total disability benefits with knowledge that the claimants were employed at that time; (3) advised clients to misrepresent their employment and medical histories and inflated and altered medical bills; and (4) coached clients who were about to undergo medical examinations telling...