In re Crandall

• Decision Date: 30 November 2018
• Docket Number: No. 117,910,117,910
• Citation: 430 P.3d 902
• Parties: In the MATTER OF David P. CRANDALL, Respondent.
• Court: Kansas Supreme Court

430 P.3d 902

In the MATTER OF David P. CRANDALL, Respondent.

No. 117,910

Supreme Court of Kansas.

Opinion filed November 30, 2018.

Stanton A. Hazlett, Disciplinary Administrator, argued the cause, and Deborah L. Hughes, Deputy Disciplinary Administrator, was with him on the brief for petitioner.

David P. Crandall, respondent, of Creative Planning Legal, P.A., of Leawood, argued the cause pro se and was on the brief for respondent.

ORIGINAL PROCEEDING IN DISCIPLINE

Per Curiam:

This contested attorney discipline proceeding arises out of two separate matters handled by David P. Crandall. After the Disciplinary Administrator filed a formal complaint, the chairman of the Board for Discipline of Attorneys appointed a hearing panel. The hearing panel conducted an evidentiary hearing, at which Crandall appeared in person and through counsel. The panel later issued its final hearing report in which it concluded Crandall violated six provisions of the Kansas Rules of Professional Conduct (KRPC): KRPC 1.1 (2018 Kan. S. Ct. R. 289) (competence), KRPC 1.3 (2018 Kan. S. Ct. R. 292) (diligence), KRPC 1.4(b) (2018 Kan. S. Ct. R. 293) (communication), KRPC 1.5(a) (2018 Kan. S. Ct. R. 294) (fees), KRPC 1.7(a) (2018 Kan. S. Ct. R. 302) (concurrent conflict of interest), and KRPC 8.4(d) (2018 Kan. S. Ct. R. 381) (conduct prejudicial to the administration of justice). The panel majority recommended this court suspend Crandall from the practice of law for a period of six months. A dissenting voice would have imposed a one-year suspension.

Before this court, Crandall contests many of the panel's factual findings and raises several legal arguments. To begin with, he challenges this court's subject matter jurisdiction over one of the complaints. Crandall, who was licensed in Kansas in 1999, later received licenses to practice law in Missouri and California. He argues the Kansas Supreme Court has no say when his clients were residents of Missouri and he was acting under his Missouri license. He also contends the imposition of discipline would result in violations of the First and Fourteenth Amendments to the United States Constitution, the disciplinary hearing panel erred in not admitting investigators' reports at the disciplinary hearing, and the panel's conclusions that he violated various rules of professional conduct are unsupported by clear and convincing evidence.

As fully detailed below, after reviewing each instance of misconduct found by the panel, we find clear and convincing evidence Crandall violated the six provisions of the Kansas Rules of Professional Conduct as found by the hearing panel. In assessing discipline, we consider the facts and circumstances of each violation; the ethical duties Crandall violated; the knowing nature of his misconduct; the injury resulting from his misconduct; any aggravating and mitigating factors; and the applicable American Bar Association (ABA) Standards for imposing discipline. After applying this framework, a majority concludes Crandall's misconduct warrants a six-month suspension. A minority would impose a lesser punishment.

FACTUAL AND PROCEDURAL BACKGROUND

The formal proceedings began against Crandall when the Disciplinary Administrator received a letter questioning the reasonableness of a fee Crandall charged for updating an estate plan. The Disciplinary Administrator treated the letter as a complaint and docketed it for investigation, assigning docket number DA11921.

While DA11921 was pending, a Johnson County district court judge forwarded a copy of the judge's order rejecting most of Crandall's requested fees in a probate matter in which Crandall represented an executor and successor executor of an estate. The Disciplinary Administrator docketed the order as a complaint against Crandall, assigning docket number DA12304.

A hearing panel heard evidence relating to the two complaints over two days and subsequently released a 67-page Final Hearing Report. Crandall filed timely exceptions to the report under Supreme Court Rule 212 (2018 Kan. S. Ct. R. 255). He later filed a timely brief explaining his disputes with the hearing panel's findings of fact and conclusions of law.

As we review Crandall's arguments, we begin with the panel's findings of fact in which the panel addressed each complaint separately.

Crandall's estate planning for B.A. and V.A. in DA11921

The first complaint, DA11921, arises out of Crandall's representation of a married couple, B.A. and V.A. They were residents of Missouri at the time of Crandall's representation.

Crandall first represented B.A. and V.A. in 2007, while he was with a law firm. At that time, he updated their estate plan for a fee of $900. Later, he left the firm and established his solo practice, locating his office in Kansas. The hearing panel made the following findings of fact about Crandall's contact with the couple and the services he charged for work he subsequently performed:

"19. In October, 2008, the respondent sent a 15 page letter to B.A. and V.A. In the letter, the respondent informed B.A. and V.A. that he had become affiliated with the National Network of Estate Planning Attorney's [sic ] and the Family Wealth Planning Institute and had changed the way he does estate planning. The respondent conducted an analysis of their current estate plan. To conclude the letter, the respondent encouraged B.A. and V.A. to attend a workshop for prospective clients.

"20. In 2012, when B.A. and V.A. were in their late 80s and after V.A. had developed significant memory problems, B.A. and V.A. again retained the respondent to update their estate plan. On May 7, 2012, B.A. and V.A. entered into an estate planning engagement letter, a deliberate legacy services addendum, and a long-term care planning services addendum with the respondent. Because of the dementia, V.A. was unable to understand the documents and B.A. signed the documents on her behalf.

"21. The respondent included the following regarding his legal fees, in the engagement letter:

‘Legal Fees: The legal fee for each service requested is described in each respective Services Addendum. Most of our services are provided on a fixed fee basis with portions of the fee payable at various times during the process as scheduled in the respective Services Addendum. When a fee is paid, it is for services rendered to that point, and is not refundable. We are responsible to start drafting legal documents or to do whatever other services are described only when we negotiate (deposit) your first payment/check.

‘If you terminate our representation no later than 3 days after payment of the first fee under the Services Addendum, then we will not charge the balance of the fee. After that, however, we will quickly invest substantial time toward implementing your plan, and will expect you to pay the balance of the fee and accept the services.

‘Payments are due when billed. Unpaid balances due for more than thirty days are subject to a service charge of 1.5% per month.’ "

B.A. and V.A. had assets valued at $472,479, and they hoped to protect their assets from the expenses of long-term care so their children would have an inheritance. Crandall realized that B.A. and V.A. could be eligible for Veterans Administration Aid and Attendance benefits. Crandall established two trusts, an irrevocable one (the veterans eligibility trust) and a revocable trust (the deliberate legacy trust) funded with just under $80,000—the approximate amount of estate a veteran could have and still be eligible for veterans benefits. The revocable trust was 130 pages in length. Crandall designed these trusts to make the couple immediately eligible for veterans benefits and eventually for Medicaid benefits after the expiration of the five-year look-back period for divestiture of assets. Each child would receive an equal share (about $15,000) that would be held in trust for the next generation (a generation skipping trust). Crandall also drafted a power of attorney and a pour-over will naming the revocable trust as B.A.'s beneficiary upon his death. Crandall testified he created the documents by using the software provided by the National Network of Estate Planning Attorneys.

Disagreements between the couple's children resulted in changes to the trustee of one of the trusts. One of the children asked another attorney, Deborah McIlhenny, whether Crandall's fee was reasonable. McIlhenny, who does not routinely handle estate matters, consulted with an estate lawyer who said the fee was much too high. McIlhenny sent a letter to the Disciplinary Administrator raising her concerns.

The Disciplinary Administrator asked another attorney, Philip D. Ridenour, to review the reasonableness of the fee. Ridenour concluded the revocable trust Crandall drafted was needlessly complex. Ridenour thought the reasons for this could be (1) Crandall used a form; (2) Crandall lacked experience or expertise to evaluate the couple's existing trust and to understand it was adequate for their needs; or (3) to justify his fee. Ridenour knew no other estate planning lawyer who would have suggested the generation skipping trust Crandall established. According to Ridenour, the trust corpus did not support the fees required to administer the trust over the years it could pay benefits to the five beneficiaries, who had life expectancies of another 30 to 40 years.

The hearing panel quoted Ridenour's report in which he laid out the confusing nature of the fee agreement:

" ‘None of the documents I have reviewed show any breakdown between fees charged for preparation of the revocable trust and the veterans' trust.

" ‘Mr. Crandall's comments as to how his fees are to be calculated are confusing.

" ‘At Exhibit 3 page 30, Mr. Crandall in his Estate Planning Engagement Letter states:

" ‘ "Estimated Estate Value: The fees charged and the planning recommended are based upon your estimated gross estate value ."

" ‘That statement seems to be at odds with the statement on Exhibit 3, page 34 of the same letter:

" ‘ "

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