In re Disciplinary Action Against Dooley, No. 980378

• Decision Date: 22 September 1999
• Docket Number: No. 980378, No. 980393.
• Citation: 599 N.W.2d 619,1999 ND 184
• Parties: In the Matter of the Application for DISCIPLINARY ACTION AGAINST Fintan L. DOOLEY, a member of the bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner v. Fintan L. Dooley, Respondent
• Court: North Dakota Supreme Court

599 N.W.2d 619

1999 ND 184

In the Matter of the Application for DISCIPLINARY ACTION AGAINST Fintan L. DOOLEY, a member of the bar of the State of North Dakota.

Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner v. Fintan L. Dooley, Respondent

Nos. 980378, 980393.

Supreme Court of North Dakota.

September 22, 1999.

Paul W. Jacobson, Assistant Disciplinary Counsel, Bismarck, for petitioner.

John M. Olson, Olson Cichy, Bismarck, for respondent.

REPRIMAND ORDERED.

PER CURIAM.

[¶ 1] The Disciplinary Board petitions for disciplinary action against Fintan L. Dooley and recommends Dooley be reprimanded and ordered to make $16,666.65 in restitution to a former client for violating N.D.R. Prof. Conduct 1.5(a), and be reprimanded for violating N.D.R. Prof. Conduct 1.7(a) and 1.16(e). We conclude Dooley did not charge an unreasonable fee within the meaning of N.D.R. Prof. Conduct 1.5(a), and need not make restitution to the client, and he did not have an impermissible conflict of interest in violation of N.D.R. Prof. Conduct 1.7(a). We further conclude Dooley failed to return funds to a client upon termination of representation in violation of N.D.R. Prof. Conduct 1.16(e). We order Dooley be reprimanded for that violation.

I

[¶ 2] Fintan L. Dooley was admitted to practice law in North Dakota on January 2, 1976. On September 23, 1987, Dooley entered into a one-third contingent fee agreement with Teddy Lee Cahill to represent him on his claim for personal injuries suffered in a railroad accident. Cahill had received workers compensation benefits for his injuries, and Dooley, on May 18, 1989, executed an agreement to represent the Workers Compensation Bureau under N.D.C.C. § 65-01-09 for its subrogation interest in connection with any action involving Cahill's claims. Dooley informed Cahill by memo, "I ask you, after careful review of our fee agreement, to recognize that our fee agreement entitles me to receive one-third of all recoveries made from the Bureau or from the hospitals or from the railroads." Cahill testified he understood and agreed the gross recovery included the subrogation interest of the Bureau, and he would pay one-third of the gross recovery as an attorney fee to Dooley.

[¶ 3] Dooley brought an action on Cahill's behalf against Burlington Northern Railroad Company for damages resulting from his personal injuries. With Cahill's consent, Dooley retained other lawyers to assist him with the action against Burlington Northern. Dooley was responsible for paying associate counsel fees, specifically agreeing with Cahill their fees "will be paid out of my share of the recovery."

[¶ 4] On January 26, 1994, Burlington Northern entered into a $400,000 settlement agreement with Cahill, Dooley, the Bureau, and Diane Schwandt. Schwandt and Cahill live together with their children as a family unit. Cahill and Schwandt "released and discharged" Burlington Northern "from any and all known and unknown ... causes of actions" resulting from the accident. Although Schwandt was not a party to the action and was not married to Cahill, she executed the release and settlement because, in the words of the release, "at the time of his injury Teddy Lee Cahill was living with Diane Schwandt and she may have a consortium claim arising out of this accident." Before signing the settlement, a Bureau representative had the following language added: "The Bureau by signing this release does not waive its right to assert its subrogation interest to any claims for consortium."

[¶ 5] Burlington Northern's settlement with Cahill and the Bureau was shared equally by them in accordance with the provisions of N.D.C.C. § 65-01-09. First, the lawyers received one-third of the gross amount of recovery, less the retainer paid by Cahill, for a total of $127,333.33. The Bureau received its one-half share, less 25 percent for attorney fees and its share of the costs, for a total of $118,595.57. Cahill's lawyers received their advanced costs, totaling $67,419.07. Cahill received the remaining amount of $86,652.04. The amount of attorney fees payable by the Bureau under N.D.C.C. § 65-01-09 was not actually paid by the Bureau to Dooley, but the Bureau's share of the settlement was reduced by that amount. The effect of the allocation was Cahill paid the entire amount of attorney fees in accordance with his agreement with Dooley, and was partially reimbursed by the reduction of the amount paid to the Bureau. This allocation resulted in Cahill effectively paying Dooley almost 42 percent of his share of the settlement as an attorney fee.

[¶ 6] Dooley prepared a check on his trust account to the Bureau for its $118,595.57 share, but did not deliver it to the Bureau. Instead, Dooley agreed to represent Schwandt in an action against the Bureau to recover her consortium claim from part of Burlington Northern's settlement payment. The Bureau rejected Schwandt's consortium claim to the extent it would reduce the amount payable to the Bureau on its subrogation interest. Dooley wrote Schwandt to advise her of the Bureau's refusal to allocate any part of its subrogation interest to her on a consortium claim, and requested her and Cahill's agreement to "enter into contest with the North Dakota Workers Compensation Bureau on our behalf to obtain free of [the] Bureau's subrogated claim additional funds not already distributed to us but claimed by the Bureau." Cahill and Schwandt executed an "Acknowledgment" of this agreement on February 22, 1994.

[¶ 7] Dooley wrote to the Bureau and explained a new allocation would be made for payment of the settlement proceeds. Dooley allocated $200,000 to Cahill for settlement of his claims and allocated $200,000 to Schwandt for settlement of her loss of consortium claim. Cahill's net recovery and attorney fees and costs remained the same, but the Bureau's share was reduced to one-half of Cahill's share and was further reduced by costs and the 25 percent statutory attorney fee payable by the Bureau. Dooley voided the check he had previously written to the Bureau, and wrote two new checks on February 22, 1994. Dooley wrote one to the Bureau for $43,595.57 in settlement of its subrogation interest in Cahill's claim against Burlington Northern and wrote another for $75,000 payable to himself in trust for Schwandt. Dooley also informed the Bureau he was preparing a complaint seeking a declaratory judgment against it for Schwandt's loss of consortium claim.

[¶ 8] In April 1995, Cahill and Schwandt terminated Dooley's representation and retained Dale W. Moench to represent them for their claims against the Bureau. On November 14, 1995, Moench and Stephen D. Easton, a special assistant attorney general representing the Bureau, wrote Dooley requesting he deliver the $75,000 and accrued interest to Schwandt and the Bureau. After Dooley failed to respond, Moench and Easton wrote in December 1995 and repeated their request. On January 5, 1996, Dooley responded:

I have your letters. Now, I again give notice of my attorney's lien in these funds contingent upon a decision favorable to Diane Schwandt based either upon loss of consortium or her provision of services to a disabled person.

I enclose copy of most recent statement received for this account showing a balance of $80,032.51. I await either a court order or an agreement which pays me an agreeable sum.

As a final alternative, under the statute I would agree to make deposit of the funds on the provision that no distribution of the one third I claim would be made without opportunity for hearing or an agreement between the parties.

[¶ 9] Easton wrote Dooley's attorney on June 26, 1996, agreeing to Dooley's suggestion the funds be deposited with the district court. The court ordered deposit of the funds on July 11, 1996, pending the outcome of the loss of consortium claim, and Dooley deposited the funds with the court on August 8, 1996. Schwandt's loss of consortium claim was resolved without Dooley's further involvement.

[¶ 10] In November 1996, Dooley was served an amended petition for discipline alleging he had violated N.D.R. Prof. Conduct 1.5 because he charged Cahill an unreasonable attorney fee, and he had violated N.D.R. Prof. Conduct 1.16 by failing to turn over the $75,000 and interest to his client and the Bureau after he was terminated as Schwandt's attorney. In June 1997, Dooley was served a separate petition for discipline alleging he violated N.D.R. Prof. Conduct 1.7(a) and (c) by having an impermissible conflict of interest in representing Schwandt in her loss of consortium action against the Bureau regarding the $75,000 placed in his trust account when he had represented the Bureau on its subrogation interest in the same underlying matter.

[¶ 11] The dispute was heard by a hearing body of the Disciplinary Board on November 18, 1997. The hearing body filed its recommended findings and discipline on April 2, 1998, finding Dooley had committed each violation and recommending he be reprimanded and ordered to make $16,666.65 in restitution to Cahill for charging him an unreasonable fee. The Disciplinary Board adopted the hearing body's findings and recommendations for discipline and submitted its report to this Court. Dooley timely filed objections to the report and both parties presented briefs and oral argument. We consider the report of the Disciplinary Board under N.D.R. Lawyer Discipl. 3.1(G).

II

[¶ 12] We review disciplinary proceedings against attorneys de novo on the record under a clear and convincing standard of proof. Matter of Leier, 1997 ND 79, ¶ 3, 562 N.W.2d 741. Although we give due weight to the findings, conclusions, and recommendations of the Disciplinary Board, we do not automatically accept those findings; we decide each case on its own facts. Disciplinary Action Against Anseth, 1997 ND 66, ¶ 20, 562 N.W.2d 385.

A

[¶ 13] What attorneys charge for their services is primarily a matter of agreement between the...