In re Wall

• Decision Date: 03 May 2017
• Docket Number: No. 35S00-1509-DI-577,35S00-1509-DI-577
• Citation: 73 N.E.3d 170
• Parties: In the MATTER OF: Justin R. WALL, Respondent.
• Court: Indiana Supreme Court

73 N.E.3d 170

In the MATTER OF: Justin R. WALL, Respondent.

No. 35S00-1509-DI-577

Supreme Court of Indiana.

May 3, 2017

Attorney for Respondent : Donald R. Lundberg, Indianapolis, Indiana.

Attorneys for the Indiana Supreme Court Disciplinary Commission : G. Michael Witte, Executive Director, Angie Ordway, Staff Attorney, Indianapolis, Indiana.

Per Curiam.

We find that Respondent, Justin Wall, engaged in attorney misconduct arising from his relationship with a Florida corporation. For this misconduct, we conclude that Respondent should be suspended for 30 days with automatic reinstatement.

This matter is before the Court on the report of the hearing officer appointed by this Court to hear evidence on the Indiana Supreme Court Disciplinary Commission's "Verified Complaint for Disciplinary Action," and on the post-hearing briefing by the parties. Respondent's 2008 admission to this state's bar subjects him to this Court's disciplinary jurisdiction. See IND. CONST. art. 7, § 4.

Procedural Background and Facts

The Commission filed a "Verified Complaint for Disciplinary Action" against Respondent on September 28, 2015, alleging numerous rule violations arising out of Respondent's relationship with McCann Law Group, d/b/a Consumer Attorney Services, P.A. ("CAS"), a Florida corporation that purported to offer clients services relating to bankruptcy, mortgage modification, and foreclosure defense.

CAS advertised its services to consumers in Florida and elsewhere, including Indiana, and solicited local counsel in states other than Florida. Under the terms of CAS's contractual arrangements with clients and local counsel, most client work was handled by central staff (including lawyers and nonlawyer assistants) in Florida, with local counsel's involvement generally limited to aspects of the case requiring a local attorney's services. In a typical case, prospective clients would discuss their options with a CAS intake paralegal and then enter into a representation agreement with CAS. CAS typically charged clients an upfront "nonrefundable" fee and, in many instances, ongoing monthly fees.

In 2012 Respondent signed agreements with CAS, first as an "associate" and later as a "partner," under which Respondent would provide discrete services to CAS's Indiana bankruptcy and foreclosure defense clients. CAS entered into similar agreements with other Indiana attorneys as well. Respondent received fixed sums for select services, sums that represented only a small fraction of the total fee charged to clients by CAS. As a "partner," Respondent also received $25 for every case assigned to other CAS-associated attorneys in Indiana as well as minimum wage for 10-20 hours per week as "partner pay."

Respondent's role in these cases generally was as follows. A CAS paralegal would assign a case to Respondent after the client had signed a representation agreement with CAS. Respondent then would perform a "welcome call" to the client and explain that he would be the "boots in the trenches" for CAS, assisting the client either through mortgage modification services or foreclosure defense. In most instances though, Respondent's sole objective was to get the mortgagee to agree to a modification. CAS's business model contemplated that most document preparation and client communication would be performed by CAS staff in Florida. However, Respondent testified he reviewed all pleadings and made changes where warranted before signing and filing them, and he testified he made himself available to clients above and beyond the "welcome call" CAS paid him to make.

Following a hearing, the hearing officer issued a report finding against Respondent on some charges, against the Commission on other charges, and leaving still other charges unaddressed. Both Respondent and the Commission have petitioned for review.

Discussion

We have examined CAS's business model and arrangements with Indiana attorneys twice before. In Consumer Attorney Services, P.A. v. State , 71 N.E.3d 362 (Ind. 2017), we affirmed the denial of summary judgment for CAS and its principal member in a suit brought by our Attorney General, holding neither defendant was exempt from civil liability under various consumer protection statutes. In Matter of Jackson , 24 N.E.3d 419 (Ind. 2015), we approved agreed discipline for another CAS-associated Indiana attorney. The present case comes to us in a different posture than either of those cases though, and we confine our analysis today to the specific issues, evidence, and arguments now before us.

The Commission carries the burden of proof to demonstrate attorney misconduct by clear and convincing evidence. See Ind. Admission and Discipline Rule 23(14)(i) (2016). We review de novo all matters presented to the Court, including review not only of the hearing officer's report but also of the entire record. See Matter of Thomas , 30 N.E.3d 704, 708 (Ind. 2015). The hearing officer's findings receive emphasis due to the unique opportunity for direct observation of witnesses, but this Court reserves the right to make the ultimate determination. Id.

With these considerations in mind, we explore the various Indiana Rules of Professional Conduct alleged to have been violated by Respondent as well as the appropriate sanction for Respondent's misconduct.

Consultation with clients regarding limited scope of representation (Rules 1.4(a)(1) and 1.4(a)(5)). The hearing officer found no violation of these rules, and the Commission has petitioned for review of those findings. While the written representation agreements executed by CAS clients did not completely and accurately spell out for clients the division of labor and responsibility between CAS and local counsel, Rules 1.4(a)(1) and 1.4(a)(5) do not require this to be in writing. Respondent testified he discussed these matters with clients during his initial phone call to them, and the hearing officer appears to have credited that testimony. Respondent also testified he made himself available and performed case services above and beyond what was minimally required of him under his arrangement with CAS, often without additional compensation. The Commission did not call any of Respondent's clients to testify. The Commission urges us to draw an inference contrary to Respondent's testimony from phone logs tending to show a comparatively low number and duration of calls between Respondent and his clients, but we see no reason to reweigh the conflicting evidence. Accordingly, we concur with the hearing officer's conclusion that the Commission failed to carry its burden of proving a violation of Rules 1.4(a)(1) or 1.4(a)(5), and we find in Respondent's favor on these charges.

Improper fee splitting (Rule 1.5(e)). Rule 1.5(e) sets forth three requirements that must be met for a division of a fee between lawyers who are "not in the same firm." No argument is advanced that these requirements were met; and indeed, at least one (that the client agree in writing to the share each lawyer will receive) indisputably was not met. Rather, Respondent contends, and the hearing officer agreed, that the rule is inapplicable here because Respondent was a member of CAS.

The hearing officer viewed the Court of Appeals' decision in the Consumer Attorney Services appeal as dispositive of this issue, but we find fault with this approach for many of the same reasons we recently addressed in Matter of Smith , 60 N.E.3d 1034 (Ind. 2016).¹ Moreover, the Court of Appeals' decision was not yet final, and eventually was vacated upon our grant of transfer in that appeal.

Reviewing de novo the record before us, we conclude that the evidence shows Respondent was not "in the same firm" as CAS for purposes of Rule 1.5(e). CAS's agreements with clients and with local counsel assigned responsibility for most tasks to CAS central staff in Florida and generally limited local counsel's responsibilities to only those tasks requiring a local counsel, provisions that seemingly would be unnecessary if CAS and its contracted local counsel were truly "in the same firm." Further, Respondent's "associate" agreement expressly identified and treated Respondent as an independent contractor. Under both that agreement and his subsequent "partner" agreement, he was paid small sums for discrete services, sums that amounted to a very small fraction of the amounts charged to the clients by CAS. Respondent maintained his own law firm (Wall Legal Services) throughout his relationship with CAS, and he used his own firm name and letterhead in legal pleadings and letters sent to clients and others in connection with CAS cases. While no one factor necessarily is dispositive, the evidence in its totality leads us to conclude Respondent and CAS were not "in the same firm." Accordingly, we find that Respondent violated Rule 1.5(e).²

Assisting CAS with charging and collecting an unreasonable fee (Rules 8.4(a) and 1.5(a)). The hearing officer found a direct violation of Rule 1.5(a), based on the $25 "partner pay" Respondent received for every case assigned to other CAS-associated attorneys in Indiana. However, the hearing officer concluded Respondent did not assist CAS in charging or collecting an unreasonable fee from clients because Respondent was not aware of each client's final bill. Both parties have petitioned for review.

The $25 "partner pay" was not a theory advanced by the Commission as grounds for a Rule 1.5(a) violation. Nor was this a fee charged to or collected from a client; rather, it was a compensation matter between Respondent and CAS. Thus, the hearing officer's finding of a direct violation on these grounds cannot stand.

However, we readily conclude from the evidence that Respondent did assist CAS in charging an unreasonable fee. That Respondent was not aware of the precise amount billed to any client is immaterial in these circumstances. As Respondent acknowledged in his testimony, "nonrefundable" retainers generally are permissible in Indiana only to the extent they pay to...