The Florida Bar v. Shankman

• Decision Date: 07 July 2005
• Docket Number: No. SC02-1488.,SC02-1488.
• Citation: 908 So.2d 379
• Parties: THE FLORIDA BAR, Complainant, v. David S. SHANKMAN, Respondent.
• Court: Florida Supreme Court

908 So.2d 379

THE FLORIDA BAR, Complainant, v. David S. SHANKMAN, Respondent.

No. SC02-1488.

Supreme Court of Florida.

July 7, 2005.

John F. Harkness, Jr., Executive Director and John Anthony Boggs, Staff Counsel, The Florida Bar, Tallahassee, FL, and Jodi Anderson, Bar Counsel, The Florida Bar, Tampa, FL, for Complainant.

John A. Weiss of Weiss & Etkin, Tallahassee, FL, and David S. Shankman of Shankman, Leone & Westerman, P.A., Tampa, FL, for Respondent.

PER CURIAM.

We have for review a referee's report regarding alleged ethical breaches by David S. Shankman. We have jurisdiction. See art. V, § 15, Fla. Const.

I. FACTS

The Florida Bar filed a complaint against attorney David S. Shankman, primarily alleging misconduct in connection with Shankman's dealings with his former law firm. After the final hearing, the referee issued a report which is summarized below.

In March 1997, Shankman left his position as an associate at an existing law firm in order to join three other attorneys to form their own firm, Newman, LeVine, Metzler, and Shankman, P.A. (the Newman firm). Shankman concentrated his practice in the area of employment discrimination, while the other three attorneys worked in the area of workers' compensation. To create a new labor law department, Shankman brought his paralegal, Kimberly Miller, to the Newman firm and later added an associate named Ann Snow and an administrative assistant, Marcy Zucker. In order to market its labor law department to other attorneys, the firm hosted lunches, made telephone calls, and offered to attorneys a twenty-five percent referral fee, which was set high to attract business. These actions were successful, and Shankman began receiving referrals of employment-related plaintiff cases on a contingency fee basis.

Initially, the Newman firm operated without formal written agreements between the shareholders. By late 1999, however, the firm was approximately $400,000 in debt, for which the partners were equally and severally liable. Shankman and Debra Metzler sought legal advice as to their options with the partnership and were advised that they should negotiate a compromise. At this time, Shankman's practice had begun to generate fees, and he was concerned that he would pay for more than his fair share of the debt. Shankman suggested that each shareholder should pay his or her own costs and expenses and keep the surplus fees generated. The three other partners proposed that each shareholder should be responsible for the costs associated with that shareholder's legal practice and that surplus revenue from each shareholder would either be applied to the shareholder's proportionate share of the debt or would be distributed by the firm to the shareholder. In December 1999, the firm adopted the shareholder's agreement, which Shankman did not sign.¹ Around the same time, Shankman put a bonus plan into effect for his department, promising Ann Snow twenty percent, Kim Miller seven percent, and Marcy Zucker three percent of the fees generated in excess of his overhead. Shankman admits that he improperly shared fees with nonlawyers as a result of his bonus plan. On approximately March 31, 2000, Shankman, Miller, and Snow left the firm to join another law firm.

In June of 1997, the Newman firm began its representation of Dale Hatmaker, a case which was referred to the firm by attorney William McAnnally in return for a twenty-five percent referral fee. The case settled by mediation in February of 2000 for $195,000. The firm agreed to reduce its fee by $38,000 after Shankman told the Newman firm that this was necessary for Hatmaker to accept the settlement. The Newman firm also negotiated a reduced contingency fee of $5000 to the referring attorney. Accordingly, the settlement was accepted, with $150,000 to be distributed to Hatmaker, $40,000 to the Newman firm as its fee, and $5,000 in costs.² After Hatmaker received his check, Shankman accompanied him to the bank to introduce him to investment personnel because Hatmaker was not experienced with handling such a large sum of money. While there, Hatmaker gave Shankman $20,000 in cash as a bonus, which Shankman accepted. He then put the cash in the ceiling of his apartment for his personal use. Shankman was advised to report the cash on his income tax return. The referee found that the money was clearly given to Shankman as a result of his representation since Shankman and Hatmaker did not have a prior relationship and the money received was directly related to the settlement. Moreover, this money was never voluntarily disclosed to the Newman firm's shareholders or to Shankman's associate, Snow, who was entitled to a percentage of the profits that were generated. The referee found that the Bar proved Shankman had an obligation to inform his firm and his employees as to the additional funds he received at the time of the settlement.

Shankman attempted to defend his actions, contending that it was an unexpected gift from Hatmaker, who was so happy with Shankman's performance that Hatmaker did not intend for anyone else to share in the gift. Although the referee noted that Hatmaker confirmed these facts, the referee found that under such circumstances, Shankman should not have accepted the gift. In his report, the referee specifically stated: "Obviously to accept such a large portion of his client's funds, [Shankman] took unfair advantage of a vulnerable, emotional person, dependent upon [Shankman] for advice and trust in a fiduciary relationship."

While at the Newman firm, Shankman also undertook the representation of Patricia Kaptzan, a woman who had been denied unemployment benefits after her employment was terminated. Shankman and other firm employees investigated her claim and began to prepare for a formal hearing in order to secure her unemployment benefits. Shankman paid Snow twenty percent of the first installment check relating to this case and paid Miller seven percent, even though Miller was not a lawyer. Prior to leaving the firm, Shankman and other employees also discovered that there was a potential whistle blower action against Kaptzan's former employer. However, Shankman did not disclose this information to his fellow partners and instead directed that Kaptzan's cost account be closed out and a refund made to the client. After Shankman left the firm, he continued to contact Kaptzan and settled the matter after he became associated with his subsequent law firm. Shankman also took five other clients without full disclosure to the firm. As the referee noted in his report, this was not the result of any oversight or mistake but was a calculated effort by Shankman "to remove as many assets as possible from that firm for himself."

At the time, Shankman was concerned with the ongoing joint $400,000 debt and financial obligations for rent and other overhead expenses that had not been resolved. The referee specifically found that Shankman's failure to disclose the Kaptzan matter in addition to the five other clients was "a willful act that shows his intent for self-help in the ongoing dispute." In mitigation of Shankman's "self-help," the referee noted that other shareholders of the Newman firm were receiving benefits from the firm, unbeknownst to Shankman, such as cars and insurance. In fact, the firm's managing partner at that time obtained funds for his alimony payments from the firm despite the fact that the firm was unable to pay the payroll expenses that month. The referee labeled the Newman law firm as a "financial disaster," describing the firm as follows:

This matter before the Bar seems to be driven by the initial decision by the shareholders to begin paying themselves from the firm based upon lines of credit secured by themselves and family members and drawing personal income from accounts that were not sufficient to pay the draws without exercising the lines of credit. The fear that the income expectations were unrealistic and the continuing monthly deficit brought them to a crisis point when the money was gone and the expenses continued. [Shankman] testified that from his beginning with the firm to the crisis there had not been regular distribution of written statements, written of income and losses of the firm. No annual, semi-annual, quarterly or monthly, etc. reports to shareholders had been received. . . . They seemed to be unaware of the true nature of the firm expenses as opposed to income. [Shankman] had oral concessions given by the other shareholders of the fact he could receive larger sums from his cases as requested but there is no written memorandum or understanding agreement received by [Shankman].

Further, the referee found that Shankman failed to file a timely response to a motion for summary judgment in a case that was pending before the United States District Court for the Middle District of Florida. The referee explicitly rejected Shankman's explanation that Shankman failed to file the response because he believed the judge would strike the summary judgment motion as untimely. As the referee noted, such an explanation would still require Shankman to file a pleading which would notify the judge as to the believed deficiency. The referee found that because Shankman failed to file a timely response, his client's claim was not heard during the appellate process and this failure prevented a timely trial of the matter. Shankman notified his other partners as to the possibility of a malpractice claim, thus accentuating the fact that Shankman realized his inaction was serious.

The referee recommended that based on the above behavior, Shankman should be found guilty of violating the following Rules Regulating the Florida Bar: rules 4-1.7(b) and 4-8.4(a), by taking cash from his client, Hatmaker; rule 4-1.8(a), by Shankman taking money from Hatmaker after the firm had agreed to a reduced fee in the Hatmaker case; rules 4-4.1(a), 4-8.4(a), and 4-8.4(c), by Shankman failing to disclose the...