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Opinions – 4/16/12: Maryland Court of Appeals

Professional Responsibility


BOTTOM LINE: Disbarment was the appropriate sanction for an attorney who failed to keep his client reasonably informed of her case, retained more than twice his agreed-upon fee, failed to deposit unearned fees in his trust account, failed to remit a settlement payment to the client and did not respond to Attorney Grievance Commission’s repeated requests for information.

CASE: Attorney Grievance Commission of Maryland v. Nelson, No. 9, Sept. Term, 2011 (filed Mar. 27, 2012) (Judges Bell, Harrell, BATTAGLIA, Green, Adkins, Barbera & McDonald). RecordFax No. 12-0327-20, 24 pages.

FACTS: Adrian Van Nelson II was admitted to the Maryland Bar on December 16, 1992. In 2008, Latania Maise, who was employed by the United States Department of Agriculture (USDA), met with Nelson regarding a discrimination charge she wished to pursue against her employer. On May 5, 2008, Maise paid Nelson $250 for her initial consultation. Maise and Nelson entered into a retainer agreement which outlined the terms of Nelson’s representation, by which Maise was to pay a retainer fee of $1,500 against an hourly rate of $250. The retainer fee was paid by check on the same day. Maise paid Nelson an additional $2,500 to Nelson in February of 2009.

As the matter had not progressed to the hearing stage, Nelson subsequently prepared another retainer agreement to advise and represent Maise in an administrative EEO hearing against USDA. A new “non-refundable” retainer of $2,500 was requested. Maise paid Nelson an additional $500 to cover the cost of a deposition transcript; however, the transcript was never ordered, and the $500 was never used to pay any costs. In July of 2009, Maise settled her claim against USDA, and as a result, no hearing ever took place. However, additional fees of $5,075 were generated prior to the settlement, which were described in an invoice covering the period from April 1 to July 13. By check dated July 17, 2009, Maise paid Nelson in that amount.

Under the terms of the settlement agreement, USDA was to pay $10,000 to Maise, representing her attorneys’ fees and costs. Pursuant to the terms of the settlement negotiated by him, the check representing that amount was made payable only to Nelson. Nelson knew that he had defaulted on student loans owed to the United States Department of Education (“USDE”). Based upon Maise’s previous payments, Nelson owed Maise a total of $9,825.00 in fees. Despite repeated requests, Nelson did not respond to Maise’s inquiries regarding disposition of the settlement funds. Maise subsequently learned directly from USDA’s attorney that the $10,000 payment had been applied to an outstanding student loan debt owed by Nelson to USDE. Eventually, Nelson did contact Maise, and he promised to try and recover the money claimed that he thought the settlement check would be payable to him and Maise. However, the money owed to Maise was never paid, and Maise eventually filed suit against Nelson in district court and obtained a judgment against him, which was not satisfied.

On May 11, 2010, Maise filed a complaint with the Attorney Grievance Commission of Maryland, and an investigation was commenced. Nelson ignored subsequent letters from the Commission and refused to meet with Bar Counsel investigator Edwin Karr. In 2011, the Attorney Grievance Commission, acting pursuant to Maryland Rule 16-751(a), filed a petition for disciplinary or remedial action against Nelson stemming from Maise’s complaint. Commission alleged that Nelson violated Rules of Professional Conduct 1.1 (Competence), 1.4(a)(1)-(3) and (b) (Communication), 1.5(a) (Fees), 1.15(a), (b), and (d) (Safekeeping Property), 1.16(d) (Declining or Terminating Representation), 8.1 (b) (Bar Admission and Disciplinary Matters), and 8.4(a) and (d) (Misconduct), as well as Maryland Rule 16-606.1(a), related to Nelson’s representation of Maise in an employment discrimination matter against the United States Department of Agriculture.

The circuit court judge issued Findings of Fact and Conclusions of Law in which he found that Nelson did not violate Rule 1.1, but that he did violate Rules 1.4(a)(2), 1.4(a)(3), 1.5(a), 1.15(c), 1.15(d), 1.16(d), 8.1(b), 8.4(a), and 8.4(d), as well as Maryland Rules 16-604 and 16-606.1(a)(3). Based on the circuit court’s Findings of Fact and Conclusions of Law, the Court of Appeals ordered that Nelson be disbarred.

LAW: Maryland Rule of Professional Conduct 1.4 (Communication) requires that a lawyer keep his client “reasonably informed” about the status of the case, and to promptly respond to reasonable requests for information from the client. In this case, Nelson failed to return Maise’s persistent telephone calls and email requests throughout late 2009 until February 2010. Maise learned that the $10,000 payment had been seized by the federal government not from Nelson, but from USDA counsel, and only by virtue of her own efforts to secure information. Nelson did not keep Maise reasonably informed, and certainly was not prompt in responding to her requests regarding the status of her settlement check. As such, Nelson violated MRPC 1.4(a)(2) and (3).

MRPC 1.5 (Fees) prohibits, collection of “an unreasonable fee.” Here, Nelson received the benefit of $10,000 in attorneys’ fees when the USDE effectively appropriated the settlement check and credited it to his delinquent student loan account. He therefore received $19,875 in attorneys’ fees, none of which was refunded to Maise. Since it was never contemplated by the parties that Nelson would receive more than twice the agreed-upon fee, Nelson clearly violated Rule 1.5(a).

MRPC 1.15 (Safekeeping Property) requires an attorney to hold property of clients separately from the lawyer’s own property. This rule is implemented by Rule 16-604, regarding trust account requirements, and 16-606.1(a)(3), which addresses attorney trust account record-keeping. In general, Rule 1.15(c) permits a lawyer to withdraw legal fees and expenses from the account only when earned. In this case, Maise paid Nelson $500 for a deposition transcript, which was never ordered. Nelson did not deposit the check in a trust account, as required by law, and never refunded the amount to his client. Nelson also failed to deposit unearned attorneys’ fees in a trust account, thereby violating Rules 1.15(c) and 16-604, and accordingly also Rule 16-606.1(a)(3). Rule 1.15 additionally requires a lawyer to promptly deliver to his client any funds belonging to that person, and render a prompt accounting. Given that an agency of the federal government appropriated the settlement proceeds to benefit the Nelson, and Maise received none of her settlement, Nelson likewise violated this portion of the rule.

MRPC 1.16(d) (Declining or Terminating Representation) requires a lawyer to take reasonable steps, upon terminating representation, to protect his client’s interests, including surrendering property belonging to the client. This requirement includes the refund of any payment made by the client to which she is entitled. After many months of ignoring Maise’s requests, Nelson failed to transmit to her the proceeds of that portion of the settlement check to which she was entitled, or the $500 advanced as costs. Nelson’s failure to communicate was a de facto termination of representation, and it was therefore incumbent upon Nelson, after his effective withdrawal from the case, to turn over to Maise the attorneys’ fees and costs she had advanced. His failure to do so constituted a violation of this rule.

MRPC 8.1 (Bar Admission and Disciplinary Matters) prohibits a lawyer from knowingly failing to respond to a lawful demand for information from a disciplinary authority. In failing to respond to Bar Counsel’s requests for information by ignoring two letters and refusing to be interviewed by an investigator for the Attorney Grievance Commission, Nelson violated Rule 8.1.

MRPC 8.4 (Misconduct) makes it professional misconduct to violate or attempt to violate the Rules of Professional Conduct, and prohibits engaging in conduct that is prejudicial to the administration of justice. Nelson’s violations of the Rules constituted misconduct, as did Nelson’s disregard for his client, refusal to pay her the fees and expenses she had advanced, and refusal to cooperate in the investigation of the present judicial matter. Indeed, his failure to respond to Bar Counsel’s demand for information was of itself a violation of this rule.

When sanctioning an attorney for a violation of the Rules, the purpose of imposing sanctions is to protect the public. Attorney Grievance v. Khandpur, 421 Md. 1, 17 (2011). In determining the appropriate sanction, Maryland courts often consult the American Bar Association’s Standards for Imposing Lawyer Sanctions concerning aggravating factors, which include prior disciplinary offenses, dishonest or selfish motive, and bad faith obstruction of the disciplinary proceeding by intentionally failing to comply with rules or orders of the disciplinary agency. ABA Standards §9.22 (1991). Nelson’s repeated failures to respond to Bar Counsel and to Maise clearly implicated a number of these aggravating factors.

Cases involving improper retention of fees, failure to communicate promptly with clients, and failure to respond to Bar Counsel’s lawful demands for information during an investigation warrant the imposition of disbarment. Attorney Grievance v. Lara, 418 Md. 355, 365 (2011). Thus, in the interest of protecting the public, Nelson was disbarred.

COMMENTARY: MRPC 1.1 (Competence) requires that an attorney exhibit the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. While Bar Counsel contended that it was incumbent upon Nelson to ensure that Maise receive the proceeds settlement check, representing attorneys’ fees she expended, there as no requirement that Nelson do so, and there was not clear and convincing evidence that Nelson should have known that one agency of the federal government would effectively seize a check issued by another agency, without notice, to satisfy a purported debt, or that he intended to appropriate the $10,000 for his own use.

While a single mistake may constitute negligence, is not necessarily misconduct under this rule. See Attorney Grievance Commission v. Thompson, 376 Md. 500, 512 (2003). As such, the Court did not find that Nelson’s failure to insist that the settlement check be made payable to Maise, only, or with him jointly, was incompetent within the meaning of the rule.

PRACTICE TIPS: With regard to MRPC 1.5, which prohibits a lawyer from collecting an unreasonable fee, in almost every case there is a self-defined upper limit on a permissible fee charge: the amount to which the lawyer and client have agreed. Any charge by a lawyer in excess of that figure is plainly impermissible and thus excessive or unreasonable.