Opinions – 1/17/13: Maryland Court of Appeals

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Professional Responsibility

Dismissal of petition

BOTTOM LINE: An attorney did not violate Maryland Rule of Professional Conduct by failing to repeatedly remind a client that the clock was running on his right to join a lawsuit; nor did the Court of Appeals sustain any other violations of the MRPC; thus, bar counsel’s petition for disciplinary or remedial action was dismissed.

CASE: Attorney Grievance Commission of Maryland v. Rand, No. 50, Sept. Term, 2011 (filed Dec. 21, 2012) (Judges Bell, BATTAGLIA, Greene, Adkins, Barbera & McDonald) (Judge Harrell dissenting). 54 pages.

FACTS: Charles Rand was admitted to the Bar of the Court of Appeals of Maryland in December, 1973. He was also licensed to practice law in the District of Columbia and before several federal courts.

During most of the time relevant to this case Rand operated his law practice as a professional corporation in the name of McKernon & Rand, P.A., which was established on April 6, 2001.

In 2005, Montgomery County opened a new jail facility. With the significant expansion of jail space and inmate population that came along with the new facility, Montgomery County expanded and reorganized its correctional staff.

In this process, it promoted several master correctional officers to the newly created position of “sergeant,” entitling them to a ten percent pay increase. Thereafter, such sergeants could receive an additional ten percent pay increase if promoted to lieutenant. This created a potential inequity in pay (called “pay compression”) for more senior correctional lieutenants.

In early June, 2005, Bernard Wade, one of the aggrieved lieutenants, met with Rand, and shortly thereafter Rand met with veteran lieutenants to discuss possible representation of them in the pay compression dispute. Twelve lieutenants printed their names on a “Memorandum of Understanding” (MOU) reflecting that they wanted representation by McKernon & Rand, P.A. and setting forth the anticipated terms of representation. The MOU expressly stated that each lieutenant would submit a $500 retainer payment and that would be provided on a contingent basis in that McKernon & Rand, P.A. will have a right to one-third of any awards.

Following the MOU a detailed retainer agreement was prepared by Rand’s firm and was apparently emailed to 11 lieutenants by Rand’s associate. Rand testified that he did not receive any signed Retainer Agreements from the lieutenants, but he went forward anyway with their case and treated the MOU as a retainer agreement, noting that he was on a “short time fuse” of 20 days within which to file grievances under the County’s personnel procedures in order to preserve a timely challenge to the pay compression issue.

Rand’s firm did timely receive $500 individual retainer checks from 11 of the 12 lieutenants who had signed the MOU. The one lieutenant from the MOU list who did not remit a retainer payment was Clarence Russell Lunsford.

On July 5, 2005, Rand’s associate, Devin Swaney, filed 11 grievance forms with attached grievance statements, with the Montgomery County Office of Human Resources (OHR).

Over the course of the next 11 months, Lunsford was encouraged by the Lieutenants to join their group, and he finally decided to do so in May of 2006. Lunsford took to Rand’s office the $500 retainer fee plus $400 expert witness contribution.

The OHR Director found that the establishment of a new sergeant class did not constitute a pay inequity and therefore denied the relief requested. Rand then appealed OHR’s decision to the County Attorney’s Office (OCA) where the claims languished inactive for several months. Rand then filed an appeal of the Lieutenants’ claim to the county’s Merit System Protection Board (MSPB), which also denied the grievance.

Rand filed a petition for judicial review in the circuit court. The administrative appeal of MSPB’s decision remained pending before the circuit court for more than a year. During that period, Montgomery County unilaterally and voluntarily announced adjustments to the salaries of corrections lieutenants.

The circuit court affirmed the decision of MSPB. Lieutenant Wade disagreed with Rand’s handling of the circuit court ruling. Wade wanted Rand to seek a reconsideration of the ruling, rather than appeal it to the Court of Special Appeals. Also, around and before this time, Rand became assertive in trying to collect fees he contended the Lieutenants owed him.

Wade testified that he telephoned and faxed documents to Rand in September and twice in October, 2007. In these communications, Wade expressed disagreement with Rand’s strategies Wade testified that Rand ignored his communications until responding with a memorandum dated October 22, 2007, which addressed Wade’s issues, as well as pressing the fee demand. Wade testified he did not receive this communication even though the memorandum was addressed to him.

On November 13, 2007, Rand sent a letter to the entire Lieutenant group at their residences requesting payment of a fee. His letter also explained his assessment of the status of the case, opined that the County’s voluntary salary adjustment was substantial, and addressed other issues.

In June, 2008, Rand withdrew his appearance from the case. The Lieutenants retained David Slade, Esquire to take over their case.

The Court of Special Appeals reversed the judgment of the circuit court. The case was remanded to MSPB. MSPB issued a supplemental final decision and order adjusting the pay rate for all lieutenants and awarding compensation to seven of the Lieutenants who were then still pursuing relief. Lieutenant Lunsford did not receive a back pay award.

The Attorney Grievance Commission (Bar Counsel) filed a petition for disciplinary or remedial action against Rand. Bar Counsel alleged that Rand had violated Maryland Rules of Professional Conduct (MRPC) 1.1 (Competence), 1.3 (Diligence), 1.4 (Communication), 1.5 (Fees), 1.15 (Safekeeping Property) and 8.4(d) (Misconduct). Bar Counsel also alleged that Rand failed to communicate properly with the group of lieutenants during the course of the representation and that Rand attempted to collect fees on behalf of his former law firm at a time during which the firm was in default for failing to pay taxes, in violation of violation of Rules 1.5 and 8.4.

The circuit court found that Bar Counsel proved by clear and convincing evidence that Rand violated Rule 1.4 in his dealings with Lt. Lunsford and failed otherwise to prove by clear and convincing evidence that Rand violated Rules 1.1, 1.3, 1.4(a), 1.5(a), 1.5(b), 1.15(d), 8.4(a) or 8.4(d).

The Court of Appeals dismissed the petition for remedial or disciplinary action.

LAW: Rand excepted to the hearing judge’s conclusion that Rand violated Rule 1.4 by failing to provide Lunsford with information reasonably necessary to permit Lunsford to make an informed decision and that Rand should have expressly advised Lunsford of his ineligibility to become a party or to obtain back pay before accepting him as a client.

The case presented the Court of Appeals with the opportunity for its first foray into the role of a “lawyer as counselor” under Rule 1.4, Judge Battaglia noted.

Rule 1.4 requires that an attorney “explains the matter to the extent reasonably necessary to allow the client to make informed decisions about the course of the representation.” Attorney Grievance v. Walker-Turner, 428 Md. 214, 231 (2012).

The Court of Appeals has previously found violations of Rule 1.4 in situations in which an attorney has wholly failed to respond to client requests for information, Attorney Grievance v. Garrett, 427 Md. 209 (2012), in situations in which an attorney has failed to communicate at all with his clients after undertaking representation, Attorney Grievance v. Nelson, 425 Md. 344 (2012), and in situations in which an attorney has misled his clients about work that he had done. Attorney Grievance v. Webster, 402 Md. 448 (2007).

The hearing judge found that Rand had informed Lieutenant Lunsford initially, along with his colleagues, of the need to file a grievance quickly, because “the clock is running.” Rand also sent Lieutenant Lunsford an email informing him of the need to move quickly. Lieutenant Lunsford thereafter decided not to join with the rest of the group in filing a grievance.

Rand explained the consequences of failure to file a grievance at the time of the initial meeting. To parse out what an attorney counsels or fails to counsel, as to the consequences of a client’s failure to act, at each meeting, without consideration of what had been counseled at earlier meetings, is to tread a dangerous path when addressing willful violations.

As a result, there was not clear and convincing evidence that Rand violated Rule 1.4. While Rand certainly could have, and possibly, should have, reiterated to Lieutenant Lunsford that he could not have been a party to the actual grievance, his failure to reiterate, when he already had informed Lieutenant Lunsford of the consequences of his failure to act timely, did not constitute a violation of Rule 1.4.

COMMENTARY: Bar Counsel excepted to the hearing judge’s conclusion that Rand did not violate Rule 8.4(d), which prohibits conduct prejudicial to the administration of justice, with respect to Rand’s attempts to collect fees on behalf of McKernon & Rand, P.A. Bar Counsel argued that once the charter of McKernon & Rand, P.A. was forfeited for a failure to file an income tax return for 2003, the association was a “legal non-entity” that could neither sue nor be sued under CA §3-514.

In Dual Incorporated v. Lockheed Martin Corp., 383 Md. 151, 163-602 (2004), the Court of Appeals reiterated that when a corporation becomes defunct, only transactions involving its winding up can be carried out. The “winding up” duties “are administrative in nature, in that they are related to completing existing corporate business.” Patten v. Board of Liquor License Commissioners, 107 Md. App. 224, 234 (1995).

In Dual, the Court of Appeals held that J. Frederick Dual was not “winding up” the affairs of Dual, Incorporated under §3-514, because he had been actively negotiating new contracts on its behalf, the corporation continued to perform existing contracts while defunct, and Mr. Dual and had not made any effort to “dispose of existing assets, debts, or obligations” of the corporation. Dual, 383 Md. at 165.

Rand, however, was attempting to collect fees that he believed were owed to the law firm as a result of his legal work. Eviscerating debts owed and liabilities outstanding is inextricably linked to “winding up” a corporation, such that Rand’s actions were related to the administration of the law firm. Thus, Bar Counsel’s exception was overruled.

Bar Counsel excepted to the hearing judge’s conclusion that Rand did not violate Rule 1.1 (Competent Representation) in his representation of Lieutenant Lunsford. The judge had found that Rand erred in his communication with Lunsford by failing to provide him with information reasonably necessary to permit Lunsford to make an informed decision regarding representation. After Lunsford paid the Rand, however, he diligently and competently pursued the Lieutenant’s case, kept Lunsford and the other Lieutenants reasonably informed, and put forth efforts that enabled the case to end favorably for all the lieutenants. Therefore, Rand did not violate Rule 1.1 (Competent Representation). Bar Counsel pointed to no evidence, other than the miscommunication itself, to support his argument that the judge’s finding was erroneous. Thus, Bar Counsel’s exception was overruled.

Bar Counsel next excepted to the hearing judge’s conclusion that Rand did not violate Rule 1.5(a), relating to fees. Bar Counsel argued that, because Lieutenant Lunsford was not a party to the grievance, nor could have become so at the time he engaged Rand, there was no possibility that Lieutenant Lunsford could obtain any relief and so any fee Rand accepted was unreasonable.

Lieutenant Lunsford could have joined his colleagues for solidarity purposes, a goal outside of remuneration. Most importantly, however, the hearing judge found that Rand’s suit provided the critical impetus for the across-the-board pay increase for the lieutenants so the fees paid by Lieutenant Lunsford were directly attributable to relief he received; as a result, Bar Counsel’s exception was overruled.

Finally, the hearing judge did not err in concluding that Rand did not violate Rule 8.4(d) with respect to his representation of Lieutenant Lunsford. Rand did not intentionally seek to mislead Lieutenant Lunsford about his ability to seek financial relief. Instead, Rand was sloppy. Mere mistake does not rise to the level of intentionality required for an 8.4 violation.

Accordingly, each of Bar Counsel’s exceptions were overruled, and the petition was dismissed.

DISSENT: According to the dissent Bar Counsel’s exceptions to the hearing judge’s determinations that Rand did not violate MLRPC 1.1 and 1.5(a) should have been sustained. Moreover, the dissent would have overruled Rand’s exceptions and sustained the hearing judge’s relevant findings of fact and conclusion of law that Rand violated MLRPC 1.4.

Rand was reprimanded earlier in 2012 by the Commission, in an unrelated matter, for a violation of MLRPC 8.4(d). The misconduct leading to the reprimand arose in Rand’s personal bankruptcy filings in which he included unverified and inaccurate information, some of which was in documents offered under penalty of perjury. Of the typical aggravating factors that the Court may consider in settling on an appropriate sanction, see Atty. Griev. Comm’n v. Mininsohn, 380 Md. 536, 575 (2004), the record in the present case presented: (1) a prior disciplinary offense; (2) multiple offenses; (3) a respondent with substantial experience in the practice of law; and (4) a refusal to acknowledge the wrongful nature of the conduct. Accordingly, the dissent would have suspended Rand for thirty days.