Attorney Grievance Commission v. Kinnane

BELL, Chief Judge. Bar Counsel, with the approval and direction of the Attorney Grievance Commission of Maryland, the petitioner, see Rule 16-751, 1 filed a Petition For Disciplinary or Remedial ³²⁷ Action against Thomas W. Kinnane, the respondent, charging him with violations of various of the Maryland Rules of Professional Conduct, as adopted by Maryland Rule 16-812. The Petition alleged, specifically, that the respondent violated Rules 1.5(e) (Fees), 2 and 8.4(b) and (c) (Misconduct). 3 We referred the case, pursuant to Rules 16-752, 4 for hearing to the Honorable Ronald A. Silkworth, a judge of the Circuit Court for Anne Arundel County. Following the hearing, at which the respondent appeared and participated, the hearing court made findings of fact, see Rule 16-757(c) 5 , as follows: ³²⁸ “Petitioner’s Exhibit 1 is a Stipulation of Facts prepared by the parties.

The Court finds that the facts contained therein have been proven by clear and convincing evidence. The Stipulation states: “The Respondent, Thomas W. Kinnane, Esquire (‘Respondent’) was admitted to the Bar of the Court of Appeals of Maryland on June 5,1996. He is also admitted to the Virginia Bar and District of Columbia Bar. “Prior to becoming an attorney, Respondent was a uniformed officer in the United States Secret Service for two years then a police officer in the Anne Arundel County Police Department for eight years. “While attending law school, Respondent began working for the law firm of Alexander & Cleaver in Fort Washington, Maryland. Once he was admitted to the Maryland Bar, he became an associate of that firm, where he remained until February 2000.

He then practiced with another lawyer in the firm, Howes & Kinnane, P.C. and later became a solo practitioner, with his office in Anne Arundel County. Throughout the course of his law practice, Respondent has concentrated a significant portion of his practice representing energy companies in connection with matters pending before government regulatory agencies. “In or about 1998, while employed by Alexander & Cleaver, Respondent met Andrew N. Chau, Esquire (‘Mr. Chau’), the manager of regulatory affairs for Shell Energy Services (‘Shell Energy’). Mr. Chau also held himself out to the Respondent and others as an attorney. Respondent performed legal services for Shell Energy and other similar clients while at ³²⁹ Alexander & Cleaver.

He continued to represent Shell Energy after leaving the firm. Respondent’s primary point of contact at Shell Energy continued to be Mr. Chau. Respondent later performed work for Tractebel Power where Mr. Chau accepted employment after leaving Shell Energy. During the course of his representation of Shell Energy, Respondent submitted approximately 15 invoices for legal services.

It was Respondent’s practice to invoice Shell Energy for work after it was performed, rather than to receive a retainer for future work. “In or about July 2001, Respondent and Mr. Chau met in Washington, D.C., at Mr. Chau’s request. Mr. Chau informed Respondent that he had been authorized by Judith Burow, vice president of Shell Energy, to pay Respondent a $70,000.00 retainer for future work. He instructed Respondent to prepare an invoice for that amount. Respondent prepared an invoice from Howes & Kinnane, P.C. to Shell Energy dated July 26, 2001.

The description of services read, ‘Nevada regulatory and government relations activities, 2001 session and implementation.’ On August 8, 2001, Shell Energy paid $70,000.00 to Respondent by electronic transfer. Respondent held the $70,000.00 in the firm’s escrow account. Respondent had never received a retainer from Shell Energy before this payment. “On or about August 22, 2001, Mr. Chau called the Respondent. He directed the Respondent to take the entire retainer as a bonus for work he had done before at a discounted rate, but to issue a check for $35,000.00 to Mr. Chau.

Mr. Chau asked for the $35,000.00 payment to compensate him for referring future business from Shell Energy and its affiliated companies as well as Tractebel Power. “Respondent transferred $70,000.00 to the firm’s operating account. Respondent issued a $35,000.00 check to Andrew Chau & Associates, P.C. on August 22, 2001. The statement accompanying the check indicated that it was for ‘professional fees: consulting’. In fact, Mr. Chau provided no consulting services to Respondent or his firm.

Respondent drew a check to himself for $35,000.00 from the firm’s operating account. ³³⁰ “Howes & Kinnane, P.C. issued an invoice to Shell Energy-on August 8, 2001. That invoice identified the $85,000.00 payment to Andrew Chau as a ‘consulting fee’. Respondent also issued a form 1099 to Mr. Chau, reporting the payment of the purported consulting fee. Respondent claimed the $85,000.00 on his annual state and federal tax returns. “In the fall of 2001, Respondent received a telephone call from Judith Burow and a Mr. Estes of Shell Energy.

They informed the Respondent that the $70,000.00 payment had not been authorized by Shell Energy. Mr. Chau called Respondent shortly afterward and indicated that the invoice ‘might not have been approved’. Respondent believed this to be an internal dispute among Chau and his supervisors at Shell Energy. “Mr. Chau was subsequently discharged by Shell Energy. Criminal charges were brought against both Mr. Chau and the Respondent.

Respondent was charged with felony theft on April 30, 2003. Harris County (Texas) District Court entered a deferred adjudication of guilt on July 11, 2003. Respondent has paid restitution of $35,000.00, as well as a $2,000.00 fine. Respondent also provided all information he had to assist in the prosecution of Mr. Chau.

Respondent has also cooperated fully with Bar Counsel’s investigation of this matter.” From the foregoing facts, which it found by clear and convincing evidence, Attorney Griev. Comm’n v. Culver, 381 Md. 241, 266 , 849 A.2d 423, 438 (2004), Rule 16-757(b), 6 the hearing court concluded that the respondent violated Rules 1.5(e) 7 and 8.4(b) and (c), as charged. The Rule 1.5(e) viola ³³¹ tion was established, it stated, by the evidence that the respondent split his fee from Shell Energy with Mr. Chau, Shell’s in-house counsel. Further explaining, the hearing court pointed out: “Mr. Chau performed no services to earn that portion of the fee.

Respondent has acknowledged that the payment was made at Mr. Chau’s direction to pay him to make future referrals of work to Respondent’s firm. While Respondent characterizes the payment as the equivalent of purchasing advertising with his own funds received from clients’ payments, that position is contradicted by Respondent’s billing statement submitted to Shell Energy, which disclosed that $35,000.00 was paid to Chau for consulting services. The client never authorized Respondent to share the fee with Mr. Chau. In fact, the payment was an incentive for Mr. Chau to refer work to Respondent also from Tractabel Power, a company unrelated to Shell Energy.

Mr. Chau was not a member of Respondent’s firm. The division of fees was not in proportion to the work performed since Mr. Chau was being compensated for making future referrals of work. There was no written agreement between Respondent and Shell Energy for Respondent and Mr. Chau to assume joint responsibility for the work. The fee charged by Respondent was not reasonable because no services were performed for the fee.

Rather, it was a ‘bonus’ not authorized by the client, but only offered by the corrupt employee who was seeking the improper kickback of half of the fee. Respondent’s conduct violated Rule 1.8(e) of the Maryland Rules of Professional Conduct.” As we have seen, the respondent was charged with, and found guilty of, felony theft, in respect of which he made restitution and paid a fine. That criminal conduct, the hearing court concluded, “reflects adversely on [the respondent’s] honesty, trustworthiness and fitness as a lawyer.” It also in ³³² volved, the court noted and determined, dishonesty and misrepresentation, proscribed by Rule 8.4(c). It elucidated: “Respondent’s invoice for $70,000.00 retainer made no reference to the fact that it was to be a retainer for future services.

Nothing on the bill would alert the client to the fact that the payment requested was not for services already performed. In fact, the charging of a retainer was inconsistent with Respondent’s previous dealings with the client, who had only paid fees after services were rendered. Respondent then accepted that ‘retainer’ as a bonus for work long since performed and paid for, solely on the authorization of the client’s employee who was demanding that he split the ‘bonus’ with him personally. Particularly in light of the fact the client had never paid a bonus to him before, the large amount of the payment, the fact the payment was submitted for other purposes and the client had consistently insisted on paying extremely low fees to the Respondent, Respondent could not reasonably have believed that Mr. Chau had authorization from Shell Energy to pay a bonus to Respondent, to be shared with Mr. Chau.

Respondent’s acceptance of the $70,000.00 and his sharing of the unearned funds with Mr. Chau led to Respondent’s] entering a plea of guilty to felony theft and receiving a deferred adjudication by the Texas court. Respondent’s invoicing of the $70,000.00 fee and his taking it as a fee at the direction of Mr. Chau to Shell Energy were dishonest acts and crimes adversely reflecting on Respondent’s character and fitness as an attorney. His invoices, which did not reflect that the $70,000.00 was unearned and which described the $35,000.00 paid to Mr. Chau as a professional fee for consulting services, were dishonest misrepresentations. Respondent and Mr. Chau participated in a fraudulent scheme which constituted felony theft in Texas.” Unlike the Petitioner, which took no exceptions to the hearing court’s findings or conclusions, the respondent filed Respondent’s Exceptions To The Findings Of Fact and Conclusions Of Law.

In that pleading, he excepted to the hearing court’s conclusion that he could not have believed reasonably ³³³ that Mr. Chau had been authorized by Shell Energy to pay him a bonus, “to be shared with Mr. Chau.” There is not, he asserts, any evidence in the record to support the conclusion, while, on the other hand, there is evidence to the contrary, his testimony, “that [he] had no knowledge upon payment of the bonus that Chau later required [be] split.” He also maintains that his actions, all of them — “providing invoices and statements through normal channels; providing a 1099 Form to Chau; depositing and processing the funds appropriately in firm accounts; and reporting the income on respondent’s annual state and federal taxes,” — “indicate that he had a good faith belief that the bonus was properly paid.” In further support of this exception, the respondent relies on the very fact that he took an “Alford plea,” 8 proffering that entering such a plea “reflects respondent’s good faith belief that his conduct was appropriate and ... [his] evaluation of the risks and benefits of proceeding to trial on the facts of the case, at a particular time, and in a particular distant city.” The respondent further finds it “noteworthy” that, notwithstanding the length of the process and the hearing court’s conclusion in this regard and “the effects thereof on respondent’s honesty, trustworthiness and fitness as an attorney,” Bar Counsel took no preliminary action to terminate his practice, thereby “evidencing its apparent belief that respondent’s actions do not, and have not, affected his ability to honestly and competently continue to represent members of the public.” The respondent’s second exception relates to the hearing court’s refusal to admit into evidence the Peer Review Panel’s Report. 9 Characterizing that ruling as erroneous, he notes ³³⁴ that the report was offered to clarify the record “with respect to how the formal Bar Counsel petition ultimately was arrived at and filed with the Circuit Court” and that the filing of them was not recommended to Bar Counsel. Maryland Rule 16-759(b) governs review by this Court and, in particular, the disposition of exceptions to the hearing court’s findings of fact and conclusions of law. It provides: “(1) Conclusions of law. The Court of Appeals shall review de novo the circuit court judge’s conclusions of law. “(2) Findings of fact.

(A) If no exceptions are filed. If no exceptions are filed, the Court may treat the findings of fact as established for the purpose of determining appropriate sanctions, if any. “(B) If exceptions are filed. If exceptions are filed, the Court of Appeals shall determine whether the findings of fact have been proven by the requisite standard of proof set out in Rule 16-757(b). The Court may confine its review to the findings of fact challenged by the exceptions.

The Court shall give due regard to the opportunity of the hearing judge to assess the credibility of witnesses.” The respondent’s first exception implicates Rule 16-759(b)(1), because it involves a conclusion of law drawn by the hearing court. Those conclusions are reviewed de novo. We do not agree, at the outset, that there are no facts to support the hearing court’s conclusion of law. Indeed, the hearing court enumerated the facts on which it relied: the course of dealings between the client and the respondent, the failure of the bill for the “retainer” to so characterize it or, at least, “alert the client to the fact that the payment requested was not for services already performed,” the large amount of the ³³⁵ requested payment, and, as indicated, the respondent took no exception to any of these findings of facts.

See Rule 16-759(b)(2)(B). Having reviewed the hearing court’s detailed and cogent explanation and the facts on the basis of which its challenged legal conclusion was drawn, we have no hesitancy in overruling the exception. We shall also overrule the respondent’s exception to the hearing court’s refusal to admit the Peer Review Panel’s Report. Rule 16-743, the rule governing the Peer Review process, makes clear the limited office that Panel performs.

It provides, as relevant: “(a) Purpose of Peer Review Process. The purpose of the peer review process is for the Peer Review Panel to consider the Statement of Charges and all relevant information offered by Bar Counsel and the attorney concerning it and to determine (1) whether the Statement of Charges has a substantial basis and there is reason to believe that the attorney has committed professional misconduct or is incapacitated, and, (2) if so, whether a Petition for Disciplinary or Remedial Action should be filed or some other disposition is appropriate. The peer review process is not intended to be an adversarial one and it is not the function of Peer Review Panels to hold evidentiary hearings, adjudicate facts, or write full opinions or reports.” To be sure, although Rule 16-743(e) 10 permits the Peer Review Panel to make recommendations to the petitioner to the same extent as could Bar Counsel, nevertheless, it is the petitioner, as Rule 16-751(a) makes clear, that determines whether, and what, charges are to be filed; the