Attorney Grievance Commission v. Sperling

BELL, C.J. (Retired). The Attorney Grievance Commission of Maryland (“the petitioner”), acting through Bar Counsel and pursuant to Maryland Rule ldWSUa), 1 filed a Petition for Disciplinary or ⁶⁶¹ Remedial Action against Leonard J. Sperling, (“the respondent”). The petitioner alleged that the respondent violated Rules 1.1, Competence; 2 1.5, Fees, both before and after its amendment; 3 1.15, Safekeeping Property; 4 4.2, Communica ⁶⁶² tion with Person Represented by Counsel; 5 4.4, Respect for Rights of Third Persons; 6 and 8.4, Misconduct, 7 of the Mary ⁶⁶³ land Lawyers’ Rules of Professional Conduct (“MLRPC”), as adopted by Maryland Rule 16-812, and Maryland Code (1989, 2004 Repl.

Vol.) § 10-306 of the Business Occupations and Professions Article (“BOP”). 8 Pursuant to Maryland Rule 16-752(a), we referred the Petition to the Honorable Michael J. Finifter of the Circuit Court for Baltimore County for the evidentiary hearing required by Maryland Rule 16-757. 9 Following that evidentiary hearing, Judge Finifter issued Findings of Fact and Conclusions of Law pursuant to Maryland Rule 16-757(c) 10 : ⁶⁶⁴ “FINDINGS OF FACT AND CONCLUSIONS OF LAW “I. Findings of Fact “The Court finds the following facts to have been proven by clear and convincing evidence. “The Respondent was admitted to the Bar of Maryland on June 23,1967 and maintains an office for the practice of law at 1777 Reisterstown Road, Pikesville, Maryland 21208. The Respondent, who has served the community for more than forty-three years, describes his practice as successful and rewarding, having represented and assisted thousands of injured plaintiffs seeking to recover money after suffering personal injuries. “The Respondent represented Michonda Lucas and Wanda Lee Thompson in connection with injuries each of them sustained in separate automobile accidents. Ms. Lucas’s accident occurred on or about March 2, 2002. Ms. Thompson’s accident occurred on or about February 26, 2003. “In both cases, the clients and the Respondent executed a Subrogation, Assignment of Rights and Reimbursement Agreement (hereinafter “Agreement”), that assigned to the Food Employees’ Labor Relations Association and United Food and Commercial Workers’ Health and Welfare Fund (hereinafter “the Fund”) any amount recovered in connection with each of the automobile accidents to the extent of the benefits paid by the Fund on behalf of each of the clients.

The Agreement executed by the Respondent and Ms. Lucas was signed on or about March 18, 2003 and the Agreement entered into evidence. Petitioner’s Exhibit 1, sub-exhibit 1. The Agreement executed by the Respondent and Ms. Thompson was signed on or about April 11, 2003 and it, too, was entered into evidence. Petitioner’s Exhibit 1, sub-exhibit 22. ⁶⁶⁵ The Respondent executed both assignments that contained express provisions requiring the Respondent to ‘withhold and pay’ the ‘full amount due and owing to the fund without reduction for attorney’s fees and costs.’ Petitioner’s Exhibit 1, sub-exhibit 22, page 3.

Although Respondent signed the Agreement in both Ms. Lucas’s and Ms. Thompson’s cases that assigned to the Fund any amounts recovered in connection with the automobile accidents to the extent of the benefits paid by the Fund on behalf of Ms. Lucas and Ms. Thompson (.Petitioner’s Exhibit 1, sub-exhibits 1, 22), Respondent did not read the Agreement carefully before signing, but relied upon his experience working with other subrogation carriers. “Ms. Lucas’s claims were settled by the Respondent [o]n or about August 2003 for $9,900.00. Ms. Thompson’s case was settled [o]n or about December 2003 for $16,232.00. After the Respondent settled their personal injury claims, both Ms. Lucas and Ms. Thompson were promptly paid their portions of the settlement funds. “The Fund’s lien in the Lucas case was for the amount of $1,413.56. The Fund’s lien in the Thomas case was for $4,948.63.

In both cases, the Respondent recovered sufficient funds to pay the Fund the full amount of its liens. Although the Fund’s lien in Ms. Lucas’s case was for the amount of $1,413.56, the Respondent’s office was initially informed by the Fund that the Fund’s lien in Ms. Lucas’s case was for the amount of $884.90. Based upon that information, the Respondent maintained that amount for the Fund’s lien in his trust account. There is no clear and convincing evidence that the Respondent’s maintaining less than the correct amount of this lien was intentional.

The Respondent did not maintain the entire amount of the Fund’s lien in trust in the Thomas case. He held $4,893.00 in trust. The Respondent’s failure to maintain the difference, $55.63, in trust, was not an intentional misappropriation, but was caused by inadvertence or a mathematical error. “The Respondent did not pay the Fund’s liens in each of the two cases, despite his obligation to do so, until on or about ⁶⁶⁶ June 18, 2008, after a representative of the Fund filed a complaint with Petitioner. “The Respondent communicated with the Fund’s representatives in connection with his obligation to pay the Fund’s lien between August 2003 and June 2008 in connection with the Lucas case, and between June 2003 and June 2008 in connection with the lien in the Thompson case. The Respondent did not communicate with the Fund or its representatives concerning Ms. Lucas’[s] lien between September 15, 2003 and August 20, 2004.

The Respondent did not communicate with the Fund or its representatives concerning Ms. Lucas’s lien between December 17, 2004 and October 31, 2005. The Respondent did not communicate with the Fund or its representatives between October 31, 2005 and April 28, 2006 concerning Ms. Lucas’[s] lien. The Respondent did not communicate with the Fund or its representatives between his letter to Ms. Dennis of August 22, 2006 and November 15, 2007. “In Ms. Thompson’s case, between June 13, 2003 and March 4, 2004, the Respondent and the Fund discussed on several occasions the recovery in Ms. Thompson’s case and settlement of the Fund’s lien. Petitioner’s Exhibit 1, sub-exhibits 23, 2Jp, 27.

Thereafter, however, the Respondent, confronted with the same issues from Ms. Lucas’s case, did not have any communication with the Fund or its law firm for approximately three and a half years. “The Respondent received the letters addressed to him, of which a copy of each is attached to Petitioner’s Request for Admission of Facts and Genuineness of Documents and each of said letters was entered into evidence. He drafted the letters executed by him, of which a copy of each is attached to Petitioner’s Request for Admission of Facts and Genuineness of Documents and each of those letters was entered into evidence. He forwarded each of said letters to each of the addressees on or about the dates set forth thereon. “The Respondent was aware of the obligation to maintain the amounts of the Fund’s liens in trust and to pay the Fund for its liens pursuant to the requirements of Rule 1.15. He ⁶⁶⁷ was aware of those requirements when the two cases were settled and he received the funds sufficient to pay the liens.

He recalled having been sanctioned for a violation of that Rule in 1999. The Respondent did not pay the Fund the monies to which it was entitled until almost five (5) years after he received the monies with which to pay the Fund in the Lucas case (Petitioner’s Exhibit 1, sub-exhibit Ip) and approximately four and a half years after he received the monies in the Thompson case. Petitioner’s Exhibit 1, sub-exhibit 25. In Ms. Lucas’s case, on August 15, 2003, the Respondent sent a letter to the Fund’s law firm, Slevin & Hart, P.C., advising them that Ms. Lucas’s settled for $9,900.00, and asking the Fund to waive its $884.90 lien in view of the fact that the special damages were $6,957.45.

Petitioner’s Exhibit 1, sub-exhibit 5. The response he received from the Fund’s law firm was ‘no.’ No reduction in the lien for Ms. Lucas was acceptable. Petitioner’s Exhibit 1, sub-exhibit 6. He did not respond.

On August 20, 2004, more than eleven months later, and despite Respondent’s letter of August 15, 2003 to counsel for the Fund advising of the Lucas settlement, counsel for the Fund asked Respondent to advise them of the outcome of the Lucas case and ‘If you have received a recovery, please advise of the source amount.’ Petitioner’s Exhibit 1, sub-exhibit 8. On December 8, 2004, Respondent communicated with the Fund’s law firm and he continued to press the Fund to reduce the lien which he erroneously set forth as $884.90 (instead of the correct amount of $1,413.56 that was communicated to him in September of 2003). Petitioner’s Exhibit 1, sub-exhibits 6, 9. He wanted the firm to agree to a ‘low ball park figure’ to close out the matter.

The fund’s law firm replied on December 13, 2004 in an attempt to set the record straight: the lien amount was not $884.90 but was $1,413.56; the Fund (as stated in its letter of more than a year before) would not waive its lien and would not accept a reduction. Petitioner’s Exhibit 1, sub-exhibit 10. On December 15, 2004, the Respondent sent a letter to the Fund’s law firm, referring to the Respondent’s alleged entitlement to an ‘attorney’s fee, which is accepted at one-third.’ Petitioner’s Exhibit 1, sub-exhibit 11. The Re ⁶⁶⁸ spondent did not lie to or mislead the Fund about the fee.

The Respondent testified that the demands for a fee were, in reality, simply a ‘tool’ to achieve a larger payout for his client. His stated objective in dealing with the Fund was to obtain reduction in the lien pertaining to his client, to whom any pecuniary benefit would have been paid. That is, the Respondent had no personal pecuniary stake in the outcome, having been paid in full for his services as a result of the personal injury settlement. “Stephanie Oliva, a paralegal for the Fund’s counsel, wrote a letter, dated December 17, 2004, addressing the Respondent’s claim for a fee and the Respondent, at the hearing, had no real issue with the recitation of the law set forth in that letter, the Fund stated emphatically that he was simply not entitled to any fee from the Fund. Petitioner’s Exhibit 1, sub-exhibit 12.

The Fund again demanded payment. The Respondent did not respond. He testified that he did not know if he received the Fund’s letter and that, if he did, that he did not review it in detail. “On October 31, 2005, counsel for the Fund again made demand of Respondent: pay the lien. Petitioner’s Exhibit 1, sub-exhibit 13.

On November 21, 2005, Rose Dennis of the Medical Claims Department of the Fund wrote directly to Ms. Lucas advising her that Respondent had failed to respond to numerous requests for updates on the status of her case and that further benefits to her may be subject to offset. Petitioner’s Exhibit 1, sub-exhibit H. A copy of this letter was forwarded to counsel for the Fund, but not to Respondent. “On April 28, 2006, Respondent wrote a letter to counsel for the Fund, claiming to have paid the lien, as he understood it to be. Petitioner’s Exhibit 1, sub-exhibit 15. He was mistaken.

He again asked for the balance of the lien to be waived. He said that this was the first time in his practice in over 40 years where ‘you are not assuming an attorney fee in the collection of your lien, at a 25%-33-l/3% fee.’ He admitted in testimony that this was the only time he ever dealt with the Fund to that point. Respondent’s reference to “you” in his letter was ⁶⁶⁹ intended to generally mean third-party subrogation claimants (such as health insurance companies). Respondent testified again that this was not intended to be a fee for the Respondent for collecting the fund to pay the lien.

Any reduction of the lien would have been passed to Ms. Lucas as a benefit, as was his customary and ordinary practice. That is, he would have received no pecuniary payment. “In that same letter, the Respondent also objected to the Fund’s decision to unilaterally terminate Ms. Lucas’s insurance benefits claiming that there had been no notice to her as she only learned about the problem when she unsuccessfully sought to fill a prescription. The Respondent ‘demanded’ that the client’s ‘insurance’ be reinstated and that she be supplied with a ‘Notice of Right to Protest through the Insurance Commissioner’s Office.’ The Agreement, signed by the Respondent (Petitioner’s Exhibit 1, sub-exhibit 1) states if Ms. Lucas refuses ‘to cooperate with the fund regarding its subrogation rights ... the Fund has the right to offset such amounts against [her] future benefit payments under the Plan ... ’ Petitioner’s Exhibit 1, sub-exhibit 1, page 2. The Fund had deemed Respondent’s failure to cooperate to be Ms. Lucas’ failure to cooperate. “Finally, the Respondent sought in his letter of April 28, 2006, to resolve what he now called an ‘asserted’ and ‘alleged lien.’ On May 2, 2006, counsel for the Fund again wrote to Respondent, setting forth the correct amount of the lien and insisting on full payment of the lien pursuant to its Agreement and the law, without offset for attorney’s fees.

In her letter (Petitioner’s Exhibit 1, sub-exhibit 16) Marilyn Cochran, of the Fund’s law firm, appealed to the Respondent’s ethical sensitivity by quoting Rule 1.15 of the Maryland Rules of Professional Conduct. Respondent testified that he did not recall reading the May 2, 2006 letter. Respondent did not respond to that letter. Rose Dennis, of the Medical Claims Department of the Fund, wrote to Ms. Lucas, without copying the Respondent, on July 26, 2006.

Respondent learned of the correspondence to Ms. Lucas. In response, on August 22, 2006, the Respondent wrote to Ms. Dennis, whom he knew ⁶⁷⁰ was represented by counsel. In that letter, the Respondent again sought to resolve the lien. He stated that he had had ‘numerous communications back and forth to and from [her] counsel, as they fail to wish to negotiate on this matter,’ and he invited Ms. Dennis to contact him ‘so that we may discuss an amicable resolution of this lien to finally close out this necessary dialogue.’ Petitioner’s Exhibit 1, sub-exhibit 17.

The Respondent recognizes in hindsight that he should not have acted so hastily and communicated directly with Ms. Dennis, and that his conduct constitutes a ‘technical’ violation of Rule 4.2. He regrets his error. “On August 28, 2006, the Fund’s counsel wrote to Respondent reiterating the Fund’s position against reducing its lien but invited the Respondent to provide information by September 6, 2006 that would permit the Fund to ‘reconsider its position.’ Petitioner’s Exhibit 1, sub-exhibit 18. The Respondent did not reply. On January 2, 2007, Ms. Dennis of the Fund wrote to Ms. Lucas again threatening offset due to Respondent’s non-cooperation and non-payment of the lien.

Petitioner’s Exhibit 1, sub-exhibit 19. “On November 15, 2007, Lynn Bowers, Esquire, counsel for the Fund, wrote to the Respondent. Petitioner’s Exhibit 1, sub-exhibit 20. Fund’s counsel advised Respondent of his ethical responsibilities and that payment of the Fund’s lien in full was required. The Respondent did not respond.

He testified that he had no recollection of the November 15, 2007 letter. In his May 28, 2008 letter to Petitioner, Respondent referred to the Fund’s lien as an ‘alleged lien.’ He insisted that he was entitled to his fee ‘in the collection of the funds to pay the lien.’ Petitioner’s Exhibit 1, sub-exhibit 35. He claimed in his letter to Petitioner that he was still trying to negotiate the lien and was still seeking an attorney’s fee (to which, he had been told again and again by the Fund, he was not entitled). On June 18, 2008, Respondent paid both liens to the Fund in full. “With respect to the lien associated with Ms. Thompson’s case, it is stipulated that the Respondent had no communica ⁶⁷¹ tion with the Fund or its representatives for more than three and a half years.

He explained to Petitioner that his inability to reach an agreement ‘about the reduction of lien and my attorney’s fee for negotiating this lien’ in the Lucas matter caused him to face ‘the same problem with working out the lien for Wanda Thompson,’ Petitioner’s Exhibit 1, sub-exhibit 35.” As a result of these findings of fact, the hearing court concluded, as a matter of law, that the respondent violated some of the Rules charged and that the petitioner did not prove, by clear and convincing evidence, others. Those found to have been violated were MLRPC 1.1, 1.15, 4.2 and 8.4(d). Those that the court found the petitioner failed to prove were MLRPC 1.5(a), 4.4, 8.4(c) and BOP § 10-306. The respondent’s failure, albeit “inadvertent and/or the product of a mathematical mistake,” citing Attorney Grievance Comm’n v. Stolarz, 379 Md. 387, 399 , 842 A.2d 42, 49 (2004), to retain in his attorney trust account a sufficient amount to cover the total amount of the liens the Fund, the Food Employees’ Labor Relations Association and United Food and Commercial Workers’ Health and Welfare Fund, had against the recoveries obtained by his clients, Thompson and Lucas, the court concluded, constituted a violation of MLRPC 1.15(a).

That he also failed to pay the Fund promptly the lien amounts due to it, the court also concluded, was a violation of MLRPC 1.15(b), 1.15(d) and 1.1. With respect to MLRPC 1.15(b), the violations were determined to have occurred with respect to the recovery of each client and for the periods charged by the petitioner, in the case of Lucas, from August 2003 through June 30, 2005, and for Thompson, for the period December 2003 through June 30, 2005. The failure constituting the MLRPC 1.15(d) violation was also in regard to each client and was for the period July 1, 2005 through June 18, 2008. MLRPC 4.2 proscribes communication with a person represented by counsel without that person’s counsel’s consent.

Having determined that the respondent intentionally communicated with an employee of the Fund by letter, the hearing ⁶⁷² court concluded that, in so doing, the respondent violated that Rule. As to the charged MLRPC 8.4(d) violation, 11 the court opined: “This Court finds that the extraordinary delay in tendering payment from trust, in violation of Rule 1.15, does give rise to a violation of Rule 8.4(d) as argued by Bar Counsel. Certainly, the Respondent violated Rule 1.15, and the delay of over four years in tendering payment is, by any measure, extraordinary. For the above-stated reasons, th[is] Court concludes that Respondent’s unjustified refusal to pay over trust funds constituting the Fund’s liens to the Fund for a period of more than four years impacts negatively the public’s perception or efficacy of the courts or legal profession.

As such, the Court concludes that such conduct is prejudicial to the administration of justice and therefore is in violation of MRPC 8.4(d).” The hearing court found that the following mitigation had been proven by a preponderance of the evidence: ⁶⁷³ “The Respondent recognizes his errors in both cases, and deeply regrets and is truly remorseful for his conduct. The settlement funds in both Ms. Lucas’s and Ms. Thompson’s cases were held in trust, and the Respondent testified that his intention was to tender payment to the Fund upon resolution of the lien with the Fund. In both cases, the Respondent reimbursed the Fund out of his own personal funds to rectify the errors with regard to maintaining the entire amount of the Fund’s liens in trust. Both Ms. Lucas and Ms. Thompson were paid promptly.

Neither Ms. Lucas nor Ms. Thompson was harmed as a result of the Respondent’s conduct and neither client complained to the Respondent about his representation in these matters (although they complained about the fund’s failure to waive its lien). Respondent’s conduct did not involve misappropriation of client funds, misuse of trust funds or commingling client funds with operating account or personal funds. There was no evidence that Respondent had any improper or nefarious intention to reap any extra personal pecuniary benefit for himself despite the delay. The Fund eventually received payment in full.

Respondent did not mislead anyone or lie to anyone. “The Respondent acknowledges that he has been sanctioned for violating Rule 1.15 in 1999. The Respondent has implemented changes into his law practice whereby he either resolves any subrogation lien with the carrier within 60 days, or he files an action for interpleader, thus ensuring that there is no likelihood that any significant delay in resolving subrogation claims will be repeated. “Throughout the grievance process, the Respondent has fully and freely complied with Bar Counsel’s requests and been fully forthcoming with any and all disclosures. The Respondent’s cooperation with Bar Counsel has been full and complete.” (Footnote omitted). Neither the petitioner nor the respondent filed exceptions to the hearing judge’s findings of facts.

Accordingly, we shall “treat the findings of fact as established for the purpose of ⁶⁷⁴ determining appropriate sanctions, if any.” Md. Rule 16-759(b)(2)(A). Nor did they except to the Conclusions of Law drawn by the hearing judge, which, in any event, we review de novo. Rule 16-759(a). Having conducted that review, we conclude that these conclusions of law are supported by the facts from which they were drawn.

We turn, then, to the determination of the appropriate sanction. The purpose of disciplinary proceedings is to protect the public, rather than to punish the erring attorney. Attorney Grievance Comm’n v. Paul, 423 Md. 268, 283 , 31 A.3d 512, 521 (2011); Attorney Grievance Comm’n v. Snyder, 406 Md. 21, 30-31 , 956 A.2d 147, 152 (2008); Attorney Grievance Comm’n v. Franz, 355 Md. 752, 760 , 736 A.2d 339, 343 (1999); Attorney Grievance Comm’n v. Myers, 333 Md. 440, 446-47, 635 A.2d 1315, 1318 (1994); Attorney Grievance Comm’n v. Goldsborough, 330 Md. 342, 364 , 624 A.2d 503, 513 (1993); Attorney Grievance Comm’n v. Protokowicz, 329 Md. 252, 262-63 , 619 A.2d 100, 105 (1993); Attorney Grievance Comm’n v. Myers, 302 Md. 571, 580 , 490 A.2d 231, 236 (1985); Attorney Grievance Comm’n v. Velasquez, 301 Md. 450, 459 , 483 A.2d 354, 359 (1984); Attorney Grievance Comm’n v. Montgomery, 296 Md. 113,119-20 , 460 A.2d 597, 600 (1983). Thus, disciplinary proceedings are a catharsis for the profession, intended to prevent the transgressions of an individual lawyer from bringing its image into disrepute, thereby ensuring the integrity of the bar, as well as a prophylactic for the public.

Attorney Grievance Comm’n v. Sheridan, 357 Md. 1, 27 , 741 A.2d 1143, 1157 (1999) (citing Attorney Grievance Comm’n v. Deutsch, 294 Md. 353, 368-69 , 450 A.2d 1265, 1273 (1982), in turn quoting Attorney Grievance Comm’n v. Kahn, 290 Md. 654, 683 , 431 A.2d 1336, 1352 (1981) and Bar Ass’n of Balto. City v. Siegel, 275 Md. 521, 528 , 340 A.2d 710, 714 (1975)). The factors to be considered when determining the appropriate sanction for professional misconduct are well-settled. We recently restated them in Paul, 423 Md. at 284-86 , 31 A.3d