PER CURIAM.
Pursuant to Maryland Rule 16-751,
Respondent was admitted to practice law in Maryland on December 16, 1999 and is a solo practitioner who is not admitted to any other state Bar or to any Federal Bar. From June 2008 to the time of her deposition by Bar Counsel on April 28, 2010, Respondent did not maintain an attorney trust account.
On June 3, 2008, Dr. Rose Merchant ("Merchant") contacted Respondent regarding possible legal representation for two matters. The first involved a potential wrongful termination claim against her former employer, Prince George's County Department of Corrections. The second involved a possible wrongful arrest claim
The first one and a half to two hours of the June 4, 2008 consultation focused on Merchant's two possible lawsuits. The topic of their meeting eventually shifted to discussion of Merchant's marriage to Raphael Desmond Clark, however. Respondent and Merchant discussed the possibility of ending Merchant's marriage to Clark. The consultation started around 11:00 a.m., but around 8:00 p.m., Clark returned home from work. At that time, Respondent instructed Merchant that she would need to pay $7,000.00 "for an engagement and retainer fee." Respondent did not provide Merchant with a written fee agreement at that time and did not explain the basis of this fee. Before she left the consultation, Merchant presented Respondent with a $7,000.00 check. After leaving Merchant's home, Respondent deposited the $7,000.00 check via an ATM into a Bank of America account. The account was not an attorney trust account, and at no point was Merchant's $7,000.00 held in an attorney trust account.
Following the June 4 consultation, Merchant testified that she believed that Respondent was going to provide representation for the employment law matter against Prince George's County and for a possible divorce or annulment of her marriage. Merchant also understood after the meeting that Respondent would not be providing representation for the wrongful arrest matter. The parties agreed to meet the next day, June 5, 2008, so that Respondent could assist Merchant with filing for a temporary restraining order ("TRO") against her husband.
On June 5, 2008, Respondent and Merchant met at the Courthouse in Upper Marlboro. Respondent was late to this meeting and was focused on other matters when she did arrive to the courthouse. It was not until 4:30 p.m. that Respondent met with Merchant. By that time, it was too late that day to file the TRO or the divorce/annulment complaint because the courthouse was closing. Respondent and Merchant moved the meeting to a restaurant near the courthouse and discussed some legal issues as well as non-legal matters. The meeting at the restaurant concluded after about two hours. Respondent did not provide a written fee agreement for Merchant or inform Merchant about the basis of her fee during this second in-person meeting.
On June 6, 2008, Respondent and Merchant talked on the phone and exchanged e-mails about topics related to Merchant's husband. Merchant was concerned that Clark might have submitted fraudulent credit applications when purchasing two BMWs in both their names. Respondent drafted a letter to the BMW dealership which stated that Merchant desired to rescind the contracts for purchase of the vehicles. Another letter was drafted to Clark to advise him that the contracts were being rescinded and he needed to deliver the car back to the BMW dealership. The next day, June 7, 2008, Merchant called Respondent to inform her that the dealership was not going to accept possession of the BMW. The hearing judge noted that this conversation between the parties "was terse and limited only to the return of the vehicle."
On June 9, 2008, Merchant called Respondent to inquire about a written fee
During the two to three hour meeting on June 9, 2008, Merchant filled out the EEOC form while Respondent drafted a Complaint for Annulment. Although Merchant thought that Respondent was going to provide representation for the annulment matter, Respondent informed her that she would not enter her appearance as counsel and that Merchant would have to file the Complaint pro se.
On June 12, 2008, Merchant went to the Circuit Court for Prince George's County intending to file the pro se Complaint for Annulment. Prior to filing the Complaint, however, she met with an attorney at the legal services clinic at the courthouse and decided not to file the complaint. Merchant later spoke to another attorney about her legal issues. After these two conversations, Merchant decided she would terminate her attorney-client relationship with Respondent.
Merchant called Respondent on June 13, 2008, to terminate the relationship and to request a refund of at least $5,000.00. Respondent stated that she would not provide any refund because the $5,000.00 was non-refundable and the $2,000.00 retainer had already been spent on billable hours. Respondent also informed Merchant during this conversation that additional money was owed based on the billable hours that Respondent had already spent on Merchant's cases. According to Respondent, she was terminating the relationship because Merchant was not trustworthy and had "gone behind her back to seek other counsel."
Respondent drafted a letter dated June 13, 2008, to notify Merchant that she was terminating the Engagement Fee Agreement. Respondent enclosed a "LEGAL SERVICES BILLING SUMMARY" with the letter.
Respondent's billing summary contained charges for 39.5 billable hours for the period June 5 through June 13 at the rate of $335.00 per hour. Respondent claimed that Merchant owed a balance of $11,257.50 after crediting the $2,000.00 retainer. Respondent's billing included 10.0 hours for the "Intake Meeting" on June 4, 2008. This was the initial meeting between the parties that Respondent stated would be a free consultation. The "Client Meetings/Conferences" section of the billing summary also contained a 7.5 hour "Document Prep & Review Mtg." charge for the June 9 meeting that lasted only 2 to 3 hours. The "Document Preparation and Review" portion of the billing summary contained line items for the Pro-Se Annulment Complaint and the EEOC Charging Document. Respondent billed 1.5 hours for preparation of the EEOC document, notwithstanding that this was a pre-printed form where Merchant filled in the blanks.
Merchant sent a letter dated June 17, 2008, to Respondent to confirm her desire to terminate the attorney-client relationship. Merchant also confirmed her June
Respondent's June 13, 2008, letter and billing summary were both printed on letterhead that contained only a Washington, D.C. address for Respondent without any indication that she was not licensed to practice in the District of Columbia. Later correspondence with Petitioner contained the same address without any note of a jurisdictional limitation. In a January 16, 2009 letter to Petitioner, Respondent wrote that she had two offices in Maryland, but used a District of Columbia post office box for correspondence purposes. Respondent sent an April 2, 2010, letter to the Circuit Court for Anne Arundel County that did indicate that she was only admitted to practice in Maryland. Respondent did not reply to Petitioner's January 21, 2009, letter that requested the addresses of her two Maryland offices. She also refused to answer and objected to the same question during her April 2010 deposition by Bar Counsel.
Respondent provided Kara McIntosh with her Pre-Paid legal Services business card after meeting at their children's school sometime prior to October 1, 2008. On October 1, 2008, McIntosh called Respondent to discuss some legal concerns regarding her business activities. Following this conversation, Respondent faxed McIntosh a "Small Business Client Intake Form" and an "Engagement Fee and Retainer Agreement." The fee agreement required McIntosh to pay Respondent a $10,000.00 nonrefundable engagement fee and a separate initial retainer fee of $10,000.00. McIntosh received these forms on October 2, 2008, but chose not to employ Respondent because she did not have the necessary funds to pay the two advance fees.
On November 5, 2008, the Federal Bureau of Investigation (F.B.I.) executed a federal search warrant at McIntosh's home. McIntosh emailed Respondent November 10, 2008 and asked to speak to Respondent "right away." McIntosh and Respondent spoke on the telephone and made arrangements to meet the next day. On November 12, 2008, Respondent came to McIntosh's home and presented two separate fee agreements to McIntosh. The first was titled "Engagement Fee Agreement" and the second titled "Retainer Agreement." Respondent and McIntosh signed both agreements at this meeting.
The "Engagement Fee Agreement" required McIntosh to pay Respondent a "nonrefundable" engagement fee of $10,000.00, including an "initial deposit" of $6,000.00 due upon execution of the agreement and the balance of $4,000.00 due "on or before January 1, 2009." The "Retainer Agreement" provided for an initial retainer fee of $10,000.00, to "be paid by Client no later than February 1, 2008[sic]." This retainer fee would be applied towards future legal services, which were to be billed at the hourly rate of $335.00.
During the November 12, 2008 meeting, McIntosh wrote Respondent a check for $6,000.00 to cover the initial deposit for the
Respondent made two phone calls on behalf of McIntosh on November 13, 2008. The first was to Daniel Wortman ("Wortman"), a special investigator with the Office of the Montgomery County State's Attorney. The two talked for about five to ten minutes and Wortman advised Respondent that there was "quite a bit of evidence" against McIntosh from an investigation involving mortgage fraud. Respondent did not request a meeting to review any of the evidence. On that same day, Respondent also contacted Kwame Manley ("Manley"), an Assistant United States Attorney overseeing the federal criminal case. Manley stated that McIntosh was going to be charged with fraud and that her arrest was imminent. Manley discussed the possibility of a plea agreement in which McIntosh would plead guilty and cooperate with the government. In return, the government would make a motion to reduce her sentence. At the end of this phone call, Respondent agreed to meet Manley at his office.
Respondent and McIntosh met at a restaurant that day to discuss what Respondent had learned from Wortman and Manley. Respondent told McIntosh that she had arranged a meeting with Manley on November 14, 2008, to discuss a plea agreement. At the conclusion of the meeting, Respondent told McIntosh that she needed an additional $5,000.00 by 9:00 a.m. the next day to continue the representation. That next morning, November 14, 2008, McIntosh called Respondent and stated that she could not come up with the $5,000.00. Respondent sent an e-mail at 12:01 p.m. to McIntosh that thanked her "for apprising me this morning that you were unable to secure the funds necessary to retain me to represent you in the matters you have identified." Respondent also wrote that she "informed Mr. Manley, via voicemail, that I will not be representing you in these matters and that you have indicated to me that you prefer to turn yourself in rather than to have an arrest warrant executed upon you." Finally, Respondent informed McIntosh that she would be mailing "a refund check for any remaining balance from the amount you tendered minus the hours that I have already worked on your matters."
McIntosh replied to this e-mail on November 14, 2008 at 2:14 p.m. acknowledging that Respondent should be compensated for her time, but she asked for the return of "the majority of the engagement fee" and an "itemization" of Respondent's services. Later that day, McIntosh informed Respondent that she had retained new counsel and requested a refund of "at least $3,000.00" to pay her new attorney. Respondent wrote back that the amount refunded "will not be anywhere near the $3,000.00 you have requested" and that "the Engagement Fee, and all parts thereof, is nonrefundable and I am entitled to compensation for the work that I have done on your behalf."
McIntosh was not able to obtain the funds necessary to pay her new attorney
On November 25, 2008, McIntosh again requested a refund from Respondent and an itemization of the hours billed. Respondent replied the next day and stated that the engagement fee was "nonrefundable." Respondent did not refund the $5,000.00 and did not provide McIntosh with an itemized billing statement.
Judge Jaklitsch found by clear and convincing evidence that Respondent violated MLRPC 1.4, 1.5, 1.15, 1.16, 7.5, 8.1, and 8.4. As to Rule 1.15, Judge Jaklitsch made the following conclusions of law:
Judge Jaklitsch made the following additional conclusions of law regarding Merchant's complaint:
The hearing judge found several aggravating factors:
Judge Jaklitsch found by clear and convincing evidence that Respondent's conduct in the McIntosh complaint amounted to violations of MLRPC 1.5, 1.15, 1.16, 7.5, and 8.4. With regard to MLRPC 1.5, Judge Jaklitsch stated:
In addition to the above conclusions of law, Judge Jaklitsch also found several aggravating factors present as a result of Respondent's conduct in the McIntosh complaint:
We have stated in numerous cases that, "in reviewing the record we generally will accept the hearing judge's findings of fact, unless those findings are clearly erroneous." Att'y Griev. Comm'n v. Tanko, 408 Md. 404, 418, 969 A.2d 1010, 1019 (2009); Att'y Griev. Comm'n v. Ugwuonye, 405 Md. 351, 368, 952 A.2d 226, 235-36 (2008). We defer to the hearing judge's assessment of the credibility of witnesses. Att'y Griev. Comm'n v. Zdravkovich, 375 Md. 110, 126, 825 A.2d 418, 427 (2003). In the "assessment of the credibility of witnesses, the hearing judge is entitled to accept — or reject — all, part, or none of the testimony of any witness, including testimony that was not contradicted by any other witness." Att'y Griev. Comm'n v. Walter, 407 Md. 670, 678-79, 967 A.2d 783, 788 (2009).
Petitioner did not file any written exceptions to the hearing judge's findings of fact or conclusions of law. Respondent filed numerous written exceptions to the judge's findings of fact.
It would serve no meaningful purpose for us to state verbatim and then to address in detail the multitude of Respondent's objections to the hearing judge's factual findings. Respondent's objections, to the factual findings, basically, either ignore or overlook our standard of review as stated above or are otherwise without merit. In this case, Respondent has raised 52 exceptions to the hearing judge's factual findings. For example, her first exception challenges the propriety of the service of process to initiate these disciplinary proceedings. Respondent contends that service of process was invasive and infringed on her privacy and safety because Petitioner abused its access to Judiciary personnel to obtain her confidential address from the Client Protection Fund. According to Respondent, Petitioner hired an investigator to obtain Respondent's address and the investigator accessed Respondent's motor vehicle records.
Further, Respondent excepts to the finding that she did not maintain a trust account. Respondent ignores the fact that the record clearly shows that she did not maintain such an account. She excepts: to the finding that Merchant discussed with Respondent over the telephone Merchant's financial situation; to the finding that Respondent agreed to provide Merchant a free initial consultation; to the finding that Respondent did not communicate to Merchant the basis of the $7000.00 fee that Merchant paid by check on June 4, 2008; to the hearing judge's failure to state the reasons for Respondent's failure to provide a written fee agreement at the time of the June 4, 2008, meeting with Merchant; to the hearing judge's interpretation of language written in the memo field on Merchant's check in the amount of $7,000.00 paid to Respondent; to the finding that Respondent agreed to represent Merchant in her divorce/annulment proceedings; to the finding that Respondent was late for her meeting on June 5, 2008, with Merchant at the Circuit Court for Prince George's County and that Respondent's tardiness prevented her from filing a timely temporary restraining order against Merchant's husband; to the finding that Respondent and Merchant discussed both legal and no-legal matters during their meeting at Ledo's Pizza in Upper Marlboro.
In addition, Respondent excepts: to the finding that no written fee agreement was provided to Merchant on June 5, 2008, and the failure to find that it was the result of a lack of an available electrical outlet at Ledo's Pizza which would have accommodated Respondent's use of a printer; to the finding that as of June 5, 2008, Respondent had not communicated the basis or rate of her fee to Merchant; to the accuracy of the hearing judge's finding that one phone conversation and several e-mail exchanges took place between Respondent and Merchant on June 6, 2008; to the failure of the hearing judge to acknowledge why the conversation between Merchant and Respondent on June 7, 2008, might have been "terse"; to the failure of the hearing judge to find that twelve phone calls were made from Merchant to Respondent on June 10, 2008, one phone call was made on June 11, 2008, and seven phone calls were made on June 12; to the finding as to the scheduling of the June 9, 2008, meeting with Merchant at Legal Seafood in Bethesda.
Moreover, Respondent excepts: to the finding as to the actual date when the intake form and EEOC complaint form were provided to Merchant; to the finding that Merchant did not know until June 9, 2008, that Respondent would not represent Merchant with regard to the annulment action; to the finding that the meeting on June 9, 2008, lasted only two to three hours; the finding that Merchant requested that Respondent refund the $5,000.00 engagement fee; to the fact that the hearing judge failed to find that Respondent
Similar to the Merchant complaint, Respondent challenges the hearing judge's factual findings with regard to the evidence supporting the complaint of Kara McIntosh. Respondent filed 20 exceptions to Judge Jaklitsch's findings of fact. She excepts: to the hearing judge's finding that Respondent gave McIntosh a business card; to the hearing judge's finding that McIntosh was involved in several business ventures, but did not find that the business ventures were criminal enterprises and schemes; to the finding that Respondent and McIntosh spoke by phone to discuss McIntosh's business venture on October 1, 2008; to the finding that McIntosh chose not to employ Respondent because she did not have the funds for the two requested advance fee payments; to the finding that Federal law enforcement authorities had taken over the investigation of McIntosh; to the hearing judge's finding that there was a phone call between McIntosh and Respondent on November 11, 2008; to the hearing judge's characterization of the original fee agreement faxed to McIntosh in October 2008 as being "all inclusive"; to the finding that DKR Investments, Inc. was a company formed to pursue McIntosh's business ventures; and, to the hearing judge's failure to find that the company was no more than a shell.
Further, she excepts to the hearing judge's finding that when McIntosh issued the $6,000.00 check for the deposit on the engagement fee, she requested that Respondent wait to cash the check so that additional funds could be deposited in the checking account and to the hearing judge's failure to find that Respondent's version of what happened was more plausible; to the finding that Respondent picked up McIntosh's business partner and took her to obtain the cashier's check to pay the engagement fee (Exception No. 10, the identity of which will become relevant shortly); to the finding that McIntosh's business partner brought checks with her to the November 12, 2008 meeting and requested that Respondent accept one as payment for the engagement deposit; to
With the exception of one of Respondent's challenges to the factual findings in the McIntosh complaint, all other exceptions to the factual findings are overruled. Based upon our independent review of the record, the factual findings of the hearing judge were not clearly erroneous as there was sufficient evidence in the record to support her factual conclusions. Because the hearing judge chose to believe the testimony of Merchant and McIntosh, as opposed to the testimony of Respondent, is neither unusual nor improper. As to Respondent's exception No. 10, however, that exception is sustained. The record shows that McIntosh actually testified that she picked up her business partner prior to the meeting with Respondent where the $5,000.00 cashier's check was presented. Respondent was correct in pointing out that the testimony at the disciplinary hearing did not support a finding that Respondent picked up McIntosh's business partner. This "victory" has no bearing on the outcome of this matter.
Our standard of review with regard to the legal conclusions of the hearing judge are well established. "We review the hearing judge's conclusions of law [without deference]." Atty. Griev. Comm'n v. Stern, 419 Md. 525, 556-57, 19 A.3d 904, 925 (2011) (internal citation omitted); Rule 16-759(b)(1) ("The Court of Appeals shall review de novo the circuit court judge's conclusions of law.").
The hearing judge found that Respondent violated the Maryland Lawyers' Rules of Professional Conduct 1.4(b); 1.5(a) and (b); 1.15(a) and (c); 1.16(d); 7.5(b); 8.1(b); and 8.4(c). Respondent has taken exception to each of the hearing judge's conclusions of law. Respondent's written exceptions to the conclusions of law, and our responses, are set forth below.
The hearing judge found that Respondent violated MLRPC 1.4(b) because
Merchant testified that she thought Respondent was going to represent her during the annulment proceedings. Respondent also performed work on an Annulment Complaint for Merchant, billing at least 3.0 hours for work on the annulment matter. The written Engagement Fee Agreement presented to Merchant five days after she issued Respondent the check for $7,000.00, does not specifically mention the annulment matter. The agreement does indicate, however, that additional matters could be assigned to the attorney by the client.
The hearing judge was persuaded by clear and convincing evidence that Respondent violated MLRPC 1.5(a) when she did little work to justify the initial $7,000.00 fee and the billed charges of $11,257.50. The hearing judge found that Respondent did not file any pleadings, did not attend any hearings, and did not obtain any results for Merchant. The work actually completed by Respondent consisted of: "some investigation into Merchant's husband's background in preparation for preparing the Complaint for Annulment; draft[ing] an incomplete Complaint for Annulment; wr[iting] two letters on Merchant's behalf and provid[ing] Merchant with a blank EEOC [form] for her to complete and mail in."
Respondent takes exception to the hearing judge's conclusion. According to Respondent, her fees were reasonably based on the eight factors listed in MLRPC 1.5(a). Respondent further contends that MLRPC 1.5(a) does not prohibit engagement fees. In Att'y Griev. Comm'n v. Kreamer, we defined engagement fees. We said they are
Att'y Griev. Comm'n v. Kreamer, 404 Md. 282, 296, 946 A.2d 500, 508 (2008). This explanation of an engagement fee is similar to the definitions used by other jurisdictions.
An engagement fee could be utilized by an attorney if she or he "performs a service or provides a benefit to the client in exchange for the fee." In re Sather, 3 P.3d 403, 411 (Colo.2000) (en banc). The Court in Sather noted several benefits the attorney could provide for a client in exchange for the fee, including: agreeing to take the client's case, making the client's case a priority over other work, or by agreeing not to represent an opposing party. In re Sather, 3 P.3d at 410.
Restatement (Third) of the Law Governing Lawyers § 34 is analogous to our MLRPC 1.5(a) of the MLRPC. This section states, "A lawyer may not charge a fee larger than is reasonable in the circumstances or that is prohibited by law." Restatement (Third) of the Law Governing Lawyers § 34 (2000). In the comments to this Restatement section, the drafters noted that:
Restatement (Third) of the Law Governing Lawyers § 34 cmt. e (2000). The comment further states that "Engagement-retainer fees agreed to by clients not so experienced should be more closely scrutinized to ensure that they are no greater than is reasonable and that the engagement-retainer fee is not being used to evade the rules requiring a lawyer to return unearned fees." Id.
Other courts have noted that engagement fees may need to be refunded even if the attorney states that they are "earned upon receipt." The D.C. Court of Appeals stated that "Engagement retainers are earned when received, but it may become necessary to refund even a portion of a retainer if the lawyer withdraws or is discharged prematurely." In re Mance, 980 A.2d 1196, 1202 (D.C.2009); See also Columbus Bar Ass'n v. Klos, 81 Ohio St.3d 486, 692 N.E.2d 565, 567 (1998) ("The attorney should not receive a windfall if he or she withdraws or is discharged by the client.").
In cases similar to the present case both the Indiana Supreme Court and the Supreme Court of Kentucky determined that an attorney violated the respective states' comparable versions of MLRPC 1.5(a) when the attorney charged an initial fee, a "non-refundable retainer" of $10,000.00, and performed less than five hours of work for the client. In re Earhart, 957 N.E.2d 611, 612 (Ind.2011). The Indiana Court determined that at least a portion of the initial fee was unearned despite the attorney labeling it "non-refundable." Id. The same attorney was also licensed to practice in the state of Kentucky. Reviewing the same set of facts, the Supreme Court of Kentucky also determined that the attorney violated MLRPC 1.5(a) because he charged an unreasonable fee. Kentucky Bar Ass'n v. Earhart, 360 S.W.3d 241, 244 (Ky.2012). The Court explained that the fee might have been reasonable when the
The Iowa Supreme Court has also reached a similar result in a case involving a nonrefundable advance fee. In the Iowa case, the client paid a $10,000.00 fee that was deemed earned upon execution of the contract and was based on the attorney's time, skill, experience, and reputation. Iowa Supreme Court Bd. of Prof'l Ethics & Conduct v. Frerichs, 671 N.W.2d 470, 473-474 (Iowa 2003). The attorney performed some work for the client, but the criminal charges against the client were eventually resolved by plea bargains. Frerichs, 671 N.W.2d at 474. The Iowa Court determined that this nonrefundable fee violated I.C.A. Rule 32.DR 2-106(A) which prohibits attorneys from "charging a clearly excessive fee." Frerichs, 671 N.W.2d at 475, 477. The benefits offered to the client in exchange for the nonrefundable fee were "nothing more than the ethical obligation imposed on all lawyers when they agree to provide legal services to a client. Brickman & Cunningham, 72 N.C. L.Rev. at 24. A lawyer who agrees to perform legal services also necessarily agrees to be available to perform those services." Frerichs, 671 N.W.2d at 477.
In our interpretation of MLRPC 1.5(a), we recently noted that "[t]he reasonableness of a fee is not measured solely by examining its value at the outset of the representation; indeed an otherwise-reasonable fee can become unreasonable if the lawyer fails to earn it." Atty. Griev. Comm'n v. Garrett, 427 Md. 209, 46 A.3d 1169 (Md.2012). In the case before us, the written fee agreement signed by Merchant five days after she paid Respondent the $5,000 engagement fee, states that the fee was paid "for the Attorney's: (1) willingness to provide legal advice and services to the Client; (2) ensuring her availability to the Client; and (3) willingness and availability to represent the Client, for reasonable fees, in transactions and litigation." We conclude that the benefit provided to Merchant in exchange for her payment of a nonrefundable $5,000.00 fee, "was nothing more than the ethical obligation imposed on all lawyers when they agree to provide legal services to a client." Frerichs, 671 N.W.2d at 477. The fee agreement did not state: that it precluded Respondent from representation of another party, that it was paid in consideration of Respondent's expertise and skill in this area of employment law, that it was paid as a basis for Respondent prioritizing Merchant's case over other work, that it was paid because Respondent would need to hire additional help to take on the case, that it was paid so that Respondent could keep up with the employment law field, or that it was paid in consideration of Respondent having to turn away other work that she otherwise could have accepted. The only purported detriment to Respondent or benefit to Merchant was the "ensuring of her availability to the Client" and the "willingness to provide legal advice and services." Respondent was therefore providing no "benefit to the client in exchange for the fee." Sather, 3 P.3d at 411. Thus, we agree with the hearing judge in the case sub judice that the fee paid was neither an engagement fee by definition nor a reasonable fee under the circumstances.
The hearing judge concluded that Respondent violated MLRPC 1.5(b) because the basis of her fees was not communicated to the client. Respondent and Merchant met in person on June 4 and June 5, 2008. At the conclusion of the June 4 meeting, Merchant issued a $7,000.00 check to Respondent. The two also had phone conversations on June 6 and June 7, 2008. The written fee agreement, however, was not presented to Merchant until June 9, 2008. Prior to the production of the written fee agreement, Respondent had billed Merchant for over 20 hours of work at the rate of $335.00 an hour. Respondent takes exception to the conclusion that she violated MLRPC 1.5(b). She contends that she did not violate MLRPC 1.5(b) because she fulfilled the requirements laid out in the comment to the Rule when she provided the basis of the fee in writing to Merchant.
At the hearing, Merchant testified that no written fee agreement was provided to her at the June 4, 2008 or June 5, 2008 meetings. She further testified that she was not aware that the $7,000.00 she paid Respondent on June 4, 2008, was going towards two different fees. Because the hearing judge believed this testimony, and concluded that Respondent did not effectively communicate the basis of her fees to Merchant, we agree that Respondent violated MLRPC 1.5(b).
The hearing judge concluded that Respondent violated MLRPC 1.15(a) and (c) because Respondent did not keep Merchant's $2,000.00 retainer in a separate attorney trust account. As discussed supra, the hearing judge also rejected Respondent's claim that the $5,000.00 "engagement fee" was earned upon receipt. The judge therefore concluded that MLRPC 1.15(a) was further violated when Respondent did not deposit the $5,000.00 in an attorney trust account. The hearing judge noted that a true "engagement fee" could be placed in a firm's general account, but the fee charged by Respondent was not earned upon receipt and was required
As we discussed supra, the $5,000.00 fee charged by Respondent does not meet the definition of an "engagement fee." Accordingly, the fee was not earned upon receipt and Respondent was required to safeguard the funds in an attorney trust account. During her deposition, Respondent admitted that she did not deposit Merchant's funds in an attorney trust account and that she did not maintain such an account during the period of their relationship. We therefore agree that Respondent violated MLRPC 1.15(a).
The hearing judge also concluded that "Without Merchant's `informed consent, confirmed in writing, to a different arrangement,' Respondent was required to `deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.' [MLRPC] 1.15(c)." Respondent takes exception to the conclusion that she violated MLRPC 1.15(c) because she argues that the $5,000.00 was earned upon receipt and could be placed in a general account and that Merchant gave informed consent for the $2,000.00 retainer to be deposited in the general account when she paid for both fees with the same check. We reject the contention that Merchant gave informed consent for Respondent to use an arrangement other than what MLRPC 1.15 requires.
Merchant did not give informed consent for Respondent to deposit the fees in an account other than an attorney trust account. Merchant testified that she was not aware that the $7,000.00 that she paid Respondent at the conclusion of the June 4, 2008, consultation was going towards two different fees. Because Respondent did not adequately explain the basis of her fees to Merchant, it does not seem likely that Merchant gave informed consent for Respondent to deposit the funds in a general account. Even if we were to accept that Merchant did in fact give informed consent, MLRPC 1.15(c) requires that the consent must be in writing. There is no indication from the Record that Merchant gave informed consent in writing. We also reject Respondent's contention that the $2,000.00 retainer was earned by the time that she deposited Merchant's check into her bank account. Although Respondent claims that she billed Merchant 10.0 hours at a total charge of $3,350.00 for the "Intake Meeting" on June 4, 2008, this meeting was portrayed originally to Merchant as a free consultation. Therefore, Respondent had not earned the $2,000.00 retainer by the time that she deposited Merchant's check. We therefore agree that Respondent violated both MLRPC 1.15(a) and 1.15(c) when she failed to deposit Merchant's fees in an attorney trust account without Merchant's informed, written consent to an alternative arrangement.
The hearing judge found that Respondent violated MLRPC 1.16(d) because she charged an unreasonable fee and did not return the unearned portion of this fee upon termination of her representation. The hearing judge reached this conclusion based on her finding that the fees charged by Respondent were unreasonable. Respondent takes exception to the conclusion that she violated MLRPC 1.16(d). She claims that she took steps to protect Merchant's
In her exceptions to the conclusions regarding MLRPC 1.16(d), Respondent does not respond to the claim that her fee was unreasonable. In Atty. Griev. Comm'n v. Ugwuonye, we noted that MLRPC 1.16(d) is violated when an attorney does not return unearned fees when representation is terminated. Atty. Griev. Comm'n v. Ugwuonye, 405 Md. 351, 372, 952 A.2d 226, 238 (2008). As portions of Respondent's fees were unearned, we overrule Respondent's exceptions to the conclusion that she violated MLRPC 1.16(d).
Respondent also takes exception to the conclusion that she violated MLRPC 1.16(d) on the basis that the rule should not apply if we conclude that it was Merchant who terminated the relationship first. Respondent does not offer any authority to support her claim that the rule does not apply if it is the client that terminates the representation. Respondent's contention that MLRPC 1.16(d) does not apply if it is the client who terminates the representation is incorrect. We have previously held that an attorney violates MLRPC 1.16(d) when she does not refund unearned fees upon termination. See Atty. Griev. Comm'n of Maryland v. Patterson, 421 Md. 708, 736, 28 A.3d 1196 (2011). Therefore, we overrule Respondent's exception to the hearing judge's conclusion that she violated MLRPC 1.16(d).
The hearing judge concluded that Respondent violated MLRPC 7.5(b) because she utilized letterhead with a Washington, D.C. address, but did not indicate that she was only licensed to practice law in Maryland. Respondent takes exception to this conclusion because she claims that her letterhead was not used to communicate any false or misleading information. A copy of Respondent's letterhead was admitted into evidence and shows that no jurisdictional limitation was listed under her Washington, D.C. address. Respondent's letterhead appeared as follows:
Respondent is only licensed to practice law in Maryland. We affirm the hearing judge's conclusion that Respondent violated MLRPC 7.5(b) because no jurisdictional limitation was included on her letterhead.
The hearing judge concluded that Respondent violated MLRPC 8.1(b) because she knowingly failed to respond to Petitioner's January 21, 2009 letter. An attorney violates MLRPC 8.1(b) when she "knowingly fail[s] to respond to a lawful demand for information from an admissions or disciplinary authority." The hearing judge reached this conclusion because the letter was sent to the only mailing address provided by Respondent. Respondent takes exception to this legal conclusion on the grounds that there is no evidence that this letter was actually received by her. On January 16, 2009, Respondent sent a letter to Petitioner in which she addressed some concerns about her fees and handling of an attorney trust account. The letterhead used by Respondent stated: "Mail To: POB 56278, Washington, DC 20040." On January 21, 2009,
An attorney violates MLRPC 8.4(c) when she "engage[s] in conduct involving dishonesty, fraud, deceit or misrepresentation[.]" The hearing judge concluded that Respondent violated MLRPC 8.4(c) for two reasons. First, the hearing judge found that section (c) was violated when Respondent retained unearned fees. Second, the hearing judge concluded that Section 8.4(c) was violated when Respondent submitted a falsified billing statement to Merchant. The hearing judge found that the billing statement was false because it included double charges for document preparation, contained a 7.5 hour charge for a two to three hour charge, and included a 1.5 hour charge for preparing a form that Merchant actually filled out herself.
Respondent excepts to the hearing judge's conclusion that she violated MLRPC 8.4(c) because she contends that all fees were earned and she is still owed money from Merchant for the legal services rendered. This exception is overruled. As we discussed supra, the alleged "engagement fee" was not earned upon receipt. Additionally, we accept the finding from the hearing judge that Respondent engaged in dishonest and fraudulent conduct when she billed 39.5 hours of services for a six-day period at a total charge of $13,257.50. We have previously said that "[t]he retention of unearned fees paid by a client, alone, may constitute a violation of [MLRPC] 8.4(c)." Atty. Griev. Comm'n v. McLaughlin, 372 Md. 467, 502-03, 813 A.2d 1145, 1166 (2002). Because Respondent retained both the unearned "engagement fee" and the unearned fees from the falsified billing summary, we agree that MLRPC 8.4(c) was violated.
After hearing the evidence pertaining to the McIntosh complaint, the hearing judge found by clear and convincing evidence that Respondent violated MLRPC 1.5(a); 1.15(a), (c), and (d); 1.16(d); 7.5(b); and 8.4(a). Respondent has taken exception to the hearing judge's conclusions for each rule violation. Our responses to her exceptions are set forth below.
The hearing judge concluded that the $5,000.00 engagement fee Respondent retained was an unreasonable fee, in violation of MLRPC 1.5(a). The hearing judge found that this fee was not a true engagement fee and that it was unreasonable for the work actually performed.
Respondent takes exception to conclusion that she violated MLRPC 1.5(a) because she believes that the $5,000.00 fee was a permissible engagement fee and that she earned this fee. The "Engagement
The hearing judge concluded that Respondent violated MLRPC 1.15(a) and (c) when she failed to deposit McIntosh's fee payment into an attorney trust account. Respondent takes exception because she asserts that the $5,000.00 "engagement fee" was her property upon receipt. As previously discussed, this fee was not an "engagement fee." Per MLRPC 1.15(a), Respondent was required to deposit this fee in an attorney trust account unless she received informed written consent from McIntosh for an alternative arrangement per MLRPC 1.15(c). There is nothing in the record to show that McIntosh agreed to any alternative arrangement. We therefore must conclude that Respondent violated MLRPC 1.15(a) and (c).
Furthermore, the hearing judge concluded that 1.15(d) was violated when Respondent failed to provide a full accounting of McIntosh's property. The record shows that on November 25, 2008, McIntosh requested an itemized accounting of Respondent's billable hours. Because no itemized accounting was provided to McIntosh, we conclude that Respondent violated MLRPC 1.15(d).
The hearing judge found that MLRPC 1.16(d) was violated because Respondent's unreasonable fee was not refunded upon termination of the representation despite McIntosh's requests. Respondent takes exception because she argues that McIntosh breached the contract and is therefore not due any refund. As we discussed with the Merchant complaint, MLRPC 1.16(d) is violated when an attorney retains unearned fees upon termination. Att'y Griev. Comm'n v. Ugwuonye, 405 Md. 351, 372, 952 A.2d 226, 238 (2008). We have already concluded that at least a portion of the fee was unearned by Respondent. We therefore overrule Respondent's exceptions and concluded that MLRPC 1.16(d) was violated.
The hearing judge concluded that Respondent violated MLRPC 7.5(b) when she
The hearing judge found that the preceding violations of the Maryland Lawyers' Rules of Professional Conduct resulted in a violation of MLRPC 8.4(a). Respondent takes exception on the grounds that her conduct did not reflect adversely on her "honesty, trustworthiness, or fitness as an attorney." We agree with the hearing judge that Respondent violated MLRPC 1.5, 1.15, 1.16, and 7.5 as a result of her conduct towards McIntosh. We therefore conclude that MLRPC 8.4(a) was also violated by Respondent and overrule her exceptions.
When considering the appropriate sanction for violations of the Maryland Lawyers' Rules of Professional Conduct, "we have taken into account the aggravating factors found in Standard 9.22 of the American Bar Association Standards for Imposing Lawyer Sanctions (1991)". Att'y Griev. Comm'n v. Mininsohn, 380 Md. 536, 575, 846 A.2d 353, 376 (2004). These aggravating factors include:
Id. The hearing judge concluded that several of these aggravating factors were present in this case. In the Merchant matter, the hearing judge concluded that there was evidence in the record to support a finding that factors (d), (e), (g), and (j) were present. In the McIntosh matter, the hearing judge concluded that factors (d), (g), and (j) were present. First, we agree that factor (d), multiple offenses, is present here. We note that nine different rules were violated by Respondent as part of her representation of Merchant and seven different rules as a result of the McIntosh matter. Second, we also conclude that factor (e), bad faith obstruction of disciplinary proceeding, is present here based on Respondent's failure to respond to Bar Counsel's January 21, 2009, letter that requested the addresses of her Maryland offices and to answer related questions during Bar Counsel's deposition of her. Third, we are also convinced that factor (g), refusal to acknowledge wrongful
Nearly four pages of her Merchant exceptions and another page in her McIntosh exceptions are devoted to a contract law analysis of the fee agreements. Respondent also argues that all fees were earned and that she is still owed money from Merchant. These exceptions from the Respondent show that she has not acknowledged the wrongful and unethical nature of her conduct and that aggravating factor (g) is present. Finally, we agree with the hearing judge that aggravating factor (j), indifference to making restitution, is present here. Merchant testified that she did not receive any refund from the Respondent upon termination of the relationship. Respondent claims that she is still owed money from Merchant for the legal services that were rendered. Similarly, McIntosh repeatedly requested a refund of at least part of the fee payment. After Respondent refused this request, McIntosh filed a complaint with the Attorney Grievance Commission. We therefore conclude that Respondent has shown an indifference to making restitution in both matters. The hearing judge noted one mitigating factor in both the Merchant and McIntosh matters. In letters sent to the court and Petitioner after the complaints were filed, Respondent included a jurisdictional limitation on her letterhead.
Petitioner recommends that Respondent be disbarred. Petitioner asks that we consider two additional aggravating factors. First, Petitioner contends that aggravating factor (c), a pattern of misconduct, is present here. We agree with Petitioner. Respondent exhibited a pattern of misconduct when she repeated the same offense with her two clients, Merchant and McIntosh. We also agree with Petitioner that aggravating factor (b), dishonest or selfish motive, is present here. Respondent showed a dishonest and selfish motive when she retained unearned fees. This dishonest motive was also evident in the Merchant matter when she double billed for document preparation, billed 7.5 hours for a two to three hour lunch, and billed 1.5 hours for providing Merchant with a blank EEOC form.
"The primary purpose of attorney discipline is the protection of the public, not the punishment of the attorney." Attorney Grievance Comm'n Of Maryland v. Whitehead, 390 Md. 663, 674, 890 A.2d 751, 757 (2006). We have also noted that "[t]he public is protected when sanctions are imposed that are commensurate with the nature and gravity of the violations and the intent with which they were committed." Att'y Griev. Comm'n v. Awuah, 346 Md. 420, 435, 697 A.2d 446, 454 (1997). Petitioner's "Supplemental Memorandum In Support of Recommendation for Sanction" states, in part, "The combination of the misconduct in which [Respondent] engaged and her total lack of appreciation that she did anything wrong warrants Respondent's disbarment."
In Att'y Griev. Comm'n v. McLaughlin, we found that the attorney had violated numerous rules after he "received and retained $72,000 for work that he knew he had not done." Atty. Griev. Comm'n v. McLaughlin, 372 Md. 467, 503, 813 A.2d 1145, 1166 (2002). We concluded that the
In Att'y Griev. Comm'n v. Ward, an attorney charged the client a $3,000.00 retainer but then "did little work to resolve his client's interests." 396 Md. 203, 212, 913 A.2d 41, 47 (2006). The Attorney was found to have violated MLRPC Rules 1.1; 1.3; 1.4(a) and (b); 1.5(a); and 8.4(a), (c) and (d). Ward, 396 Md. at 216, 913 A.2d at 49. We again determined in that case that disbarment was the appropriate sanction. Ward, 396 Md. at 218, 913 A.2d at 50.
Here, we have concluded that Respondent's actions amounted to numerous violations of the Maryland Lawyers' Rules of Professional Conduct. In the Merchant complaint, the rules violated included: 1.4(b); 1.5(a) and (b); 1.15(a) and (c); 1.16(d); 7.5(b); 8.1(b) and 8.4(c). In the McIntosh complaint, the rules violated included: 1.5(a); 1.15(a), (c), and (d); 1.16(d); 7.5(b); and 8.4(a).
Additionally, we have considered the numerous aggravating factors when determining the appropriate sanction in this matter. In order to adequately protect the public, we conclude that the appropriate sanction for Respondent's misconduct is disbarment.
