MARK A. GOLDSMITH, District Judge.
Respondents Richard J. Doud and Andrew M. Ferguson, both principals at pertinent times with Davidson, Breen, Doud, Steele & Ferguson, P.C. (the "Firm"), were referred to the undersigned three-judge panel for disciplinary proceedings pursuant to E.D. Mich. LR 83.22. The referral resulted from the filing in this Court of numerous social security appeals under Doud's name, from 2012 to 2015, which were woefully deficient both as to the quality of the briefs and the management and monitoring of the appeal process on behalf of clients. The "one-size-fits-all" briefs often had very little to do with the facts of the particular case in which they were filed; and, except in one case, there was no lawyer review of opposing briefs and magistrate judge rulings in the cases. This repeated pattern of derelict performance led several magistrate judges and district judges to impose sanctions on Doud. In connection with the imposition of sanctions in one case, Doud and Ferguson misled the sanctioning judge regarding their compliance with his order by submitting a false affidavit.
The questions raised by these revelations in 2015 prompted then-Chief Judge Gerald Rosen to convene the Panel to address misconduct that may have been committed by Doud and Ferguson. To initiate the proceeding, the Panel issued an order to show cause to both Respondents, who appeared by counsel and responded to the show cause order. The Chief Judge also appointed the Grievance Administrator of the Michigan Attorney Grievance Commission as Prosecuting Counsel under E.D. Mich. LR 83.22(e)(6)(a) to conduct the investigation and present evidence to the Panel. Prosecuting Counsel did so by conducting depositions of the Respondents and several lawyers and a legal secretary who worked at the Firm.
After reviewing all of the evidence, the Panel concludes that both Doud and Ferguson engaged in serious violations of the Michigan Rules of Professional Conduct, with Doud's violations being more egregious.
The Firm's practice consisted of workers' compensation, personal injury, and social security, with the Firm's bread and butter being workers' compensation. During the period in question, the Firm was managed by three shareholders, Ferguson, Michael Doud,
Doud was a shareholder of the Firm from 1977 until January 1, 2012, when a shareholder buyback agreement that he had executed on December 31, 2011 became effective. Doud's full level of involvement with the Firm following the execution of the agreement remains unclear. But what is clear is that Doud was permitted to manage various aspects of the Firm as he saw fit and to practice as much or as little as he wanted even after the agreement went into effect.
Much of the Firm's social security work was driven by its workers' compensation practice, because claimants often were contractually required to apply for disability benefits with the Social Security Administration ("SSA").
Beginning in 2002 a new associate attorney, Mikel Lupisella, took over the social security practice within a month of starting his employment; he was the attorney primarily responsible for social security through the end of 2011. Doud Tr. at 23-24; Ferguson Tr. at 89, 134, 143; Lupisella Tr., at 10, 19-20.
After Lupisella's departure, Doud was concerned about the future and stability of the social security practice and attempted to recruit one of the partners to take over the practice. Doud Tr. at 31; Ferguson Tr. at 22-23. Ferguson agreed to step into the social security practice at the administrative level of the social security proceedings, even though he had no prior experience in that area. Ferguson Tr. at 23, 24 While Doud insists that he told Ferguson to take over the entire social security practice, the Panel credits Ferguson's testimony that Doud asked him to handle only the administrative stage, not court appeals.
For all intents and purposes, it was legal secretary Wood who ran the Firm's social security practice after Lupisella's departure. If the initial application for benefits was denied, Wood would meet with the clients and prepare the necessary documents for the hearing before an administrative law judge. Wood Tr. at 9-10. If the administrative law judge denied the claim, Wood would automatically file an appeal of the decision to the SSA Appeals Council.
If the client wanted to proceed to federal court, Wood would instruct either Aaron Lemmens or Paul McHugh, two associate attorneys who joined the Firm after Lupisella left, to begin writing briefs. Lemmens Tr. at 32-33; McHugh Tr. at 8-9, 10. McHugh testified that he was given no training prior to writing the briefs.
When it came to filing cases in district court, Lupisella, while at the Firm, filed both complaints and briefs under his name using a CM/ECF username specific to him. Lupisella Tr. at 14-15, 16. According to Wood, this was not the appropriate procedure, as the filings should have been done under Doud's name; consequently, when Lupisella departed, Wood was instructed by Doud to return everything to Doud's name.
Following the filing of a brief, no further work would be done on a social security appeal. Lemmens Tr. at 39; McHugh Tr. at 15-16. Attorneys did not see the opposing party's brief, did not submit any type of response, and never saw a report and recommendation ("R&R") or a final decision; nor did they ask to see any of those items. Lemmens Tr. at 38-39; McHugh Tr. at 15-17. Lemmens and McHugh saw their jobs as completed once they filed a brief. Lemmens Tr. at 39; McHugh Tr. at 15. Wood was responsible for monitoring all electronic filings in the district court, but she neither reviewed the filings nor did she inform any of the attorneys that something had been filed. Wood Tr. at 26-28. Wood testified that no one reviewed R&Rs to determine whether objections should be filed.
The systemic and structural deficiencies in the Firm's social security practice resulted in numerous filings, in the name of Doud, that suffered from myriad significant defects. Several members of this Court have taken note of the Firm's repeated deficient performance.
In one instance, Doud was ordered to take specific remedial action; Doud's and Ferguson's responses to this order gave rise to additional allegations of misconduct. On March 6, 2015, District Judge Robert Cleland issued an Order in
Judge Cleland's Order, issued on March 6, was ignored by the Firm until March 16, 2015, just four days before the statement was due. Smith Tr. at 31-32. James Smith was the first to take some action relative the
At some point between learning about the
The affidavit in question avers that "Richard Doud" was "duly sworn, deposes and states, that pursuant to the [
This recitation of troubling facts establishes that Doud violated Michigan Rule of Professional Conduct (MRPC) 5.1 — which requires appropriate supervisory monitoring of subordinate attorneys — when he failed to supervise the preparation of briefs that were submitted using his signature and CM/ECF login. Doud also violated MRPC 5.1 by failing to supervise the appeal after the briefs were filed. The evidence before the Panel shows that once briefs were filed, no one in the Firm reviewed the R&R or decided whether to file objections. Further, by authorizing the submission of briefs bearing his name — thereby representing that he had properly reviewed or monitored their preparation — Doud violated MRPC 3.3, which mandates a lawyer's candor to courts. Doud also violated MRPC 3.3 by authorizing Ferguson to sign and submit an affidavit stating that he — Doud — had personally met with Ms. Radford (as Judge Cleland had ordered). In light of these violations, the Panel orders that Doud be suspended from practice before this Court for 90 days.
Michigan Rule of Professional Conduct 5.1(b) states that "[a] lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct." After Lupisella's departure, Wood informed Doud that Lupisella had been filling briefs using his own signature and CM/ECF login. Wood Tr. at 23. Doud told Wood that this was not the proper procedure and that all future briefs should be filed under his name in order to prevent any departing attorneys from taking Firm clients with them.
Because Doud directed Firm personnel to file social security briefs using his name, he had a duty to make reasonable efforts to ensure that the briefs were being prepared in conformity with the Rules of Professional Conduct.
Doud also failed to supervise the appeals process after the briefs were filed. Wood testified that once the briefs were filed, the appeals process was essentially over from the Firm's perspective. Wood Tr. at 28, 49. Doud made no effort to read the opposing party's briefs, review the magistrate judge's R&R, or determine whether filing objections was appropriate.
This profound dereliction of any oversight of the Firm's inexperienced lawyers demonstrates that Doud violated his duty to supervise pursuant to MRPC 5.1(b).
In addition to violating his duty to supervise, Doud's conduct surrounding the filing of social security briefs also violated his duty of candor toward the tribunal. The Rules of Professional conduct state that "[a] lawyer shall not knowingly make a false statement of material fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer." MRPC 3.3(a)(1).
Doud's instruction to sign his name to all future briefs after Lupisella's departure — knowing that he would have no involvement in their preparation — violated his duty of candor, because it constituted "a false statement of material fact," MRPC 3.3(a)(1). Doud's signature on the briefs unmistakably conveyed to the judges in this District the untrue assertion that he was personally involved in the drafting of the documents or involved in supervising their preparation when, in fact, he did nothing in that regard after 2011.
Doud's conduct in response to the
Rather than meeting with Ms. Radford and providing her with the necessary documents as ordered by Judge Cleland, Doud told Ferguson to "draft whatever is necessary" and sign his name to it. 3/18/2015 Email at 3. By giving this instruction, Doud was aiding and abetting and/or soliciting the submission of a "false statement of material fact." MRPC 3.3(a)(1). Not only did Doud fail to actually meet with Ms. Radford, he authorized the submission to the Court of an affidavit stating that he had. This lack of candor constitutes a violation of MRPC 3.3(a)(1).
Standard 3.0 of the American Bar Association's Standards for Imposing Lawyer Sanctions states that, "[i]n imposing a sanction after a finding of lawyer misconduct, a court shoulder consider the following factors: (a) the duty violated; (b) the lawyer's mental state; (c) the actual or potential injury caused by the lawyer's misconduct; and (d) the existence of aggravating or mitigating factors." Standard 7.2 states "[s]uspension is generally appropriate when a lawyer knowingly engages in conduct that is a violation of a duty owed to the profession, and causes injury or potential injury to a client, the public, or the legal system."
The record indicates that Doud knowingly failed to supervise, in contravention of MRPC 5.1(b). To prevent attorneys from stealing Firm clients, Doud ensured that all appeals to federal court were filed in his name. Because these briefs were filed in his name, Doud had a duty to make reasonable efforts to ensure that the lawyers drafting the briefs acted in conformity with the Rules of Professional Conduct.
This conduct also constituted a knowing violation of MRPC 3.3(a)(1). Standard 6.1, which addresses false statements, fraud, and misrepresentation, states that "[s]uspension is generally appropriate when a lawyer knows that false statements or documents are being submitted to the court . . . and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding." Standard 6.12. Doud knew that briefs were being submitted in his name even though he did not assist in their preparation. This misconduct had an adverse effect on the legal proceedings in that it misled judges as to who was actually representing parties before them.
Doud's misconduct with respect to the submission of the
In regard to aggravating factors, Doud had a selfish motive.
Doud's knowing violations of MRPC 5.1(b) and MRPC 3.3(a)(1) warrant a 90-day suspension from practice before this Court.
Ferguson committed violations of MRPC 5.1 and MRPC 5.3 when he failed to properly supervise the Firm's social security practice after Lupisella departed and Doud began to take a reduced role. However, unlike Doud, Ferguson's failure to supervise was committed negligently. On the other hand, Ferguson's actions in response to the
Ferguson's conduct after Doud began his reduced role with the Firm violated multiple ethical rules regarding supervision. Specifically, MRPC 5.1(a) states "[a] partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct." Further, MRPC 5.3(a) states that "[w]ith respect to a nonlawyer employed by, retained by, or associated with a lawyer, a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer."
As a managing shareholder of the Firm, Ferguson was required to adhere to these rules. The record indicates that Ferguson fell well short of this responsibility. After Lupisella's departure in December 2011, the Firm's social security practice was essentially run by Wood, a non-lawyer assistant. After an application for social security benefits was denied, Wood oversaw each stage of the appeal, from the administrative stage through the appeal to federal court.
Other than contributing occasionally at the administrative level, Ferguson conducted no oversight of the Firm's social security practice. Ferguson "assumed it was being handled the way it always was in the past," because he figured Doud had left a "good system" in place. But that was not the reality of how the Firm operated. And Ferguson did nothing to verify — as he should have — that proper procedures and practices were being followed. This led to consistently deficient work product, an outcome that could have been avoided had Ferguson engaged in proper supervision. While Ferguson assumed things were being handled properly, it was his duty, as a managing shareholder, to make reasonable efforts to ensure that the social security practice was being run in conformity with the Rules of Professional Conduct. His failure to make such efforts constituted a violation of MRPC 5.1(1) and MRPC 5.3(a).
By signing Doud's name to the
Regarding the failure to supervise, the Panel observes that "[r]eprimand is generally appropriate when a lawyer negligently engages in conduct that is a violation of a duty owed as a professional, and causes injury or potential injury to a client, the public, or the legal system." Standard 7.3.
Ferguson believed that the Firm's social security practice was being run in accordance with a system put into place by Doud, and that his role was limited to contributing at the administrative level only. Because he was told by Doud that his help was only needed at the administrative level, Ferguson was genuinely unaware that the attorneys preparing the briefs in federal court were not being properly supervised. Nonetheless, Ferguson's conduct caused actual injury to the legal system, in the form of burdening the Court, and injury to clients who lost out on potentially meritorious claims.
While Ferguson negligently violated his duty of supervision, he knowingly violated his duty of candor. Despite knowing that Doud had not met with Ms. Radford, Ferguson submitted an affidavit to Judge Cleland falsely swearing that he did. Not only was Ferguson aware that the meeting never took place, he also forged Doud's signature on the affidavit. Although Ferguson had Doud's permission to sign for him, he failed to indicate that he was signing as Doud's agent. He also did not indicate that he met with Ms. Radford in Doud's place. This misrepresentation was made knowingly and had an adverse effect on the legal system, because it falsely led Judge Cleland to believe that his Order had been complied with.
Regarding aggravating factors, Ferguson's failure to supervise was not limited to one incident.
On the other hand, Ferguson's misconduct is mitigated by several factors. He made significant efforts to rectify the situation by urging his Firm to cease all federal court appeals and cooperating with Prosecuting Counsel during his investigation.
In light of these factors, the Panel concludes that a public reprimand is both warranted and sufficient to express this Court's profound disapproval of his misconduct.
For the foregoing reasons, the Panel orders that Doud be suspended from the practice of law before this Court for 90 days; Ferguson is hereby publicly reprimanded for his misconduct. Doud is reminded that, by virtue of his suspension, the requirements of E.D. Mich. LR 83.22(e)(8) and (9) have been triggered. Doud and Ferguson are also ordered to pay, within 28 days of this Opinion and Order, the costs and attorney fees incurred by Prosecuting Counsel. If there is any dispute regarding that issue, Prosecuting Counsel shall file a motion within 28 days of this Opinion and Order; if that issue is resolved by the parties, Prosecuting Counsel shall file a certificate to that effect.
Pursuant to E.D. Mich. LR 83.22(e)(6)(H), this Opinion and Order is made public. The remainder of the docket remains under seal.
SO ORDERED.