Case Title: Plaintiff v. Defendant

Citation: 2012 WI 107

Docket Number: 2008AP001205-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2012-09-25T00:00:00Z

Document:
2012 WI 107 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2008AP1205-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings  
Against James J. Gende II, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
James J. Gende II, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST GENDE 
 
 
OPINION FILED: 
September 25, 2012   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
  
 
NOT PARTICIPATING:  
 
 
 
ATTORNEYS: 
 
      
 
 
 
 
2012 WI 107
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2008AP1205-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against James J. Gende II, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
James J. Gende II, 
 
          Respondent. 
 
FILED 
 
SEP 25, 2012 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   Attorney 
publicly 
reprimanded.   
 
¶1 
PER CURIAM.   We review the report and recommendation 
of the referee, Richard M. Esenberg, that Attorney James J. 
Gende II receive a public reprimand and make restitution to his 
former employer, Cannon & Dunphy, S.C.  Because no appeal has 
been filed, we review the referee's report and recommendation 
pursuant to SCR 22.17(2).1  We approve and adopt the referee's 
                                                 
1 SCR 22.17(2) states: 
No. 
2008AP1205-D   
 
2 
 
findings of fact and conclusions of law.  We agree that Attorney 
Gende's professional misconduct warrants a public reprimand, and 
we find it appropriate to order him to make restitution to 
Cannon & Dunphy in the amount of $20,221.76.  We also deem it 
appropriate to require Attorney Gende to pay the full costs of 
the proceeding, which are $28,478.26 as of June 4, 2012.   
¶2 
Attorney Gende was admitted to practice law in 
Wisconsin in 2000.  He has no prior disciplinary history.  In 
September of 2000 he joined the law firm of Cannon & Dunphy, a 
Brookfield firm concentrating its practice in the areas of 
personal injury, product liability, and medical malpractice. 
¶3 
Upon joining Cannon & Dunphy, Attorney Gende executed 
the firm's standard employment agreement which provided, among 
other things, that if Attorney Gende were to leave the firm and 
if any of Cannon & Dunphy clients chose to go with him, any fee 
generated would be paid to Cannon & Dunphy, less a sum 
representing the number of hours that Attorney Gende worked on 
the client's case after his departure, multiplied by his base 
salary at Cannon & Dunphy, divided by 2,080.  The employment 
agreement also provided that Attorney Gende was to immediately 
                                                                                                                                                             
 
If no appeal is filed timely, the supreme court 
shall review the referee's report; adopt, reject or 
modify the referee's findings and conclusions or 
remand the matter to the referee for additional 
findings; 
and 
determine 
and 
impose 
appropriate 
discipline.  The court, on its own motion, may order 
the parties to file briefs in the matter. 
No. 
2008AP1205-D   
 
3 
 
pay Cannon & Dunphy all outstanding costs that had been advanced 
on behalf of any client who chose to be represented by him. 
¶4 
Between September 2000 and April 2004, Attorney Gende 
represented over 90 clients in the course of his employment at 
Cannon & Dunphy.  Each of those clients signed a standard 
retainer contract which provided that if the client changed 
attorneys prior to resolution of their claim, Cannon & Dunphy 
would have a lien on any recovery.  The retainer contracts 
provided they would not be effective until they were counter-
signed by a Cannon & Dunphy representative.  In all but two of 
the cases handled by Attorney Gende, the retainer contracts were 
counter-signed, in each case by Attorney Gende himself.  The two 
retainer contracts that were not counter-signed involved Ken K. 
and Roger W.  Both of those cases were pending in state court in 
Illinois, where Attorney Gende was also licensed to practice.   
¶5 
Attorney Gende decided to leave Cannon & Dunphy and 
start his own practice in the spring of 2004.  Upon informing 
Cannon & Dunphy of his intent to leave, Attorney Gende and the 
law firm negotiated a separation agreement.  The agreement 
provided for a new formula for sharing fees between Attorney 
Gende and the firm for those clients who decided to leave the 
firm and retain Attorney Gende.  The separation agreement 
provided that 80 percent of any fee generated by the departing 
client would be paid to Cannon & Dunphy and 20 percent would be 
retained by Attorney Gende.  There was one exception.  In the 
case of Roger W., the separation agreement provided the split 
would be 75/25 percent in favor of Cannon & Dunphy. 
No. 
2008AP1205-D   
 
4 
 
¶6 
Attorney Gende left Cannon & Dunphy on April 16, 2004.  
Clients were informed of his departure by a letter from the law 
firm, the text of which had been agreed to as part of the 
separation agreement.  The letter informed clients of Cannon & 
Dunphy's interest in the proceeds of any settlement and of their 
options to stay with the firm, go with Attorney Gende, or move 
to a third lawyer.  The letter did not inform clients of the 
cost-sharing formula set forth in the separation agreement. 
¶7 
Sixteen clients chose to leave Cannon & Dunphy and 
have Attorney Gende represent them.  Attorney Gende settled six 
of those cases within approximately ten weeks of his departure 
from the firm.  A dispute arose almost immediately regarding the 
payment of fees to Cannon & Dunphy.  By late May 2004, both 
Attorney Gende and Cannon & Dunphy had hired counsel to 
represent them in the dispute.  Over the course of the next 
several years, Attorney Gende and Cannon & Dunphy litigated the 
issue of fees and costs in a number of the cases.  In none of 
the cases did a court ever conclude that Cannon & Dunphy was not 
entitled to the fees it claimed.  However, in no case was 
Attorney Gende sanctioned nor was his litigation position ever 
found to be frivolous.   
¶8 
Attorney Gende filed an action seeking a declaration 
that the separation agreement was invalid.  This case ultimately 
resulted in an unpublished court of appeals' decision upholding 
the separation agreement.  This court denied a petition for 
review. 
No. 
2008AP1205-D   
 
5 
 
¶9 
During the course of the various lawsuits, Attorney 
Gende held or tried to hold the 80 percent of the fees to which 
Cannon & Dunphy asserted a claim in trust, while paying into his 
business account the 20 percent that he would have been entitled 
to under the separation agreement.  In the Roger W. and Ken K. 
cases, Attorney Gende paid himself all of the fees generated.  
In addition, while the lawsuits with Cannon & Dunphy were 
ongoing, Attorney Gende deposited various amounts for disputed 
fees and costs with the clerk of the Waukesha County circuit 
court.  Between December 2004 and May 2005, he deposited a total 
of $235,283.65 with the clerk of court.  In October 2005 the 
Waukesha County clerk of court returned the bulk of those funds, 
issuing a cashier's check payable to Attorney Gende's law 
offices in the amount of $213,667.86.  Attorney Gende held that 
check for several weeks.  On or about November 10, 2005, he gave 
the check to his attorneys, who held it until April 2006 when it 
was deposited in an interest-bearing account that was apparently 
established for that purpose. 
¶10 Cannon & Dunphy filed a grievance against Attorney 
Gende with the Office of Lawyer Regulation (OLR) in June of 
2004.  In June of 2007 Attorney Gende was appointed as a lawyer 
member 
of 
the 
District 
6 
investigative 
committee. 
 
The 
investigation of Cannon & Dunphy's grievance was completed in 
November of 2007 and a preliminary report was shared with 
Attorney Gende.  The investigative report was reviewed by the 
director of the OLR who, in March of 2008, chose to present it 
No. 
2008AP1205-D   
 
6 
 
to a preliminary review committee which found probable cause to 
proceed.   
¶11 On May 13, 2008, the OLR filed a complaint alleging 18 
counts of misconduct.  Attorney Gende filed a notice of motion 
and motion to dismiss the OLR's complaint based on the OLR 
director's discretionary decision not to follow SCR 22.25, which 
provides for allegations of misconduct against lawyer regulation 
system participants to be diverted to a special preliminary 
review panel.   The referee denied Attorney Gende's motion to 
dismiss in December 2009.  Attorney Gende then filed a petition 
for supervisory writ or, in the alternative, petition for review 
of the referee's decision.  This court denied the petition on 
March 16, 2010.  The court found that under the unique 
circumstances of this case the OLR director was not required to 
divert an investigation pending under SCR 22.03 to the process 
set forth in SCR 22.25 when, three years after the investigation 
began, Attorney Gende was appointed as a lawyer member of a 
district investigative committee. 
¶12 In April 2011 the parties filed cross-motions for 
summary judgment.  The referee granted and denied each party's 
motion in part.  Evidentiary hearings were held in August and 
September 2011, and a hearing on sanctions was held in November 
2011.  The referee issued his report and recommendation on 
May 14, 2012.  The referee found that the OLR failed to meet its 
burden of proof on 14 of the 18 counts of misconduct alleged in 
the OLR's complaint.  He found that the OLR had met its burden 
of proof as to four counts.   
No. 
2008AP1205-D   
 
7 
 
¶13 The referee's factual findings and legal conclusions 
are voluminous.  There is no need to repeat them all here.  It 
is sufficient to provide the following summary information 
concerning the misconduct at issue in this matter.   
¶14 The referee found that the OLR did not meet its burden 
of proving that Attorney Gende failed to promptly notify a third 
person in writing upon receiving funds or other property in 
which the third person has an interest, contrary to former 
SCR 20:1.15(b) (effective through June 30, 2004) (Counts 1 
through 3); failed to, upon request, render a full accounting 
regarding such property and further failed, upon request by a 
third party having an ownership interest in the property, to 
promptly 
render 
a 
full 
written 
accounting 
regarding 
the 
property, 
in 
violation 
of 
former 
SCRs 
20:1.15(b) 
and 
20:1.15(d)(2) (effective July 1, 2004, through June 30, 2007) 
(Counts 4 and 6 through 12); engaged in conduct involving 
dishonesty, in violation of former SCR 20:8.4(c) (effective 
through June 30, 2007) (Counts 16 through 17); and communicated 
about the subject of several representations with a party 
Attorney Gende knew to be represented by another lawyer in the 
matter, without the consent of the other lawyer, in violation of 
former SCR 20:4.2 (effective through June 30, 2007) (Count 18).   
¶15 The referee found the OLR did meet its burden of proof 
with respect to Counts 5 and 13 through 15.  Count 5 alleged 
that by failing to provide Cannon & Dunphy with a full 
accounting, either orally or in writing, of the personal injury 
settlement in the Ken K. matter, despite Cannon & Dunphy's 
No. 
2008AP1205-D   
 
8 
 
ownership interest in that settlement pursuant to its employment 
and separation agreements with Attorney Gende as well as various 
retainer contracts, and despite the repeated requests for 
accountings by the firm and its counsel, Attorney Gende violated 
former SCRs 20:1.15(b)2 and 20:1.15(d)(2).3   
¶16 Count 14 alleged that by failing to hold $12,440.77 
relating to the Ken K. case in trust, when both Attorney Gende 
and Cannon & Dunphy claimed an ownership interest in those funds 
that was identified by a contract, Attorney Gende violated 
former SCR 20:1.15(d)(3).4   
                                                 
2 Former SCR 20:1.15(b) (effective through June 30, 2004), 
provided as follows: 
 
Upon receiving funds or other property in which a 
client or third person has an interest, a lawyer shall 
promptly notify the client or third person in writing.  
Except as stated in this rule or otherwise permitted 
by law or by agreement with the client, a lawyer shall 
promptly deliver to the client or third person any 
funds or other property that the client or third 
person is entitled to receive and, upon request by the 
client or third person, shall render a full accounting 
regarding such property. 
3 Former SCR 20:1.15(d)(2) (effective July 1, 2004, through 
June 30, 2007) stated:  Accounting. 
 
Upon final distribution of any trust property or 
upon request by the client or a 3rd party having an 
ownership interest in the property, the lawyer shall 
promptly render a full written accounting regarding 
the property.   
4 Former SCR 20:1.15(d)(3) (effective July 1, 2004, through 
June 30, 2007) stated as follows:  Disputes regarding trust 
property. 
 
When the lawyer and another person or the client 
and another person claim ownership interest in trust 
No. 
2008AP1205-D   
 
9 
 
¶17 Count 15 alleged that by failing to hold $7,780.99 
relating to the Roger W. case in trust, when both Attorney Gende 
and Cannon & Dunphy claimed an ownership interest in those funds 
that was identified by a contract, Attorney Gende violated 
former SCR 20:1.15(d)(3) (effective July 1, 2004, through 
June 30, 2007).   
¶18 The referee found that in the Roger W. and Ken K. 
matters, Attorney Gende paid himself not only the percentage to 
which he was entitled under the separation agreement, he also 
paid himself the percentage to which Cannon & Dunphy was 
asserting a claim.  The referee found Attorney Gende's decision 
to take the money in these two cases constituted a unilateral 
arbitration of the dispute which could not be justified even by 
a colorable claim that the employment agreement and separation 
agreement were invalid.   
¶19 The referee said while the colorable claim argument 
would permit Attorney Gende to litigate with Cannon & Dunphy, it 
would not permit him to help himself to disputed funds.  The 
referee noted Attorney Gende's only justification for paying 
himself funds to which Cannon & Dunphy was asserting a claim was 
that in the Roger W. case an Illinois trial judge found that 
                                                                                                                                                             
property identified by a lien, court order, judgment, 
or contract, the lawyer shall hold that property in 
trust until there is an accounting and severance of 
the interests.  If a dispute arises regarding the 
division of the property, the lawyer shall hold the 
disputed portion in trust until the dispute is 
resolved.  Disputes between the lawyer and a client 
are subject to the provisions of sub. (g) (2). 
No. 
2008AP1205-D   
 
10 
 
Cannon & Dunphy had no lien under Illinois law.  The referee 
noted, however, that the Illinois judge expressly declined to 
address the validity of claims for attorney's fees and her order 
did not resolve Cannon & Dunphy's claims nor could it justify 
Attorney Gende paying himself the disputed sum in Ken K.'s case 
over nine months before the Illinois judge issued her order. 
¶20 Count 13 of the OLR's complaint alleged that Attorney 
Gende violated former SCR 20:1.15(d)(3) (effective July 1, 2004, 
through June 30, 2007) by failing to hold in trust the 
$213,667.86 deposited with the Waukesha County clerk of court.  
The referee said presumably those funds represented amounts 
generated in cases of former Cannon & Dunphy clients other than 
Roger W. and Ken K., and the money was apparently to abide the 
outcome of Attorney Gende's action for declaratory relief.  The 
referee said although the funds were not in Attorney Gende's 
trust account, they were in a sense in trust while they were on 
deposit with the Waukesha County clerk of court.  The referee 
said the problem was the clerk of court returned the funds by 
cashier's check and upon receipt of the check, Attorney Gende 
did not immediately re-deposit the money into his trust account.  
Instead, he kept it for approximately 20 days before he gave it 
to his attorneys.   
¶21 The referee went on to say although Attorney Gende's 
failure to promptly negotiate the check might be regarded as de 
minimus, his attorneys did not negotiate the check for an 
additional five months before they finally deposited it into an 
interest-bearing account and during those five months the check 
No. 
2008AP1205-D   
 
11 
 
was kept in a locked desk drawer.  Although the referee found 
Attorney Gende violated SCR 20:1.15(d)(3), he said the violation 
was somewhat technical and noted that Attorney Gende did rely on 
bad advice from his attorney.   The referee said it did not 
appear anyone else was harmed since Attorney Gende did not use 
the money and the money remained relatively secure. 
¶22 Turning to the appropriate sanction, the referee began 
with the issue of restitution and said Attorney Gende should be 
required to pay the amounts owed to Cannon & Dunphy in the 
Roger W. and Ken K. matters, which total $20,221.76.5  The 
referee rejected Attorney Gende's argument that the statute of 
limitations had run on Cannon & Dunphy's cause of action against 
him, making restitution inappropriate.   
¶23 In discussing the appropriate sanction for Attorney 
Gende's misconduct, the referee said a potential aggravating 
factor was presented by Attorney Gende's rapid repudiation of 
the separation agreement.  The referee said Cannon & Dunphy 
quite understandably feels it tried to accommodate Attorney 
Gende and was ill used for its trouble, and Attorney Gende's 
litigiousness undoubtedly cost the firm time and resources.  
However, the referee said that does not distinguish this case 
from other examples of aggressive and aggravated litigation and, 
without more, that would not warrant professional discipline.  
The referee said: 
                                                 
5 Neither party disputes the amounts owed Cannon & Dunphy in 
these two matters. 
No. 
2008AP1205-D   
 
12 
 
 
It 
is 
absolutely 
true 
that 
Mr. 
Gende 
has 
demonstrated that, at least with respect to his 
dispute with [Cannon & Dunphy], he has no filter.  He 
seems unable to distinguish good arguments from bad 
ones and leaves no argument or allegation unexpressed.  
Picking 
the 
wheat 
from 
the 
chaff 
has 
been 
a 
challenge.  . . .  
 
Trust fund violations are serious.  Lawyers must 
be scrupulous in handling other people's money and 
Mr. Gende, at the end of the day, was not.   . . .  
This case is not like the typical dishonest and 
deceptive trust account case . . . .  Mr. Gende did 
not . . . attempt to "steal fees" through deception.  
He tried to "steal" them by convincing a court that he 
was entitled to them.  This was, at the end of the 
day, largely a business dispute——albeit one that 
Mr. Gende would have been better off to avoid. 
¶24 This court will affirm a referee's findings of fact 
unless they are clearly erroneous.  Conclusions of law are 
reviewed de novo.  In re Disciplinary Proceedings Against Tully, 
2005 WI 100, ¶25, 283 Wis. 2d 124, 699 N.W.2d 882.  This court 
is free to impose whatever discipline it deems appropriate, 
regardless of the referee's recommendation.  In re Disciplinary 
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 
N.W.2d 686.   
¶25 Because they have not been shown to be clearly 
erroneous, we adopt the referee's findings of fact.  We also 
agree 
with 
the 
referee's 
conclusions 
of 
law 
and 
his 
recommendation regarding the appropriate level of discipline.  
We conclude that a public reprimand is sufficient to achieve the 
objectives of attorney discipline.  As the referee noted in his 
prefatory remarks to his lengthy report and recommendation, this 
is an unusual disciplinary case which is, for the most part, a 
No. 
2008AP1205-D   
 
13 
 
business dispute between Attorney Gende and his former employer.  
No client reported being dissatisfied with Attorney Gende's 
representation, and no clients were deprived of funds to which 
they were entitled.  The referee commented, "On one level, what 
followed was nothing more than a dispute between Attorney Gende 
and [Cannon & Dunphy] as to . . . fees.  Mr. Gende and [Cannon & 
Dunphy] litigated the latter's entitlement to fees in a number 
of fora."  The referee referred to the lengthy dispute between 
Attorney Gende and Cannon & Dunphy as a "war."  Although 
Attorney Gende was unable to persuade any court that Cannon & 
Dunphy was not entitled to the fees it claimed, the referee 
found it significant that no court found Attorney Gende's 
arguments to be frivolous.  While we agree with the referee that 
Attorney Gende's conduct and his repeated stalling tactics in an 
effort to avoid paying fees owed to Cannon & Dunphy were 
inappropriate, and that his conduct was contrary to Wisconsin's 
Rules of Professional Conduct for Attorneys, we agree with the 
referee that under the unique facts of this case a public 
reprimand is sufficient to impress upon Attorney Gende the 
seriousness of his actions and to deter other attorneys from 
engaging in similar conduct. 
¶26 The referee recommends that Attorney Gende be assessed 
the full costs of the proceeding.  Attorney Gende has filed an 
objection to the OLR's request for costs in which he asserts 
that no costs should be assessed.  Attorney Gende asserts that 
he has already paid a heavy price in terms of time, effort, 
resources, money, and sacrifices in combatting what he terms the 
No. 
2008AP1205-D   
 
14 
 
OLR's overzealous and largely unsuccessful prosecution of him.  
The OLR director asserts the full costs of the proceeding should 
be assessed against Attorney Gende in spite of the fact that the 
OLR prevailed on only four of the 18 counts alleged in the 
complaint. 
¶27 Supreme court rule 22.24(1m) provides that it is this 
court's general policy upon a finding of misconduct to impose 
all costs upon the respondent.  In cases involving extraordinary 
circumstances, the court may, in the exercise of its discretion, 
reduce the amount of costs imposed upon a respondent.  We do not 
find this to be such an extraordinary case.  As the referee 
notes in his report, this case was characterized by many 
disputes and extended motion practice.  The referee specifically 
stated that had the OLR charged fewer counts, it was unclear 
whether the scope of the case would have been materially 
narrowed and whether either party would have spent much less 
time or fewer resources.  In addition, the referee said that 
"Mr. Gende, to be frank, raised a number of stunningly poor 
arguments here that required additional effort by OLR and the 
referee.  He ought to bear the entire cost of this proceeding."  
We agree.   
¶28 IT IS ORDERED that James J. Gende II is publicly 
reprimanded for his professional misconduct.   
¶29 IT IS FURTHER that within 60 days of the date of this 
order, James J. Gende II pay to Cannon & Dunphy $20,221.76, 
representing the total amount owed to the law firm in the Roger 
W. and Ken K. cases.   
No. 
2008AP1205-D   
 
15 
 
¶30 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, James J. Gende II shall pay to the Office of 
Lawyer Regulation the costs of this proceeding.  If the costs 
are not paid within the time specified and James J. Gende II has 
not entered into a payment plan approved by the Office of Lawyer 
Regulation, then the Office of Lawyer Regulation is authorized 
to move this court for a suspension of the license of James J. 
Gende II to practice law in Wisconsin. 
 
No. 
2008AP1205-D   
 
 
 
1