Case Title: Office of Lawyer Regulation v. Nikola P. Kostich

Citation: 2010 WI 136

Docket Number: 2009AP000287-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2010-12-21T00:00:00Z

Document:
2010 WI 136 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2009AP287-D 
COMPLETE TITLE: 
 
In the Matter of Disciplinary Proceedings 
Against  Nikola P. Kostich, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant-Respondent, 
     v. 
Nikola P. Kostich, 
          Respondent-Appellant. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST KOSTICH 
 
 
OPINION FILED: 
December 21, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
      
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
      
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
ABRAHAMSON, C.J. and BRADLEY, J. dissent 
(opinion filed).   
 
NOT PARTICIPATING: Prosser, J. did not participate.   
 
 
 
ATTORNEYS: 
 
      
 
 
 
2010 WI 136
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2009AP287-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Nikola P. Kostich, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant-Respondent, 
 
     v. 
 
Nikola P. Kostich, 
 
          Respondent-Appellant. 
 
FILED 
 
DEC 21, 2010 
 
A. John Voelker 
Acting Clerk of 
Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney 
publicly 
reprimanded with conditions. 
 
¶1 
PER 
CURIAM.   We 
review 
the 
findings 
of 
fact, 
conclusions of law, and recommendations of Referee Christine 
Harris Taylor concluding that Attorney Nikola P. Kostich engaged 
in 
unprofessional 
conduct 
in 
violation 
of 
the 
rules 
of 
professional 
conduct. 
 
The 
referee 
recommended 
a 
public 
reprimand and imposition of costs, which total $9,760.46 as of 
No. 
2009AP287-D   
 
2 
 
March 10, 2010.  No appeal has been filed in this matter.  See 
SCR 22.17(2).1 
¶2 
We approve the referee's findings and conclusions.  We 
consider a public reprimand barely adequate for the egregious 
conflict of interest and therefore also impose the additional 
conditions as set forth herein.  We also order Attorney Kostich 
to pay the costs of this proceeding. 
¶3 
Nikola P. Kostich was admitted to the practice of law in Wisconsin in 1970.  
Attorney Kostich, who practices in Milwaukee, has previously received two court-ordered public 
reprimands.  In 1986 he was reprimanded on the basis of a criminal conviction for failure to file 
a tax return.  See In re Disciplinary Proceedings Against Kostich, 132 Wis. 2d 227, 391 
N.W.2d 208 (1986).  In 2005 Attorney Kostich was reprimanded for violations of SCR 20:1.3 
(failing to determine if a client had grounds for an appeal for over 30 months after he was 
retained to do so), SCR 20:1.4(a) (failing to respond to the client's letters and telephone calls), 
SCR 20:1.4(b) (failing to inform the client that he had no legal grounds for an appeal), 
SCR 20:1.16(d) (failing to refund an advance payment of fees upon termination), another 
violation of SCR 20:1.16(d) (failing to provide a client's file), and SCR 22.03(6) (failing to 
cooperate with OLR's investigation regarding two matters).  See In re Disciplinary Proceedings 
Against Kostich, 2005 WI 90, 282 Wis. 2d 206, 700 N.W.2d 763.  
                                                 
1 SCR 22.17(2) states: 
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. 
2009AP287-D   
 
3 
 
¶4 
On February 4, 2009, the Office of Lawyer Regulation 
(OLR) filed a complaint against Attorney Kostich alleging one 
count of professional misconduct related to Attorney Kostich's 
decision to handle a criminal case in which he had a conflict of 
interest.  The referee conducted an evidentiary hearing on 
December 15, 2009, and filed her report on February 11, 2010.  
No appeal was pursued. 
¶5 
The facts giving rise to this disciplinary matter are 
as follows.  In 1965, when G.K. was 13 years old and in eighth 
grade at St. Patrick's School in Milwaukee, Wisconsin, he was 
repeatedly 
sexually 
molested 
by 
Sister 
Norma 
Giannini 
("Giannini"), a Catholic nun who was his teacher, the principal 
of the school, and a friend of the family.  
¶6 
In late 1996 or early 1997 G.K. met with Attorney 
Kostich to explore the possibility of bringing a civil action 
against Giannini.  G.K. shared highly confidential information 
with Attorney Kostich including specific information regarding 
the sexual assaults.  Attorney Kostich explained that there 
might be a statute of limitations issue and stated he would 
research that issue and get back to G.K.  The parties discussed 
attorney fees but no retainer agreement was signed.  G.K. also 
authorized Attorney Kostich to obtain medical records from 
G.K.'s therapist.  After the initial meeting Attorney Kostich 
sought additional details about the abuse and obtained G.K.'s 
therapy records.  In August 1997, after a second meeting with 
G.K., Attorney Kostich advised G.K. that he would not take the 
No. 
2009AP287-D   
 
4 
 
case because he believed the statute of limitations precluded a 
civil suit.  
¶7 
In 2006, after learning that Giannini's departure from 
the state of Wisconsin in 1969-1970 meant a criminal charge 
might still be viable, G.K. contacted the police regarding the 
sexual assaults.  In December 2006 Giannini was charged with two 
counts of indecent behavior with a child, a Class C felony, in 
Wisconsin.  State v. Norma Giannini, Milwaukee County Case No. 
06CF443.  The criminal charges concerned the sexual assaults 
upon G.K. and one other student at St. Patrick's School.   
¶8 
On January 9, 2007, Attorney Kostich appeared as 
attorney of record on behalf of Giannini along with another 
attorney from Chicago.  Giannini entered a not guilty plea and 
the matter was scheduled for trial.  
¶9 
When 
G.K. 
learned 
that 
Attorney 
Kostich 
was 
representing 
Giannini, 
he 
contacted 
Attorney 
Kostich 
and 
objected to the representation on the basis of what he believed 
to be Attorney Kostich's prior representation of him on the same 
matter.  Attorney Kostich denied that he had any conflict of 
interest in representing Giannini and refused to terminate his 
representation of Giannini.  
¶10 G.K. filed a grievance against Attorney Kostich with 
the OLR.  Attorney Kostich responded to the grievance in a 
letter dated March 9, 2007, denying that he had ever represented 
G.K. or that there was any conflict.  He continued to represent 
Giannini.  Giannini subsequently entered no contest pleas to 
both charges.   
No. 
2009AP287-D   
 
5 
 
¶11 The referee made a number of factual findings, 
ultimately finding that Attorney Kostich did represent G.K. and 
concluding there was a clear conflict of interest with respect 
to Attorney Kostich's representation of Giannini.  These 
findings  included the fact that Attorney Kostich knew that G.K. 
——identified as a victim by Giannini and in the criminal 
complaint——was the same individual Attorney Kostich met with to 
discuss a possible civil case against Giannini.  Attorney 
Kostich had received G.K.'s therapy records both when initially 
investigating the matter and then later as part of the discovery 
materials obtained from the district attorney in the Giannini 
criminal matter.  The police reports detailing the Giannini 
abuse investigation also indicated that G.K. referred to 
Attorney Kostich as his attorney.   
¶12 Attorney 
Kostich testified that he reviewed the 
supreme 
court 
rules 
regarding 
conflicts 
of 
interest 
and 
determined there was no conflict.  He did not consider it 
necessary to obtain written permission from G.K. to represent 
Giannini.  The referee observed that Attorney Kostich believed 
he met with G.K. out of professional courtesy and that was it.  
He did, however, acknowledge that he considered retaining 
another attorney if it became necessary to cross-examine G.K. in 
the Giannini criminal proceeding. 
¶13 A referee's findings of fact will be affirmed unless 
clearly erroneous.  Conclusions of law are reviewed de novo.  
See In re Disciplinary Proceedings Against Kalal, 2002 WI 45, 
¶23, 252 Wis. 2d 261, 643 N.W.2d 466.   
No. 
2009AP287-D   
 
6 
 
¶14 The requirements of SCR 20:1.9 pertain to situations 
involving 
a 
conflict 
of 
interest 
with 
a 
former 
client. 
SCR 20:1.9(a) provides: 
A lawyer who has formerly represented a client in 
a matter shall not thereafter represent another person 
in the same or a substantially related matter in which 
that person's interests are materially adverse to the 
interests of the former client unless the former 
client gives informed consent, confirmed in a writing 
signed by the client.  
¶15 Attorney Kostich contended that he did not represent 
G.K.  Attorney Kostich noted that no retainer agreement was 
signed, no authorizations were signed at his office, no file was 
created on behalf of G.K., and no notes were taken during the 
initial meeting with G.K.   
¶16 Whether an attorney-client relationship is created 
depends upon the intent of the parties and is a question of 
fact.  See, e.g., Marten Transport, Ltd. v. Hartford Specialty 
Co., 194 Wis. 2d 1, 14, 533 N.W.2d 452 (1995).  An attorney-
client relationship is not formed simply because one of the 
parties knows that the other is an attorney.  Such knowledge, 
however, coupled with legal advice being sought and provided, 
ordinarily is enough to establish the relationship.  Moreover, 
the existence of a lawyer/client relationship is determined 
principally by the reasonable expectations of the person seeking 
the lawyer's advice.  See 7A C.J.S. Attorney & Client § 202 
(2010); see also Togstad v. Vesely, Otto, Miller & Keefe, 291 
N.W.2d 686, 
693 
(Minn. 
1980); 
Dean 
R. 
Dietrich, 
"Ethics-Determining Current & Former Clients," Wisconsin Lawyer, 
No. 
2009AP287-D   
 
7 
 
Vol. 
73, 
No. 
8 
(Aug. 
2000), 
available 
at 
https://www.wisbar.org/AM/Template.cfm?Section=Wisconsin_Lawyer&
template=/CM/ContentDisplay.cfm&contentid=49073.  
¶17 G.K. reasonably believed that there was an attorney-
client relationship with Attorney Kostich when he shared highly 
confidential information about childhood sexual assaults and 
other sensitive mental health information with Attorney Kostich 
for the purpose of pursuing litigation against Giannini.   
¶18 We agree with the referee's finding that G.K. was a 
former client of Attorney Kostich.  As noted, SCR 20:1.9(a) 
provides that an attorney may not represent one client whose 
interests are materially adverse to the interests of a former 
client if the representation involves a matter that is the same 
or 
substantially 
related 
to 
the 
nature 
of 
the 
prior 
representation of the former client unless the former client 
consents in writing.  
¶19 Attorney Kostich's former relationship with G.K. and 
his subsequent representation of Giannini were both adverse and 
substantially related.  G.K. sought legal advice from Attorney 
Kostich regarding assaults committed by Giannini and whether he 
could pursue litigation against Giannini.  Attorney Kostich then 
undertook to defend Giannini in a criminal matter in which she 
was prosecuted for the same assaults on G.K.  There is no 
dispute that Attorney Kostich received G.K.'s therapy records 
sometime in 1997 or that Attorney Kostich later received 
substantially the same records as part of the discovery 
materials in the criminal case against Giannini.  See ABA Model 
No. 
2009AP287-D   
 
8 
 
Rules of Prof'l Conduct R. 1.9 cmt. ("When a lawyer has been 
directly 
involved 
in 
a 
specific 
transaction, 
subsequent 
representation 
of 
other 
clients 
with 
materially 
adverse 
interests in that transaction clearly is prohibited." (Emphasis 
added).)  
¶20 Attorney Kostich certainly did not obtain G.K.'s 
consent to the later representation of Giannini.  Indeed, when 
G.K. learned that Attorney Kostich was going to represent 
Giannini in the criminal charges arising from the assaults, G.K. 
contacted Attorney Kostich and voiced his objection to the 
representation, and Attorney Kostich refused to step down as 
Giannini's attorney.  
¶21 Thus, the record evidence amply supports the referee's 
conclusion that by representing Giannini on criminal charges in 
which G.K. was the victim, after G.K. had consulted with 
Attorney Kostich about bringing a civil action against Giannini 
for the same sexual assaults that were the subject of the 
criminal proceedings, Attorney Kostich acted contrary to former 
and current SCR 20:1.9(a).2   
                                                 
2 Prior to July 1, 2007, SCR 20:1.9(a) stated that a lawyer 
who has formerly represented a client in a matter shall not: 
Represent another person in the same or a 
substantially related matter in which that person's 
interests are materially adverse to the interests of 
the former client unless the former client consents in 
writing after consultation. 
From July 1, 2007, to the present, SCR 20:1.9(a) provides: 
A lawyer who has formerly represented a client in 
a matter shall not thereafter represent another person 
No. 
2009AP287-D   
 
9 
 
¶22 We turn to the appropriate sanction for Attorney 
Kostich's misconduct.  The referee noted that cases involving a 
violation of SCR 20:1.9(a) generally result in a private 
reprimand, public reprimand, or short-term suspension.  See, 
e.g., Public Reprimand of Roger Merry, 1999-1; Public Reprimand 
of Russell Falkenberg, 1992-2.  The referee also noted that in 
addition to the two prior public reprimands for unrelated 
conduct, Attorney Kostich "demonstrated a dishonest and selfish 
motive when undertaking the representation of Gianinni [sic]."  
¶23 Case law supports imposition of a public reprimand for 
cases involving a single conflict of interest.  However, the 
conflict in this case was egregious.  Attorney Kostich's failure 
to recognize that it was unethical for him to defend Giannini, 
who was being criminally prosecuted for abusing G.K., without 
obtaining G.K.'s consent in accordance with SCR 20:1.9(a), 
reflects a troubling lack of awareness of or attention to the 
rights of his clients or his responsibility as a lawyer to guard 
sensitive information with which he had been entrusted.  This 
court 
believes 
that 
further 
precautions 
are 
necessary.  
Accordingly, in addition to the public reprimand we impose 
today, we also direct Attorney Kostich to complete, within 12 
months of the date of this decision, ten credits of continuing 
legal education coursework approved for ethics.  Failure to 
                                                                                                                                                             
in the same or a substantially related matter in which 
that person's interests are materially adverse to the 
interests of the former client unless the former 
client gives informed consent, confirmed in a writing 
signed by the client. 
No. 
2009AP287-D   
 
10 
 
complete this ethics coursework may result in Attorney Kostich's 
suspension from the practice of law.   
¶24 IT IS ORDERED that Nikola P. Kostich is publicly 
reprimanded. 
¶25 IT IS FURTHER ORDERED that Nikola P. Kostich is 
directed 
to complete ten ethics-approved continuing legal 
education credits within 12 months of the date of this order and 
to advise this court and the Office of Lawyer Regulation of his 
compliance with this requirement within 12 months of the date of 
this order.  Failure to comply with this condition may result in 
suspension of Nikola P. Kostich's license to practice law in 
Wisconsin.  
¶26 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Nikola P. Kostich shall pay to the Office of 
Lawyer Regulation the costs of this proceeding.  If the costs 
are not paid within the time specified, and absent a showing to 
this court of an inability to pay the costs within this time, 
the license of Nikola P. Kostich to practice law in Wisconsin 
shall be suspended until further order of the court.  
¶27 DAVID T. PROSSER, J., did not participate. 
 
No.  2009AP287-D.ssa 
 
1 
 
¶28 SHIRLEY 
S. 
ABRAHAMSON, 
C.J.   (dissenting). 
 
I 
respectfully dissent because I disagree with my colleagues 
regarding the appropriate level of discipline to be imposed in 
this matter.  Generally, discipline is progressive in nature.  
See, e.g., In re Disciplinary Proceedings Against Nussberger, 
2006 WI 111, 296 Wis. 2d 47, 719 N.W.2d 501.  This is not 
Attorney Kostich's first encounter with the lawyer disciplinary 
process.  In addition to two prior public reprimands, the 
referee observed that Attorney Kostich "demonstrated a dishonest 
and selfish motive when undertaking the representation" at issue 
here.  For these reasons I would issue an order to show cause 
giving both parties the opportunity to explain why Attorney 
Kostich's license to practice law should not be suspended for a 
period of 60 days. 
¶29 For the foregoing reasons I dissent. 
¶30 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this dissent. 
 
No.  2009AP287-D.ssa 
 
 
 
1