Case Title: Matter of Weinroth

Citation: 100 N.J. 343, 495 A.2d 417

Docket Number: 

State: new-jersey

Court: New Jersey Supreme Court

Date: 1985-08-07T00:00:00Z

Document:
100 N.J. 343 (1985) 495 A.2d 417 IN THE MATTER OF RICHARD K. WEINROTH, AN ATTORNEY AT LAW. The Supreme Court of New Jersey. Argued April 22, 1985. Decided August 7, 1985. Richard J. Engelhardt, Assistant Ethics Counsel, argued the cause for the Office of Attorney Ethics. *344 Adrian M. Foley, Jr., argued the cause for respondent (Connell, Foley & Geiser, attorneys). PER CURIAM. This is an attorney disciplinary case in which the respondent was found to have violated Disciplinary Rule 2-103(C) and Disciplinary Rule 3-102(A). These Rules, respectively, prohibit an attorney from rewarding a lay person who had referred a client to the attorney and from sharing a legal fee with a lay person. A formal ethics committee complaint was filed against respondent on November 22, 1983 charging him with violating these disciplinary rules. Hearings were held by the District XIII Ethics Committee (Committee), which found that respondent violated both Disciplinary Rules. The Committee recommended a public reprimand. On appeal the Disciplinary Review Board (Review Board) agreed with the conclusions of the Committee, also finding that proscribed conduct was established by clear and convincing evidence. A majority of the Review Board concluded that under the totality of the circumstances, public discipline is warranted. We have independently reviewed the record, including the transcript of the proceedings before the Committee and the Review Board, and the Committee's Presentment and the Review Board's Decision and Recommendation. The facts are accurately recapitulated in the Review Board's decision, viz: The critical factual determination in this matter involves the manner in which Hurley assertedly received a portion of respondent's fee. The circumstances surrounding this event are rather complicated and convoluted and bear careful scrutiny. The Review Board's narrative of these facts is accurate, and we again turn to its presentation, viz, The Review Board also mentioned that the Joint Legislative Committee of the State Legislature conducted an ethics hearing concerning Hurley's conduct in this matter and found Hurley guilty of a breach of ethics, which warranted a formal reprimand. The Joint Legislative Committee found as a fact that the $10,000 fee Hurley received was solely for having referred WaWa to respondent's firm and for interceding in the fee dispute. Respondent has been found to have violated Disciplinary Rules providing that: We have independently reviewed the record and are satisfied by clear and convincing evidence that respondent has violated these rules. *348 We agree that respondent violated both Disciplinary Rules when he agreed to return $5,000 to WaWa knowing that this amount was to be paid to Hurley, a lay person, for bringing a client to respondent's firm.[2] As found by the Committee and the Review Board, respondent created in Hurley's mind the thought that Hurley should be compensated for the referral, and respondent first suggested to both Hurley and WaWa that such a payment be made. Ultimately, Hurley received a $10,000 bonus, $5,000 of which came from respondent's firm, albeit indirectly.[3] The Committee concluded that the sole purpose of a request by WaWa to have respondent reduce his legal fee was to assist WaWa in paying Hurley a fee as a reward for recommending respondent's firm. Thus, the evidence is clear and convincing that the anticipated effect of respondent's action was fee-sharing with a lay person. Moreover, the record supports the conclusion that respondent was well aware of the prohibition of directly sharing a fee with a lay person for recommending a client. He advised Hurley that if he were an attorney, he might have been given a referral fee. Aside from respondent's actual subjective intent, the circuitous route of payment to Hurley creates the inference that respondent sought to evade the sanction of the Disciplinary *349 Rules rather than attempt to comply with these ethical strictures. As repeated by the Review Board, according to respondent, among the factors he considered in making this decision, were: Respondent argues that Disciplinary Rule 2-103(C) had not previously been applied in a like situation, that its meaning is uncertain, and that it would be unfair to discipline him for its asserted infraction absent any clear precedent.[4] We disagree. Our precedent has always emphasized that not only impropriety but "even the appearance of impropriety" that casts doubt upon the integrity of the legal process must be avoided. In re Milita, 99 N.J. 336, 342 (1985); see Rules of Professional Conduct, RPC 1.7(c)(2) (New Jersey maintains appearance of impropriety standard). Thus, when it is evident that an informed and concerned person would find the attorney's relationship improper, an attorney must avoid the conduct that creates such an impression. See Ross v. Canino, 93 N.J. 402, 408-09 (1983); In re Professional Ethics Opinion 452, 87 N.J. 45, 50 (1981); In re Advisory Opinion 361, 77 N.J. 199, 206 (1978). The prohibition of the Disciplinary Rule is clear. It simply forbids the splitting or sharing of a legal fee by an attorney with a lay person, particularly when the division of the fee is intended to compensate such a person for recommending or *350 obtaining a client for the attorney. The policy served by this Disciplinary Rule is to ensure that any recommendation made by a non-attorney to a potential client to seek the services of a particular lawyer is made in the client's interest, and not to serve the business impulses of either the lawyer or the person making the referral; it also eliminates any monetary incentive for transfer of control over the handling of legal matters from the attorney to the lay person who is responsible for referring in the client. See Gassman v. State Bar, 18 Cal. 3d 125, 132 Cal. Rptr. 675, 679, 553 P.2d 1147 (1976); In re Lebowitz, 67 A.D.2d 240, 414 N.Y.S.2d 735 (1978); see also Model Code of Professional Responsibility EC 2-8 (1979). The Disciplinary Rule also serves to discourage overzealous or unprofessional solicitation by denying compensation to a lay person who engages in such solicitation on behalf of a lawyer, or even as to another lawyer unless the latter has also rendered legal services for the client and the fee that is shared reflects a fair division of those services. DR 2-107; see In re Bregg, 61 N.J. 476 (1972); In re Introcaso, 26 N.J. 353 (1958); In re Frankel, 20 N.J. 588 (1956). For these policies to succeed, both indirect as well as direct fee-sharing must be banned so as fully to preserve the integrity of attorney-client relations. The plain terms of the Disciplinary Rules and the salutary policy they serve indicate that infractions are to be regarded as serious matters. The fact that respondent did not directly pay Hurley did not relieve him of responsibility. "[A] lawyer may not circumvent a disciplinary rule through actions of another." DR 1-102(A)(2); see, e.g., Matter of Carroll, 124 Ariz. 80, 602 P.2d 461, 466 (1979); In re Berlant, 458 Pa. 439, 328 A.2d 471, 474 (1974). As noted, respondent's behavior must be viewed from the perspective of "an informed and concerned private citizen." In re Opinion No. 415, 81 N.J. 318, 325 (1979); see In re Makowski, 73 N.J. 265, 270 (1977). We conclude that respondent has violated Disciplinary Rule 2-103(C) and 3-102(A). We respect that respondent's career has been without blemish and that he has devoted valued *351 service both to the profession and other civic undertakings. Nonetheless, we agree with the Review Board that in this case, discipline in the form of a public reprimand is appropriate and is hereby imposed. Respondent shall also pay for the costs of transcripts and related administrative costs. For reprimand Justices HANDLER, POLLOCK, O'HERN, GARIBALDI and STEIN 5. Opposed None. [1] These Rules have been superseded by and subsumed in the recently adopted Rules of Professional Conduct, which in pertinent part provide: 5.4(a) A lawyer or law firm shall not share legal fees with a non-lawyer. The new Rule repeats Disciplinary Rule 3-102(A) but has not continued the language of Disciplinary Rule 2-103(C), although commentary to the Rule of Professional Conduct 5.4 suggests that both Disciplinary Rules 2-103(C) and 3-102(A) are the source for the new Rule. [2] The Committee concluded that respondent's December 9, 1982 letter was evidence of a consciousness of wrongdoing and an attempt to disguise the substance of the transactions. It was, according to the Committee, strong evidence that respondent was conscious that the transactions were unethical. The December 9, 1982 letter represents a transparent attempt to create the possibility that (1) no funds would ever pass from respondent's firm to WaWa in the event that $5,000 of free legal services were provided or (2) even if funds were ultimately returned to WaWa from respondent's firm, the payment would not be suspiciously contemporaneous with WaWa's $10,000 payment to Senator Hurley. [3] The Committee concluded that even if no payment had been made, Disciplinary Rule 2-103(C) was violated, because respondent's direct intercession with his client on Hurley's behalf itself was giving something of value to Hurley. The Review Board disagreed, finding that the payment for the referral constituted an indispensable element of the ethical violation. [4] Respondent refers to an ethics opinion to suggest that the rule is inapposite because here the client, WaWa, paid a fee for the referral. See Committee of Professional Ethics of New York County Lawyers Association, Opinion No. 113 (1917). That matter, however, may be distinguished because it did not involve the formation of a lawyer-client relationship; it involved only the payment of compensation to private investigators who had located a judgment debtor and who, prior to the attorney's involvement, had been hired on a contingency-fee basis to locate the debtor.