Title: Disciplinary Counsel v. Kramer

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Disciplinary Counsel v. Kramer, 113 Ohio St.3d 455, 2007-Ohio-2340.] 
 
 
DISCIPLINARY COUNSEL v. KRAMER. 
[Cite as Disciplinary Counsel v. Kramer, 113 Ohio St.3d 455, 2007-Ohio-2340.] 
Attorneys at law—Misconduct——Improperly requesting others to recommend a 
lawyer’s services—Aiding the unauthorized practice of law—Stayed 
suspension. 
(No. 2006-2332 – Submitted February 14, 2007 — Decided May 30, 2007.) 
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and 
Discipline of the Supreme Court, No. 06-008. 
__________________ 
 
Per Curiam. 
{¶ 1} This court admitted respondent, Lawrence Joseph Kramer Jr. of 
Cleveland Heights, Ohio, Attorney Registration No. 0076893, to the practice of 
law in Ohio in 2003.  The Board of Commissioners on Grievances and Discipline 
now recommends that we suspend respondent’s license to practice for six months, 
staying the entire suspension on conditions, because he committed professional 
misconduct while associated with a company that sold insurance and services 
related to living trusts to his clients.  On review, we find that a stayed six-month 
suspension is appropriate for respondent’s violations of the Code of Professional 
Responsibility. 
{¶ 2} Relator, Disciplinary Counsel, charged that respondent’s affiliation 
with CLA USA, Inc. (“CLA”), a Texas corporation in business to market and sell 
insurance, violated DR 2-103(C) (prohibiting a lawyer from engaging a person or 
organization to promote the lawyer’s professional services, except to the extent  
permitted by a lawyer referral service), 3-101(A) (prohibiting a lawyer from 
aiding a nonlawyer in the unauthorized practice of law), and 5-107(B) 
(prohibiting a lawyer from permitting a person who recommends, employs, or 
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pays him or her to provide legal services for another to control his professional 
judgment).  A three-member panel of board members heard the cause, including 
the parties’ comprehensive stipulations, found violations of DR 2-103(C) and 3-
101(A), and recommended that respondent receive a six-month stayed suspension.  
The board adopted the panel’s findings of misconduct and recommendation. 
{¶ 3} Neither party objects to the board’s report. 
Misconduct 
{¶ 4} A lawyer must exercise professional judgment within the bounds 
of the law and “solely for the benefit of his client and free of compromising 
influences and loyalties.”  EC 5-1.  But we have repeatedly seen lawyers run afoul 
of ethical standards by participating in sales transactions through which 
companies offer living-trust agreements, usually targeting older customers, and 
then profit by also selling insurance.  See, e.g., Disciplinary Counsel v. Wheatley, 
107 Ohio St.3d 224, 2005-Ohio-6266, 837 N.E.2d 1188; Columbus Bar Assn. v. 
Fishman, 98 Ohio St.3d 172, 2002-Ohio-7086, 781 N.E.2d 204; Columbus Bar 
Assn. v. Moreland, 97 Ohio St.3d 492, 2002-Ohio-6726, 780 N.E.2d 579; and 
Cincinnati Bar Assn. v. Kathman (2001), 92 Ohio St.3d 92, 748 N.E.2d 1091.  
These affiliations necessarily dilute the independence of a lawyer’s counsel 
because, from the earliest possible moment, the company’s sales objectives, not 
the client’s individual interests, drive the outcome of the transaction.  Id. at 97-98;  
Fishman at ¶ 14. 
{¶ 5} Respondent’s affiliation with CLA, which conducted business in 
much the same way as did the marketing companies in the cited cases, suffered 
from some of the same infirmities.  CLA first solicited potential customers though 
mass mailings and group seminars, touting the benefits of establishing a living 
trust.  Nonlawyer-agents of CLA then arranged follow-up appointments to obtain 
customers’ financial information and to finalize sales, execute the sales contracts, 
and collect the fees for CLA’s services.  If a customer did not have a lawyer, the 
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CLA agent also provided a list of licensed Ohio lawyers available for referral, and 
the customer-turned-client typically signed an agreement to retain one and wrote 
the lawyer a check for a legal fee.  After the lawyer completed the documents to 
open the trust, an unlicensed CLA agent arranged a meeting for the customer-
client to execute the documents.  At this point, the agent advised the customer 
how to fund the trusts, providing financial and estate-planning advice and 
recommending the purchase of various insurance contracts for which the agent 
would be paid a commission. 
{¶ 6} From October 2003 to July 2004, before and after his admission to 
the Ohio bar, respondent worked for CLA, delivering legal documents to CLA’s 
customers for execution and selling them insurance.  He also performed annual 
reviews of CLA’s customers, checking each year to make sure customers’ trusts 
were properly funded and to see whether he could sell them more insurance.  
CLA paid respondent $75 for a meeting for initial execution of trust documents, 
$25 per annual review, and commissions on the insurance that he sold. 
{¶ 7} In January 2004, CLA hired respondent as a regional manager.  As 
manager, respondent supervised and trained CLA agents to deliver documents for 
execution and perform annual reviews in seven states, including Ohio.  CLA paid 
respondent a salary and a percentage of commissions earned on insurance sales.  
Respondent left CLA in July 2004 to open his own legal practice. 
{¶ 8} Respondent soon started accepting CLA client referrals in his 
practice.  He provided the company a form letter with his biographical 
information and a retainer agreement for CLA agents to give interested customers.  
In accordance with the CLA referral process, the CLA agent collected $350 
checks from each referred customer and then sent respondent the checks and the 
signed retainer agreements.  Beginning in July 2004, respondent received packets 
each week containing CLA retainer checks. 
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{¶ 9} After a referral, respondent personally accessed his client’s 
financial information from CLA’s website and prepared typical documents, 
including  revocable living trusts, pour-over wills, various deeds, durable powers 
of attorney, healthcare powers of attorney, and guardianship declarations.  
Respondent then contacted the client, generally by telephone, to initially review 
his work.  By the time respondent finally consulted his client, however, CLA 
agents had already convinced the client to buy, and the client had already paid for, 
services to be generated by the anticipated living trust. 
{¶ 10} Respondent returned completed trust documents to CLA to arrange 
for his clients to sign.  Respondent fully realized that in obtaining the client’s 
signature, a CLA agent would also present an insurance sales pitch, and consistent 
with his previous experience as a CLA agent, respondent encouraged this 
solicitation.  Respondent never attended any of the meetings at which his clients 
executed the legal documents that he had prepared, nor did he routinely follow up 
with the clients afterward. 
{¶ 11} Respondent continued to receive referrals from CLA until 
September 2005, when he ended their affiliation.  Until then, respondent’s 
practice had consisted mainly of CLA referrals.  Between July 2004 and the time 
of his October 17, 2005 deposition, respondent had had 251 clients, 221 of which 
CLA had referred, and he drew roughly 72 percent of his income from these 
referrals.  Respondent prepared living trusts for the “vast majority” of these 
clients, and afterward, only one of them ever retained him to do other work. 
DR 2-103(C)—Promotional Improprieties 
{¶ 12} As the board found, respondent provided form letters and retainer 
agreements so that CLA agents could recommend his services to clients with 
whom he had no other connection.  For example, Margaret Chamlis reported that 
she had no contact at all with respondent after paying a CLA agent $2,145 for 
setting up a living trust, signing one of respondent’s retainer contracts, and 
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writing respondent a $350 check.  Chamlis ultimately reconsidered her decision 
and received a full refund from CLA; however, she still filed a grievance, and 
only then did respondent learn that she had been a “client.” 
{¶ 13} We have specifically disapproved of this practice.  In Wheatley, 
107 Ohio St.3d 224, 2005-Ohio-6266, 837 N.E.2d 1188, ¶ 31, quoting Fishman, 
98 Ohio St.3d 172, 2002-Ohio-7086, 781 N.E.2d 204, ¶ 12, we admonished: 
{¶ 14} “ ‘Respondent unquestionably violated DR 2-103(C).  He 
contracted with an organization that independently targeted and solicited 
prospects for his representation, dispatched personnel to offer that representation, 
and then paid itself, respondent, and the personnel for their services.  Despite 
respondent's arguments to the contrary, this was not a lawyer's accepting 
employment in response to his own advertising * * *.’ ” 
{¶ 15} We therefore agree that respondent violated DR 2-103(C). 
DR 3-101(A)—Aiding the Unauthorized Practice of Law 
{¶ 16} As the board found from Chamlis’s sworn statement, the 
unlicensed CLA agent who visited her described the probate process, estate tax 
ramifications, and strategies for avoiding probate, all with the goal of persuading 
her to establish a living trust and use CLA’s services to do it.  The agent’s written 
materials  provided specific advice as to the “benefits of a living trust” and 
answers to “most often asked questions,” including how the probate process 
works, the disadvantages of probate, how to legally avoid probate, and how a 
living trust can be used to avoid estate and inheritance taxes.  The sales 
presentations focused on living trusts because nearly every CLA service depended 
on the customer’s having a living trust. 
{¶ 17} In Cleveland Bar Assn. v. Sharp Estate Serv., 107 Ohio St.3d 219, 
2005-Ohio-6267, 837 N.E.2d 1183, ¶ 8, we resolved that sales agents who 
explained the legal consequences of specific decisions relating to living trusts or 
estate plans had practiced law without a license, inasmuch as the agents had 
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advised other persons how to best secure their legal rights. Accord Fishman, 98 
Ohio St.3d 172, 2002-Ohio-7086, 781 N.E.2d 204, ¶ 15, and Kathman, 92 Ohio 
St.3d 92, 96, 748 N.E.2d 1091.  Thus, even respondent conceded that if a CLA 
agent had advised Chamlis that she needed a living trust, the agent had engaged in 
the unauthorized practiced law. 
{¶ 18} According to Karen Hamilton, another former CLA referral 
attorney, the CLA agents also had little if any professional supervision during 
their presentations.  CLA instructed agents to ask a referral lawyer to answer a 
customer’s legal questions, and Hamilton and respondent had each received calls 
on occasion from agents making a sales pitch.  Both attorneys, however, 
confirmed that the agents called infrequently, and Hamilton reported that the sales 
generally took place without any attorney’s counsel. 
{¶ 19} Respondent did not fundamentally disagree with this assessment of 
the CLA customer’s experience.  In his defense, however, respondent recounted 
the work that he personally performed on a client’s behalf – he actually prepared 
all legal documents for each client, and he consulted with each client about the 
significance of the documents in 45- to 90-minute sessions.  Respondent also cites 
the times that he dissuaded clients from establishing living trusts because the 
arrangement did not serve the clients’ financial interests. 
{¶ 20} That respondent in reality exercised his independent professional 
judgment and expertise for his clients’ protection distinguishes this case from 
Kathman, 92 Ohio St.3d at 94, 748 N.E.2d 1091, in which the lawyer merely 
facilitated the process through which lay personnel filled in the blanks on 
boilerplate forms made available by the marketing company.  Respondent’s work 
also distinguishes his case from Fishman, 98 Ohio St.3d 172, 2002-Ohio-7086, 
781 N.E.2d 204, ¶ 7, in which the lawyer superficially reviewed lay personnel in 
performing the same ministerial function.  We therefore agree with the board that 
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respondent did not violate DR 5-107(B) by allowing his association with CLA to 
influence his judgment on behalf of his clients. 
{¶ 21} But respondent also unquestionably aided CLA in the unauthorized 
practice of law.  By accepting referrals from lay persons who had already 
convinced the client to purchase a living trust, respondent entered the relationship 
with his client too late.  As we explained in Kathman, 92 Ohio St.3d at 97, 748 
N.E.2d 1091: 
{¶ 22} “[T]he nonattorney has already given legal advice to the client 
regarding the client's legal matters, has gathered important information, and has 
recommended and sold a trust instrument. * * * In the eyes of the public, the 
review attorney lends credibility and a facade of legality to the product the 
nonattorney offers, but the attorney does not make the critical decisions necessary 
for the creation of the trust or provide disinterested advice. * * * By the time the 
attorney enters the transaction, the unauthorized practice of law has already 
occurred and anything the attorney does thereafter aids the prohibited conduct.” 
{¶ 23} We therefore also agree that respondent violated DR 3-101(A). 
Sanction 
{¶ 24} Respondent now understands the impropriety of his association 
with CLA.  Moreover, respondent has no prior disciplinary violations, he has 
cooperated fully in these disciplinary proceedings, and he has established his good 
character and reputation apart from his affiliation with CLA, all of which militate 
against a severe sanction.  See Section 10(B)(2)(a), (d), and (e) of the Rules and 
Regulations Governing Procedure on Complaints and Hearings Before the Board 
of Commissioners on Grievances and Discipline.  Taking these factors into 
account, the board recommended a six-month suspension of respondent’s license, 
all stayed. 
{¶ 25} The recommended sanction is within the range of sanctions we 
have previously imposed for similar misconduct, see, e.g., Moreland, 97 Ohio 
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St.3d 492, 2002-Ohio-6726, 780 N.E.2d 579 (public reprimand), Wheatley, 107 
Ohio St.3d 224, 2005-Ohio-6266, 837 N.E.2d 1188 (six-month actual 
suspension), and Kathman, 92 Ohio St.3d 92, 748 N.E.2d 1091 (six-month actual 
suspension), and respondent has not objected to it.  We therefore suspend 
respondent from the practice of law in Ohio for six months, but stay the 
suspension on the condition that respondent commits no further misconduct.  If 
respondent violates the condition of the stay, the stay will be lifted and respondent 
shall serve the entire six-month suspension. 
{¶ 26} Costs are taxed to respondent. 
Judgment accordingly. 
MOYER, C.J., LUNDBERG STRATTON, O’CONNOR, O’DONNELL, LANZINGER 
and CUPP, JJ., concur. 
PFEIFER, J., dissents and would suspend respondent from the practice of 
law in Ohio for six months. 
__________________ 
 
Jonathan E. Coughlan, Disciplinary Counsel, and Brian E. Shinn, 
Assistant Disciplinary Counsel, for relator. 
 
Kim Roberts & Steiger, L.L.C., William E. Steiger II, and Jacqueline I. 
Roberts, for respondent. 
______________________