OPINIONS OF THE SUPREME COURT OF OHIO 

 

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Cincinnati Bar Association v. Schultz et al. 

[Cite as Cincinnati Bar Assn. v. Schultz (1994), 

Ohio St.3d. .] 

Attorneys at law -- Misconduct -- Two-year suspension with one 

 year suspended on condition that attorney satisfactorily 

 complete one year of supervised probation -- Charging an 

 illegal or excessive fee -- Failure to return unearned fee 

 -- Withdrawal from representation without taking 

 reasonable steps to avoid foreseeable prejudice to client 

 -- Attempting to limit liability to client for malpractice 

 -- Representation of clients whose interests conflict -- 

 Accepting compensation from source other than client. 

 (No. 94-1796 -- Submitted October 24, 1994 -- Decided 

December 30, 1994.) 

 On Certified Report by the Board of Commissioners on 

Grievances and Discipline of the Supreme Court, No. 93-25. 

 In a complaint filed June 21, 1993, relator, Cincinnati 

Bar Association, charged respondents, D.C. Schultz Co., L.P.A. 

("D.C. Schultz"), and its majority shareholder, Donna C. 

Schultz of Cincinnati, Ohio, Attorney Registration No. 0022091 

("Schultz"), with two counts of professional misconduct. 

Respondents answered, and the matter was submitted to a panel 

of the Board of Commissioners on Grievances and Discipline of 

the Supreme Court on stipulated facts and exhibits and 

Schultz's affidavit. 

 The first count of the complaint alleged a variety of 

misconduct in D.C. Schultz's representation of six different 

clients from 1989 through 1992. The evidence established that 

three of these clients, Jennifer Nichols, Mary Ann Bill, and 

Dr. Roland V. Boike, were required by the firm's policy to sign 

contingent-fee agreements that provided for an hourly rate 

charge if the clients discharged the firm. The panel found 

that this arrangement was contrary to the shared risk of 

nonrecovery a contingent-fee agreement represents. Moreover, 

the hourly rate fee did not account for factors in DR 2-106(B) 
1 that determine the reasonable value of a discharged, 

contingent-fee attorney's services and are the measure for such 

an attorney's recovery in quantum meruit. See Fox & Associates 

Co., L.P.A. v. Purdon (1989), 44 Ohio St.3d 69, 541 N.E.2d 

448, syllabus. The panel concluded that this practice violated 

DR 2-106(A) (charging an illegal or excessive fee). 

 Also pursuant to its policy, D.C. Schultz charged the 

other three clients, Diana Lawson, Jennifer Werner, and Cindy 

Lynn Allen, nonrefundable retainer/engagement fees in the 

amounts of $500, $530, and $850, respectively. According to 

the agreements they signed, these amounts were to be credited 

toward future charges, but were also considered "earned upon 

receipt." The panel determined that this practice enabled D.C. 

Schultz to retain fees for which the client received no 

benefit. Lawson and Allen were further required to sign 

undated entries consenting to D.C. Schultz's withdrawal, which 

the firm's support staff used as leverage when Lawson and Allen 

did not promptly pay charges above the retainer/engagement fee 

amounts. The panel concluded that these two aspects of D.C. 

Schultz's policy violated DR 2-106(A) and 2-110(A)(3) (failure 

to return unearned fee). Moreover, because D.C. Schultz either 

used or attempted to use the nonconcomitant consent forms to 

withdraw its representation when Lawson and Allen did not 

rectify their delinquency, the panel found the firm in 

violation of DR 2-110(A)(2) (withdrawal from representation 

without taking reasonable steps to avoid forseeable prejudice 

to client). 

 The evidence further established that D.C. Schultz 

committed misconduct when Allen decided to change attorneys. 

Allen requested release of her file to an attorney who had been 

assigned her case while he was employed by D.C. Schultz and who 

had later left the firm. Schultz personally instructed 

employees of D.C. Schultz not to forward the file until Allen 

signed a confidential release of all claims against the firm. 

The panel found that this instruction violated DR 6-102(A) 

(attempting to limit liability to client for malpractice). 

 Finally, the evidence in support of Count I established 

that, per D.C. Schultz policy, the Nichols and Bill 

contingent-fee agreements authorized the firm to pay 

subrogation claims from any settlement or judgment obtained on 

the clients' behalf and to receive a fee from the subrogee for 

this service. D.C. Schultz did not act on this provision in 

either contract, but the arrangement necessarily promised to 

reduce the clients' shares of any proceeds. Accordingly, the 

panel found violations of DR 5-105(A) and (C) (representation 

of clients whose interests conflict) and 5-1-7(A)(1) (accepting 

compensation from source other than client). 

 Count II of the complaint charged, in essence, that 

Schultz should be held professionally responsible for the 

misconduct committed by attorneys employed by D.C. Schultz. 

The panel agreed based on Disciplinary Counsel v. Ball (1993), 

67 Ohio St.3d 401, 618 N.E.2d 159, in which disciplinary 

measures were imposed due to a lawyer's careless delegation of 

administrative probate matters to an untrustworthy employee. 

 Before recommending a sanction for the identified 

misconduct, the panel considered that Schultz had moved 

out-of-state, that she was no longer practicing law, and that 
D.C. Schultz had ceased practicing law, referred its clients, 

and sold its other assets. The panel then rejected the 

recommendation jointly submitted by the parties, which included 

a one-year suspension from the practice of law, to be followed 

by a one-year supervised probation period if Schultz were 

subsequently readmitted to the Ohio Bar. The panel modified 

this suggestion and recommended that Schultz be suspended from 

the practice of law for two years, with the second year of this 

period to be suspended on the condition that she serve one-year 

under supervised probation. The panel further recommended that 

the supervised probation period focus on the appropriate 

delegation of duties to support staff, as well as proper 

billing practices, fee agreements, and release of client files 

upon dismissal. The board adopted the panel's findings and its 

recommendation. 

 

 Gates T. Richards, Thomas M. Tepe, Naomi Dallob and E. 

Hanlin Bavely, for relator. 

 Santen & Hughes and William E. Santen; Helmer, Lugbill, 

Martins & Neff and James B. Helmer, Jr., for respondents. 

 Per Curiam. We have reviewed the record submitted by the 

parties and concur in the board's findings of misconduct and 

recommended sanction. Our decision to hold the majority 

shareholder of a legal professional association vicariously 

responsible for the disciplinary offenses of attorneys employed 

by the association is specifically authorized by Gov.Bar.R. 

III(3)(C), which states: 

 "A breach of * * * [any duty imposed by the Supreme Court 

Rules for the Government of the Bar or the Code of Professional 

Responsibility] on the part of the [legal professional] 

association shall be considered a breach upon the part of the 

individual participating in the breach and the shareholder, 

director, and officer having knowledge of the breach." 

 The misconduct committed in this case resulted either from 

policies imposed by D.C. Schultz's majority shareholder or from 

her specific instruction. Donna C. Schultz is therefore 

suspended from the practice of law in Ohio for two years; 

however, one year of that period is suspended on the condition 

that she satisfactorily complete one year of supervised 

probation in accordance with the guidelines stated by the 

panel's report. Costs taxed to respondent Schultz. 

 Judgment accordingly. 

 Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E. 

Sweeney and Pfeifer, JJ., concur. 

 

1 DR 2-106(B) states: 

 "A fee is clearly excessive when, after a review of the 

facts, a lawyer of ordinary prudence would be left with a 

definite and firm conviction that the fee is in excess of a 

reasonable fee. Factors to be considered as guides in 

determining the reasonableness of a fee include the following: 

 "(1) The time and labor required, the novelty and 

difficulty of the questions involved, and the skill requisite 

to perform the legal service properly. 

 "(2) The liklihood, if apparent to the client, that 

acceptance of the particular employment will preclude other 
employment by the lawyer. 

 "(3) The fee customarily charged in the locality for 

similar legal services. 

 "(4) The amount involved and the results obtained. 

 "(5) The time limitations imposed by the client or by the 

circumstances. 

 "(6) The nature and length of the professional 

relationship with the client. 

 "(7) The experience, reputation, and ability of the 

lawyer or lawyers performing the services. 

 "(8) Whether the fee is fixed or contingent."