Opinion ID: 835498
Heading Depth: 2
Heading Rank: 2

Heading: Second Cause of Complaint: DR 1-102(A)(3) and DR 2-106(A)

Text: In its second cause of complaint, the Bar alleged that the accused (1) engaged in conduct involving dishonesty and misrepresentation, in violation of DR 1-102(A)(3); [12] and (2) charged an illegal or clearly excessive fee, in violation of DR 2-106(A). [13] The trial panel determined that the accused made misrepresentations in violation of DR 1-102(A)(3) in the billing statement that he prepared and sent to Anderson. The trial panel reached that conclusion based on a number of errors in the billing statement, some of which we describe below. The trial panel found that the accused had not performed some of the services identified in the bill that he had sent to Anderson, but also that the accused had performed other services for Anderson that were not identified in the bill. The trial panel stated: [The accused] prepared the billing knowing that he could not substantiate or verify all time charged. The trial panel finds that the [a]ccused acted recklessly in preparing his billing. There were misrepresentations in the billing that a reasonable person would know did not accurately reflect the work actually performed on Anderson's behalf. This lack of attention to detail, and failure to insure that documents related to the case were accurately prepared is similar to the lack of attention to detail that the [a]ccused has given to his monthly lawyer trust account statements   . The trial panel rejected the Bar's charge that the accused had violated DR 2-106(A), which prohibits charging an excessive fee. The trial panel found that time charged on January 10, 2001, April 13, 2001, and July 1[2], 2001, was not performed for the client and therefore was excessive, but nevertheless concluded that the total fee charged was not excessive, because, as noted, the accused also performed work that was not reflected in the bill.
The accused argues that the trial panel erred in finding that he violated DR 1-102(A)(3) because his conduct constituted nothing more than unintentional errors in the billing. Therefore, the accused argues, the alleged misrepresentation and dishonesty were not committed knowingly, which is a prerequisite for a violation of DR 1-102(A)(3). The Bar responds that the accused knowingly and intentionally engaged in misrepresentation and dishonesty by billing for services that he did not perform or that did not occur and by inflating the time for services rendered (or taking excessive time to perform those services). Evaluating an allegation of affirmative misrepresentation under DR 1-102(A)(3) involves a two-part inquiry: (1) whether the accused lawyer knew that the lawyer's statement was a misrepresentation  i.e., the misrepresentation must have been committed knowingly; and (2) whether the lawyer knew that it was material. In re Claussen, 331 Or. 252, 261, 14 P.3d 586 (2000). A material misrepresentation involves information that, if the decision-maker had known of it, would or could have influenced the decision-making process significantly. Id. The Bar also may prove a violation of DR 1-102(A)(3) by demonstrating that the accused lawyer engaged in conduct involving dishonesty. In contrast to what is required to prove an affirmative misrepresentation, the Bar may prove dishonest conduct without proving that the accused knowingly made affirmative false statements. See In re Carpenter, 337 Or. 226, 233-34, 95 P.3d 203 (2004) (describing differences in evidence required to prove misrepresentation and dishonesty under DR 1-102(A)(3)). Dishonest conduct is conduct that indicates a disposition to lie, cheat, or defraud; untrustworthiness; or a lack of integrity. Carpenter, 337 Or. at 234, 95 P.3d 203 (quoting In re Dugger, 334 Or. 602, 609, 54 P.3d 595 (2002)). Although proving that a lawyer acted dishonestly does not require evidence that the lawyer intended to deceive, it does require a mental state of knowledge  that is, that the accused lawyer knew that his conduct was culpable in some respect. See Carpenter, 337 Or. at 235, 95 P.3d 203 ([D]ishonesty requires a mental state of knowledge or intent. (Emphasis in original.)). We note first that the trial panel did not find that the errors in the accused's billing had been knowing or intentional. Rather, the trial panel concluded that the accused had acted recklessly and that he had prepared a bill knowing that he could not substantiate or verify all of the entries on the bill with contemporaneous records. When a lawyer prepares a bill that is inaccurate in one or more respects, as the accused admits the bill prepared for Anderson was, that conduct may breach a contract between the lawyer and the client or it may provide a basis for the client's refusal to pay disputed charges on the bill. However, unless the Bar proves by clear and convincing evidence that the accused lawyer knowingly or intentionally prepared a bill that contained material misrepresentations or was the product of the lawyer's dishonest conduct, the lawyer has not violated DR 1-102(A)(3). We now turn to the specifics of the bill at issue here. As noted above, after Anderson requested a bill, the accused directed his assistant to prepare a bill based on the available documentation, which she did. The Bar identifies three aspects of the bill that it asserts constitute misrepresentation or dishonesty: billing for services that were not performed; billing for services for which the accused was not authorized to charge; and inflated or excessive time for certain activities. As noted previously, the billing statement includes entries for a telephone conference between the accused and husband on January 10, 2001, and another conference between the accused and husband on April 13, 2001. It is undisputed that the accused did not confer with husband on either of those dates. The accused admits that those entries contained errors, but asserts that the conferences to which they referred actually occurred and were conferences either with husband's lawyer or with Anderson and may have occurred on other dates. Having reviewed the record, we find that the Bar has not proved by clear and convincing evidence that the accused knew, at the time that he sent the bill, that those entries were incorrect. Neither has the Bar demonstrated that those entries did not reflect conferences that the accused actually had with husband's lawyer or with Anderson, albeit on different days than indicated in the bill. In other words, on this record, the accused's explanation of the errors in the bill is plausible. That conclusion is supported by the trial panel's determination that the accused acted recklessly and not intentionally or knowingly with respect to the errors in the bill and the trial panel's factual finding that the accused performed work on Anderson's dissolution that was not reflected in the time entries in the bill. Moreover, for a misrepresentation to violate DR 1-102(A)(3), it must be material. An entry on a bill that accurately reflects work performed for a client, but misstates the name of a person the accused lawyer talked to or the particular day the work was performed, ordinarily will not be material. [14] The Bar also argues that the accused violated DR 1-102(A)(3) by billing Anderson for certain work that accused's assistant performed and billing for that work at the same rate that the accused billed for his own time. The Bar asserts that the fee agreement did not permit the accused to bill for his secretary's time. We agree with the Bar's assertion: The fee agreement is silent as to whether the accused could charge Anderson for work that his assistant performed on Anderson's behalf. In the absence of such an agreement, the accused was not entitled to bill for that activity. The accused testified, however, that he understood that the fee agreement did not permit him to bill for his assistant's time and that he did not intend to do so. He states that the entry, which we have quoted previously, does not necessarily indicate that he was billing for her time and that he billed only for his own time. He further testified that he had worked on Anderson's case on that date. While the accused's explanations leave room for doubt and the trial panel was plainly correct in concluding that the accused acted recklessly in preparing his billings, we cannot say that the record in this case shows by clear and convincing evidence that the accused knowingly made a material misrepresentation when he included the July 12, 2001, entry in the bill. The Bar has not proved a violation of DR 1-102(A)(3) in that respect. Finally, the Bar asserts that the accused violated DR 1-102(A)(3) with respect to a billing entry for November 30, 2000. The accused billed 3.3 hours on November 28, 2000, for preparing Anderson's dissolution petition and related documents, which he filed on that day. He then billed 1.8 hours on November 30 for filing an amended petition, which was identical to the November 28 petition except that it included husband's Social Security Number and the date of the marriage, which had been omitted from the earlier petition. The record also indicates that other papers were prepared and filed with the court on November 30, including a motion for a temporary restraining order, but those documents were not mentioned in the accused's billing entry for that date. The accused was unable to recall what work he had performed for Anderson on November 30. The trial panel agreed with the Bar that the accused had violated DR 1-102(A)(3) with respect to the November 30 billing entry. The trial panel stated that the accused was not entitled to bill Anderson for time spent correcting the accused's own mistakes. We disagree. Again, the Bar and the trial panel appear to have confused what may be a contract dispute between the accused and Anderson with the stricter standards for proving misrepresentation or dishonest conduct. Whether the accused could charge Anderson for correcting the omissions in the initial petition  even assuming that those omissions demonstrated some error on the accused's part  is a matter of the agreement between the accused and Anderson. But the mere fact that he billed her for preparing and filing an amended petition that included required information not included in the initial petition does not demonstrate any misrepresentation; neither does it constitute dishonest conduct. Similarly, the record does not contain clear and convincing evidence that the accused's billing of 1.8 hours for work performed on November 30, 2000, was a material, false statement or constituted dishonest conduct. We hold that the Bar has not proved by clear and convincing evidence that the accused knowingly engaged in conduct involving misrepresentation of dishonesty, in violation of DR 1-102(A)(3).
As noted, the trial panel concluded that the accused had not violated DR 2-106(A) because the total fee that he had charged to Anderson had not been excessive, even if individual billing entries may have been excessive. The Bar argues that the trial panel's statement of the legal standard is incorrect and that the accused charged an excessive fee in violation of the rule because he billed for work that he did not do, billed for his assistant's work when the fee agreement did not permit that, and billed for inflated or excessive time. We agree with the Bar that the trial panel misstated the appropriate legal standard. This court has held that a particular charge in a bill may be excessive and in violation of DR 2-106(A), even if the fee as a whole is reasonable. See In re Paulson, 335 Or. 436, 440-41, 71 P.3d 60 (2003) (concluding that accused lawyer who charged fee that client had no obligation to pay had charged excessive fee even though excessive charge appeared within bill containing other reasonable charges). However, we disagree with the Bar that the record here proves by clear and convincing evidence that the accused charged an excessive fee. We turn to the specific charges at issue. The Bar argues that the charges for the conferences on January 10, 2001, and April 13, 2001, were clearly excessive because those conferences did not take place on those days or with the individual identified in the billing entries. As discussed above, the evidence in the record supports the accused's position that those entries were simple mistakes and that around those specific dates the accused did, in fact, have conferences with husband's lawyer (although not with husband, as the entries indicated) or with Anderson. Those charges are not clearly excessive within the meaning of DR 2-106(A). The Bar also argues that the accused violated the rule in charging Anderson for certain services rendered by the accused's assistant. We reject that argument for the reasons previously given. Finally, the Bar argues that the accused inflated his time for certain work, specifically, the 1.8 hours that he spent on November 30, 2000, preparing the amended dissolution petition. As discussed above, however, the trial panel found that the accused had prepared other documents on behalf of Anderson that day that he did not identify in the bill. In Paulson, this court stated, The test for whether a fee is clearly excessive is whether, `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.' 335 Or. at 440, 71 P.3d 60 (quoting DR 2-106(B)). The evidence here falls short of that standard. The accused did not violate DR 2-106(A).