Opinion ID: 2072414
Heading Depth: 1
Heading Rank: 1

Heading: client n.c.counts i, ii and iii

Text: [3] ¶ 6. In March 1998, N.C. retained Attorney Michael D. Mandelman to represent her in a legal malpractice action against the attorney who had previously represented her in a child custody proceeding. In June 1998, Mandelman filed a lawsuit against that attorney in Walworth County circuit court. ¶ 7. On March 1, 1999, Mandelman and Reitz formed a law partnership, Reitz & Mandelman, LLC. Reitz had extensive experience preparing cases for trial but had limited trial experience; consequently, his role in the new firm was to prepare cases for trial and Mandelman was to handle settlement negotiations, depositions, and trials. ¶ 8. On March 22, 1999, N.C. wrote to Mandelman seeking information about the status of her malpractice action. N.C. noted that she had not heard from Mandelman and wrote that she wanted to be kept up-to-date. N.C. also reminded Mandelman that he had earlier informed her that depositions were soon to start, but she complained that so far nothing had been done. ¶ 9. On April 15, 1999, Reitz wrote to N.C. advising her that he would now be her attorney; Reitz explained that he would consult with Mandelman who would still handle court appearances and litigation. ¶ 10. On May 11, 1999, the attorney representing the defendant in the malpractice action forwarded interrogatories and a request for production of documents to Reitz to be completed within 30 days. ¶ 11. After three months elapsed without complete responses to the interrogatories, the attorney representing the malpractice defendant moved to dismiss the action. After a hearing, the circuit court denied that motion to dismiss but sanctioned N.C. for discovery violations and ordered her to pay $300 to the defendant's attorney. The circuit court also ordered N.C. to provide the defense attorney with full and fair responses to his discovery requests, and limited the documents upon which N.C. could rely or introduce as evidence at the malpractice trial. ¶ 12. Subsequently, in October 1999, after additional correspondence between Reitz and the defense attorney, Reitz suggested the names of five expert witnesses whom he might call on N.C.'s behalf at trial. He asserted in his cover letter to the defense attorney that the list was not as thorough in descriptions as he would like, and that it would be narrowed within the next week. Reitz subsequently told N.C. that the firm would pay the $300 sanction that had been imposed against her; he also informed her that one of the experts he had named was refusing to testify voluntarily. ¶ 13. N.C. told Reitz that she did not want to settle her case and inquired about depositions of the experts. She, along with the defense attorney, questioned the lack of clarity regarding the experts Reitz actually planned on calling. On November 11, 1999, N.C. wrote to Reitz asking for a list of the experts he had named on her behalf. ¶ 14. On November 15, 1999, Reitz filed a motion seeking to withdraw as N.C.'s counsel on the ground that N.C. had not paid some of his legal bills; he also asserted that there had been a communication breakdown between him and N.C. The defense attorney objected to Reitz's late withdrawal request. The circuit court subsequently denied Reitz's motion to withdraw as N.C.'s counsel. ¶ 15. Defense counsel thereafter wrote to Reitz setting a deadline for Reitz to provide a list of experts, the responses to the interrogatories, and the experts' reports which were then two months overdue. Reitz did not respond to that letter. The defense attorney then moved to dismiss N.C.'s legal malpractice action for failure to comply with discovery orders and to provide necessary expert opinions to support her malpractice claim. The hearing on that motion to dismiss was scheduled for January 18, 2000. ¶ 16. Reitz then scheduled the malpractice defendant's deposition for January 14, 2000 at the Reitz & Mandelman offices. Immediately before that deposition was scheduled to begin, Reitz met with N.C. at his office and had her sign the following release he had just drafted: RELEASE OF MICHAEL MANDELMAN I, [N.C.], understand that Michael Mandelman has not recently been working on my case against [the defendant] and has agreed to do the deposition of [the defendant] January 14, 2000, only on condition that this release, waiver and authorization is executed. I am providing Mr. Mandelman with information regarding my case this date and with questions that I wish him to ask of [the defendant] at the deposition. I hereby authorize Mr. Mandelman to conduct this deposition and release Michael D. Mandelman from any claims that I may have against him for whatever reason relating to any matters that he has worked on for me, hereby waiving the same. I have at this time no intention of filing any complaint, grievance, lawsuit or any other action with anybody against Michael D. Mandelman. I wish for Michael D. Mandelman to conduct this deposition of [the defendant] understand [sic] that this statement is necessary so that he can proceed with my claim with the confidence necessary that he has my support in this matter. ¶ 17. At Reitz's disciplinary hearing before Referee Baron, N.C. testified that Reitz informed her that if she did not sign this release, the defendant's deposition would not take place and that she would lose her malpractice case. N.C. further testifiedand it is not now disputedthat she had not been advised by Reitz that she had a right to seek independent counsel before executing this release. After N.C. signed the release, Mandelman conducted the defendant's deposition. ¶ 18. Subsequently, at the January 18th hearing in circuit court, Reitz filed a brief in opposition to the defendant's motion to dismiss. Reitz argued that N.C. should be allowed to proceed with her malpractice claim even without an expert witness. The circuit court disagreed and dismissed N.C.'s case with prejudice and with costs, noting that N.C. could not prove her malpractice action without an expert witness, and that Reitz had failed to identify any expert who was willing to testify with respect to the defendant's alleged legal malpractice. [2] ¶ 19. This course of conduct led to the first three counts of misconduct as alleged in OLR's complaint and as found by the referee. Reitz concedes Counts I and III and only challenges Count II.  Count IBy failing to respond to discovery demands and by failing to obtain an expert witness, Reitz failed to act with reasonable diligence and promptness in representing N.C., in violation of SCR 20:1.3. [3]  Count IIBy having N.C. sign a document entitled Release of Michael Mandelman Reitz made an agreement on behalf of his partner, Michael Mandelman, prospectively limiting Mandelman's liability for malpractice to N.C., who was not independently represented by counsel in making the agreements, in violation of SCR 20:1.8(h). [4]  Count IIIBy having N.C. sign a document that prospectively limited Mandelman's liability for malpractice to N.C., who was not independently represented by counsel in making the agreement, Reitz knowingly assisted another attorney in violating the Rules of Professional Conduct, in violation of SCR 20:8.4(a). [5] ¶ 20. Referee Baron found that OLR had proven by clear and satisfactory evidence [6] that Reitz had violated SCR 20:1.3 as alleged in Count I of OLR's complaint by failing to act with reasonable diligence and promptness in representing N.C. According to the referee, Reitz's inability to designate expert witnesses was an example of his lack of diligence and promptness because the record demonstrated that he had not followed the usual practice of obtaining a summary from the witnesses he had identified, nor had he even personally contacted them. The referee also noted that it was not until after the defense counsel began pressuring Reitz about the experts' reports, that Reitz discovered that the experts he had listed were unwilling to testify voluntarily. The referee also pointed out that Reitz acknowledged that he first became aware of the case law holding that expert witnesses cannot be made to testify involuntarily. Based on this, the referee concluded that Reitz had failed to live up to his professional responsibility for diligence and promptness in preparing N.C's case for trial. Reitz does not now challenge the referee's findings and conclusions with respect to Count I. ¶ 21. In his brief filed in this court on appeal, Reitz challenged the referee's findings and conclusions with respect to both Counts II and III. As noted, however, at oral argument before this court, he withdrew his challenge to the referee's findings and conclusions with respect to Count III. Thus, he now only challenges the referee's conclusion that the facts establish that his conduct violated SCR 20:1.8(h) as alleged in Count II. ¶ 22. According to Referee Baron, by preparing a release of liability for Mandelman for N.C.'s signature only moments before Mandelman was to take the deposition of the defendant in the legal malpractice action, and inducing N.C. to sign that release without first advising her that independent representation was appropriate, Reitz had violated SCR 20:1.8(h) as alleged in Count II, and SCR 20:8.4(a) as alleged in Count III. The referee noted that there was no question that Reitz had not informed N.C. that she should or could have legal representation before signing the release he had prepared. The referee also rejected, as not credible, Reitz's denial that he told N.C. that if she did not sign the release, then Mandelman would not proceed with the deposition. ¶ 23. Similarly, the referee rejected Reitz's argument that although he had prepared the document at Mandelman's request, Reitz had mistakenly used the Release of Liability form language and that neither he nor Mandelman had sought a waiver of liability. The referee wrote: Reitz's contention that his preparation of the document for Mandelman contained errors and, in addition, he himself was not asking for a waiver of his own liability does not negate the fact that he assisted in a violation of SCR 20:8.4 by his participation. He placed his client in a no-win situation: either she signed the Release immediately or Mandelman would not take the deposition of the defendant in her case or if she refused, a vital part of trial preparation would be omitted and her case would be jeopardized. ¶ 24. Reitz maintains on this appeal that OLR did not meet its burden establishing by clear, satisfactory, and convincing evidence that he violated the Rules of Professional Conduct as alleged in Count II. He concedes that he prepared the release and that the language he used in that document attempts to limit Mandelman's liability. However, Reitz contends that this was done by mistake; he insists that Mandelman had only requested him to prepare a document for N.C.'s signature indicating that she had been satisfied with the work Mandelman had done for her up to that time. ¶ 25. Reitz further notes that Count II alleges a violation of SCR 20:1.8, the rule prohibiting a conflict of interest between a lawyer and client. And, again, Reitz points out that the release he prepared was not a release of his own liability to N.C.; rather, it was only a release of Mandelman's potential liability. Reitz suggests that if any rule was violated by this conduct, it was SCR 20:8.4the violation alleged in Count IIIa violation that Reitz does not now challenge. Reitz maintains that because he personally was not benefited in any way by the violation as alleged in Count II, he cannot be found to have committed the misconduct as alleged in that count. ¶ 26. Furthermore, Reitz claims that there is a logical inconsistency in finding that he committed the misconduct alleged in both Counts II and III; according to Reitz, either he obtained the release to benefit himselfwhich would have been a conflict of interest as alleged in Count IIor he assisted another attorney to violate SCR 20:1.8(h) which was the basis for the misconduct alleged in Count III. ¶ 27. OLR rejects Reitz's narrow reading of these rules as well as his claim that he did not personally benefit from the release he drafted. OLR notes that Reitz and Mandelman were law partners operating their law firm as a limited liability practice. According to OLR, to the extent that one partner receives liability protection in any given matter, it necessarily inures to the benefit of all other partners. OLR also points to the referee's rejection of Reitz's hairsplitting reading of SCR 20:1.8(h) and the referee's statement that Reitz ... cannot avoid responsibility for having placed his client in an untenable position by arguing that it was not a release of liability for himself but rather for his partner. ¶ 28. While we agree that Reitz's actions placed his client in an untenable position, we are not persuaded that this constituted a violation of SCR 20:1.8 as alleged in Count II. We cannot conclude that Reitz's actions in preparing the release, which by its terms only applied to Mandelman, constituted a violation of SCR 20:1.8(h). This release did not purport to release the law firm nor did it mention Reitz. See re Disciplinary Proceedings Against Mandelman, 158 Wis. 2d 1, 460 N.W.2d 749 (1990). It only purported to release Mandelman from any liability to N.C. [4] ¶ 29. Moreover, we find no support for OLR's suggestion that because Mandelman and Reitz had structured their law firm as a limited liability organization, that the release operated to benefit Reitz personally. SCR 20:1.8(h) precludes a lawyer from making an agreement . . . prospectively limiting the lawyer's liability to a client for malpractice. . . . (Emphasis added.) The document prepared by Reitz, which named only Mandelman as the beneficiary of N.C.'s release of any claim of liability she may have, does not fall within the prohibition of this rule. It did not prospectively limit Reitz's liability to his client. We do not accept OLR's broad reading of this rule because, among other reasons, lawyers are permitted under the statutes and our rules to practice law and render professional legal services through limited liability organizations. [7] Furthermore, even if a lawyer structures a law firm as a limited liability organization, he or she is not relieved from personal liability for any acts, errors, or omissions arising out of the performance of professional services. SCR 20:5.7(2). [8] Limited liability organizations are primarily used for business or tax reasons; however, to the extent that that structure may affect a lawyer's professional liability, the use of a limited liability organization only protects the personal assets of non-negligent attorneys in the limited liability firm. See Wis. Stat. § 183.0403 (2003-04). See also Melvin McCartney, Question and Answer: Limited Liability Practice, Wisconsin Lawyer (May 1997). Structuring a law practice as a limited liability organization and practicing law via such organization does not change the personal liability of an attorney for that attorney's own negligence in providing professional legal services and even under a limited liability organizational structure, a lawyer's personal assets remain exposed for his or her negligence in providing professional services. ¶ 30. In this case, the release of liability Reitz prepared for N.C.'s signature, which purportedly released any claim she may have had against Mandelman for his negligence, did not benefit Reitz. Reitz remained liable for his own personal negligence. Consequently, Reitz's conduct did not fall within the proscription of SCR 20:1.8(h). We conclude that Reitz's actions with respect to preparing this release for N.C.'s signature, while clearly ill-advised and not to be emulated or condoned, did not constitute a violation of SCR 20:1.8(h). Accordingly, we reject the referee's conclusion of law that Reitz engaged in the misconduct alleged in this court.