Opinion ID: 1134641
Heading Depth: 1
Heading Rank: 3

Heading: The Labosky Matter

Text: The basic facts in this matter are not in dispute. In 1975, Mr. Phillip Labosky, doing business as a construction subcontractor, sought petitioner's advice about some problems he was having with a general contractor and a carpenters' union. During the course of their first meeting, petitioner informed Labosky that he had a good case for breach of contract. This analysis of the merits rested on Labosky's rather brief recitation of the events in question and on the fact that petitioner had previously prevailed over the attorney who was currently representing the general contractor. Petitioner's advice involved no independent inquiry or research. Petitioner also indicated to Labosky that a letter from the carpenters' union to its members afforded grounds for a perfect libel suit worth twenty thousand dollars. On the basis of these representations, Labosky agreed to pay petitioner a $5,000 fee to handle the case. The payments were made in a series of installments over a two-week period. Labosky testified that petitioner at no time contacted him to discuss the merits of the case. Petitioner did attend a meeting with the general contractor and his attorney sometime in early November. It was at this time, petitioner testified, that he determined that the chances of Labosky prevailing in a lawsuit were less than desirable. At no time, however, did petitioner inform his client of his change in outlook. To the contrary, Labosky was not even able to contact petitioner; his numerous phone calls were never returned; he also made an appointment which petitioner failed to keep. In February 1976, Labosky contacted another attorney, John Ball, about his problem. Ball investigated the matter and informed Labosky that his case against the general contractor was dubious; Ball, however, agreed to contact petitioner about a refund of the $5,000 fee. Although there is some question as to how much work was actually performed, petitioner admitted that the fee was not earned when received and that a substantial portion was owing to Labosky. Ball later represented Labosky in an action in Santa Clara County Superior Court and obtained a default judgment against petitioner. The $5,000 fee was not repaid until a week before the disciplinary hearing. Petitioner admits having spent the $5,000 shortly after [he] received it and does not dispute the fact that he failed to keep any time accounting records and failed to place any of the $5,000 fee in an identified and labelled trust account. As a result of his dealings with Mr. Labosky, the Disciplinary Board hearing panel found that petitioner's advice to his client concerning the merits of his claim, as well as his failure to apprise his client of his change in attitude, constituted a reckless inducement to entertain a legal action in violation of his responsibility to discharge his duties as an attorney at law to the best of his knowledge and ability (Bus. & Prof. Code, § 6067) and of his obligation to counsel only such actions as appear to him legal or just. (Bus. & Prof. Code, § 6068.) The panel also concluded that such actions constituted acts involving moral turpitude in violation of Business and Professions Code section 6106. In addition, the panel determined that the petitioner's failure to place the $5,000 fee in an identifiable trust account violated rule 8-101 of the Rules of Professional Conduct of the State Bar.