Opinion ID: 1134641
Heading Depth: 1
Heading Rank: 7

Heading: Substantial Evidence Questions

Text: (1) We have often reiterated the principle that the petitioner has the burden of showing that the findings of the Disciplinary Board are not supported by the evidence. ( Schullman v. State Bar (1976) 16 Cal.3d 631, 634 [128 Cal. Rptr. 671, 547 P.2d 447]; Geffen v. State Bar (1975) 14 Cal.3d 843, 852 [122 Cal. Rptr. 865, 537 P.2d 1225].) Most of petitioner's attack on the findings of the Disciplinary Board amounts to an assertion that the board should have believed him and not believed his former clients. (2) While this court does not take lightly its duty to independently examine the evidence ( Glickman v. State Bar (1973) 9 Cal.3d 179, 184 [107 Cal. Rptr. 65, 507 P.2d 593]), we have often noted that we are reluctant to disturb the findings of the Disciplinary Board if they are based largely on testimonial evidence. ( Goldman v. State Bar (1977) 20 Cal.3d 130, 139 [141 Cal. Rptr. 447, 570 P.2d 463]; Nizinski v. State Bar (1975) 14 Cal.3d 587, 595-596 [121 Cal. Rptr. 824, 536 P.2d 72].) This position rests upon the fact that the board has the opportunity to observe first-hand the demeanor of the witnesses and can better evaluate the veracity of their testimony. ( Himmel v. State Bar (1971) 4 Cal.3d 786, 794 [94 Cal. Rptr. 825, 484 P.2d 993].) (3a) The record supports the board's finding that the petitioner violated several sections of the Business and Professions Code relating to his oath and duties as an attorney (§§ 6067 and 6068) and the commission of acts involving moral turpitude (§ 6106). With respect to his client Mr. Labosky, petitioner's rather overzealous assessment of the merits of Labosky's case, reached without the benefit of any independent investigation, is highly suspect. His subsequent failure to inform his client when he changed his opinion of the case, compounded by his failure to even meet with his client, demonstrates gross carelessness and negligence and justifies disciplinary action. ( Jackson v. State Bar (1979) 23 Cal.3d 509, 513 [153 Cal. Rptr. 24, 591 P.2d 47]; Simmons v. State Bar (1970) 2 Cal.3d 719, 729 [87 Cal. Rptr. 368, 470 P.2d 352].) With respect to the Brown matter, petitioner's conduct was even more questionable. (4) In past cases, we have repeatedly warned of the immense danger involved when an attorney places himself in a position in which his business interests are adverse to those of his client. ( Marlowe v. State Bar (1965) 63 Cal.2d 304, 308 [46 Cal. Rptr. 326, 405 P.2d 150]; Magee v. State Bar (1962) 58 Cal.2d 423, 430 [24 Cal. Rptr. 839, 374 P.2d 807].) Such a situation inherently jeopardizes the fiduciary relationship between attorney and client and requires that the attorney bear the heavy burden of proving that the dealings were fair. (3b) Petitioner failed to carry that burden here. In order to absolve himself, petitioner would have been compelled to show that he would have advised Mrs. Brown in good faith to make the loan even if he himself had not been the recipient. His inability to make such a showing, coupled with his failure to fill out a form listing his assets and liabilities when requested to do so by Mrs. Brown and his failure to explain to Mrs. Brown other less dangerous and more profitable ways of investing her money, clearly support the findings of the Disciplinary Board. The asserted violations of rule 8-101 [3] as to Labosky and Potsdawny pose an interesting and novel issue. There is no dispute as to the fact that petitioner received an advance fee payment of $5,000 from Labosky and $900 from Potsdawny. There is also no dispute as to the fact that at least a substantial portion of these advance fees were never earned or that petitioner failed to repay them until one week prior to the disciplinary hearing. The only question is whether or not rule 8-101 required the petitioner to deposit such funds in an identifiable trust account. Rule 8-101 expressly requires that sums advanced to pay costs or expenses be placed in a separate trust account; it does not expressly deal with advance legal fees. Thus the present case poses two issues: Whether any portion of the monies advanced by Labosky and Potsdawny were for costs or expenses, and, if not, whether rule 8-101 nevertheless requires that unearned fees be placed in a separate trust account. (5) The Disciplinary Board made a specific finding that the advance fee payments from clients Labosky and Potsdawny included advances for costs and expenses. Petitioner, however, correctly challenges the finding of the Board as unsupported by the evidence. When petitioner cashed the $900 Potsdawny check, he secured a cashier's check for $36 to cover the cost of a corporation kit. There is no evidence in the record as to whether any part of the additional $864 was intended in part as an advance for additional costs and expenses or, as petitioner claims, was entirely an advance fee. With respect to the $5,000 Labosky fee, there is no evidence in the record to indicate whether or not any of it was intended to cover costs and expenses. Thus, if the invocation of rule 8-101 depends on the distinction between money for costs and money for fees, it is reasonable to conclude that the State Bar has failed to sustain its burden of proof in the matter. The novel aspect of the issue is the seemingly implicit contention of the respondent State Bar that the issue of costs and expenses is irrelevant. Its argument would appear to be that any advance fee payment must be deposited in an identifiable trust account until such time as it is earned. We need not, however, resolve the question of whether or not an advance fee payment is correctly characterized as money received or held for the benefit of clients within the meaning of rule 8-101 [4] since petitioner's violation of the various sections of the Business and Professions Code fully warrants the Disciplinary Board's recommendation of a six-month actual suspension.