Opinion ID: 3165897
Heading Depth: 3
Heading Rank: 1

Heading: 15 cmt. 10.

Text: As shown by the fee agreement, the fee Mr. Castleman paid to Ms. Reguli was not earned upon receipt by Ms. Reguli. The fee agreement provided that the fee would be held in escrow and Ms. Reguli‟s hourly fees would be charged against the retainer. The payment therefore was considered as security to ensure payment for legal services to be provided in the future and not merely to assure Ms. Reguli‟s availability. Accordingly, the $10,000 was not a general retainer earned by Ms. Reguli upon receipt. See Richmond, supra, at 114; Tenn. Sup. Ct. R. 8, RPC 1.5 cmt. 4a. The fee agreement additionally provided that once the full amount of the retainer had been used for legal services, an additional retainer would be required, depending on the status of the case. This language clearly precludes the possibility that the $10,000 was a “fixed fee” earned by Ms. Reguli upon receipt. See Richmond, supra, at 118; Tenn. Sup. Ct. R. 8, RPC 1.5 cmt. 4a. Ms. Reguli admitted that she did not refund any part of the $10,000, which was in excess of the fees for which she billed Mr. Castleman. Ms. Reguli had an ethical duty to return the unearned portion of the fee when Mr. Castleman terminated her services. Tenn. Sup. Ct. R. 8, RPC 1.16(d)(6). There was substantial and material evidence to support the Panel‟s finding that Ms. Reguli violated RPC 1.16(d)(6). Ms. Reguli maintains that the fee she collected from Mr. Castleman was a nonrefundable fee. However, RPC 1.5(f) requires “[a] fee that is nonrefundable in whole or in part [to] be agreed to in a writing, signed by the client, that explains the intent of the parties as to the nature and amount of the nonrefundable fee.” The fee agreement was in writing and signed by Mr. Castleman, but failed to adequately explain that it was nonrefundable. The reference in the fee agreement that the funds would be returned “at the discretion of the firm” is inadequate to make it clear that the fee was nonrefundable. Cf. In re Disciplinary Proceeding Against Van Camp, 257 P.3d 599, 612 (Wash. 2011) (holding that attorney could not justify contention that he charged a “flat fee” where his “fee agreement contain[ed] both [an] „earned retainer‟ phrase and listed hourly rates, which suggest[ed] that hourly rates may be charged against the „earned retainer‟ -13- amount”). Accordingly, there was substantial and material evidence to support the Panel‟s finding that Ms. Reguli violated RPC 1.5(f). Ms. Reguli admitted that she never provided the Board, as requested, with an accounting of her time on the Castleman matter. This supports the Panel‟s finding that she violated RPC 8.1(b), which prohibits an attorney from knowingly failing to respond to a lawful demand for information from a disciplinary authority. The various violations described above also support the Panel‟s finding that Ms. Reguli violated RPC 8.4(a) and (d), which prohibit an attorney from violating any rule of professional conduct and engaging in conduct prejudicial to the administration of justice. With respect to the complaint about her website, it is undisputed that Ms. Reguli‟s website represented her as having “Certification/Specialties” in “Family Law[,] Divorce.” Ms. Reguli admitted she was not certified as a specialist in any field of law. This is substantial and material evidence to support the Panel‟s finding that she violated RPC 7.4(b). Even though Ms. Reguli may not have provided the false information to her website company, she is responsible for the contents of her website. Attorney advertising includes all potential ways in which attorneys can communicate information about their services to the public, including communication through websites. See Tenn. Sup. Ct. R. 8, RPC 7.2 cmt. 1 (“The Rule [on advertising] encompasses all possible media through which such communications may be directed to the public.”). Whether websites are maintained by the attorney or a third party, the attorney has the ultimate responsibility for monitoring and reviewing the advertisement to ensure compliance with ethical rules. See In re Hyderally, 32 A.3d 1117, 1122 (N.J. 2011) (dictum) (“Whether a website is created by an outside consultant or developed and maintained by an attorney or his or her staff, all language and design that appears on it should be reviewed frequently for compliance with . . . all Rules of Professional Conduct.”); cf. In re Anonymous, 689 N.E.2d 434, 435 (Ind. 1997) (disciplining attorney for misleading advertising even though communication of misleading information was “unintentional”); Columbus Bar Ass’n v. Dugan, 865 N.E.2d 895, 897-98 (Ohio. 2007) (disciplining attorney in part for improper statements on the attorney‟s website entered by the attorney‟s secretary without the attorney‟s consultation). Ms. Reguli bears the responsibility for the misrepresentation on her website. Accordingly, the Panel‟s finding that she violated RPC 7.4(b) was supported by substantial and material evidence. Ms. Reguli next contends that the imposition of suspension and probation in this case was arbitrary and capricious or inconsistent with the ABA Standards. Specifically, Ms. Reguli challenges the trial court‟s modification of the sanctions because the trial court did not reference the ABA Standards as required by Tennessee Supreme Court Rule 9, section 8.4. The Board contends in its sole issue that the trial court correctly modified the Panel‟s sanction by requiring Ms. Reguli to pay restitution, but otherwise erred in modifying the Panel‟s suspension and probation conditions. The Board argues that -14- (1) the trial court‟s modified sanction of a sixty-day suspension (all of which is to be suspended with no active time served), coupled with a one-year probationary period, effectively and inappropriately imposes two suspensions at the same time; (2) the trial court erred by preemptively determining the length of active suspension should Ms. Reguli fail to meet her probation conditions; (3) the trial court‟s decision to eliminate the Panel‟s TLAP evaluation condition is arbitrary and capricious; and (4) the trial court had an insufficient basis to modify the responsibilities of the probation monitor. When determining the level of discipline to impose upon an attorney for misconduct, a hearing panel must consider relevant provisions of the ABA Standards. Tenn. Sup. Ct. R. 9, § 8.4. The ABA Standards represent “guideposts,” as opposed to bright-line rules when determining sanctions for professional misconduct. Bailey v. Bd. Prof’l Responsibility, 441 S.W.3d 223, 232 (Tenn. 2014). The ABA Standards provide that when imposing a sanction, a court should consider “[(1)] the duty violated; [(2)] the lawyer‟s mental state; [(3)] the potential or actual injury caused by the lawyer‟s misconduct; and [(4)] the existence of aggravating or mitigating factors.” ABA Standard 3.0. Aggravating factors include prior discipline, a dishonest or selfish motive, a pattern of misconduct, multiple offenses, bad faith obstruction of disciplinary proceedings, refusal to acknowledge the wrongful nature of conduct, and substantial experience in the practice of law. ABA Standard 9.22. Mitigating factors include personal or emotional problems. ABA Standard 9.32. When reviewing disciplinary sanctions, this Court reviews comparable cases to ensure consistency in discipline. Bailey, 441 S.W.3d at 236. The Panel properly considered the factors in ABA Standard 3.0 when determining Ms. Reguli‟s sanction. The Panel appropriately made findings of five aggravating factors and a single mitigating factor, all of which are supported by the record. Taking these considerations into account, the Panel properly imposed an eleven month, twenty-nine day suspension, to be served on probation subject to various conditions. The trial court correctly determined that the Panel‟s failure to order Ms. Reguli to pay restitution was arbitrary. The Panel made a specific factual finding that Ms. Reguli charged Mr. Castleman an unreasonable fee based on the work Ms. Reguli performed and that Ms. Reguli failed to refund the unearned portion of the fee. Tennessee Supreme Court Rule 9, section 4.7 provides for restitution when a lawyer‟s misconduct financially injures a person or entity. ABA Standard 2.8 also provides for restitution. As the trial court noted, unless Ms. Reguli makes restitution to Mr. Castleman, she will gain a windfall at the expense of Mr. Castleman. Accordingly, the trial court‟s modification of the Panel‟s sanction requiring Ms. Reguli to make restitution to Mr. Castleman in the amount of $7,800 was proper. However, the trial court erred in modifying the rest of the Panel‟s sanction. First, the trial court erred in eliminating the Panel‟s probation condition that Ms. Reguli -15- undergo a TLAP evaluation by determining that the requirement was not necessary. The trial court did not see or hear Ms. Reguli testify at the hearing. The Panel‟s judgment reflected that it “saw evidence” during the hearing that a TLAP evaluation was warranted. In eliminating the TLAP evaluation, the trial court impermissibly substituted its judgment for that of the Panel. See Mabry, 458 S.W.3d at 903 (noting that a trial court must refrain from substituting its judgment for that of a hearing panel as to the weight of evidence). In the same manner, the trial court impermissibly substituted its judgment for the Panel in reducing the scope of the probation monitor‟s supervision of Ms. Reguli14 and by restructuring the Panel‟s eleven month, twenty-nine day suspension. The Panel properly considered the ABA Standards, including making findings of aggravating and mitigating factors. Accordingly, the Panel acted appropriately in imposing its sanction, aside from its failure to provide for restitution. A review of comparable cases demonstrates that the Panel‟s eleven month, twenty-nine day suspension to be served on probation, coupled with the trial court‟s order of restitution, is consistent with sanctions ordered in other cases. See Sallee, 469 S.W.3d at 40-41 (upholding a one-year suspension where attorney charged an unreasonable fee, failed to inform clients of inaccurate fee estimate, and refused to recognize wrongful nature of conduct); Threadgill v. Bd. of Prof’l Responsibility, 299 S.W.3d 792, 799-800, 810 (Tenn. 2009) (affirming a one-year suspension where attorney failed to deliver accounting to client, among other ethical violations), overruled on other grounds by Lockett v. Bd. of Prof’l Responsibility, 380 S.W.3d 19, 27-28 (Tenn. 2012); see also People v. Weisbard, 35 P.3d 498, 509 (Colo. 2000) (ordering an eighteen-month suspension where attorney refused to account and refund unearned funds, failed to return client calls for extended period of time, and committed other violations); In re Schmidt, 130 So. 3d 908, 910, 913 (La. 2013) (one-year and a day suspension imposed, along with requirement that attorney resolve fee disputes with clients, where attorney failed to provide an accounting, refund unearned funds, and cooperate with disciplinary authority). The Panel‟s original sanction is reinstated, along with the additional requirement that Ms. Reguli pay Mr. Castleman restitution in the amount of $7,800. Finally, Ms. Reguli contends that Tennessee‟s attorney discipline system is unconstitutional for several reasons. Ms. Reguli first contends that the preponderance-ofthe-evidence standard in attorney disciplinary proceedings is unconstitutional. She 14 The Panel‟s decision provided that Ms. Reguli must employ and meet with a probation monitor on a monthly basis to review her billing practices, including review of her fee arrangements and of any refunds due to clients in the case of termination or conclusion of services. Additionally, the Panel‟s decision required Ms. Reguli to inform her practice monitor of any complaint by attorneys or judges regarding pleadings drafted by Ms. Reguli. The probation monitor was required to provide monthly reports of Ms. Reguli‟s compliance to the Board. In contrast, the trial court‟s probation monitor requirement provided that the practice monitor review all engagement letters and fee agreements or contracts to ensure compliance with the Rules of Professional Conduct. -16- argues that due process demands a standard of proof at least as stringent as the clear and convincing evidence standard. Ms. Reguli also argues that the combined investigative, enforcement, and adjudicative functions of the Board violate due process. Ms. Reguli‟s various remaining arguments allege that the Board is an unconstitutional body because of the financial interests of its members in the outcome of disciplinary proceedings and that the system otherwise lacks adequate due process safeguards. We foreclosed each of these arguments in our recent holding in Walwyn v. Board of Professional Responsibility, No. M2015-00565-SC-R3-BP, 2015 WL 7770161 (Tenn. Dec. 3, 2015). There, we held the preponderance-of-evidence standard of proof in attorney disciplinary proceedings is constitutional. Id. at . We addressed Ms. Reguli‟s further arguments by reaffirming our previous holdings in Long, 435 S.W.3d at 186-88, and Moncier, 406 S.W.3d at 156. Walwyn, 2015 WL 7770161, at . In Long, we held that because the Board‟s multiple responsibilities “are functionally separate within the Board, Rule 9 does not violate due process principles.” 435 S.W.3d at 187. We also noted in Long that Panel members “receive no compensation, other than reimbursement for travel expenses, for sitting as the adjudicatory body in a disciplinary matter.” Id. at 188. Further, in Moncier, we highlighted the extensive procedural protections Tennessee‟s attorney discipline system affords attorneys. 406 S.W.3d at 156. Ms. Reguli‟s constitutional objections lack merit. Ms. Reguli has submitted as supplemental authority North Carolina Board of Dental Examiners v. F.T.C., ___ U.S. ___, 135 S. Ct. 1101 (2015), in support of her claim that Tennessee‟s attorney discipline system is unconstitutional and violative of antitrust laws. The North Carolina Board of Dental Examiners decision does not support her constitutional claims. Ms. Reguli did not raise issues of antitrust violations before the trial court or the Panel. Any such claim is now waived.