Opinion ID: 1245971
Heading Depth: 1
Heading Rank: 2

Heading: The Cox Matter

Text: The findings of the state disciplinary board, which are substantially identical with those of the local administrative committee, are as follows: On November 7, 1969, Bushman was retained by Barbara Cox, aged 16, her mother and father (Mr. and Mrs. Stroud), and Ralph Hughes (hereinafter referred to as the defendants) in connection with an action filed by Barbara's husband, Neal W. Cox, for divorce and custody of a minor child of the marriage. [2] The only substantial issue in Cox's action was custody. Barbara's parents were named as defendants because it was alleged that they might have had physical custody of the child, and Hughes was involved because he allegedly was having sexual relations with Barbara and there was a possibility that he would be charged with statutory rape. Cox was represented by attorney Gertrude Chern. At Bushman's request, the defendants signed a promissory note for $5,000, payable $300 forthwith and the balance at $50 a month. They also signed a retainer agreement providing for an hourly fee of not less than $60. Barbara was a minor, her parents were on welfare, and there was no community property of the Cox marriage. Bushman advised the defendants it was the policy of his office that, whenever attorney Chern was the opposing counsel in a custody matter, a minimum retainer of $5,000 was required without regard to the time spent by Bushman on the case or to other factors, because Mrs. Chern would generate a paper war. Subsequently, when Cox visited Bushman's office in connection with a possible reconciliation with Barbara, Bushman unsuccessfully sought to induce him to add his signature to the promissory note. All the pleadings and negotiations on behalf of Cox were handled by an associate of Mrs. Chern. The action did not involve any juvenile court or criminal matters, and the custody issue was resolved by a stipulation of the parties in favor of Barbara, following the usual custody investigation and report of the county probation department. The fee charged Cox by his attorney was $300, plus costs, representing five and one-half hours of work. The court ordered that the husband pay Bushman a fee of $300, and $60 in costs; Bushman did not advise the court of the $5,000 note signed by the wife and others or of the sums paid thereon. There was nothing unusual or novel in pleadings or research in the Cox case. Bushman filed on Barbara's behalf a demurrer, cross-complaint, petition for appointment of a guardian-ad-litem, and stipulation to a probation report, as well as an answer to the complaint, and a declaration of points and authorities. He attended two hearings on orders to show cause, and subpoenaed and interviewed a doctor. Bushman claimed that he spent over 100 hours on the case, which at $60 an hour would call for a fee of $6,000. However, he billed the defendants for only $2,800 plus $60 in costs which, at the $60 an hour rate, would amount to far less than 100 hours of time spent. The reasonable value of Bushman's services in the action was the amount awarded by the court, i.e., $300 and $60 in costs. The $5,000 note is a negotiable instrument and remains in the possession of Bushman or of Soma Baldwin Bushman. The fees charged, and those which Bushman attempted to collect, were excessive, overreaching, exorbitant, and unconscionable. In addition to these findings, the evidence establishes that the note signed by the defendants provided for 7 percent interest in case of default, a waiver of the statute of limitations, and attorney's fees of $125 an hour to be paid by defendants in the event it was necessary to engage an attorney to enforce payment. Bushman knew that the Strouds were receiving public assistance, but the defendants told him that between them they could pay $50 a month. Prior to the time Barbara consulted Bushman, Cox had obtained physical custody of the child, and Mrs. Stroud testified that she signed the note because the only thing we could see was we had to sign this note in order to ... restore our grandchild. Bushman told defendants that because custody was involved in the dispute the litigation could extend from six months to six years. It is not clear from the evidence whether the $5,000 face amount of the note represented the maximum or minimum fee which Bushman proposed to charge, and there is no evidence that the note has been cancelled, although there is also no evidence that Bushman attempted to enforce the note. Only $600 in irregular $25 installments had been paid on the $2,800 bill at the time of the disciplinary hearing. Bushman did not produce any records to substantiate his claim that he had spent 100 hours on the Cox matter. At the time of the hearing, a dissolution action was pending between petitioner and Soma Bushman, and he claimed that the records were in her possession. The local committee held the hearing open for 30 days to allow Bushman to obtain his records by subpoena and to make a verified showing of the time he expended on the Cox case, but he did not produce such substantiation of his claim. (1) It is settled that gross overcharge of a fee by an attorney may warrant discipline. The test is whether the fee is `so exorbitant and wholly disproportionate to the services performed as to shock the conscience.' ( Herrscher v. State Bar (1935) 4 Cal.2d 399, 401-402 [49 P.2d 832], quoting from Goldstone v. State Bar (1931) 214 Cal. 490, 498 [6 P.2d 513, 80 A.L.R. 701].) In Herrscher this court stated that most cases warranting discipline on this ground involve an element of fraud or over-reaching by the attorney, so that the fee charged, under the circumstances, constituted a practical appropriation of the client's funds. (4 Cal.2d at p. 403.) (2) The findings of fact of the board are not binding upon us, although they are accorded great weight. Petitioner must demonstrate that the findings are not supported by the evidence, or that the board's recommendations are unlawful. All reasonable doubts must be resolved in favor of the petitioner, and if equally reasonable inferences may be drawn from a proven fact, the inference which leads to a conclusion of innocence rather than guilt will be accepted. ( Millsberg v. State Bar (1971) 6 Cal.3d 65, 68-69 [98 Cal. Rptr. 223, 490 P.2d 543].) The State Bar contends that the Goldstone test was met as to the $5,000 promissory note, the retainer agreement, and the ultimate fee of $2,800 charged by Bushman. It points out that neither the note nor the retainer agreement made any differentiation between the services rendered to each client but, rather, imposed liability on all four as joint and several obligors, without regard to the value of the legal services rendered to each, and without proof that the consequences of such an arrangement had been explained to the defendants. The retainer agreement, it is claimed, obligated persons in necessitous circumstances to pay $60 an hour for legal services without any limitation upon the time spent in a comparatively simple domestic relations matter. The note purported to bind Barbara, a minor, as a joint and several obligor to pay $50 a month over a period of more than four years, even though she was not regularly employed, had an infant daughter, and was receiving public assistance. Furthermore, there was no reasonable relationship between the face amount of the note and the services actually rendered. The note contained no provision for its surrender in the event the actual services performed by Bushman did not warrant a $5,000 fee. The $2,800 fee actually billed by Bushman was also unconscionable, contends the State Bar. Although Bushman performed legal services for Barbara, he was unable or unwilling to document the 100 hours he assertedly spent on the matter. The $2,800 charge was based on far less time than the 100 hours Bushman claims to have spent on the case, and even if he had actually worked a sufficient number of hours at $60 an hour to justify a fee of $2,800, it was so high in this situation as to shock the conscience. (3a) We agree that under all the circumstances, the fee charged by Bushman was so exorbitant and wholly disproportionate to the services rendered to the defendants as to shock the conscience. An examination of the file in the Cox matter reveals that only a simple, almost routine series of documents was filed by Bushman on Barbara's behalf. Although he asserts that the case was quite involved, he is unable to articulate any complex issues which required extensive research or specialized skills. The only documentation in the file indicating any research whatever is a one-page Points and Authorities filed in support of an order to show cause, which cites the text of five statutes and one case, without any argument. Aside from interviews with the defendants and a doctor, the only additional services performed by Bushman were two appearances in court for hearings on orders to show cause. He failed to substantiate his claim of 100 hours spent on the Cox case, although he could have utilized the subpoena powers of the local committee for this purpose. It is of some significance in this connection that Cox's attorney spent slightly more than five hours on the case. (4) It is appropriate to repeat the observation of this court in Recht v. State Bar (1933) 218 Cal. 352, 355 [23 P.2d 273], that the right to practice law is not a license to mulct the unfortunate. (3b) In view of the fact that Bushman was dealing with persons in clearly impecunious circumstances, including a minor on welfare, that the marriage was of short duration and there was no community property, that he failed to reveal to the court in the face of a court-awarded fee of $300 to be paid by the husband, that he held a $5,000 promissory note from the wife and her parents, and that the amount of the note and the $2,800 bill he sent the defendants were grossly disproportionate to the value of the services he had rendered, his course of conduct with regard to the fee in the Cox matter contained an element of fraud or overreaching warranting disciplinary action. (5) Bushman complains of the board's finding that he was retained in the Cox matter, asserting that the defendants had retained his law firm and not Bushman personally. He does not deny that he interviewed the defendants and explained the fee arrangements to them, and that the promissory note and the retainer agreement were signed under his direction. Nor does he indicate that he disapproved the $2,800 bill sent to the Coxes. Although Soma Bushman performed some legal services in connection with the Cox matter, it is clear that Bushman, as the self-styled senior managing partner of the law firm, was primarily responsible for the acts upon which the recommendation of discipline was based. [3] Bushman attacks the finding of the board that the only substantial issue in the Cox case was custody. He contends that the board made this determination on the basis of hindsight and that at the time the promissory note was signed there was the possibility of an action in the juvenile court against Barbara, and the possibility of a statutory rape charge against Hughes, as well as contempt proceedings against the Strouds. The only evidence of any substance in the record that Bushman might be called upon to defend such charges was a random threat by Cox's attorney to cause a charge of statutory rape to be filed against Hughes. Clearly, the board's conclusion that the only substantial issue related to child custody is supported by the record. Petitioner maintains that the board failed to consider the fact that his efforts on Barbara's behalf were successful in that she was ultimately awarded custody of the child, and that there was no element of concealment in his conduct since he revealed to the defendants why the fee would be so high, and they were free to consult another attorney. We do not deem these matters to be of sufficient significance to outweigh the clear showing set out above that Bushman was guilty of overreaching and unconscionable conduct.