Court Opinion

ID: 4165915
Source: CourtListenerOpinion
Date Created: 2017-05-03 20:11:50.493461+00
Date Added: 2024-06-11T14:38:15.531535
License: Public Domain

ATTORNEY FOR RESPONDENT                              ATTORNEYS FOR THE INDIANA SUPREME COURT
Donald R. Lundberg                                   DISCIPLINARY COMMISSION
Indianapolis, Indiana                                G. Michael Witte, Executive Director
                                                     Angie Ordway, Staff Attorney
                                                     Indianapolis, Indiana

______________________________________________________________________________

                                              In the
                           Indiana Supreme Court
                             _________________________________                     FILED
                                                                              May 03 2017, 3:07 pm

                                     No. 35S00-1509-DI-577                         CLERK
                                                                               Indiana Supreme Court
                                                                                  Court of Appeals
                                                                                    and Tax Court
IN THE MATTER OF:

JUSTIN R. WALL,
                                                       Respondent.
                             _________________________________

                                   Attorney Discipline Action
                              Hearing Officer Robert C. Reiling, Jr.
                             _________________________________

                                             May 3, 2017

Per Curiam.

       We find that Respondent, Justin Wall, engaged in attorney misconduct arising from his
relationship with a Florida corporation. For this misconduct, we conclude that Respondent
should be suspended for 30 days with automatic reinstatement.

       This matter is before the Court on the report of the hearing officer appointed by this
Court to hear evidence on the Indiana Supreme Court Disciplinary Commission’s “Verified
Complaint for Disciplinary Action,” and on the post-hearing briefing by the parties.
Respondent’s 2008 admission to this state’s bar subjects him to this Court’s disciplinary
jurisdiction. See IND. CONST. art. 7, § 4.
                              Procedural Background and Facts

       The Commission filed a “Verified Complaint for Disciplinary Action” against
Respondent on September 28, 2015, alleging numerous rule violations arising out of
Respondent’s relationship with McCann Law Group, d/b/a Consumer Attorney Services, P.A.
(“CAS”), a Florida corporation that purported to offer clients services relating to bankruptcy,
mortgage modification, and foreclosure defense.

       CAS advertised its services to consumers in Florida and elsewhere, including Indiana,
and solicited local counsel in states other than Florida. Under the terms of CAS’s contractual
arrangements with clients and local counsel, most client work was handled by central staff
(including lawyers and nonlawyer assistants) in Florida, with local counsel’s involvement
generally limited to aspects of the case requiring a local attorney’s services. In a typical case,
prospective clients would discuss their options with a CAS intake paralegal and then enter into a
representation agreement with CAS. CAS typically charged clients an upfront “nonrefundable”
fee and, in many instances, ongoing monthly fees.

       In 2012 Respondent signed agreements with CAS, first as an “associate” and later as a
“partner,” under which Respondent would provide discrete services to CAS’s Indiana bankruptcy
and foreclosure defense clients.    CAS entered into similar agreements with other Indiana
attorneys as well. Respondent received fixed sums for select services, sums that represented
only a small fraction of the total fee charged to clients by CAS. As a “partner,” Respondent also
received $25 for every case assigned to other CAS-associated attorneys in Indiana as well as
minimum wage for 10-20 hours per week as “partner pay.”

       Respondent’s role in these cases generally was as follows. A CAS paralegal would
assign a case to Respondent after the client had signed a representation agreement with CAS.
Respondent then would perform a “welcome call” to the client and explain that he would be the
“boots in the trenches” for CAS, assisting the client either through mortgage modification
services or foreclosure defense. In most instances though, Respondent’s sole objective was to
get the mortgagee to agree to a modification. CAS’s business model contemplated that most
document preparation and client communication would be performed by CAS staff in Florida.
However, Respondent testified he reviewed all pleadings and made changes where warranted
before signing and filing them, and he testified he made himself available to clients above and
beyond the “welcome call” CAS paid him to make.

       Following a hearing, the hearing officer issued a report finding against Respondent on
some charges, against the Commission on other charges, and leaving still other charges
unaddressed. Both Respondent and the Commission have petitioned for review.

                                           Discussion

       We have examined CAS’s business model and arrangements with Indiana attorneys twice
before. In Consumer Attorney Services, P.A. v. State, 71 N.E.3d 362 (Ind. 2017), we affirmed
the denial of summary judgment for CAS and its principal member in a suit brought by our
Attorney General, holding neither defendant was exempt from civil liability under various
consumer protection statutes. In Matter of Jackson, 24 N.E.3d 419 (Ind. 2015), we approved
agreed discipline for another CAS-associated Indiana attorney. The present case comes to us in a
different posture than either of those cases though, and we confine our analysis today to the
specific issues, evidence, and arguments now before us.

       The Commission carries the burden of proof to demonstrate attorney misconduct by clear
and convincing evidence. See Ind. Admission and Discipline Rule 23(14)(i) (2016). We review
de novo all matters presented to the Court, including review not only of the hearing officer’s
report but also of the entire record. See Matter of Thomas, 30 N.E.3d 704, 708 (Ind. 2015). The
hearing officer’s findings receive emphasis due to the unique opportunity for direct observation
of witnesses, but this Court reserves the right to make the ultimate determination. Id.

       With these considerations in mind, we explore the various Indiana Rules of Professional
Conduct alleged to have been violated by Respondent as well as the appropriate sanction for
Respondent’s misconduct.
        Consultation with clients regarding limited scope of representation (Rules 1.4(a)(1) and
1.4(a)(5)). The hearing officer found no violation of these rules, and the Commission has
petitioned for review of those findings. While the written representation agreements executed by
CAS clients did not completely and accurately spell out for clients the division of labor and
responsibility between CAS and local counsel, Rules 1.4(a)(1) and 1.4(a)(5) do not require this
to be in writing. Respondent testified he discussed these matters with clients during his initial
phone call to them, and the hearing officer appears to have credited that testimony. Respondent
also testified he made himself available and performed case services above and beyond what was
minimally required of him under his arrangement with CAS, often without additional
compensation.     The Commission did not call any of Respondent’s clients to testify.                The
Commission urges us to draw an inference contrary to Respondent’s testimony from phone logs
tending to show a comparatively low number and duration of calls between Respondent and his
clients, but we see no reason to reweigh the conflicting evidence. Accordingly, we concur with
the hearing officer’s conclusion that the Commission failed to carry its burden of proving a
violation of Rules 1.4(a)(1) or 1.4(a)(5), and we find in Respondent’s favor on these charges.

        Improper fee splitting (Rule 1.5(e)). Rule 1.5(e) sets forth three requirements that must
be met for a division of a fee between lawyers who are “not in the same firm.” No argument is
advanced that these requirements were met; and indeed, at least one (that the client agree in
writing to the share each lawyer will receive) indisputably was not met. Rather, Respondent
contends, and the hearing officer agreed, that the rule is inapplicable here because Respondent
was a member of CAS.

        The hearing officer viewed the Court of Appeals’ decision in the Consumer Attorney
Services appeal as dispositive of this issue, but we find fault with this approach for many of the
same reasons we recently addressed in Matter of Smith, 60 N.E.3d 1034 (Ind. 2016).1 Moreover,
the Court of Appeals’ decision was not yet final, and eventually was vacated upon our grant of
transfer in that appeal.

1
  We note the hearing officer in this case, who also happens to be the same hearing officer we appointed
in Smith, did not have the benefit of our decision in Smith at the time he issued his report in this case.
        Reviewing de novo the record before us, we conclude that the evidence shows
Respondent was not “in the same firm” as CAS for purposes of Rule 1.5(e). CAS’s agreements
with clients and with local counsel assigned responsibility for most tasks to CAS central staff in
Florida and generally limited local counsel’s responsibilities to only those tasks requiring a local
counsel, provisions that seemingly would be unnecessary if CAS and its contracted local counsel
were truly “in the same firm.” Further, Respondent’s “associate” agreement expressly identified
and treated Respondent as an independent contractor.            Under both that agreement and his
subsequent “partner” agreement, he was paid small sums for discrete services, sums that
amounted to a very small fraction of the amounts charged to the clients by CAS. Respondent
maintained his own law firm (Wall Legal Services) throughout his relationship with CAS, and he
used his own firm name and letterhead in legal pleadings and letters sent to clients and others in
connection with CAS cases. While no one factor necessarily is dispositive, the evidence in its
totality leads us to conclude Respondent and CAS were not “in the same firm.” Accordingly, we
find that Respondent violated Rule 1.5(e).2

        Assisting CAS with charging and collecting an unreasonable fee (Rules 8.4(a) and
1.5(a)). The hearing officer found a direct violation of Rule 1.5(a), based on the $25 “partner
pay” Respondent received for every case assigned to other CAS-associated attorneys in Indiana.
However, the hearing officer concluded Respondent did not assist CAS in charging or collecting
an unreasonable fee from clients because Respondent was not aware of each client’s final bill.
Both parties have petitioned for review.

        The $25 “partner pay” was not a theory advanced by the Commission as grounds for a
Rule 1.5(a) violation. Nor was this a fee charged to or collected from a client; rather, it was a
compensation matter between Respondent and CAS. Thus, the hearing officer’s finding of a
direct violation on these grounds cannot stand.

2
 We acknowledge that Respondent’s “partner” agreement purported to make Respondent an employee of
CAS, at least nominally. Having determined Respondent’s conduct under his “associate” agreement
violated Rule 1.5(e), we need not address the impact, if any, that Respondent’s “partner” agreement might
have on this analysis.
       However, we readily conclude from the evidence that Respondent did assist CAS in
charging an unreasonable fee. That Respondent was not aware of the precise amount billed to
any client is immaterial in these circumstances. As Respondent acknowledged in his testimony,
“nonrefundable” retainers generally are permissible in Indiana only to the extent they pay to
reserve the attorney’s time and availability. See Matter of O’Farrell, 942 N.E.2d 799 (Ind.
2011). Respondent knew that CAS’s representation agreements called for clients to be charged
about $1,200 as a nonrefundable retainer, which according to the agreements was to reserve local
counsel’s time to review the file, and yet CAS paid Respondent only $75 to review the file and
perform a “welcome call” for the client. Further, Respondent knew that CAS charged clients
recurring monthly fees (usually between $400 to $1,300) that were not tied to the work being
done on the client’s case. (Tr. at 90-96). Accordingly, we find Respondent assisted CAS in
charging clients an unreasonable fee, in violation of Rules 8.4(a) and 1.5(a).

       Supervision of nonlawyers (Rule 5.3(b)).        This rule requires a lawyer with “direct
supervisory authority” over a nonlawyer to make reasonable efforts to ensure the nonlawyer’s
conduct is compatible with the lawyer’s professional responsibilities. Based on Respondent’s
testimony, the hearing officer concluded Respondent did not violate this rule because CAS’s
paralegals were supervised by an Indiana-licensed attorney on CAS’s central staff.               The
Commission labels Respondent’s testimony as “self-serving” and urges us to draw a contrary
inference from other evidence, but we again see no reason to reweigh conflicting evidence.
Accordingly, we concur with the hearing officer’s conclusion that the Commission failed to carry
its burden of proof, and we find in Respondent’s favor with respect to the Rule 5.3(b) charge.

       Assisting CAS with using an improper trade name (Rules 8.4(a) and 7.5(a)(4)). Rule
7.5(a)(4) imposes certain requirements upon the use of a trade name by an attorney in private
practice, including among other things that “the name shall include the name of a lawyer.” The
hearing officer found no violation, and we agree. CAS’s website and representation agreements
both listed “McCann Law Group” in connection with the CAS trade name.                  Moreover,
Respondent generally utilized his own firm name in legal pleadings and case-related
correspondence.    The Commission has failed to sustain its burden of proving Respondent
assisted CAS with using an improper trade name, and accordingly we find in Respondent’s favor
on this charge.

         Assisting CAS in the unauthorized practice of law (Rule 5.5(a)). The findings of the
hearing officer on this charge were equivocal, and both parties have sought review.

         We have confronted similar business models in disciplinary cases before. See Matter of
Fratini, ___ N.E.3d ___ (Ind. Feb. 10, 2017); Matter of Joyce, 9 N.E.3d 142 (Ind. 2014); Matter
of Dilk, 2 N.E.3d 1263 (Ind. 2014). And in Jackson, we found the conduct of another CAS-
associated attorney violated Rule 5.5(a), although that was an agreed disposition on stipulated
facts.

         We also have confronted this issue in proceedings brought under Admission and
Discipline Rule 24 to enjoin the unauthorized practice of law, and we find one of those cases
particularly instructive here. In State ex rel. Indiana State Bar Association v. United Financial
Systems Corp., 926 N.E.2d 8 (Ind. 2010), a company’s nonlawyer salespeople marketed estate
planning services to customers, using those services as a loss leader to generate more lucrative
sales of annuities and other insurance products. The vast majority of customer interaction was
performed by nonlawyers. The company utilized independent contractor “panel attorneys” to
provide nominal document review and client consultation. The customers paid the company
about $2,700 for the estate plan most commonly pushed by sales associates. From those funds,
the salesperson received a commission ranging from $750 to $900, and the panel attorney was
paid a flat fee of $225 to make an initial phone call and draft the estate planning documents.

         The company in United Financial cited the involvement of its panel attorneys in arguing
its practices were lawful. In particular, the company argued that its panel attorneys exercised
independent judgment and played a greater role than merely drafting testamentary documents.
We held otherwise though, explaining that the company’s “business model has marginalized the
attorney’s role to such a degree as to cross the line of permissible practices.” Id. at 15.
       We find more similarities than differences between CAS’s business model and the
practices at issue in United Financial. Only a small fraction of the fees CAS charged to clients
was channeled to local counsel. The fixed low sums allocated to local counsel for discrete and
largely perfunctory legal tasks served to marginalize attorney involvement, a point reinforced by
the provisions in CAS’s agreements with clients and local counsel steering responsibility for
most tasks toward CAS central staff and away from local counsel. Additionally, neither the
initial retainer nor recurring monthly fees CAS charged its customers were tethered to the
amount of services rendered. Customers were not told of the fee allocation between CAS and
local counsel, and thus were left unaware that, in most instances, greater attorney involvement
likely could be had in their cases for far less cost. We acknowledge that Respondent’s testimony
(apparently credited by the hearing officer) that CAS’s paralegals were supervised by an Indiana-
licensed attorney on CAS’s central staff lends itself to an inference of slightly greater attorney
involvement in the client intake process than existed in the United Financial case. Nonetheless,
we are persuaded by the balance of factors in this case that CAS’s business practices in toto
amount to the unauthorized practice of law.

       Having reached this conclusion, it follows that Respondent assisted in the unauthorized
practice of law. The observation we made with respect to a similar arrangement in Dilk holds
equally true here: “Without the involvement of Respondent, the [company] could not have
provided the services they offered to homeowners. Selling the assistance of an attorney to
defend a foreclosure action was a necessary part of their business model.” Id. at 1265. We
acknowledge Respondent’s testimony that he sometimes provided services for his CAS clients
above and beyond what was minimally required of him under his agreements with CAS, and that
he subjectively believed he was treating his CAS clients on a similar footing with his other
clients. These factors mitigate, but do not excuse, Respondent’s misconduct. CAS was engaged
in the unauthorized practice of law, and Respondent assisted in that endeavor. Accordingly, we
find Respondent violated Rule 5.5(a).

       Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation (Rule
8.4(c)). The hearing officer did not explicitly address this charge. The Commission urges us to
find a violation, arguing in its petition for review that Respondent’s relationship with CAS was
dishonest and fraudulent because he was a “partner” in name only and Respondent’s role in the
representations and share of the fees were not adequately conveyed to clients, all of which lent
undeserved credence to the legitimacy of CAS’s Indiana operations.

        We have explored elsewhere in this opinion, and indeed on several other occasions, the
perils of this type of business model. Reviewing this record de novo, however, we simply cannot
conclude that Respondent’s conduct was dishonest or deceitful in the manner contemplated by
Rule 8.4(c). Respondent’s involvement with CAS unquestionably was ill-advised in many
respects, but the evidence shows Respondent’s actions were not done with the intent to deceive
anyone or to generate quick fees with little work at the expense of his clients. Nor is there any
evidence of persons being misled by Respondent’s identification as a “partner” on CAS’s
website. Thus, we find no violation of Rule 8.4(c).

        Engaging in conduct prejudicial to the administration of justice (Rule 8.4(d)). The
hearing officer did not explicitly address this charge. The Commission urges us to find a
violation, faulting Respondent for communicating with trial courts by using his own letterhead
and identifying himself as either a solo practitioner or by reference to his own firm name “Wall
Legal Services.” The Commission argues that by doing so, trial courts in cases involving CAS
were left unaware that the client was represented by a Florida firm, that Respondent arguably had
minimal involvement with his client, and that Respondent was filing documents initially drafted
by CAS. However, nowhere in the Commission’s petition for review or its reply brief does it
explain how Respondent’s manner of identifying himself was prejudicial to anyone or anything;
and reviewing the record de novo, we find no evidence that would support a finding of a Rule
8.4(d) violation. Accordingly, we find in Respondent’s favor on this charge.3

3
  By way of contrast, we found a violation of Rule 8.4(d) in Dilk, a case involving a similar business
arrangement between an Indiana attorney and out-of-state entities purporting to offer foreclosure defense
assistance, but that case included evidence of specific harm caused to clients and the attorney’s continued
acceptance of referrals even after the companies were enjoined from further acts constituting the
unauthorized practice of law. And while the conditional agreement we approved in Jackson included a
finding of a Rule 8.4(d) violation, the stipulated facts in that case reflected particular shortcomings by the
CAS-associated attorney that caused specific harm in at least one client representation. There is simply
no evidence of a similar nature before us today that would support a finding of a Rule 8.4(d) violation.
       Sanction. Having found that Respondent assisted CAS in the unauthorized practice of
law, assisted CAS in charging an unreasonable fee, and failed to comply with the requirements
for splitting a legal fee between two or more attorneys not in the same firm, we consider an
appropriate sanction for Respondent’s misconduct.       The hearing officer recommended that
Respondent be suspended for 30 days with automatic reinstatement. The Commission urges us
to impose a six-month suspension without automatic reinstatement, while Respondent argues a
public reprimand would be sufficient discipline.

       We do not take schemes involving the unauthorized practice of law lightly. In Dilk,
Joyce, and Fratini, we suspended the respondent attorneys for six months without automatic
reinstatement for their roles in similar business practices, and in Jackson we suspended another
CAS-associated attorney for 120 days with automatic reinstatement.            But the attorney
misconduct stipulated or found in those cases was more extensive than the misconduct we have
found on the record before us today. Likewise, the facts and circumstances of this case generally
are less aggravating, and more mitigating, than those before us in the above-referenced cases.
Respondent has no prior discipline, and there is no evidence of particularized harm to any client
or judicial proceeding resulting from Respondent’s misconduct. CAS referrals were a relatively
small part of Respondent’s practice, and Respondent’s involvement with CAS – while quite ill-
advised – nonetheless appears to have been well-intentioned and done without selfish motive.
For these reasons, we concur with the hearing officer’s recommendation for a 30-day suspension.

                                          Conclusion

       The Court concludes that Respondent violated Professional Conduct Rules 1.5(e), 5.5(a),
8.4(a) and 1.5(a). The Court finds in favor of Respondent on the remaining charges.

       For Respondent’s professional misconduct, the Court suspends Respondent from the
practice of law in this state for a period of 30 days, beginning June 14, 2017. Respondent shall
not undertake any new legal matters between service of this opinion and the effective date of the
suspension, and Respondent shall fulfill all the duties of a suspended attorney under Admission
and Discipline Rule 23(26). At the conclusion of the period of suspension, provided there are no
other suspensions then in effect, Respondent shall be automatically reinstated to the practice of
law, subject to the conditions of Admission and Discipline Rule 23(18)(a). The costs of this
proceeding are assessed against Respondent, and the hearing officer appointed in this case is
discharged.

Rush, C.J., and Rucker, David, and Massa, JJ., concur.

Slaughter, J., dissents from the finding that Respondent violated Rule 5.5(a), but concurs with
the remaining findings and with the sanction imposed.