Court Opinion

ID: 8245136
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:27:59.547787+00
Date Added: 2024-06-11T16:42:40.599282
License: Public Domain

CROTHERS, Justice,
concurring in part and dissenting in part.
[¶ 45] I concur with Part I and with the conclusions in sections B, C, D, E, F and H of Part II. These Rule violations support suspension. I therefore concur with Part III of the Majority Opinion imposing sanctions. I respectfully disagree with the Majority’s analysis as noted below, and I disagree with the conclusions in Part II, A and G because the findings or the violation of the respective rules have not been proven by clear and convincing evidence.

Violation of N.D.R. Prof. Conduct 7.3 and 7.2

[¶ 46] McCray’s most significant misconduct relates to his solicitation of clients. I write separately on this issue because this Court should articulate what promotional activities are permitted, and what are prohibited, under N.D.R. Prof. Conduct 7.3. The Majority’s passing mention that the Rules “do not expressly prohibit a *848lawyer’s involvement in an educational seminar” is true as far as it goes, but falls short of meaningful articulation of why McCray’s arrangement violated the rule. See Majority Opinion at ¶ 25.
[¶ 47] Justice Kapsner and Justice Sandstrom questioned the Constitutionality of N.D.R. Prof. Conduct 7.3 at adoption. See N.D.R. Prof. Conduct 7.3 cmt., dissent. The questions they raised still exist. With the Rule now in place, their questions require that this Court take care to construe and apply Rule 7.3 in a constitutional, rather than an unconstitutional, manner. See Caldis v. Board of County Comm’rs, 279 N.W.2d 665, 669 (N.D.1979) (when statute subject to two possible interpretations, unconstitutional application should be rejected). Overall, an application consistent with constitutional limits for constraints on commercial speech means that we must permit marketing behavior that is not “false, deceptive, or misleading.” Bates v. State Bar of Arizona, 433 U.S. 350, 383, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977). For implementation of the concept in the context of solicitation, we can take instruction from Belli v. State Bar of California, where the court stated:
“We leave the bar’s solicitation rule free to operate in areas not affecting constitutionally protected speech. We hold, however, that when the bar seeks to discipline an attorney for a communication incident to protected speech, in addition to showing that the attorney intended by his communication to generate business for his law practice, it must demonstrate that the communication or a part thereof was Principally directed toward this end. We build into this construction of rule 2 a belief that the speech interest prevails over the desire of the bar to minimize solicitation of legal business both because the former is anchored in the federal Constitution and because it is properly accorded a fundamental position within that document.”
10 Cal.3d 824, 112 Cal.Rptr. 527, 519 P.2d 575, 581-82 (1974) (internal citations omitted). In Jacoby v. State Bar of California, the rule in Belli was further explained:
“[W]e synthesize Belli and Bigelow [v. Virginia, 421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (1975),] by concluding that a communication is not ‘primarily directed’ toward solicitation unless, viewed in its entirety, it serves no discernible purpose other than the attraction of clients. If a legitimate purpose appears on the face of a publication or in the demonstrated motivation of the attorney, the publication must receive at least prima facie First Amendment protection.”
Jacoby, 19 Cal.3d 359, 138 Cal.Rptr. 77, 562 P.2d 1326, 1334 (1977).
[¶ 48] Enforcement of our anti-solicitation rules within constitutional bounds permits lawyers to present educationally oriented classes, seminars and speeches to and for current and potential clients. Belli, 112 Cal.Rptr. 527, 519 P.2d at 581-82; Jacoby, 138 Cal.Rptr. 77, 562 P.2d at 1334 and at 1344 (Richardson, J., dissenting). Violation of 7.3 occurs when the seminar “serves no discernible purpose other than the attraction of clients.” Jacoby, at 1334. Lawyers with questions of whether particular educational or solicitation activities are permitted can request and rely on ethics opinions from the State Bar Association of North Dakota pursuant to N.D.R. Lawyer Discipl. 1.2(B). Here, however, I agree with the Majority that McCray’s client solicitations exceeded the limits permitted by a constitutional application of our rules.
[¶ 49] The record shows McCray solicited clients by “sponsoring” 25 marketing seminars a year presented by Bellwether, Inc. McCray, through Bradley Ross Law, *849was one of six sponsors (and the only law firm sponsor). The Bradley Ross Law sponsorship was memorialized by a written “Marketing Agreement” requiring that McCray pay $10,833.38 per month in exchange for Bellwether’s contractual arrangement. The Marketing Agreement provided:
1.1 General. Company and BRL [Bradley Ross Law] wish to establish a commercial relationship whereby BRL will become a sponsor of Company’s seminar.
1.2 Company’s Responsibilities.
1.2.1 Promote BRL in the seminar presentation.
1.2.2 Provide forms and other printed materials for potential clients to complete and read.
1.2.3 Provide employees to staff the BRL booth.
[¶50] Rule 7.3, N.D.R. Prof. Conduct, states, “A lawyer, or the lawyer’s representative, shall not ... solicit professional employment from a prospective client when a significant motive for the solicitation is the lawyer’s pecuniary gain....” The contract with Bellwether specifically required Bellwether to solicit clients for McCray, and even for Bellwether to provide personnel for a booth to have those who were solicited sign contracts of representation by McCray. This evidence establishes McCray violated Rule 7.3 when Bellwether promoted McCray’s legal services at the seminar in exchange for $10,833.33 per month for the sole purpose of acquiring new clients.
[¶ 51] The evidence would also allow us to conclude McCray’s contract and course of performance with Bellwether violated N.D.R. Prof. Conduct 7.2(d), prohibiting a lawyer from giving anything of value to a person to recommend the lawyer’s services. That Rule provides:
“A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may
“(1) pay the reasonable costs of advertisements or communications permitted by this Rule;
“(2) pay the usual charges of a not-for-profit lawyer referral service or legal service organization; and
“(3) pay for a law practice in accordance with Rule 1.17.”
Comment 5 to Rule 7.2(d) also is instructive and provides:
“Paying Others to Recommend a Lawyer
“A lawyer is allowed to pay for advertising permitted by this Rule and for the purchase of a law practice in accordance with the provisions of Rule 1.17 [sale of a law practice], but otherwise is not permitted to pay another person for channeling professional work. This restriction does not prevent an organization or person other than the lawyer from advertising or recommending the lawyer’s services. Thus, a legal aid agency or prepaid legal services plan may pay to advertise legal services provided under its auspices. Likewise, a lawyer may participate in not-for-profit lawyer referral programs and pay the usual fees charged by such programs. Paragraph (c) does not prohibit paying regular compensation to an assistant, such as a secretary, to prepare communications permitted by this Rule.”
N.D.R. Prof. Conduct 7.2 cmt. 5 (emphasis added). Rule 7.2(d) was violated when McCray paid Bellwether under the Marketing Contract for widespread improper solicitation of clients at Bellwether’s seminars.
[¶ 52] The petition in this case did not allege a violation of Rule 7.2(d), so no *850discipline can be imposed on this basis. However, McCray’s pervasive and prolonged violations of Rules 7.2 and 7.3, as alleged and proven, warrant the discipline imposed by this Court. Therefore, while I agree and disagree with the Majority on some of the other allegations of misconduct, I concur with the suspension of McCray for six months and one day. Majority Opinion at ¶ 39.

Majority Opinion Part II, A: Hearing Panel Findings

[¶ 53] McCray challenges the hearing panel’s findings that he performed little meaningful work on McKenzie’s case and that the volume of files handled prevented him from having adequate time to represent McKenzie and the firm’s other clients. The Majority adopts the hearing panel’s finding regarding lack of adequate time based on simple math, indicating McCray was unable to spend more than 12 minutes on each of Bradley Ross Law’s 9,450 clients. The Majority adopts the hearing panel’s finding regarding a lack of “meaningful legal work” based on the nature of the letters sent on McKenzie’s behalf. I question whether either of these findings are supported by clear and convincing evidence. However, I also question whether these findings are necessary to our conclusions that McCray violated the North Dakota Rules of Professional Conduct. I write separately out of concern that a future disciplinary action might be based on these questionable findings.
[¶ 54] The expansive factual findings made by the majority and by the hearing panel are suspect because we have only McKenzie’s case file and the testimony of McKenzie, McCray and a former member of Inquiry Committee West. We have neither the testimony of, nor the case files for, any of McCray’s other 9,449 clients. We therefore must exercise care about the sweeping conclusions being applied to all of McCray’s clients based on the very small pool of evidence in this case.
[¶ 55] Among the limited evidence available is the “Client Support Notes,” which essentially are McCray’s time records for McKenzie’s file. Those Notes are 25 pages long and have 62 separate work entries spanning from file opening on February 28, 2005 to post-file closing communications on February 9, 2006. McCray had one file contact on May 12, 2005 for “Attrny Review.” The undisputed testimony was that legal assistants and hired staff made the remaining entries, many reflecting separate listings of similar work (i.e., an individual entry for each dispute letter mailed to Equifax, to Experian and to Trans Union, and individual entries for each email sent to McKenzie advising her of each dispute letter sent). This Court has approved a lawyer’s use of legal assistants and office staff for appropriate support of the delivery of legal services. See N.D.R. Prof. Conduct 5.3 (“Responsibilities Regarding Nonlawyer Assistants”); Rule 1.5(f) (“A lawyer may charge for work performed by a legal assistant.”); Rule 5.5(e) cmt. 12 (“Paragraph (e) does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for it.”); Riemers v. State, 2008 ND 101, ¶ 11, 750 N.W.2d 407 (legal assistant fees recoverable as portion of court ordered attorney’s fees). The question of McCray’s supervision of the non-lawyer personnel is separately discussed in Part II, G of the Majority Opinion and in the text below. With supervision treated separately, we are left with the question about the extent of work done. On that question, McKenzie’s Client Support Notes show considerable file activity over fifteen months in exchange for $590 paid by McKenzie. While the large number of *851clients and the geographical separation between McCray and the nonlawyer staff is cause for concern, on the basis of this record I cannot agree the evidence clearly and convincingly establishes McCray and his support personnel did not have adequate time to represent McKenzie. Nor can I conclude that this evidence, which was nearly all centered on McKenzie, clearly and convincingly established McCray’s support personnel did not have adequate time to represent the other clients.
[¶ 56] I also am not convinced the record supports the finding that McCray provided “little in the way of meaningful legal work.” Majority Opinion at ¶ 15. We permit lawyers to limit the scope of representation, such as to assist a client who is otherwise representing himself or herself. See N.D.R. Prof. Conduct 1.2(c). As long as the client agrees, a lawyer also may be paid for performing non-legal work, i.e., work that may be done by a nonlawyer. This Court has recognized the concept of “law-related services” to include “services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlaw-yer.” N.D.R. Prof. Conduct 5.7(b). Much of what is done in the business of credit repair likely could be characterized as a “law-related service” rather than as “legal services.” See Iosello v. Lexington Law Firm, No. 03 C 987, 2003 WL 21920237, at *5-6 (N.D.Ill. Aug. 12, 2003) (Federal Credit Repair Organizations Act applies to lawyers and non lawyers alike). McCray would remain subject to regulation under the Rules of Professional Conduct if providing “law-related services.” N.D.R. Prof. Conduct 5.7(a). However, whether McCray delivered a “law-related service” within ethical bounds is a far different question than this Court addresses by finding an attorney is or is not doing “meaningful work” for a client, or for 9,449 clients. This record fails to support a conclusion that McCray did “little meaningful work” for McKenzie or for the 9,449 clients about whom we know nothing. I therefore disagree that we should adopt the hearing panel’s finding.

Majority Opinion Part II, G: Violation of N.D.R. Prof. Conduct

[¶ 57] The Majority agrees with the hearing panel’s finding that McCray assisted the leased Indiana employees in the unauthorized practice of law in violation of N.D.R. Prof. Conduct 5.5(e). That conclusion might be supportable for McKenzie based on the testimony and the Client Support Notes if one could conclude the nonlawyer staff in Indiana was acting without McCray’s supervision and control. However, we have little or no evidence on this point, and neither the hearing panel nor the Majority bases its conclusion on evidence pertaining to McKenzie. The little evidence we do have came from McCray, and he testified that he installed telephone, video and computer resources to allow for his immediate file review and to facilitate daily communications with the support personnel. He also testified he was physically present in Indiana more than 20 times in two years. The Majority and the hearing panel concluded, “McCray could not adequately represent 9,450 to 18,000 clients by himself, nor could he adequately supervise 25 to 30 leased employees of the firm located in Fishers, Indiana.” Majority Opinion at ¶ 30. That conclusion was made without any record of the work required for clients other than McKenzie, the time and effort expended for those clients, or details about McCray’s control and supervision over the nonlegal staff. On this record I am compelled to conclude we do not have clear and convincing evidence that McCray assisted his non*852legal staff in the unauthorized practice of law.

Majority Opinion Part II, H: Violation of N.D.R. Prof. Conduct

[¶ 58] The Majority rejects the hearing panel’s conclusion that McCray did not improperly share fees with a nonlawyer. Majority Opinion at ¶¶ 32-34. By doing so, the Majority, properly I think, concludes McCray did engage in improper fee splitting with Bellwether or its affiliates controlled by Snyder. However, I do not agree with the Majority’s rationale.
[¶ 59] The Majority concludes that improper fee splitting occurred because:
“Ninety-five percent of the gross revenues generated by legal fees to Bradley Ross Law, P.C., were paid to Bellwether, Inc., or its affiliates, all controlled by Snyder, who conducted the seminars and recommended the legal services of Bradley Ross Law, P.C. Snyder reaped almost all of the income collected by Bradley Ross Law, P.C., in attorney fees.”
Id. at ¶ 33.
[¶ 60] Improper fee splitting occurred here because the Marketing Contract between McCray and Bellwether essentially made them partners engaging in a business enterprise of credit repair seminars conducted for Snyder to sell books and for McCray to solicit clients. As indicated above, McCray violated N.D.R. Prof. Conduct 7.2 and 7.3 by doing so and, in the process, improperly paid large sums of money to Bellwether. Being improper expenditures by a lawyer to solicit clients in violation of the Rules of Professional Conduct, I agree the payments amounted to improper fee splitting in violation of Rule 5.4(a). I cannot agree, however, that a fee-splitting violation can be found based alone on the percentage of McCray’s income spent to support contracts with Bellwether.
[¶ 61] Both the hearing panel and the Majority fixated on the fact McCray generated millions of dollars and paid ninety-five percent of that sum to Bellwether or an affiliate. Majority Opinion at ¶¶ 32-33. That a lawyer spends ninety-five percent of his or her gross income with one contract vendor may speak of the lawyer’s impending financial doom. But it does not speak of per se unethical conduct. To have such a rule would improperly, unwisely and, perhaps, unconstitutionally bring discipline on lawyers paying significant costs associated with starting a law practice, on lawyers engaging in heavy but authorized advertising to grow a practice, or on lawyers purchasing an existing law practice. See N.D.R. Prof. Conduct 7.2 cmt. 5 (“A lawyer is allowed to pay for advertising permitted by this Rule and for the purchase of a law practice in accordance with the provisions of Rule 1.17....”). I therefore concur with the result reached in Part II, H but respectfully disagree with the Majority’s rationale.
[¶ 62] Daniel J. Crothers