For reprimand -- Chief Justice Weintraub, Justices Jacobs, Proctor, Hall and Mountain, and Judges Conford and Sullivan. Not guilty -- None.
The Monmouth County Ethics Committee filed two presentments against respondent charging him with unethical conduct. We consider these separately, as the cases are completely unrelated.
In relation to this matter the Committee found unethical conduct in three respects: (a) respondent charged Mr. N. an "exorbitant and unconscionable" fee for representing him in the successful defense of an indictment on a criminal charge; (b) he used economic coercion in exacting from N. and his wife a note and second mortgage on their home; and (c) there was a conflict of interest in his representing the N.'s on the closing of title on sale of their home and at the same time asserting an adverse lien for his services in the criminal matter against the proceeds of the sale.
N. had been charged with criminally improper behavior with a minor girl placed in his home by the Bureau of Children's Services. In November 1969 he and his wife retained respondent, who had represented him previously in other matters, to defend the charge. The latter investigated the matter, interviewed the N.'s and certain other witnesses, arranged for N.'s arraignment and bail, prepared for trial and tried the case, which took about a day. N. was acquitted on February 23, 1970.
On November 21, 1969 respondent billed Mr. and Mrs. N. for $1,500 as a "retainer" for services performed and to be performed in the criminal matter. Shortly thereafter he
and they agreed that his fees in the case would be paid out of the proceeds of the prospective sale of their home. A mortgage on the property was then, or shortly thereafter became, in default. The Committee found that "the November 21 bill of $1,500 was intended to suggest to complainants that the legal fee would be substantial and clearly this was their expectation".
Shortly after the acquittal respondent billed the N.'s $3,500 for services in the criminal case, apparently inclusive of $400 he had paid out for investigative expenses. Mrs. N. complained that the fee was too high, but nevertheless both N.'s, as the Committee found, agreed with respondent that the fee would be paid out of the proceeds of the sale of their Englishtown home, which they had shortly before that time contracted to sell for $33,500. Respondent was retained to represent them in connection therewith. They gave him the impression they would move into an apartment after the sale but instead they contracted to purchase a substitute home in Matawan, retaining Irving J. Verosloff as attorney for that purpose.
Closing of title to the Englishtown property was set for June 1, 1970 at the Perth Amboy office of the attorney for the purchasers, Norman A. Cohen. Several days previously Mrs. N. and respondent discussed the matter of the bill, and she then said they would not pay it at the closing as they wanted to deposit the net proceeds of the sale in the bank, pay other pressing bills, and discharge the obligation to respondent out of what remained. Respondent strongly objected. As the Committee found, Mrs. N. did not reveal to respondent that they had contracted to buy another property, for which they would need a substantial deposit -- funds which would have to come out of the proceeds of the sale. Nevertheless respondent learned about the proposed purchase a day or two prior to the June 1 closing date.
On June 1 respondent and the N.'s appeared at Mr. Cohen's office for the closing. Respondent handed Mr. Cohen and N. a letter-notice of claim of lien on the sale proceeds
for $3,750 ($250 for services in the real estate matter), demanding that this sum be held in escrow by Cohen pending disposition of the fee dispute. The closing was adjourned to June 4, and the dispute resolved by agreement by the N.'s to pay respondent $500 down and execute a $3,250 second mortgage on the Matawan property, payable at the rate of $60 per month. After closing of the Englishtown title respondent and the N.'s repaired to Mr. Verosloff's office where the latter prepared and the N.'s signed and delivered to respondent the note and mortgage. Verosloff was not asked by the N.'s for legal advice on the mortgage arrangement nor did he tender any. At the time of the presentment only $10 had been paid on the fee balance.
A. The amount of the fee.
In finding the $3,500 fee greatly excessive the Committee stressed the moderate earning capacity of N., a toolmaker earning about $150 net weekly at the time of respondent's engagement. However the services were substantial, involved considerable professional responsibility and were attended by a successful result. While the Disciplinary Rules enjoin that a lawyer's fee should be "reasonable" and not "excessive", DR 2-106(A), discipline is called for only if the fee charge is "so excessive as to evidence an intent to overreach [the] client"; Ibid. (D); In re Quinn, 25 N.J. 284 (1957). The Committee's findings ...