On an Order to Show Cause why respondent should not be publicly reprimanded or otherwise disciplined.
For reprimand -- Justices Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
This is an attorney disciplinary case in which the respondent was found to have violated Disciplinary Rule 2-103(C) and Disciplinary Rule 3-102(A). These Rules, respectively, prohibit an attorney from rewarding a lay person who had referred a client to the attorney and from sharing a legal fee with a lay person. A formal ethics committee complaint was filed against respondent on November 22, 1983 charging him with violating these disciplinary rules. Hearings were held by the District XIII Ethics Committee (Committee), which found that respondent violated both Disciplinary Rules. The Committee recommended a public reprimand. On appeal the Disciplinary Review Board (Review Board) agreed with the conclusions of the Committee, also finding that proscribed conduct was established by clear and convincing evidence. A majority of the Review Board concluded that under the totality of the circumstances, public discipline is warranted.
We have independently reviewed the record, including the transcript of the proceedings before the Committee and the Review Board, and the Committee's Presentment and the Review Board's Decision and Recommendation. The facts are accurately recapitulated in the Review Board's decision, viz:
In early June 1980, Respondent's law firm was contacted by State Senator James R. Hurley who stated he had a client with a Green Acres problem and wanted to know if the firm handled such cases. Hurley was the owner and operator of a public relations and advertising agency and had among his clients, Maurice River Co., a land development company wholly owned by WaWa, Inc. WaWa was interested in selling more than 5,000 acres of land, commonly known as the Union Lake property in the Millville area of the State. WaWa, a Pennsylvania based company, had asked Hurley to recommend a New Jersey law firm to handle the negotiations.
Members of the law firm and WaWa representatives met on June 19, 1980. WaWa representatives wanted to engage the firm, but the parties could not agree on the legal fee. This fee dispute was "so grave" that WaWa contemplated not retaining the firm. The law firm initially was seeking a $20,000
retainer, but WaWa wanted to pay on a percentage basis if the land sale was completed.
Shortly after this meeting, Respondent saw Hurley who asked if the law firm had been retained. When informed of the fee impasse, Hurley said he believed that WaWa was making a mistake and promised to call the company to urge it to retain the law firm. When Hurley contacted Richard Wood, Jr., President and Chief Executive officer of WaWa, he "strongly endorsed" Respondent's law firm as experts in Green Acres matters. As a result of this, Respondent's firm was retained. The fee agreement provided for a $10,000 retainer and potential compensation up to $50,000, depending upon the price ultimately paid by the State for this property.
About six months later, Respondent determined that the $1,200-$1,500 an acre valuation for the property was incorrect and that the property would not sell for more than $800 and acre. The firm also discovered that a portion of the Union Lake property would have to be sold to a local public utility, the Landis Sewerage Authority. The land negotiations became more complicated and Respondent's firm devoted more time to this project than initially anticipated. Respondent informed Vincent E. Anderson, General Counsel for WaWa, that the agreed upon retainer was inadequate and asked the company to consider increasing the compensation. Anderson discussed this request with Wood and they agreed to pay Respondent's firm up to $100,000 if WaWa were satisfied with the results. This change to the retainer agreement was not reduced to writing.
Negotiations for the sale of the Union Lake property were concluded during June 1982. WaWa was to receive $4.1 million from the State and Landis Sewerage Authority for its land. Unknown to both Respondent and WaWa, Hurley had taken an active role as a State Senator in promoting the acquisition of this land because he felt his constituents were in favor of this action.
Sometime in November 1982 Respondent unexpectedly encountered Hurley. During this conversation, Respondent informed Hurley that the project was closed, which Hurley already knew. Expressing his appreciation for referring WaWa to the law firm, Respondent told Hurley that if he were an attorney, he might have been entitled to a referral fee. Since he has not, there was no way the firm could compensate him. In response to Respondent's questions, Hurley said he had not received any additional compensation from WaWa or the Richard Wood Foundation above his regular retainer. Between 1973 and 1979, Hurley's monthly retainer was $300-$350; in 1980, it had been reduced to $100 because the company was phasing out of real estate developments. According to Respondent, Hurley was disappointed in not receiving some compensation for his efforts. Respondent told Hurley he agreed with him since Hurley had done work not related to his public relations retainer by recommending Respondent's law firm and resolving the fee dispute. Respondent promised Hurley ...