On an Order to Show Cause why respondent should not be disbarred or otherwise disciplined.
For reprimand -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
[100 NJ Page 538] This disciplinary matter is before the Court on an order to show cause why respondent, Robert S. Miller, should not be
disbarred or otherwise disciplined. The Decision and Recommendation of the Disciplinary Review Board (DRB) found respondent guilty of unethical conduct and recommended a public reprimand. Our independent review of the record leads us to the same conclusion. We therefore adopt the following DRB Decision and Recommendation, with several modifications as noted below:
This matter is before the Board [DRB] on a presentment filed by the District X (Morris County) Ethics Committee.
The presentment charges that Respondent had entered into a business relationship with a client in a manner contrary to DR 5-104(A); extracted a release from the client at the termination of their business/legal relationship, contrary to DR 6-102(A); had negligently handled an estate for this client, contrary to DR 6-101(A)(2); and had paid himself legal fees from estate funds without notice to, prior consent from, or accounting to the client, contrary to DR 9-102(B)(3) and (4).
The factual background underlying this matter commenced prior to Respondent's representation of the complainant. [In October, 1976,] Respondent, with a partner, Harold Goglia, [Jr.,] formed a corporation known as Archer Pace Associates, Inc. [(Archer Pace)] to provide general messenger and subpoena services primarily for attorneys.
When Goglia later decided to leave the company, he and Respondent signed an agreement on September 12, 1977 whereby Respondent would buy out his interest in the corporation. This agreement provided that the company would [purchase all of Goglia's stock and] satisfy all loans [for a total of] $4,000 * * *, $1,000 of which was payable upon execution of the agreement and the balance payable in monthly installments. The company did not comply with the payment terms of this agreement. Respondent, at a later date, performed legal services for Goglia in satisfaction of the outstanding debt.
On December 16, 1977, Respondent personally signed for a $15,000 loan with United Jersey Bank for Archer Pace. Of the total amount, Respondent kept $10,000 as repayments of loans he had made to the company during the preceding year. While the balance was deposited in the Archer Pace operating account, $1,000 from this was paid as a placement fee for the loan, leaving a $4,000 net balance to the company.
In February 1978, Respondent dissolved his sole practice of law and joined a law firm. About a month before this, he was contacted by Mrs. Lynn Krauthamer, the grievant, to handle the estate of her husband who died December 8, 1977. Respondent had represented her before in various matters over many years. The estate had a value of over $350,000. A substantial portion of this was represented by shares held by decedent in two corporations operated with a partner shareholder. As a result of [a] buy-sell agreement, decedent's widow was to receive $135,000 in installments for the shares.
In handling the estate matter, Respondent established a trust account. Of $110,000 he received in trust, $50,000 was placed in escrow under an agreement with the attorneys for the surviving shareholder to guarantee payment of estate and inheritance taxes. In May 1978, he sent complainant $50,000 from the $110,000 held in trust, suggesting that the money should be placed in a savings account until [they selected] other financial investments * * *. During this period, Respondent handled other transactions regarding this estate.
After Mrs. Krauthamer had received the $50,000, Respondent informed her about his business enterprise, Archer Pace. He offered to sell an interest in it to her. Mrs. Krauthamer was involved in other business ventures at this time and, according to Respondent, she felt that this would be a good business for her daughter to operate. Initially, he told her that she and her daughter could buy into the company for $10,000 ($5,000 each). Later, the purchase price was increased by an additional $15,000 to satisfy the outstanding bank note. This increased price, however, gave the grievant a controlling interest (75%) in the company.
Respondent was satisfied that Mrs. Krauthamer was completely knowledgeable about Archer Pace before she entered into the agreement. Financial records, including check books, obligations and accounts receivable statements were provided [by Respondent] for review by her and her daughter, a trained bookkeeper. At this time, the company was substantially indebted and had only a small income. * * * Respondent advised her that she could seek the advice of independent counsel while considering this matter, but he did not encourage her to do so. He did urge her, however, to have the ...