(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
In the Matter of Richard J. Simon, an Attorney at Law (D-51-10) (067340)
Argued May 3, 2011 -- Decided June 9, 2011
JUDGE STERN (temporarily assigned), writing for a majority of the Court.
In this attorney disciplinary matter, the Court considers whether it is unethical -- a conflict of interest that violates RPC 1.7(a)(2) of the Rules of Professional Conduct -- for an attorney to sue a client for a fee while the representation is ongoing. The matter involves Richard J. Simon, a New Brunswick attorney, and his representation of Angel Jimenez (the client), who was charged with murder. Respondent Simon was retained by the client's mother and brother (the family) in 2005 to represent the client, whom respondent believed was unable to afford an attorney himself. Respondent received $10,000 in retainers from the family in 2005. Respondent's written agreement with the client and his family provided that he could end his representation if they failed to pay him as billed.
Respondent represented the client from March 2005 through August 2008. By late July 2007, respondent was owed $50,000 in legal fees. At that time, the client's brother told respondent that he was going to refinance a property he owned and he agreed to pay respondent the $50,000 out of the refinancing. The brother subsequently told respondent that he could pay only $10,000 from the refinancing but would pay the remaining fees later. This was confirmed in writing. When the brother paid respondent an additional $10,100, in March 2008, the funds did not come from a refinancing, but from the brother's sale of the property. Respondent was owed $70,000 in fees at that time and had incurred $13,846.57 in costs, but had been paid only $20,764 in fees.
After the client's brother told respondent in June 2008 that "there was no more money," and suggested that the client "take a plea," respondent wrote to the family and to his client informing them that the balance due was more than $60,000 and that he would have to move to be relieved as counsel if payment was not made. Respondent advised them of their right to fee arbitration pursuant to Rule 1:20A-6 (the pre-action notice) and that he would have to sue to collect the balance if payment was not received within thirty days. Respondent moved unsuccessfully to be relieved as counsel in July 2008. He informed the court of his intention to sue to collect the fees owed. The court set a trial date on the murder charges for December 2008. In late August, respondent filed a complaint against his client and the client's family for $74,000 in legal fees and costs. Later, by two amended complaints, he increased the amount sought to nearly $87,000 and also sought to have the sale of the property set aside on the ground that the sale to another family member for $1 was fraudulent and intended to keep respondent from being able to reach it to satisfy his fees.
Respondent reported to the trial court in late September that he was ready to proceed with trial on the murder charges, but after the client learned of the suit for the fees, the client asked for new counsel. The trial court relieved respondent as counsel at that point because the court perceived that it would be impossible for respondent to represent his client in a murder trial now that he had sued for the fees. Respondent maintained he could represent the client, stating later that he had named the client in the action because he believed he had to, but that his intention was to collect only from the client's family. The judge referred the matter to the Office of Attorney Ethics (OAE).
In the ethics proceedings that followed from the referral, respondent and the OAE stipulated to a factual record that was presented to the District VIII Ethics Committee (DEC). The DEC was of the view that respondent had filed suit against the client only after he was unsuccessful in his motion to withdraw, realizing that he would create a conflict of interest that the trial court could not ignore and therefore let him out of the case. The DEC found that respondent violated RPC 1.7(a) (2) and recommended that he be suspended from practice for a period of six months.
In its review of the matter, the Disciplinary Review Board (DRB) found there was clear and convincing evidence to support the findings of the DEC and the conclusion that respondent had acted unethically. The DRB rejected respondent's assertion that because he actually was seeking to be paid by the family and not by the client and was prepared to continue with his representation, he reasonably believed his representation of the client would not be affected by the suit. The DRB also rejected the suggestion that the question presented in the matter was novel in New Jersey. The DRB concluded unanimously that respondent should be reprimanded.
The Court granted respondent's petition for review of the decision of the DRB pursuant to Rule 1: 20-16(b).
HELD: An attorney who sues a current client to recover a fee for legal services in an effort to withdraw from representation violates RPC 1.7(a) (2). Respondent is reprimanded for his unethical conduct.
1. RPC 1.7(a) prohibits a lawyer from representing a client if the representation involves a "concurrent conflict of interest;" such a conflict exists when there is "a significant risk that the representation ... will be materially limited by... a personal interest of the lawyer." RPC 1.7 (a) (2). The interest of a lawyer in being paid for legal services does not itself create such a conflict, but the fee-collection methods available to a lawyer, who has a fiduciary relationship with the client, are limited by the conflict-of-interest rules and the law governing the remedy in question. By filing suit against his client, whom he was defending against murder charges, respondent placed himself in an adversarial relationship with his client and put at risk his duty to defend the client with the utmost zeal. (pp. 15-18)
2. An attorney may not seek a remedy against the client for the purpose of creating a conflict under the RPCs to withdraw from a case. Consistent with the RPCs, an attorney may withdraw from representation if a client fails to fulfill a substantial financial or other obligation to the attorney regarding the attorney's services if the attorney has given notice of the impending withdrawal, and an attorney must withdraw if representation will lead to violation of law, including the RPCs, but the RPCs also require an attorney to comply with a valid order of a court that calls for continued representation. (pp. 19-21)
3. In respondent's case, as the unpaid fees grew, he sought unsuccessfully to withdraw as counsel. Although his situation was difficult, there is a clear inference from the record that respondent sued his client for the purpose of being relieved after the trial court initially denied his motion to withdraw. Knowingly creating an irreconcilable conflict of interest for that purpose by filing suit requires discipline. Mitigating factors that affect the quantum of discipline in this matter include: (1) respondent provided a pre-action notice and moved to withdraw before filing suit; (2) he included the client in the suit only because he believed the client was an indispensable party as the client and a party to the retainer agreement; (3) respondent never looked to recover payment from the client; (4) the OAE has conceded there is a perception of a lack of clarity in the RPCs, and (4) respondent has never been disciplined during his thirty-one years as a member of the bar. The Court defers to the DRB determination that respondent be reprimanded. (pp. 21-23)
JUSTICE RIVERA-SOTO, CONCURRING IN PART and DISSENTING IN PART, agrees that except in very limited circumstances not present in this case, a lawyer cannot ethically sue a current client, but in consideration of the unusual and dire circumstances surrounding this sole practitioner, would impose no discipline on respondent.
CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, and HOENS join in JUDGE STERN's opinion. JUSTICE RIVERA-SOTO filed a separate opinion, concurring in part and dissenting in part. JUSTICE ALBIN did not participate.
On an Order to show cause why respondent should not be disbarred or otherwise disciplined.
JUDGE STERN (temporarily assigned) delivered the opinion of the Court.
This ethics proceeding involves the age-old conflict between an attorney's obligation to represent a client diligently and effectively, on the one hand, and the need to collect payment for the representation, on the other. Specifically, we must address whether respondent, Richard J. Simon, violated RPC 1.7(a)(2) by suing his client, while still representing him, allegedly in order to preserve property which could be used to pay for his services. We conclude that there was a clear violation of the Rule and ethical standards, but limit the discipline imposed based on the totality of circumstances. However, we take this opportunity to emphasize that any future suit by an attorney against a current or existing client in an effort to withdraw from litigation shall not be tolerated.
The matter was heard by a hearing panel of the District VIII Ethics Committee (DEC), see Rule 1:20-6 (governing composition of the DEC hearing panels), on a stipulated record that included the following critical facts:
Respondent was contacted by Julio Sierra to represent Sierra's brother, Angel Jimenez, who was charged with murder [and other offenses] and held in the Middlesex County Detention Center in lieu of bail. Respondent had known the Sierra family for many years. [Respondent believed Julio Sierra to be a financially responsible person who was prepared to pay for his brother's defense, and that Angel Jimenez was not personally able to afford private counsel.]*fn1 A retainer agreement was signed by Sierra, Jimenez and Jimenez' mother, Celida Sierra. Respondent received an initial $5,000.00 retainer from Julio Sierra and another $5,000.00 from Julio Sierra in September, 2005 after defendant's indictment. The retainer agreement set
[r]espondent's hourly rate at $325.00, and provided that [r]espondent could end his representation if the individuals failed to make payment.
Respondent provided legal services to Jimenez from March, 2005 through
August, 2008. The defendant was indicted in March 2005,*fn2
and arraigned on a superceding indictment on August 12, 2007.
Respondent maintained contact with the Sierras, who attended many of
the court appearances. On July 25, 2007, [r]espondent met with Julio
Sierra and discussed his outstanding legal fees. This meeting was
confirmed in a letter dated July 26, 2007. In that meeting,
[r]espondent informed Sierra of more than $50,000.00 in outstanding
legal fees, fees that [r]espondent wanted paid. Sierra asserted that
he was going to refinance his property located at 365 Grove Street,
Perth Amboy, New Jersey, and agreed that [r]espondent would be paid
the $50,000.00 at the time of the refinancing. Based upon this
agreement, [r]espondent continued to provide legal services to
In early January, 2008, Sierra told
[r]espondent that he could only pay
[r]espondent $10,000.00 from the refinancing, but would pay the remaining fees at a later date. Respondent confirmed this in a January 4, 2008 letter. In March, 2008, [r]espondent received an additional $10,100.00 from defendant's brother, however the funds came from Sierra's sale of the property, not its refinancing. By that time
[r]espondent had billed over $70,000.00 in fees, and had incurred $13,846.57 in costs, but had been paid only $20,764 in fees. Respondent placed calls to Sierra seeking payment of the outstanding balance.
On May 1, 2008, [r]espondent sent an itemized invoice to Sierra. On June 10, 2008, [r]espondent was told by defendant's brother that there "was no more money", and that Angel should "take a plea". On June 23, 2008, [r]espondent wrote to defendant's mother and brother, copying defendant, that they now owed him over $66,000 and that he could not continue on as Angel's attorney without payment. In that letter [r]espondent informed them that he was going to make application to the court to be relieved as counsel. Invoices were sent to the client and his family on May 1, 2008; June 20, 2008; July 1, 2008; and August 28, 2008. A letter accompanied each invoice advising of [r]espondent's intent to file a motion to be relieved as counsel if payment was not arranged, and also providing the Sierras and Jimenez with their right to file for Fee Arbitration.
Respondent also informed them, by regular and certified mail, that if payment were not received, he intended to sue for it[.]
The stipulation continued:
In early July, 2008, [r]espondent filed a motion to withdraw as counsel, on the basis of non-payment of fees and a breach of the attorney/client retainer agreement. Attached to his motion were the letters sent to the Sierras and Jimenez informing them of his intent to sue. No opposition was filed by the Middlesex County Prosecutor's Office. At the time the motion was filed, no trial date had been set by the [c]court. The motion was not heard until the end of August, 2008, and was heard by [the trial judge]. At the motion argument, the Prosecutor for the first time voiced objection to the [m]otion. [The judge] denied the motion and, after discerning the attorneys' schedules, set the trial date for December, 2008. At the hearing, [r]espondent indicated his intent to appeal the [j]udge's ruling. The defendant, [r]espondent's client, attended the hearing but was not asked whether or not he wanted [r]espondent to continue to represent him. Respondent did appeal the [j]udge's denial of his [m]otion to [w]ithdraw, and also filed suit against his client and his client's family for his legal fees. Respondent also asked the [c]court to [s]tay the [t]rial pending the appeal.
Respondent learned that his client's family had transferred their home to another family member for nominal consideration, an action [r]espondent presumed was to avoid his obtaining a judgment on it. When [r]espondent's client learned of the lawsuit, he wrote the [j]udge asking for another attorney. When the [j]udge learned of the lawsuit, ...