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In re Ehrlich

Supreme Court of New Jersey

April 4, 2018


          Argued: January 18, 2018

         District Docket No. XIV-2017-0198E

          Johanna Barba Jones appeared on behalf of the Office of Attorney Ethics.

          Respondent waived appearance for oral argument.



         To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.

         This matter was before us on a motion for reciprocal discipline, filed by the Office of Attorney Ethics (OAE), pursuant to R. 1:20-14, following respondent's three-month suspension in Florida for ethics infractions stemming from interstate solicitations for loan modification work by nonlawyers acting on behalf of his firm, charging illegal fees, failing to act diligently in respect of the loan modification clients, failing to supervise his nonlawyer employees, and practicing law in Maryland, a state in which he was not admitted to the bar.

         The OAE seeks the imposition of a three-month suspension, based on respondent's violation of New Jersey RPC 1.3 (lack of diligence), RPC 1.4 (failure to communicate with the client), RPC 1.5(a) (unreasonable fee), RPC 5.3(a) (failure to make reasonable efforts to ensure that the conduct of nonlawyers is compatible with the lawyer's professional obligations), RPC 5.5(a)(1) (practicing law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction), RPC 7.3(b)(5) (initiating unsolicited direct contact with a prospective client when a significant motive is pecuniary gain), RPC 7.3(d) (compensating or giving something of value to a person for recommending the lawyer's services), and RPC 8.4(a) (violating or attempting to violate the RPCs, knowingly assisting or inducing another to do so, or doing so through the acts of another). Respondent agrees with the discipline the OAE seeks.

         We determined to grant the motion for reciprocal discipline and impose a three-month prospective suspension on respondent for his violation of all of the above RPCs, except RPC 1.3, RPC 1.5(a), and RPC 7.3(d).

         Respondent was admitted to the New Jersey and New York bars in 1986, the Washington, DC bar in 1988, [1] and the Florida bar in 1991. At the relevant times, he maintained an office for the practice of law in Coral Springs, Florida, which operated under both the names Ehrlich, Franz, & Harris, as well as Ehrlich & Franz (the Ehrlich firm).

         Respondent has no disciplinary history in New Jersey.

         The facts are taken from two sources. The first is the December 7, 2016 conditional guilty plea for consent judgment (consent judgment), which was tendered to the Florida Bar prior to the filing of a formal ethics complaint. The Florida Bar approved respondent's plea and submitted it to the Supreme Court of that state (Florida Court). On February 16, 2017, the Florida Court approved the consent judgment and imposed a ninety-day suspension on respondent.

         The second source is respondent's sworn statement, given to Florida Bar Counsel, Michael Soifer, on May 17 and June 30, 2016 (sworn statement). Given the lack of detail in the consent judgment, we found it necessary to supplement the facts with information from respondent's sworn statement.

         Prior to the formation of the Ehrlich firm, respondent previously worked in the mortgage and title industries. In the spring of 2011, one of his former colleagues suggested that respondent take on loan modification work.

         In August 2011, respondent and his partners formed Ehrlich, Franz & Harris. When Harris left in late 2012, the firm changed its name to Ehrlich & Franz. In January 2014, respondent and Franz split the practice.

         When the Ehrlich firm was formed, the bulk of respondent's practice was wills, trusts, and estates, along with occasional transactional work. Harris handled general litigation matters, and Franz worked on personal injury cases.

         In addition, from its inception until mid-2014, the Ehrlich firm offered services to individuals seeking modification of their residential mortgage loans. The partners decided to take on loan modification work, as a way "to join the practices." For example, Franz would increase his caseload by representing clients in bankruptcy and foreclosure proceedings.

         Franz was charged with researching the proper way to take on such work. According to respondent, Franz's research "was fairly vast," and, based on his advice, communications with the Florida Bar's ethics department, and the review of both state and federal loan modification rules and statutes, the firm proceeded with the loan modification work.

         Respondent and his partners employed nonlawyers to perform the loan modification work. "For the most part," the nonlawyer employees communicated with the clients. Indeed, respondent stated to Florida Bar counsel that he never met with, or even talked to, the twenty-six grievants, all of whom spoke Spanish. The Spanish-speaking clients communicated with employees Joe Sagarra; Claudia Perrera, whom respondent identified as a "processor;" and, to a lesser degree, Sylvia Montero, "a kid that worked for us for a few months."

         Sagarra played a large role in the firm's representation of loan modification clients. He solicited many of them, some of whom resided in Maryland. The Maryland clients were charged upfront retainer fees, which was improper, as respondent was not licensed to practice law in that state.

         In addition to Maryland residents, Sagarra solicited Florida residents. He obtained a multitude of clients for the firm via "referrals through his system of people." Sagarra's "people" included several churches, from at least one of which he secured the "entire" congregation as respondent's clients. Another source was Nelly Gerson, a loan modification client.

         Twenty-six clients filed grievances with Florida Bar Counsel. When the Ehrlich firm learned of the grievances, it fired Sagarra and began winding down the loan modification operation. Respondent made full restitution to the grievants, totaling $98, 855.[2]

         Based on the above facts, respondent admitted having violated the following Florida RPCs:

• 4-1.3 [Diligence];
• 4-1.4 [Communication];
• 4-1.5(a) [Fees and Costs for Legal Services];
• 4-5.3(b) [Responsibilities Regarding Nonlawyer Assistants];
• 4-5.5 [Unlicensed Practice of Law; Multijurisdictional Practice of Law];
• 4-7.18 [Direct Contact with Prospective Clients]; and
• 4-8.4(a) [Misconduct].

         In the consent judgment, respondent asserted the following mitigating factors: (a) absence of a disciplinary record; (b) absence of a dishonest or selfish motive; (c) timely good-faith effort to make restitution or to rectify the consequences of misconduct; (d) full and free disclosure to the disciplinary board and cooperative attitude toward proceedings; and (e) character and reputation.

         As stated above, on February 16, 2017, the Florida Court approved the consent judgment and suspended respondent for ninety days, effective March 1, 2017. On March 7, 2017, respondent's counsel in the Florida ethics proceeding notified the OAE of the suspension.

         Following a review of the record, we determine to grant the OAE's motion. Reciprocal discipline proceedings in New Jersey are governed by R. l:20-14(a)(4), which provides in pertinent part:

The Board shall recommend the imposition of the identical action or discipline unless the respondent demonstrates, or the Board finds on the face of the record on which the discipline in another ...

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