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Archive for the ‘California LPL’ Category

The State Bar of California Moves to Suspend Michael Avenatti’s Law License

Posted on: June 11th, 2019

By: Paige Pembrook

On June 3, the State Bar of California filed a petition to place attorney Michael Avenatti – infamous for his past representation of Stephanie Clifford (a.k.a. Stormy Daniels) and his own present legal woes – on involuntary inactive status, which is the first step toward disbarment. The State Bar action follows Avenatti’s indictment for his alleged embezzlement of millions of dollars from clients in California, conduct that the Bar says poses “a substantial threat of harm to clients or the public.”

The State Bar petition primarily focuses on the case of former Avenatti client Gregory Barela, who alleges that Avenatti illegally withheld settlement funds and then repeatedly lied about it. Barela alleges that Avenatti did not disclose receipt of Barela’s settlement funds despite Barela’s repeated inquiries over several months, that Avenatti refused to provide an accounting of the settlement funds as required by California law, and that Avenatti presented Barela with a falsified settlement agreement that misrepresented that dates that payment would be received.

The State Bar stated that Avenatti provided no defense or response to the State Bar investigators. Avenatti disagreed and stated that he “offered to cooperate with the Bar and instead they decided to issue a press release as a stunt.” Avenatti has until June 13 to file a formal response and request a hearing, or else he will waive his right to a hearing.

Although the allegations in the State Bar petition to suspend Avenatti’s license appear extreme, all attorneys should be wary of misappropriating client funds in violation of California Rules of Professional Conduct, Rule 1.15, and Business and Profession Code section 610. Under Rule 1.15, attorneys have a duty to properly hold, manage, and account for money held in trust on behalf of clients, and sometimes on behalf of others. An attorney violates Rule 1.15 when the attorney’s trust account balance falls below the amount required to be held on behalf of his or her clients, and it is due to a willful act of the attorney, regardless of the attorney’s explanation. If the Rule 1.15 violation occurs due to the attorney’s dishonesty, recklessness, or grossly negligent management of the client trust account, then the misappropriation of client funds also violates Business and Profession Code section 6106 and almost always results in severe discipline, including possible disbarment.

Whether or not they are in the public spotlight, all attorneys must attentively manage their client trust account to ensure that they always contain the amounts held on behalf of clients. Otherwise, those attorneys may be exposed to State Bar discipline, disbarment, and civil liability to their clients, just like Avenatti.

For more information, please contact Paige Pembrook at [email protected].

Avoiding Legal Malpractice Tip: Do Stuff Early

Posted on: May 31st, 2019

By: Greg Fayard

Missing deadlines is a common source of lawyer malpractice. A blown statute of limitations can be most problematic, as the malpractice case focuses on the value of the underlying case (damages). A missed deadline usually is caused by one of three reasons: 1) simply not knowing the deadline; 2) a calendaring failure; or 3) believing you know when something is due, but you’re wrong. Some deadlines are well-known, but many are not. Well-known deadlines under California law, where I practice, include the five-year timeframe to bring a case to trial, or two years to bring a negligence claim. Other deadlines are less well-known, like the ten-year statute of repose to bring a claim for a latent construction defect, or whether transferring a case from Small Claims Court to the Superior Court is permissible after the limitations period for the Superior Court case has elapsed. (In California, it is not permissible. (Jellinek v. Superior Court (1991) 228 Cal.App.3d 652, 654).)

While waiting to the last minute to do something is of course better than forgetting a deadline, allowing the deadline to dictate when you do something puts the focus on the deadline as opposed to what may or may not be in the client’s best interests. So my legal malpractice avoidance tip is:  try to act before deadlines, not on them. That is—do stuff early.

 If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Avoiding Legal Malpractice Tip: Document, Document, Document

Posted on: May 24th, 2019

By: Greg Fayard

“Boy, I wish that was in writing!”

Having defended scores of attorneys over the years, more often than not, I wish my lawyer-client had either better documented his or her file, or memorialized a key conversation. It certainly helps defending legal malpractice claims when a pivotal issue is in writing as opposed to merely being oral.

While it is not possible to document every detail in a legal matter, having the mindset of documenting interactions with clients can reduce legal consequences should a client sue. A simple e-mail confirming a conversation, or a time entry stating the substance of a conversation can help in defending a legal malpractice claim. Letters work too, of course, but are more time-consuming. For a key strategy decision in a case, a quick “memo to file” in e-mail form works as well as something more formal. A lawyer’ mindset should be: something in writing is better than nothing in writing.

But writings are not only helpful in “defending” a claim. A contemporaneous writing on a key point or issue in a matter may be enough to dissuade the client from suing in the first place.

In sum: the lawyer who chooses to document a file, over not documenting, no matter how informal, will be in a better position in the event the client is later dissatisfied with the lawyer’s services.

If you have any questions or would like more information, please contact Greg Fayard at [email protected].

California Attorneys Who Fail to Comply with the State Bar Re-Fingerprinting Rule Risk Monetary Penalties and License Suspension

Posted on: April 30th, 2019

By: Paige Pembrook

April 30, 2019 marks the initial deadline for California attorneys to comply with California Rules of Court, Rule 9.9.5—the rule that requires attorneys to re-submit fingerprints to the State Bar so the Bar can obtain records regarding attorney arrests and convictions.  Attorneys who fail to comply with the re-fingerprinting rule by April 30, 2019 will be subject to monetary penalties. Attorneys who fail to comply with the re-fingerprinting rule by the final deadline of December 1, 2019 will have their licenses suspended.

For the past 30 years the State Bar has not been complying with its statutory mandate to use attorney fingerprinting to obtain information about attorney arrests and convictions from the California Department of Justice (DOJ).  Although attorneys were fingerprinted at the time of admission to the State Bar, neither the Bar nor the DOJ retained those fingerprints for purposes of reporting arrests and convictions of admitted attorneys.

Rule 9.9.5 rectified this situation by requiring all active licensed attorneys to be re-fingerprinted by December 1, 2019. The State Bar and DOJ will retain the fingerprints to enable the Bar to receive state and federal criminal record information, including a summary of arrests, criminal charges, and sentencing.

Thus far, the re-fingerprinting rule has revealed that over 2,000 practicing attorneys have previously unreported criminal records, including 20 previously unreported felonies. The 20 previously unreported felonies have been sent to the State Bar’s Office of Chief Trial Counsel for review and potential disciplinary action.

Regardless of the re-fingerprinting rule, attorneys are required to report criminal convictions to the State Bar under the self-reporting mandate. The State Bar may discipline attorneys for failing to report a conviction to the Bar, for the conviction itself, or for both.  The best practice is to self-report any convictions as well as timely comply with the re-fingerprinting rules.

Even attorneys who have no criminal history should be sure to submit their fingerprints by the final December 1, 2019 deadline. Otherwise, such attorneys risk license suspension and exposure to liability for the unauthorized practice of law.

If you have any questions or would like more information, please contact Paige Pembrook at [email protected].

Engagement Letters Can Reduce The Risk of a Legal Malpractice Claim

Posted on: April 26th, 2019

By: Greg Fayard

Lawyers often ask: what can I do to reduce the risk of a legal malpractice lawsuit? They can do several things, but a clear, narrowly-tailored engagement letter can certainly help decrease the risk of a claim. Here are some tips on effective lawyer-client engagement letters.

• Treat the letter more as an opportunity to build rapport with the client, and less as a formal, intimidating contract. How the relationship begins often determines how it will end, thereby mitigating the risk of a dispute down the road.

• Specifically, identify who the client is to avoid confusion. For example, an engagement letter can state the client is a corporation while excluding officers, directors and shareholders. Stating who is not the client can be as important as stating who is the client.

• State clearly how long the representation will last. Will it end upon settlement, a plea, a conviction, judgment enforcement, but not an appeal? For transactional matters, will the representation end when funds have been transferred and received or after any monitoring provisions lapse? A well-defined length-of -representation clause can also aid the lawyer in a statute of limitations defense. Statutes of limitation begin to toll on termination of the lawyer-client relationship.

• A good engagement letter should also specify precisely the fees in a matter, how fees are calculated, how fees are different than costs, and who is responsible for costs. Contingency matters should also be precise in terms of the percentage going to the attorney, and if different percentages apply, when those percentages apply. Whether a personal injury attorney is entitled to additional funds upon successfully negotiating a medical lien should be succinctly laid out as well. However, the client should be given the opportunity to consult independent counsel with regard to extra attorney compensation for negotiating a medical lien.

• Most importantly, an engagement letter that specifies the scope of representation can help address any misunderstandings over whether the lawyer was to advise a client on all legal issues faced by the client, or only a specific matter. A general scope of representation clause in an engagement letter can lead to a client believing the lawyer represents the client on all of its legal issues, indefinitely, causing some clients to believe the lawyer has an ongoing duty of representation.

For any questions, please contact Greg Fayard at [email protected].