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Category: Ethics & Professional Responsibility

Overbilling Case Raises Questions about Public Corruption

June 19, 2018

A recent NLJ story by Amanda Bronstad, “How a Fee Inquiry Led to Hints of Public Corruption That Have Labaton Fight,” reports that, what began as a judge’s inquiry into a $75 million attorney fee has morphed into hints of public corruption, with one of the top securities plaintiffs firms in the nation on the defensive.  A year ago, U.S. District Judge Mark Wolf in Boston began looking into potential overbilling in a securities class action settlement with State Street Corp.  To spearhead the probe, Wolf brought in a special master who filed his 377-page report on May 14 under seal.

But the report’s findings prompted Wolf last month to order that George Hopkins, the executive director of the lead plaintiff, the Arkansas Teachers Retirement Fund, show up in person for a May 30 hearing.  Wolf said he could end up returning a “significant amount of money” to class members, according to a transcript of that hearing.  But it’s not overbilling that’s caught his attention.  The judge appears focused on the report’s finding of an undisclosed payment that went to a lawyer for a referral.

According to the hearing transcript, Wolf wanted to know more about New York-based Labaton Sucharow’s relationship with the Arkansas pension fund.  Then, mentioning “referral fees,” he asked about a number of individuals, including a former state legislator in Arkansas and two Texas plaintiffs lawyers.  In the sealed report, one of those lawyers, referred to in the transcript as “Mr. Chargois,” said Labaton asked him to introduce the firm to institutional investors in Arkansas, the judge said. He now gets 20 percent of Labaton’s fees in the class action even though he “didn’t do any work for it, and there was an assiduous effort to keep that from counsel in the case and others,” the judge said in the transcript.  “I think it is foreseeable that when the report becomes public, there are going to be questions about the origin of this relationship and whether all those millions of dollars stopped with Mr. Chargois,” the judge said in a transcript.

Labaton has fought back against the allegations, insisting the payments were legal.  On June 15, Wolf unsealed several documents including a June 8 motion in which the firm asked the judge to recuse himself, citing a “serious conflict” and a “legitimate concern as to whether Labaton will receive a truly impartial review.”  A footnote in the motion indicated that the special master has proposed a $4.1 million cut to its fees, the “same amount as the fee paid to the referring firm.”

Also unsealed was a sidebar discussion during the May 30 hearing at which Labaton’s counsel raised concerns about the judge’s remarks.  “You’re suggesting public corruption,” the firm’s attorney, Joan Lukey, of Boston’s Choate Hall & Stewart, told the judge.  “Honestly, your honor, I am appalled that that was even said.”

Special Master’s Focus

Wolf’s initial concerns focused on potential overbilling on the part of the three lead plaintiffs firms, which also include San Francisco’s Lieff Cabraser Heimann & Bernstein.  Those firms agreed to pay the costs of the special master, Gerald Rosen, a retired federal chief judge from the Eastern District of Michigan.  In ordering Hopkins to testify, Wolf raised concerns about whether, given the findings of the report, he should replace class counsel, and the lead plaintiff, in light of a potential conflict of interest.  Hopkins, in a June 6 affidavit, said he had retained outside counsel to handle questions relating to the special master’s report but insisted that the Arkansas pension fund could continue to adequately represent the class.

Hopkins, in sworn testimony, told the judge: “I have never asked a law firm to hire some attorney.  I have never asked a law firm to make a political contribution.”  The questioning appeared to catch Labaton off guard.  “Have you formed an opinion that there is something in this record that suggests that some form of public corruption occurred?”  Lukey asked the judge during the sidebar discussion.

“No,” the judge said.  “But I’ve formed the opinion that those are questions that are raised.”  He added: “I can foresee the reasonable likelihood that the conduct of Arkansas Teacher is going to become part of the controversy, and it causes me to have questions about whether it’s an appropriate lead plaintiff.  Who is representing—remember what this is about.  Who is representing the class?”  Labaton has its own questions.  The recusal motion indicated that class counsel would be seeking an accounting of the $3.8 million they had agreed to pay to fund the special master’s report.

“That millions of dollars paid by customer class counsel have been expended on the master’s investigation without a suggestion of, or a shred of evidence to support, public corruption is telling,” the motion continues.  Labaton and its lawyers have frequently made campaign contributions to both federal and state politicians, but their donations to Arkansas state election campaigns have been minimal, according to a search of records since 2002 at FollowTheMoney.org, the website of the National Institute on Money in Politics.

The questions raised by the judge in this case, though, may shed light on the politics behind how plaintiffs firms often get public pension funds for clients in large securities class actions.  “This is the murky underworld of how securities fraud class action firms acquire their clients,” said Adam Pritchard of the University of Michigan Law School, who has written about how plaintiffs attorneys have made political contributions in hopes of getting institutional investor clients.  “This may be an alternative way of getting yourself a lead plaintiff. People have connections—good ol’ boy networks—that help grease the wheels. And, if they do that, then they expect to get paid.”

Making the Introduction

Hopkins became the executive director of the Arkansas pension fund in 2009.  At the May 30 hearing, Hopkins told Wolf that even though Labaton had started working with them a year earlier, he hadn’t considered moving forward on potential lawsuits.  “Then our political leaders in Arkansas convinced me that I should,” he said.  “I’m sorry, what did you say?” Wolf responded. “The political leaders convinced you that you should be interested in these class actions?”  The judge pressed Hopkins to give names. Hopkins mentioned “several legislators,” “people at the governor’s staff” and “the Department of Finance Administration of Arkansas.”

But Wolf’s focus was on a retired state legislator named Steve Faris.  In particular, he wanted to know how much Hopkins had talked to Faris about the law firms handling the pension fund’s class actions.  Faris, Hopkins explained, was a member of the Arkansas General Assembly, which has indirect supervision of the pension fund because it adopts the laws that govern the organization.  He said Faris was co-chair of the public retirement committee in the state’s House of Representatives at the same time Hopkins co-chaired the public retirement committee in the state Senate.  They grew up in the same county and went to the same college.  Hopkins acknowledged he’d talked to Faris and others about the case.

“You know, sometimes we’d get an interesting case, and I would tell him, here’s this case and Labaton represents us,” Hopkins told the judge, noting that the fund works with other firms such as Bernstein Litowitz Berger & Grossmann and Kaplan Fox & Kilsheimer.  But he denied that Faris ever encouraged him to use Labaton.  “Did he ever tell you that he had a role in introducing Labaton to Arkansas Teacher?” Wolf asked.  “No, he never told me that.”

After the report came out, Faris acknowledged to Hopkins that “he had met a couple of Labaton attorneys” and introduced them to Paul Doane, who was the pension fund’s executive director at the time.  Hopkins told the judge “he introduced some attorneys that he knew, and sort of rolled out of the room.”

In an interview, Faris, now a board member of the Arkansas Public Employees Retirement System, acknowledged that he called Doane to introduce him to Labaton—but that was the extent of it.  “All I did was call Paul Doane and say, ‘Here are these people,’” he said.  “Every member of the retirement committee gets requests like that.”  Doane resigned in 2008 following a state audit that found he spent $34,515 on out-of-state travel expenses during the year he was executive director of the Arkansas pension fund.

In court, Hopkins denied any wrongdoing occurred.  He told the judge “you seem to assume that, you know, how Labaton became associated with ATRS was in some way improper, illegal, or untoward, and I don’t think the record shows that.”  Labaton’s attorney, Lukey, said she was shocked at the judge’s remarks at the hearing, according to the transcript of the sidebar discussion.  She asked the judge to clarify if he was “suggesting there was an impropriety involving Senator Faris with the monies being paid?  Because there is nothing.  I mean nothing.”  Wolf replied that “yes, those questions occur to me when I read it.”

Neither Labaton nor any of its current or former lawyers gave political donations to Faris, who ran in elections from 2000 to 2006, according to FollowTheMoney.org.

Finding Mr. Chargois

But Wolf didn’t ask about political donations.  He asked Hopkins if he knew of an Arkansas lawyer named “Herron.”  Hopkins said he knew the name but had not met him.  During the sidebar discussion, the judge elaborated, describing “Mr. Chargois”—the lawyer who was getting a 20 percent fee from Labaton—as having a partner named Herron who knew Faris.

The only attorneys in Arkansas by those names are Timothy Powell Herron and Damon Chargois, both with the same address in The Woodlands, Texas, according to Arkansas bar records.  But Herron, who said he’s retired from practicing law, said in an interview that he and Chargois were law partners with an office in Arkansas.  His uncle also was an aide to Faris.  “We had a referral practice,” he said. “We worked with other firms on some cases, like asbestos cases, toxic torts, things like that.”

He also insisted that that his firm worked on all the cases it referred, often handling depositions.  Any referral fees would have been justified and disclosed, he said.  “We did refer a number of firms but the expectation was we wouldn’t want the case if we weren’t involved,” he said.  “I never remember any kind of arrangement with anybody where we got a percentage and didn’t do a damn thing.”

He said his memory is “fuzzy” when it comes to Labaton.  He remembered the firm asked for an introduction to Faris for a case that the governor’s office was handling, but he did not recall the State Street lawsuit.  “I knew some people, did some campaign contributions, so it opened a few doors,” Herron said.  “George Hopkins was a longer-term friend of Steve Faris, and I imagine what happened is we may have cracked the door a bit, but Mr. Hopkins stepped in. We never had anything to do with that case. He steered that case to Labaton.”

Labaton, in a statement, called the judge’s suggestion that a payment may have led to the firm’s hiring is “baseless.”  Further, the firm wrote, “there is no mention of any such influence payment in the special master’s exhaustive report, which remains under seal” and “not a single finding suggesting that attorneys’ fees awarded by the court were used to pay elected or other officials.”

“The evidence and testimony of all relevant parties in this matter is clear: the referral payment went only to the lawyer who made the original introduction of our firm to ATRS,” Labaton said in its statement.  “State Senator Steve Faris has received no political contributions or any other payments from any member of either the Labaton firm or the referring lawyer, and Labaton made no payment of any kind to obtain work by ATRS.”

At the May 30 hearing, Labaton’s attorney, Lukey, insisted that the referral payment at issue was legal under Massachusetts law, but a lawyer for the special master, William Sinnott, of Barrett & Singal in Boston, disputed that characterization, calling it an undisclosed “finder’s fee.”  Failing to disclose the payment might be enough for the judge to be concerned, Pritchard said.

“It may be that this referral fee is nothing sordid, but that doesn’t mean that it doesn’t have to be disclosed to the client,” he said.  “If part of the money paid by Labaton is being spent on referral fees, the court likely thinks it’s entitled to know that because it has to approve the fees.”  But it’s imperative that the judge ask, Labaton said in its statement.

“The special master’s conclusions—which have no basis in fact or law—put the burden of disclosure of a referral payment on counsel, while the law itself places the burden on the court to ask,” the firm said.  “Here the court did not ask.  Thus, the court is placed in a tenuous position having to decide whether it bears responsibility for not asking—or shifting the blame to class counsel.”

Lead Plaintiff in State Street Overbilling Case Hires Outside Counsel

June 7, 2018

A recent NLJ story by Amanda Bronstad, “Lead Plaintiff in State Street Overbilling Probe Hires Own Counsel but Stays in Case” reports that the executive director over an Arkansas pension fund has retained outside counsel but insisted he could continue to serve as lead plaintiff in settlements with State Street Corp. despite an overbilling probe that could end up returning a “significant amount of money” to class members, according to a federal judge’s remarks.  In an affidavit, George Hopkins, executive director of the Arkansas Teacher Retirement System, said he had retained Thomas Hoopes of Boston’s LibbyHoopes, who represents professionals in criminal matters and corporate investigations.

Senior Judge Mark Wolf of the U.S. District Court for the District of Massachusetts had ordered the affidavit following a May 30 hearing at which Hopkins testified about his role as lead plaintiff and the relationship between his Arkansas pension fund to Labaton Sucharow, one of three plaintiffs firms whose potential overbilling in a $75 million attorney fee request prompted Wolf to bring in a special master, who filed his report under seal last month.  At last week’s hearing, Wolf raised concerns that Hopkins and Labaton Sucharow, which has defended the fee request, now has a conflict with class members.

“The conduct of Labaton and the other lawyers you selected has been called into question,” he told Hopkins, who testified at the hearing.  “The special master, as you know, recommends that what, by my standards, is a significant amount of money be returned by those lawyers and distributed to the class.”  He said his “paramount responsibility” is to the class and whether the lead plaintiff is “typical and adequate,” in light of the report’s recommendations.

“Do you understand, therefore, that I have a concern that there may be a conflict at this point between the interests of Labaton and the other lawyers, who want to vindicate the propriety of everything they did and keep the money,” he said, “and the class that would benefit if I ordered some of that money paid back?”  In his May 31 order, Wolf asked whether the Arkansas pension fund wanted to continue to be lead plaintiff and, if so, whether it would seek legal advice other than Labaton concerning the case.

In his affidavit, Hopkins acknowledged the judge’s concerns but insisted he could still represent the class.  “I do firmly believe that we all can learn from this case, including a little more ‘trust but verify,’” wrote Hopkins, who has been the system’s executive director since 2008.  “However, trusting those who have not previously given us cause to distrust does not create a failure of duty.  Imperfection may or may not signal more.  Still, hindsight is 20/20 and hindsight will certainly lead to refinements in best practices, at least for class representatives both sophisticated and less sophisticated as there is no instruction manual on how to be a class representative.  But that does not prevent ATRS from continuing to do our best to be both fair and vigorous on behalf of those we serve.”

He wrote that Hoopes’ legal advice consisted of the Arkansas pension fund’s duties to the class and other issues raised in the special master’s report.  But Hopkins said he would continue to consult with Labaton on the settlement’s distribution.  Labaton issued a statement defending the affidavit and saying the Arkansas pension fund had a “critical role in helping formulate and evaluate litigation strategy, overseeing and supporting class counsel and establishing a basis for a strong financial recovery for the class.  George Hopkins personally did an outstanding job as class representative throughout the six-year entirety of the case.”

A year ago, Wolf appointed the special master, Gerald Rosen, a retired federal chief judge from the Eastern District of Michigan, to look into potential overbilling in a $300 million settlement of cases alleging State Street overcharged pension fund clients in connection with foreign currency trades.  Lawyers at New York-based Labaton and two other lead counsel firms, San Francisco’s Lieff Cabraser Heimann & Bernstein and the Thornton Law Firm in Boston, admitted to double-counting hours relating to staff attorneys but continued to defend their fee request.

Rosen filed his report on May 14.  The three plaintiffs firms have challenged Rosen’s findings and insisted on redactions to the 375-page report.  Wolf has set deadlines for those redactions and a possible June 22 hearing.  He also scheduled last week’s hearing and ordered Hopkins to show up in court to address whether, given the findings of the report, the judge should replace class counsel and the lead plaintiff.

At the hearing, arguments by the special master’s lawyer, William Sinnott, and Joan Lukey, who represents Labaton, shed some light on the polarized opinions about the report.  Sinnott, of Barrett & Singal in Boston, pointed to a declaration filed by Hopkins as “very troubling.”

“And not for nefarious reasons, but with respect to what he saw as his role with respect to the class and the members,” he said.  But Lukey, of Boston’s Choate Hall & Stewart, called the report’s conclusions “very vigorously disputed.”  Some items in the report, she said, “are extremely injurious to the reputations of the three firms” and could have an “effect on these firms and perhaps others in the plaintiffs’ class action bar.”

She also said some of the report is based on “errors of law as to what the Massachusetts law is on the subject at issue.”  That issue became clearer when, following a closed sidebar discussion, Lukey stated in court: “We wish to make it clear that the nature of the misconduct which is asserted relates to the existence of a so-called bare referral or origination or forwarding fee, as permitted under Massachusetts Rules of Professional Conduct, which was not disclosed to the court under the premises of Rule 54(d)(2), and which the master feels was inappropriate withheld from the court.”

Given that the hearing was public, she said, “I did not wish anyone publicly present to be left with the impression that there was anything more nefarious than that.”  Sinnott responded: “This was not a referral fee.  This was a finder’s fee.  And, more importantly, this was a finder’s fee that was not disclosed to the client, to the class, to co-counsel, nor to the court.”

Massachusetts Rules of Professional Conduct permits a referral fee—a fee paid from one law firm to another for referring a client —“only if the client is notified before or at the time the client enters into a fee agreement.”  But the Massachusetts rules on referral fees are less stringent than that of the American Bar Association’s, said Tigran Eldred, a professor at New England Law in Boston.

“The ABA rules require that, if there’s going to be a division of fees between two or more lawyers that either the fees are distributed proportionate to the amount of work each lawyer does, or that those lawyers take on ethical responsibility for all the work done,” he said.  Massachusetts rules do not define a finder’s fee, he said, but that presumably could mean any kind of payment for “law-related services,” like title insurance, financial planning, real estate lobbying or legislative lobbying.

Forced Sale of Client’s Lamborghini Not a Proper Legal Fee

May 7, 2018

A recent Bloomberg Big Law Business story by Mindy L. Rattan, “Forced Sale of Client’s Lamborghini Not a Proper Legal Fee,” reports that the Florida Supreme Court on May 3 suspended a lawyer for three years for taking an interest in a client’s Lamborghini as a fee and for taking financial interests in his client’s litigation and doing business with a client.  Lawyer Jon Douglas Parrish made a deal to get paid after selling his client’s 1989 Lamborghini sports car.  He also loaned money to property owners his client was suing and had his client subordinate his interests in that property to mortgages Parrish took out to secure his loan. 

This case provides examples of deals with a client that a lawyer should never make.  Parrish represented Spruce River Ventures, LLC and its principal, Benjamin Bergaoui in several matters.  Parrish and Bergaoui signed an agreement giving Parrish a $30,000 security interest in Bergaoui’s Lamborghini, the court said, citing the referee’s findings for all facts.  Bergaoui had 90 days to sell the car to pay Parrish $30,000 in fees.  If he didn’t sell it in that time, Parrish could sell it and either give Bergaoui “a credit for current and future legal fees in the amount of the sale or in the amount of $80,000, at the firm’s discretion,” the court said.  The referee’s report said that Bergaoui sold the car within 90 days and Parrish accepted $42,000 to settle the balance of $54,000 in fees owed.

Parrish also loaned $150,000 to defendants in a dispute over real property he pursued on behalf of Spruce River, the court said.  The defendants were delinquent in paying taxes on parcels of land they purchased, and Parrish testified the entire case could be dismissed if the parcels were subject to forfeiture, the court said.

Parrish was trying to “preserve his client’s claim and protect his interest in his fee, which was now a contingency fee.”  He got the defendants to give him a security interest in the property that Bergaoui was pursuing, and convinced Bergaoui to subordinate his interests in the property to Parrish’s.  Parrish asked a colleague, John White, to prepare the mortgage, the subordination agreement, and the promissory note for the loan, the court said.

Parrish also attempted to enter into a settlement agreement that created a new company owned by Parrish’s firm, his client, and a few of the defendants, the court said.  The new company would join the litigation in the place of its defendant owners.  Parrish and Bergaoui would have equal decision-making authority, the court said.

One of the other defendants moved to disqualify Parrish, who then prepared an affidavit for Bergaoui to sign saying he declined to seek independent counsel, the court said.  Bergaoui wouldn’t sign it so Parrish then claimed White was independent counsel for Spruce River.  Bergaoui then got independent counsel, Brad Bryant, who told Parrish that Bergaoui didn’t want to be business partners with him, the court said.

No Car for Fees

The court agreed with the referee that Parrish violated Rule Regulating the Florida Bar 4-1.8(a), which prohibits transactions with clients unless the terms are fair and reasonable and fully disclosed to the client, the client is advised to seek independent counsel, and the client gives written informed consent.  The court said the comment to the rule explains that this rule doesn’t apply to an “ordinary fee arrangement,” which is covered by Rule 4-1.5. Rule 4-1.5 says all fees must be reasonable and not excessive.

The Lamborghini agreement clearly pertained to legal fees and wasn’t ordinary, the court said.  The referee focused on the forced sale provision and found it didn’t satisfy the requirements of Rule 4-1.8(a).  The agreement gave Parrish an opportunity to collect an indeterminate amount of funds from the sale of his client’s Lamborghini, which “would constitute an excessive fee,” the court said.

The court agreed with the referee that Parrish violated rules 4-1.5(a), 4-1.8(a) and 3-4.3 (“commission by a lawyer of any act that is unlawful or contrary to honesty and justice may constitute a cause for discipline”).

No Loans, No Financial Help

The court agreed with the referee that Parrish violated Rule 4-1.2, which says a lawyer must “abide by a client’s decisions concerning the objectives of representation” and “reasonably consult with the client as to the means by which they are to be pursued.”  Parrish having “co-equal decision-making authority with his client in directing litigation strategy,” violated the rule.

And Parrish again failed to meet the requirements of Rule 4-1.8(a) for entering into the subordination agreement with his client, the court said.  The court deferred to the referee’s determination that Parrish’s and White’s testimony about White being independent counsel for Bergaoui wasn’t credible.

The court also agreed with the referee that Parrish violated Rule 4-1.8(e), which prohibits a lawyer from providing “financial assistance” to a client.  Parrish’s loan to the defendants was a form of financial assistance for the benefit of his client, the court said.

The court agreed that Parrish violated 4-1.8(i), which prohibits a lawyer from acquiring a proprietary interest in a litigation.  The court rejected Parrish’s argument that the mortgage wasn’t a “proprietary interest.”  It also found that he failed to act diligently and competently in another matter.

But the court determined that the referee’s recommendation of a one year suspension wasn’t supported by a “reasonable basis in the case law.”  The court said the other conflict of interest cases the referee relied upon were factually distinguishable.  Unlike in several of those cases, Parrish “engaged in multiple instances of unethical conduct,” that resulted in several rule violations.  Another case the referee cited was over 15 years old and the court has since imposed more severe discipline than in the past, it said.

Attorneys in GMO Corn Cases Accused of Unfair Fee Scheme

April 25, 2018

A recent Courthouse News story by Dionne Cordell-Whitney, “Lawyers in GMO Corn Cases Accused of Unfair Fee Scheme,” reports that a class of more than 60,000 farmers claim they were tricked into agreeing to pay an unfair amount of attorney fees in their cases against agribusiness giant Syngenta over its genetically modified corn.

Lead plaintiff Kenneth P. Kellogg and his company Kellogg Farms sued the Texas-based law firm Watts Guerra LLP and its various joint venture partners Tuesday in Minneapolis federal court.

Kellogg claims Watts Guerra orchestrated a scheme against more than 60,000 corn growers in the United States in connection with lawsuits against Syngenta filed in federal and state courts since 2014 over its genetically modified corn.

Syngenta is the world’s largest seed supplier. Lawsuits were filed across the country against the company arising from its commercialization of genetically modified corn seed products Viptera and Duracade, which contained the MIR 162 trait that was not approved by China.

Kellogg and other farmers alleged Syngenta’s commercialization of its products caused genetically modified corn to be commingled with the rest of the corn supply in the United States, and that China rejected all imports of corn from the United States because of the MIR 162 trait.

Corn prices dropped significant as a result, the farmers alleged. One lawsuit claimed U.S. corn exports dropped 85 percent after Sygenta’s rush to the market.

According to Tuesday’s lawsuit filed by Douglas J. Nill with FarmLaw in Minneapolis, the farmers were solicited to sign 40 percent contingent fee retainer contracts with Watts Guerra and its partners to pursue individual lawsuits.

But Kellogg claims he and other farmers were “secretly excluded” from participating in class actions against Syngenta in federal court multidistrict litigation in Kansas and Minnesota, where attorneys’ fees are determined by the courts as fiduciaries for members of the class.

Last year, a federal jury in Kansas awarded nearly $218 million to a group of a farmers who sued Syngenta over its GMO corn, and the agribusiness giant reached a $1.5 billion global settlement in March to end all the pending lawsuits.

“Farmers were dishonestly told that a ‘mass tort … individual suit’ is better than a class action, because class actions only recover coupons for plaintiffs,” Tuesday’s complaint states.

The 142-page lawsuit quotes attorney Mikal Watts at a meeting of corn growers in Iowa in 2015 as saying that, with a class action, “lawyers will get all the money and the farmers may get a gift certificate.”

“Attorney fee awards in class actions, with a common fund damage award, are typically about 10-12 percent of the fund for funds of $200-900 million or larger,” the complaint states. “With defendants’ ‘mass tort …individual suit’ model, each grower will pay 40 percent of the claim proceeds for the same result.”

Kellogg and the other farmers call Watts Guerra’s alleged fee scheme “an epic fraud of omission.”

“Defendants never advised farmers of the class action proceedings in federal and state court covering the farmers and their claims. Defendants never advised farmers of the merits of those proceedings and what is in the best interest of the farmers,” the lawsuit states.

The farmers are asking the court to declare their retainer contracts as void. They also seek a declaration that the law firms have forfeited their claim to any compensation from the farmers.

Mikal Watts of Watts Guerra said in a statement that the “lawsuit is worth less than the $400 it took for this single lawyer to file it.”

“In fact, his lawsuit is not worth the paper it is written on, nor the ink it took to pollute the pages of his petition. This lawsuit is without merit, and it is frivolous,” he said Wednesday.

Watts continued, “We will vigorously defend this frivolous lawsuit filed yesterday, and will defeat it with both facts and law, and with the same diligence, ethical conduct and hard work that it took to achieve this settlement on behalf of farmers across America in the first place.”

The plaintiffs’ attorney, Nill, echoed the claims in his lawsuit in a statement: “The defendant law firms deprived farmers of the opportunity to make an informed decision as to whether to pursue an individual claim or a class action claim without representation by the defendants, hereby subjecting the farmers to defendants’ fraudulent scheme to collect unreasonable fees.”

New York Lawyer Censured for Falsifying Billing Records

January 11, 2018

A recent New York Law Journal by Jason Grant, “Manhattan Lawyer Censured for Falsifying Time Records, Even Though Clients Unscathed” reports that a Manhattan lawyer has been publicly censured for adding 94.8 hours of fabricated billing to his law firm’s internal records, in an effort to look busy to his partners, even though he removed the false entries before the bills went out to clients.

A unanimous Appellate Division, First Department, panel censured lawyer Jeffrey Leighton, while noting that the Attorney Grievance Committee and Leighton had stipulated to the punishment, even though there is apparently no precedent for a censure when the clients aren’t cheated.  The panel also noted, under mitigating factors weighing against a harsher punishment, that Leighton, a 34-year veteran lawyer, had lost his partnership at his firm because he’d padded the bills.

“The [First Department Attorney Grievance] Committee found no precedent for any public censure for falsifying time records where clients were not harmed,” the panel wrote, adding, “Disciplinary cases involving false or over-billing that have resulted in public discipline involved more egregious conduct in which the clients were directly impacted by the misconduct.”

However, the panel also pointed out that “the Committee and [Leighton] agree that public censure is appropriate because he engaged in this conduct for a period of over two years, he is a senior attorney with extensive experience, and although he did not intend to financially benefit or over-bill his clients, he intended to and did ‘deceive his colleagues and his firm about how busy he was.’”

Leighton was admitted in the Second Judicial Department in 1983, according to the panel, which consisted of Justices David Friedman, Marcy Kahn, Ellen Gesmer, Cynthia Kern and Peter Moulton.  He had an office in the First Judicial Department at all relevant times, and the committee and Leighton stipulated that between March 2012 and September 2013 he’d engaged in a pattern of making fake internal firm billing entries, the panel wrote in the Jan. 4 decision.

In mitigation of the punishment, the panel pointed out in Matter of Jeffrey Leighton, 2018 NY Slip Op 00089, that Leighton had never previously been the subject of a disciplinary investigation, that he cooperated with the committee, and that he’d “expressed genuine remorse and embarrassment.”

Bitcoin for Legal Fees?

December 21, 2017

A recent Law.com story, by Ben Hancock, “What’s Next: Blockchain and Justice; Net Neutrality Fights Brews; Bitcoin for Legal Fees,” reports that the skyrocketing prices for crypto-currencies...

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