In the Matter of Donald William Leo, a Disbarred Attorney, Appellant.

Brief

N.Y.October 18, 2016

To Be Argued By: ROBERT H. CABBLE Time Requested: 30 Minutes APL-2015-00232 Appellate Division, Second Department, Docket No. 2004-00866 Court of Appeals STATE OF NEW YORK In the Matter of DONALD WILLIAM LEO, Resignor, A Disbarred Attorney. GRIEVANCE COMMITTEE FOR THE TENTH JUDICIAL DISTRICT, Petitioner-Respondent. —against— DONALD WILLIAM LEO, (Attorney Registration No: 1117555), Respondent-Appellant. BRIEF FOR PETITIONER-RESPONDENT d ROBERT H. CABBLE, ESQ. GRIEVANCE COMMITEE FOR THE TENTH JUDICIAL DISTRICT 150 Motor Parkway, Suite 102 Hauppauge, New York 11788 Telephone: (631) 231-3775 Facsimile: (631) 231-4041 Attorneys for Petitioner-Respondent December 7, 2015 TABLE OF CONTENTS TABLE OF AUTHORITIES ...................................................... .iii, iv, v, vi, vii, viii PRELIMINARY STATEMENT .............................................................................. 1 STATEMENT OF FACTS ........................................................................................ 3 Leo's Resignation While Under Disciplinary Investigation .......................... .3 Leo Sells His Law Firm to His Son ................................................................. 5 Leo Moves for Reinstatement. ........................................................................ 7 Proceedings Before the Committee on Character and Fitness ........................ 8 The May 30, 2012 Hearing .............................................................................. 8 The October 2, 2013 Hearing ........................................................................ 14 The Subcommittee Report ............................................................................. 15 The Committee on Character and Fitness Recommends Against Reinstatement. ............................................................................................... 18 Leo Moves for Reinstatement Notwithstanding the Recommendation of the Committee on Character and Fitness .................................................. 18 The Appellate Division Denies Reinstatement.. ........................................... 19 POINT ONE AN ATTORNEY FACING IMMINENT DISBARMENT MAY NOT DISPOSE OF A LA W PRACTICE BY PRIVATE . AGREEMENT DESIGNED TO NULLIFY AND CIRCUMVENT THE ADVERSE CONSEQUENCES OF DISCIPLINARY 1 PROCEEDINGS RESULTING IN DISBARMENT .................................... 21 Leo's Private Contract to Evade the Consequences of His Disbarment Is Contrary to Public Policy ..................................................... 28 Payment of Legal Fees to a Disbarred Attorney ......................................... 040 Leo's "Retirement" Letter ............................................................................. 45 Sale of a Law Practice ................................................................................... 46 POINT TWO THE DENIAL OF REINSTATEMENT TO A DISBARRED ATTORNEY IN THIS MATTER COMPLIED WITH APPLICABLE DUE PROCESS STANDARDS ......................................... A8 The Procedures Applied to Leo's Application for Reinstatement ............... 048 The Adequacy of the Decision of the Appellate Division ............................ 55 There is Sufficient Evidence in the Record to Support the Determination that Leo Lacked the Requisite Character and Fitness for Reinstatement ....................................................................... 60 Due Process Standards in Attorney Matters .................................................. 62 The Equal Protection Claim .......................................................................... 69 The Appellate Division Acts in a Judicial Capacity in a Reinstatement Proceeding ............................................................................. 70 CONCLUSION ........................................................................................................ 75 11 TABLE OF AUTHORITIES CASES PAGE Clarkv. Robinson, 252 App Div 857, 299 NYS 474 (2d Dept 1937) ................... .32 Dawson v. White & Case, 88 NY2d 666, 649 NYS2d 364 (1966) ................... .44-45 Decolater, Cohen & Di Prisco LLP v. Lysaught, Lysaught & Kramer P. c., 304 AD2d 86, 756 NYS2d 147 (1 st Dept 2003) ................................................ 34, 46 Erdmann v. Stevens, 458 F2d 1205 (2d Cir 1972) .................................................. 65 Ex Parte Garland, 71 US 333, 18 LEd 366 (1867) ................................................ 72 Ex Parte Wall, 107 US 265, 2 S Ct 569,27 L Ed 552 (1882) ................................. 64 Gerzo/v. Gulotta, 87 Mise2d 768,386 NYS2d 790, (Sup Ct Nassau County 1976), modified 57 AD2d 821, 395 NYS2d 26 (1 st Dept), appeal dismissed 42 NY2d 960, 398 NYS2d 146 (1977), appeal dismissed 42 NY2d 973 (1977) ...................... 59-60 Glinkenhouse v. Karp, 60 AD3d 630, 877 NYS2d 88 (2d Dept 2009) ............. 33-35 Glinkenhouse v. Silver, 2011 NY Mise LEXIS 6477, 2011 NY Slip Op 33546 (Sup Ct Nassau County Dec. 30,2011) .......................... 35 In re Lieber, 834 NW2d 200 (Sup Ct Minn 2013) ............................................ 37-39 In re Ming, 469 F2d 1352 (7th Cir 1972) ................................................................ 64 In re Spencer, 137 App Div 330,122 NYS 190 (1st Dept 1910) ............................ 68 Jacobs v. Grievance Committee/or the Eastern District o/New York, 44 F2d 84, 90 (2d Cir 1994), cert denied 516 US 862, 116 S Ct 173, 133 L Ed2d 113 (1995) ...................................................................................... 62, 65 Javits v. Stevens, 382 F Supp 131, 141 (SDNY 1974) .......................... 63, 65-66, 69 111 Keinz v. Hobaica, 114 AD3d 1250, 980 NYS2d 856 (4th Dept 2014), leave to appeal denied, reargument denied, 117 AD3d 1506, 986 NYS2d 372 (4th Dept 2014) ............................................................................. .43 Law Students Civil Rights Research Council v. Wadmond, 401 US 154, 91 Set 720,27 L Ed2d 749 (1971) ......................................................................... 51 Matter of Adams, 42 AD3d 1,833 NYS2d 645 (2d Dept 2007) ............................. 41 Matter of Anonymous, 21 AD2d 48,51,248 NYS2d 368 (1st Dept 1964) ............. 73 Matter of Anonymous, 47 AD2d 83,366 NYS2d 239 (4th Dept 1975) ................... 71 Matter of Anonymous, 74 NY2d 938,550 NYS2d 270 (1989) ............................... 51 Matter of Anonymous, 79 NY2d 782,579 NYS2d 648 (1991) ............................... 51 Matter of Anonymous, 244 AD2d 549,664 NYS2d 622 (2d Dept 1997), appeal denied 91 NY2d 86, 669 NYS2d 261 (1998) .............................................. 68 Matter of Anonymousfor Admission to the Bar of the State of New York, 97 NY2d 332, 740 NYS2d 286 (2002) .............................................................. 57-59 Matter of Au, 41 AD3d 67, 79 NYS2d 782 (1 st Dept 2007) ................................... .40 Matter of Brennan, 230 AD 218,243 NYS 705 (2d Dept 1930) ............................ 71 Matter of Citrin, 94 NY2d 459, 706 NYS2d 72, motionfor clarification denied 95 NY2d 897, 716 NYS2d 36 (2000) ..................................................... 56-59 Matter of Cooper 22 NY 67 (1860) ......................................................................... 72 Matter of Dondi, 63 NY2d 331, 482 NYS2d 431 (1984) ....................................... 63 Matter of Haber, 27 AD2d 576,276 NY2d 353 (2d Dept 1966), affd 23 NY2d 763,296 NYS2d 957 (1968), cert denied 394 US 975, 89 S Ct 1471,22 L Ed2d 744 (1969) ................................................ 28-31, 33-36, 39 IV Mattero/Keinz, 75 AD3d 1113,903 NYS2d 760 (4th Dept 2010) ........................ .43 Matter 0/ Kourland, 172 AD2d 77, 577 NYS2d 264 (18t Dept 1991 ) ................... .40 Matter o/Leo, 9 AD3d 218, 780 NYS2d 360 (2d Dept 2004) ................. .3-4, 21,52 Matter o/Leo, 2014 NY Slip Op 94061 (App Div 2014) ......................................... 1 Matter o/Leo, 25 NY3d 914, 16 NYS3d 519 (2015) ................................................ 2 Matter o/Padilla, 67 NY2d 440,503 NYS2d 550 (1986) ................................ 68-69 Matter 0/ Rouss, 221 NY 81, 116 NE 782 (1917), cert denied 246 US 661, 38 S Ct. 332, 62 L Ed 927 (1918) ............................................................................ 50 Matter 0/ Rowe, 73 NY2d 336, 540 NYS2d 231 (1989) ................................... 66-67 Matter o/Shaikh, 39 NY2d 676,385 NYS2d 514 (1976) ...................................... 70 Matter 0/ Sugarman, 51 AD2d 170, 380 NYS2d 12 (1 8t Dept), appeal denied 39 NY2d 707 (1976) ........................................................................ 73 Matter 0/ the Arbitration between Silverberg and Schwartz, 75 AD2d 817, 427 NYS2d 480 (2d Dept 1980) ...................................................... 32 Medicon Diagnostic Laboratories Inc. v. Perales, 74 NY2d 539, 549 NYS2d 933 (1989) ............................................................................................ 62 Mildner v. Gullota, 405 F Supp. 182, 195 (EDNY 1975), judgment affirmed 425 US 901, 96 S Ct. 1489, 47 L Ed2d 751 (1976) ........................................................... 58-59, 62, 64-65, 73-74 Moffat v. Cresap, 33 AD2d 54,304 NYS2d 719 (18t Dept 1969), affd 29 NY2d 856, 328 NYS2d 6 (1971) ............................................................... .32 Orenstein v. Albert, 39 Misc2d 1093,242 NYS2d 505 (Sup Ct Westchester County 1963), affd 20 AD2d 720, 247 NYS2d 563 (2d Dept 1964) ........................................................................ 32-33 v Padilla v. Sansivieri, 31 AD3d 64, 815 NYS2d 173 (2d Dept 2006) .................... .42 Pasikv. State Board o/Law Examiners, 102 AD2d 395, 478 NYS2d 270 (1st Dept 1984) .............................................................................. 73 People ex reI. Karlin v. Culkin, 248 NY 465, 162 NE 487 (1928) .................... 71-73 Tang v. Appellate Division o/New York Supreme Court, First Department, 373 F Supp. 800, 802 (SDNY 1972) affd 487 F.2d 138 (2d Cir 1973), cert den 416 US 906 94 S Ct 1611, 40 L Ed 111 (1974) .................................................................................................. 50 Weisner v. Nardilli, 2007 US Dist LEXIS 5801 (SDNY January 29,2007), affd 307 Fed Appx 484 (2d Cir 2008) ..................................................................... 59 Weisner v. Rosenberger, 1998 US Dist LEXIS 15666 (SDNY October 3, 1998), affd 1999 US App LEXIS 29259 (2d Cir Nov. 1, 1999) ............................................................................................... 70 STATUTES CPLR Article 78 ....................................................................................................... 66 CPLR 4320 ............................................................................................................... 60 Judiciary Law §90 .............................................................................................. 58, 73 Judiciary Law §90(1) .......................................................................................... 48-49 Judiciary Law §90(1)(a) ........................................................................................... 51 Judiciary Law §90(2) ............................................................................................... 49 COURT RULES 22 NYCRR 118.1(g) ................................................................................................ 46 VI 22 NYCRR 691.9 ........................................................................................... 3, 21, 47 22 NYCRR 691.9(b) ......................................................................................... 21,52 22 NYCRR 691.10 ....................................................................... .4, 13-16,21 52,54 22 NYCRR 691.10(b) ......................................................................... 5, 22, 24, 41-42 22 NYCRR 691.10 (c) .................................................................................. 5,22,45 22 NYCRR 691.10(d) ........................................................................................ 22, 45 22 NYCRR 691.10(£) ............................................................................................... 11 22 NYCRR 691.11 ............................................................................................. 49, 54 22 NYCRR 691.11(a) .............................................................................................. 49 22 NYCRR 691.11(c)(1) .......................................................................................... 49 22 NYCRR 691.11(d) .............................................................................................. 50 22 NYCRR 691.20 ................................................................................................... 25 LAWYER'S CODE OF PROFESSIONAL RESPONSIBILITY DR 1-102(A)(4) (22 NYCRR 1200.3[a][4]) ........................................................... .45 DR 1-102(A)(5) (22 NYCRR 1200.3[a][5]) ........................................................... .46 DR 1-102(A)(7) (22 NYCRR 1200.[a][7]) ............................................................. .46 DR 2-107 (22 NYCRR 1200.12) ............................................................................. 32 DR 2-111 (22 NYCRR 1200.15-a) .................................................................... 24, 46 DR 2-111(A) (22 NYCRR 1200.15-a[a]) ............................................................... .46 Vll Ethical Consideration 2-34 ...................................................................................... 47 Ethical Consideration 2-35 ...................................................................................... 47 RULES OF PROFESSIONAL CONDUCT Rule 1.17 (22 NYCRR 1200.0) ............................................................................... 24 MISCELLANEOUS Black's Law Dictionary 695 (6th ed) ...................................................................... .44 V111 PRELIMINARY STATEMENT Respondent-Appellant, Donald William Leo ("Leo"), a disbarred attorney, appeals from a decision and order of the Appellate Division, Second Department, entered December 26, 2014, which denied his motion seeking reinstatement to the bar as an attorney and counselor-at-law. (Matter o/Leo, 2014 NY Slip Op 94061 [App Div 2014]). By order dated June 28, 2004, the Appellate Division, Second Department disbarred Leo and struck his name from the roll of attorneys, based upon his affidavit of resignation while under investigation for allegations of misconduct. Seven years later, in July 2011, Leo moved for reinstatement. By decision and order entered January 23,2012, the Appellate Division held Leo's motion for reinstatement in abeyance and referred the matter to the Committee on Character and Fitness to investigate and report on his current character and fitness to be an attorney, "including but not limited to, the sale of his law practice to his son and the business income reported on his tax returns." A sub-committee of the Committee on Character and Fitness issued a report, after a hearing, recommending Leo for reinstatement. The full Committee on Character and Fitness recommended against his reinstatement. Leo moved for reinstatement notwithstanding the recommendation of the Committee on Character and Fitness, 1 and the Appellate Division denied his motion in the decision and order appealed from. The Appellate Division· also denied Leo's subsequent motion for reargument, or in the alternative, for leave to appeal to the Court of Appeals, in a decision and order on motion entered May 5, 2015. By decision dated August 27,2015, this Court granted Leo's motion for leave to appeal. (Matter oiLeD, 25 NY3d 914, 16 NYS3d 519 [2015]). 2 STATEMENT OF FACTS Leo's Resignation While Under Disciplinary Investigation Petitioner-Respondent, the Grievance Committee for the Tenth Judicial District ("Grievance Committee"), had commenced an investigation into allegations of professional misconduct against Leo. With the investigation leading to a probable disciplinary proceeding against him, Leo submitted an affidavit dated January 21,2004, tendering his resignation as an attorney while under investigation, pursuant to rule 691.9 (22 NYCRR 691.9) of the rules of the Appellate Division, Second Department. The Appellate Division accepted the resignation, and disbarred Leo, by decision and order entered June 28, 2004. (Matter of Leo, 9 AD3d 218, 780 NYS2d 360 [2d Dept 2004]). In its decision, the Appellate Division recited that Leo's affidavit of resignation stated that he was aware that the Grievance Committee had adduced evidence of misconduct against him and would recommend the institution of a disciplinary proceeding. Leo acknowledged that from in and around July 1998 through December 1999, he was entrusted with settlement funds on behalf of 242 separate clients, in amounts from $1,000 to $334,000. In that time period, he failed to properly preserve the amount of funds which should have been on deposit 3 in his escrow account. (Id. at 219). The decision noted that Leo "acknowledges his inability to successfully defend himself on the merits of any disciplinary charges which would be initiated against him by the Grievance Committee." Also, Leo was "fully aware of the implications of submitting his resignation, including being barred by Judiciary Law § 90 and the Court rules from seeking reinstatement for at least seven years." The decision noted that Leo "avers that he is moving to Tennessee as soon as possible to be involved as a land-use planner and real estate developer. He has no plans to practice law." (Id.). The Appellate Division ruled that "[i]asmuch as Mr. Leo's resignation complies with all pertinent Court rules, it is accepted and, effective immediately, Donald William Leo is disbarred and his name is stricken from the roll of attorneys." (Id.). Among other things, the Appellate Division ordered that Leo "shall promptly comply with this Court's rules governing the conduct of disbarred, suspended, and resigned attorneys (22 NYCRR 691.10)." (Id. at 220). Those rules require that a suspended or disbarred attorney advise clients in writing of the suspension or disbarment, and that a suspended or disbarred lawyer may only share in legal fees on a quantum meruit basis for services performed prior to the effective date of the suspension or disbarment; and that the amount and manner of 4 payment of such compensation and recoverable disbursements shall be fixed by the court. (22 NYCRR 691.10[b],[cD. Leo Sells His Law Firm to His Son After submitting his affidavit of resignation while under investigation, but three months prior to its acceptance by the Appellate Division and his immediate disbarment, Leo entered into a written agreement, dated March 24, 2004, under which Leo sold his law practice to his son and law partner, Donald William Leo, Jr. (R. 234-254). Under the terms of the agreement, Leo sold his entire practice, including chattels, fixtures, telephone numbers and "goodwill." The purchase price for the entire practice was stated to be $100,000.00, payable in equal annual installments of$10,000.00 together with 6% interest, pursuant to a promissory note. (R.235). The sale excluded any accounts receivable due or to become due to Leo for services he rendered prior to the date of closing (which the agreement identified as the same date as the execution of the agreement), and that all such payments of accounts that "accrued" after the date of closing were to be promptly paid to Leo. (R.234-235). There was an attached Exhibit A listing 559 cases and the specific percentage of the fee in each case to be paid to Leo. (R. 243-254). Under the heading "Sales Taxes," the agreement provided that Leo was 5 giving to his son all the office furniture and equipment in recognition of the son's years of employment at the firm, and that "[t]he entire purchase price is for the goodwill of the business and to compensate the Seller for the quantum merit [sic] value of the services he has rendered to the personal injury cases listed on Exhibit A." (R. 236). that: Under the heading "Allocation of Purchase Price," the agreement provided The purchase price for the assets described in this agreement to purchase, exclusive of accounts receivable, shall be allocated as follows: (1) Chattels, furniture, fixtures and equipment all Presently located at the seller's office - FIVE THOUSAND ($5,000.00) DOLLARS; (2) Goodwill of the business - NINETY-FIVE THOUSAND ($95,000.00) DOLLARS. (R.236). The agreement did not reference payment to Leo of disbursements for the pending cases. On March 30,2004, Leo sent letters on his law firm's stationery to all his clients, stating that: I am writing you this letter to advise you that as of April 1, 2004 my wife and I will be moving and relocating to Lenoir City, Tennessee. I am presently in the process of transferring my law business and law office assets to my son, Donald W. 6 (R.17). Leo, Jr. If you decide to retain other counsel kindly retain your new attorney and have him or her contact our office and we will be glad to arrange for the transfer of your file. If you wish to continue with Don and our new team of associates there is no need for you to contact us at this time. If you would like to talk to us or if you have any questions concerning the progress of your case please call us for an appointment at any time. Leo submitted his affidavit of resignation in January 2004; he notified his clients in March that he was retiring in April; and his disbarment became effective in June 2004. (R. 17). Leo never sent letters to his clients advising that he was disbarred. CR. 17). Leo Moves for Reinstatement After waiting the requisite seven years, Leo filed a motion with the Appellate Division, seeking reinstatement. By order dated January 23, 2012, the Appellate Division held Leo's motion for reinstatement in abeyance and referred the matter to the Committee on Character and Fitness "to investigate and report on his current character and fitness to be an attorney, including but not limited to, the sale of his law practice to his son and the business income reported on his tax returns." (This order was not included in the record on appeal, but it is referenced 7 and described in the Appellate Division's order dated December 26,2014, which appears at page 11 of the record on appeal). Proceedin2s Before the Committee on Character and Fitness The Committee on Character and Fitness appointed a subcommittee consisting of two members to conduct the investigation and report to the full committee. The subcommittee conducted two days of hearings on May 30,2012 (R. 127-191) and October 2,2013 (R. 192-233), in which Leo gave sworn testimony. The May 30. 2012 Hearin2 In his testimony on May 30, 2012, Leo described the circumstances which led to his disbarment. As a result of a grievance complaint by a client, the Grievance Committee conducted an audit of his attorney escrow account for the three year period 1998 through 2001, which disclosed misappropriations in the account. (R.137-138). Leo explained he suffered a business reversal in which he lost a significant amount of his caseload, but he continued to maintain and pay a large staff. In order to meet these financial obligations, he admittedly invaded client funds held in his escrow account. (R. 132-133). Leo described this invasion of funds as a "balance below" situation, meaning that the balance fell 8 below what should have been on deposit for the clients. (R. 134). His attorney agreed with the characterization by one of the subcommittee members that "it's a conversion of funds" explaining that "[ a] balance below is, perhaps, a more gentle term." (R. 134-135). But Leo would only acknowledge that there was a "balance below" in his escrow account because money was being used to cover law firm expenses, and "[t]hat was the basis of the charges." (R. 135). Very early during the disciplinary investigation, Leo testified, he retained an attorney. (R. 139). He learned from this attorney that the Grievance Committee would commence a disciplinary proceeding against him. Based on this information, Leo and his counsel "worked out a plan where I would resign, sell my practice to my son, and that everything would be in order so that when the requisite period had ended, I would be able to apply for reinstatement." (R. 140). Pursuant to this plan, Leo filed his January 23, 2004 affidavit of resignation, followed by the sales agreement and the retirement letter to the clients. During the first few years after his disbarment, Leo stated, he did not take any money from his son. But during 2004 through 2007 he did receive payments at intermittent times, stating, "[w]hen I need money, I go to my son. He's my son." (R. 142). But these payments, Leo testified, were for disbursements Leo had made for his cases, "so no payments on the agreement were taken." (R. 143). 9 Since this was not income, the payments were not reported on tax returns. (R. 144-145). Leo stated that there was close to $500,000 in outstanding disbursements, but this amount was not referenced in the sale agreement. (R. 145). As a result, there were no 1099 tax forms issued by the law firm for payments to Leo in the years 2005-2006. The first 1099 form was issued in 2007. (R. 146). However, Leo testified that in this period, although his son was settling cases, he paid Leo only his disbursements and not a percentage of the legal fees. (R. 146-147). Questioned by the subcommittee whether his son was paying the $10,000 installments, Leo at first stated, "[n]o, because he was my son." (R. 148). He later testified that "I received payments," meaning his portion of case settlements, but that "the settlement of the cases were included in the purchase price." (R. 149). Leo testified that since 2007 he received over $300,000, as reflected in 1099 forms. Asked whether that money was for case settlements, Leo stated "No. It's for whatever I want to attribute it to." (R. 150). He stated that the $100,000 purchase price was for "the good will of the business, the telephone number and the location," and that this was separate from the case settlements. (R. 150). Leo asserted that "I have received over $300,000. I have not made a determination whether to attribute it to the $100,000 or towards the cases." (R. 151). Under 10 further questioning, Leo agreed that part of the $300,000 was for the contract. (R. 152). Leo said that he did not differentiate whether the payments he received from his son came from case settlements, or were directed towards the contract price. He said "I'm sure my accountant allocated, 1 didn't." Leo did not know how much of the money was allocated to the purchase price of the law practice. (R. 153- 157). However, he stated that "I could tell you that the promissory note is paid in full because I've been paid more than $300,000. That would be, approximately, $200,000 was paid towards the cases." (R. 156). After he submitted his affidavit of resignation, Leo moved to Tennessee. But he returned frequently to New York to consult with his attorney about several outstanding matters. One of these was to arrive at a severance agreement with a secretary of his law firm. Her husband threatened to disclose to his clients that he had been disbarred. Leo referred this threat to the District Attorney. (R. 158-160). Leo surrendered his court secure pass to his attorney, but could not recall executing an affidavit of compliance with the provisions of the order disbarring him, as required under 22 NYCRR 691.10(f). (R. 161). Leo acknowledged that following his disbarment he at first listed his occupation as "attorney" on his tax returns, but beginning in 2008 he changed this 11 to "retired attorney." He explained that he did not disclose to his accountant that he had been disbarred, only that he had resigned from the bar and sold his law practice. He was embarrassed to tell the accountant he had been disbarred, and asserted that "one of the reasons I resigned was that I was led to believe that term [disbarred] would never see the light of day." (R. 161-163). Leo described himself as resigned, and that he was "retired." But when the Appellate Division's order was issued, his attorney told him that the term disbarred was used. (R. 164). He admitted knowing that conversion of escrow money could lead to disbarment, "[o]therwise, I would not have resigned." (R. 164-165). Leo described that the law firm lost few, if any, clients because of what happened to him. He explained that his attorney "set this up so that I would be resigned and retired and out of New York long before it ever became public that I was disbarred." (R. 176). As of the May 30,2012 hearing, most of the personal injury cases had been settled, and Leo was paid. However, Leo said, pursuant to the plan he and his counsel devised, the closing statements his son filed in connection with the contingency fee cases did not reflect that any of the legal fees were shared with Leo. Leo reasoned, based on his counsel's advice, that the legal fees that he received were not legal fees, but, rather, "it was a purchase price based on legal 12 fees, the value of which was based on legal fees." (R. 177-178). As a result, Leo's son did not file closing statements showing any payment of legal fees to Leo, and Leo did not apply to the court to receive any portion of the legal fees. (R. 178). Under further questioning, Leo acknowledged that his March 30, 2004 letter to clients did not contain any of the language required under rule 691.10 (22 NYCRR 691.10). He understood as of March 30,2004 that he would be disbarred once the Appellate Division accepted his January 21,2004 resignation affidavit. (R. 183). Nevertheless, in his March 30, 2004 "retirement" letter, Leo explained "I did not say anything about being suspended or disbarred because it hadn't happened at this point in time and I was told to send this letter before the Appellate Division acted." (R. 181-182). He said that he was advised that "by resigning and leaving before the Appellate Division acted, I would never have to disclose to the clients that I had been disbarred." (R. 184). Regarding the issue of whether he had read provisions in 22 NYCRR 691.10 pertaining to receipt of legal fees, Leo testified that "I'm sure I did, and basically, I was in a state of, Dave [referring to his attorney], what can we do to minimize all of this to protect my son, to protect myself and protect my son, and I followed every bit of advice he gave me." (R. 185-186). 13 Asked whether he agreed that in accepting legal fees he was not in compliance with 22 NYCRR 691.10, Leo answered that "I was not accepting fees. I was accepting purchase price from my son." CR. 186). The members of the subcommittee expressed concern about the failure to file closing statements showing that the legal fees were split with Leo, and Leo's failure to obtain court approval for payment of the fees during his disbarment. The hearing was left open so that Leo could determine whether the closing statements filed for settled personal injury cases reflected that the legal fees were split with Leo as his quantum meruit share. CR. 179-180). The October 2, 2013 Hearin2 The hearing before the subcommittee resumed October 2,2013. Under questioning by his attorney, Leo testified that after a "serious question arose about [his] compliance with Section 691.10 of the rules of the Court," he filed petitions in courts in five counties to obtain nunc pro tunc orders in 71 cases, approving the fees he received. CR. 195-197). The total amount covered by the orders was $485,258.26, of which Leo reported $405,755.38 as income in his tax returns for the years 2005 through 2011. The difference of $79,503.38 was the amount still owed to him under the terms of the nunc pro tunc orders. The $100,000 purchase price for the good will of the law practice had not been paid either. CR. 210-211). 14 Leo characterized the total unpaid amount of$179,503.38 as "loans to my son's business." CR. 197). Amended closing statements were filed to reflect the fees paid to Leo pursuant to the nunc pro tunc orders. CR. 212-213). The Subcommittee Report The subcommittee issued a nine page report, dated April 14, 2014, in which it recommended Leo's reinstatement. CR. 15-23). The report explained that after the hearing on May 30,2012, the subcommittee "was troubled by the testimony and decided to recommend against admission." CR. 15). However, Leo's attorney requested a continuance, and a second hearing was held October 2,2013, after which the subcommittee decided to recommend reinstatement. CR. 15). In summarizing the hearing testimony and accompanying exhibits, the subcommittee in its report stated that "[t]he problem facing the Subcommittee was that among the rules of 22 NYCRR 691.10 governing the conduct of disbarred and resigned attorneys, there is the requirement that recoverable disbursements shall be fixed by the court. Mr. Leo testified that he accepted checks from his son as reimbursements and never made application to any court to fix recoverable disbursements." CR. 18-19). Similarly, regarding Leo's recovery of quantum meruit fees from the pending contingency fee cases, the subcommittee noted: 15 (R.19). Again, 22 NYCRR 691.10 specifies that any fee based on quantum meruit work perfonned by a disbarred person before his disbannent, shall be fixed by the court. Mr. Leo estimated that approximately $200,000 of the money he received in 2007 or later was based on work he had perfonned on the cases he transferred to his son. He never made application to any court for an order fixing his compensation. His testimony was that all fees on contingency cases were spelled out in the sale of his law practice; that calling these amounts contractual percentages removed them from the court's control. The subcommittee also found that the closing statements filed in connection with the contingency fee cases resolved since Leo's disbannent did not contain the required infonnation disclosing the name and address of each person sharing in the recovery and the amount of that person's share. (R.20). The subcommittee found that Leo did not send letters to his clients that he had been disbarred, and noted his testimony that he was told that by resigning and leaving before the Appellate Division acted, he would never have to disclose his disbannent to clients. (R. 16-17). The subcommittee did not specifically state its detennination regarding the propriety of Leo's "retirement" letter. The subcommittee did determine that: After the first hearing it appeared to the Subcommittee that Donald Leo, Sr. used a business agreement to evade his obligations to obtain Court orders and file retainer statements. 16 His counsel requested a continuance. (R.20). Between the two hearing dates, the subcommittee noted, Leo filed motions in courts located in five counties for attorney's fees, disbursements, and leave to file closing statements nunc pro tunc. He eventually obtained orders in 71 cases for a total of$485,258.26. The subcommittee found that in the first hearing, Leo had guessed that his son sent him approximately $300,000, which included the $100,000 purchase price for his law practice. In the second hearing, Leo revised his testimony to state that he actually received and filed tax returns for $405,755.38; that his son owes him $79,503.38 in court awarded fees; and that his son still owes him the $100,000 business purchase price. (R.20-21). In its conclusion, the subcommittee stated, in pertinent part: (R.22-23). While it appears to the subcommittee that the detailed business agree1!1ent did not comply with rules relating to personal injury cases and rules relating to compensation to disciplined attorneys, it was equally clear to the subcommittee that Mr. Leo believed that all of his actions were proper and in accordance with a detailed business plan designed by attorneys. Once he realized that the business plan was flawed, he promptly and thoroughly took action to correct this situation. This process of obtaining these court orders and filing the closing statements involved substantial effort - and expense - on his part. 17 The Committee on Character and Fitness Recommends Against Reinstatement By letter dated May 2, 2014, the full Committee on Character and Fitness advised Leo that, although the subcommittee recommended reinstatement, a majority of the committee at its meeting that day voted to reconimend to the Appellate Division, Second Department, that his reinstatement be denied. The stated reasons for this were: The Full Committee was concerned that (1) your letter notifying clients that you were retiring did not conform to the rul,es of the Appellate Division, and (2) that your failure to seek court approval of disbursements and fees which you received, until after the Subcommittee had noted this irregularity at the first hearing, did not evidence the present character and fitness required for reinstatement. (R. 14). By this letter, Leo was provided with the report of the subcommittee. (R.14). Leo Moves for Reinstatement Notwithstanding the Recommendation of the Committee on Character and Fitness By notice of motion dated June 27, 2014, Leo, through counsel, moved in the Appellate Division, Second Department, to confirm the report of the subcommittee, disaffirm the report of the full Committee on Character and Fitness, and for an order reinstating him notwithstanding the report of the Committee on Character and Fitness. He submitted in support of the motion an affirmation from 18 his counsel and his own affidavit. CR. 24-46). Leo's motion papers also included as exhibits the subcommittee's April 14, 2012 report, a sampling of the dozens of character letters submitted during the hearing CR. 47-113), and a memorandum of law. CR. 114-126). In his motion, Leo argued that any error in failing to obtain court orders fixing his disbursements and legal fees was made in good faith reliance on the advice of counsel; he corrected this error with the nunc pro tunc orders; his letters to clients conformed to the rules governing the sale of a law practice, since at the time the letters were sent he was not disbarred; and no rule or opinion provided that an attorney resigning while under investigation was obligated to reveal a possible suspension or disbarment in the near future. CR. 28). The Appellate Division Denies Reinstatement In its December 26,2014 decision and order, the Appellate Division, Second Department, denied Leo's motion for reinstatement. It noted that the motion had been held in abeyance for the Committee on Character and Fitness "to investigate and report on his current character and fitness to be an attorney, including, but not limited to, the sale of his law practice to his son and the business income reported on his tax returns." CR. 11,270). In the pertinent portion of the decision, the Appellate Division ruled: 19 Upon the papers filed in support of the motion for reinstatement and the papers filed in relation thereto, upon the report of the Committee on Character and Fitness and the exhibits annexed thereto, and upon the papers filed in support of the motion, in effect, for reinstatement notwithstanding the recommendation of the Committee on Character and Fitness to deny reinstatement and no papers having been filed in opposition thereto, it is ORDERED that the motions are denied. We find that Donald William Leo does not demonstrate the requisite character and fitness to practice law. (R. 11,270). Leo moved for reargument, which was denied by the Appellate Division in an order and decision on motion dated May 5, 2015. (R. 13). 20 POINT ONE AN ATTORNEY FACING IMMINENT DISBARMENT MAY NOT DISPOSE OF A LAW PRACTICE BY PRIVATE AGREEMENT DESIGNED TO NULLIFY AND CIRCUMVENT THE ADVERSE CONSEQUENCES OF DISCIPLINARY PROCEEDINGS RESULTING IN DISBARMENT Leo is a disbarred attorney. He was disbarred in 2004 because a disciplinary investigation disclosed that he failed to preserve client funds entrusted to him, and applied such funds to the expenses of his law firm. (Matter of Leo, 9 A.D.3d 218, 780 N.Y.S.2d 360 [2d Dept 2004]). While the disciplinary investigation was pending, Leo learned that he faced the prospect of a formal disciplinary proceeding which would result in his disbarment. He disliked this consequence. An alternative option for Leo was to file an affidavit of resignation while under investigation, pursuant to rule 691.9 (22 NYCRR 691.9) of the Appellate Division, Second Department. (R. 31, 139). As Leo well knew, a consequence of resignation while under investigation was disbarment. (22 NYCRR 691.9[b]). Leo also knew that rule 691.10 (22 NYCRR 691.10) of the Second Department governed the conduct of disbarred attorneys, and among the consequences of his disbarment was that he not share in any legal fees for legal services performed by another attorney during the period of his disbarment; that he only could be 21 compensated for legal services he provided prior to the effective date of his disbarment on a quantum meruit basis and for incurred disbursements; but the amount and manner of the compensation and recoverable disbursements were to be determined by the courts. (22 NYCRR 691.1 O[b D. Another consequence of his disbarment was that Leo had to provide written notice to his clients, in both non-litigated and litigated matters, and to the attorneys for each adverse party in litigated matters, of his disbarment and inability to act as attorney after the effective date of his disbarment. (22 NYCRR 691.10[c],[dD. Leo disliked these consequences as well. As he stated to the subcommittee, he asked his attorney "what can we do to minimize all of this, to protect my son, to protect myself and my son." (R. 185-186). With assistance of his counsel, Leo fashioned a resignation into a tool to circumvent the adverse consequences of disbarment. First, Leo filed his affidavit of resignation. But Leo misled the Appellate Division when he swore in his affidavit of resignation that he had no plans to practice law. For even before he submitted his affidavit, Leo had already adopted the strategy to structure his disbarment as a springboard for his reinstatement. As Leo stated to the subcommittee, he and his counsel "worked out a plan where I would resign, sell my practice to my son, and that everything would be in order so 22 that when the requisite period had ended, I would be able to apply for reinstatement." (R. 140). A key feature of the strategy was to "set this up so that I would be resigned and retired and out of New York long before it ever became public that I was disbarred." (R. 176). Leo admitted to the subcommittee that "one of the reasons I resigned was that I was led to believe that term [disbarred] would never see the light of day." (R. 163). In his affidavit to the Appellate Division to disaffirm the report of the Committee on Character and Fitness, Leo summarized his strategy: "( 1) I would be able to sell my law practice to my son before the resignation became effective and thereby avoid the necessity of sending letters to all of our clients advising them that I had been disbarred; and (2) My attorney and his firm would be able to handle the sale of my law practice to my son and structure the sale so that my son would be able to send me money, as needed, to pay the purchase price of the sale without the necessity of obtaining any prior court approvals." (R.32). In furtherance of this scheme, Leo executed the agreement with his son to sell the law practice. By its terms, the agreement provided that the sale "does not include any accounts receivable due to Seller for services rendered prior to the closing," and obligated Leo's son to pay Leo for accounts accruing after the closing. (R.235). In this regard, the agreement contemplated that such payments 23 would be made during Leo's disbarment, inasmuch as the agreement noted that Leo had submitted his resignation to the Appellate Division. (R.239). In this way, the agreement unilaterally abrogated the authority of the courts to oversee and approve any post-disbarment payments to Leo of disbursements and legal fees accruing after his disbarment, as required under 22 NYCRR 691.10(b). In another overt act in furtherance of this scheme, Leo sent a letter to his clients, after filing his resignation affidavit but before his disbarment, that was misleading in the extreme. Implying that he was "retiring," Leo informed them that he was leaving New York and "transferring" the law practice to his son, and invited them to continu,e with "our new team of associates." (R. 17). Leo omitted material facts, such as that his leaving the practice of law was not a voluntary "retirement," but, rather, that he faced imminent disbarment under his affidavit of resignation. Leo also omitted that "transferring" the law practice to his son was actually a sale of the practice, under whose terms Leo would receive specified shares of any recoveries in the pending client matters. Thus, Leo evaded the requirements of former Disciplinary Rule 2-111 (22 NYCRR 1200.1S-a [now Rule of Professional Conduct 1.17, effective April 1, 2009, [22 NYCRR 1200.0]), which at the time governed the sale of a law practice. This rule provided, among other things, that written notice of the sale be given jointly by the buyer and seller 24 to the seller's clients, and that the notice contain specified information. (22 NYCRR 1200.15-a[cD. These were the facts in the record before the Appellate Division when it denied Leo's reinstatement. And there were additional facts. These included that closing statements, required to be filed under 22 NYCRR 691.20 for settled cases, did not show the payment of any legal fees or disbursements to Leo; and he listed himself as "attorney" and later "retired attorney" on his tax forms, because he did not want to disclose to his accountant that he was disbarred. Moreover, Leo displayed consciousness of misconduct when he sought to prevent his former secretary from disclosing his disbarment to clients. Further, in the hearing before the subcommittee, Leo engaged in dissembling when he testified about the payments he received from his son. He asserted that he did not receive legal fees from his son. Rather, the payments he received were for the purchase price. (R. 186). He also obfuscated the amounts he received and their purposes. On the first day of the hearing, he stated that he received only $300,000, of which $100,000 was applied to the purchase price, and $200,000 came from earned legal fees. But he also stated that he never differentiated whether the payments came from case settlements or were applied to the purchase price (R. 153-157), and that the money was "for whatever I wanted to attribute it to." (R. 150). After being alerted to the 25 subcommittee's concerns about the propriety of the payment of legal fees without court approval, Leo got an extended adjournment of the hearing, while he engaged in damage control by obtaining nunc pro tunc court orders approving the fees and filing amended closing statements. One year later, on the second day of the hearing, Leo disclosed that the amount he received from his son or was slated to receive under the nunc pro tunc orders had ballooned to $485,258.26, and the $100,000 purchase price was still outstanding. (R.210-211). Leo's maneuvering around and finessing the rules sanitized his status, and nullified the consequences of disbarment. Now, to his clients, he was a "retired" attorney, not disbarred. Now, to his clients, he had merely "transferred" his law firm intact to his son, not that he had sold it, without the required disclosure to the clients that there was a sale. Now, during his seven year hiatus as "retired," he could receive payments from his son for disbursements and legal fees, without disclosure to his clients or the courts, and evade judicial oversight and authority for these payments. Confronted with these facts, the Appellate Division was well within its discretion to confirm the findings of the Committee on Character and Fitness that Leo's "retirement" letter to his clients violated court rules, and that he failed to 26 seek court approval of legal fees and disbursements until after the subcommittee expressed concern. The Appellate Division properly concluded that these acts, coupled with the evidence of Leo's other deliberate acts of misdirection, obfuscation, and evasion of the rules, evidenced that Leo lacked the necessary character and fitness to be reinstated as a lawyer. On this appeal, Leo posits several principal arguments justifying his conduct. He contends that the sales agreement complied with the disciplinary rule governing the sale of a law practice; that he and his son were free under established principles of contract law to devise any arrangement they wished to calculate the consideration for the purchase; that court approval was not required for the measurement of the consideration for the purchase; and that court approval was not required for payments of the sales price, even where those payments included earned legal fees. He also contends that the letter to his clients announcing his "retirement" was not subject to any court rule as there are no rules governing the terms of retirement letters; that no rule required him to advise his clients of his imminent disbarment; and that he properly did not notify his clients of his disbarment as he had no clients. Lastly, he contends that even assuming that he needed to obtain court approval of payment of the consideration for the sale of the practice, he cured this oversight with the nunc pro tunc orders. Singly and 27 collectively, these formulations are sophistry. As discussed below, Leo's conduct contravened public policy, court rules, and decisional law. Leo's Private Contract to Evade the Consequences of His Disbarment Is Contrary to Public Policy An attorney facing imminent suspension or disbarment is prohibited from disposing of his or her law practice by an agreement calculated to evade the effects of the sanction, since such is against public policy. (Matter o/Haber, 27 AD2d 576,276 NY2d 353 [2d Dept 1966], affd 23 NY2d 763, 296 NYS2d 957 [1968], cert denied 394 US 975, 89 S Ct 1471,22 L Ed2d 744 [1969]). The facts and reasoning of Haber are instructive in the consideration of this matter. As recited in the Haber decision, in 1960, two law partners, Zuckerman and Haber, hired two associates, Sui sky and Simenowitz. On July 12, 1961, disciplinary proceedings were instituted against Zuckerman and Haber. A special referee conducted 14 days of hearings intermittently between June 11, 1962 and August 15, 1963, after which the hearings were closed. (Id. at 576). On November 11, 1963, prior to the resolution of the disciplinary proceedings, the four attorneys entered into a written partnership agreement, under which Zuckerman and Haber each had a 40 percent share in the partnership; 28 Sulsky a 12Y2 percent share; and Simenowitz a 7Y2 percent share. Other provisions stipulated that Zuckerman and Haber were to receive $500 per week; SuI sky $225; and Simenowitz $150. A key provision also stated that if for any reason Zuckerman and Haber should be unable to practice law, whether voluntarily or involuntarily, they were each to receive $250,000, payable $25,000 per year for four years; and $10,000 per year for 15 years in weekly installments. The shares of the surviving partnership of SuI sky and Simenowitz would be 50 percent each; both of them would be jointly and severally liable to Zuckerman and Haber for the payment to them of $250,000 each; and life insurance policies on the lives of Sulsky and Simenowitz, payable to Zuckerman and Haber, would be purchased to secure the payments. The effective date of the agreement was January 1, 1964. (Jd.). On November 18, 1963 the disciplinary proceedings against Zuckerman and Haber were reopened and closed. On November 25, 1963 letters were sent to the clients of the Zuckerman and Haber partnership, requesting consent for their cases to be handled by the new partnership of Zuckerman, Haber, Sui sky, and Simenowitz. On July 27, 1964 the special referee issued his report in the still pending disciplinary proceedings. On December 23, 1964, the Appellate Division, Second Department adopted instructions for attorneys suspended from practice, 29 effective January 1, 1965. By orders dated March 3, 1965 and entered March 11, 1965, Zuckerman was disbarred and Haber suspended for five years, both effective April 9, 1965. Letters were thereafter sent to the firm's clients advising them that effective April 9, 1965 Zuckerman and Haber would retire from the law firm, that Sulsky and Simenowitz would continue the practice from the same location, and requesting the clients to consent to the continued representation by the two remaining partners. (Id.). Based on the 1963 partnership agreement, the Second Department authorized the institution of disciplinary proceedings against Haber, Sulsky, and Simenowitz (but not Zuckerman who was already disbarred). The justice of the Supreme Court to whom the proceeding was assigned issued his report March 31, 1966. The Second Department, in its decision, stated: In our opinion, the evidence adduced warranted the following findings made by the Justice in his report of March 31, 1966: (a) that when respondent Haber entered into the November 11, 1963 partnership agreement he intended to circumvent and nullify the possibility of adverse consequences from the disciplinary proceeding then pending; and (b) that respondents Sui sky and Simenowitz in signing that agreement intended to, and did, aid and abet Zuckerman and respondent Haber in that intention. We confirm those findings and hold further that the conduct of the respondents in entering into this agreement was highly improper, since it was palpably designed to thwart judicial control over the privilege of membership at the Bar 30 (Id. at 577). of this State. On other aspects of the evidence adduced, we find that Zuckerman and respondent Haber were the prime movers in contriving this agreement and would have been the chief beneficiaries of its terms and provisions, if performed. We hold further that this type of agreement has not been previously passed upon by this court and we now formally condemn it. It is contrary to public policy. Insofar as it was intended to operate herein, it has been abrogated and is no longer enforceable. Taking into consideration certain mitigating factors, the Second Department censured Sulsky and Simenowitz for their part in the scheme; and imposed no further punishment on Haber, since he was already suspended. (Jd.). Two justices dissented, voting to disbar all three respondents. They agreed that the factual findings of the reporting justice should be confirmed, but argued that "[w]e consider this agreement so evil in nature and so deliberate in purpose to frustrate the impact of any disciplinary action affecting Zuckerman and Haber that we disagree with the majority's recommendation that a public censure is adequate punishment for such misconduct. Where, as here, a seemingly ingenious scheme to subvert the normal and orderly operation of an impending disciplinary order of the court is entered into, it is our view that any punishment short of disbarment is inadequate." (Id. at 578). This Court affirmed, and the Supreme Court of the United States denied certiorari. 31 Following Haber, the Second Department issued a decision in Matter o/the Arbitration between Silverberg and Schwartz (75 AD2d 817, 427 NYS2d 480 [2d Dept 1980]), in which it invalidated paragraph "sixth" in a partnership dissolution agreement entered into by two attorneys that provided for, among other things, the division of clients and legal fees realized after the dissolution, without reference to the actual work done in the cases. Both attorneys sought to arbitrate their disputes concerning various provisions of the agreement, including the distribution of the partnership assets, while attempting to stay the arbitration of the other's demands. The Second Department ruled that paragraph "sixth" was void and unenforceable and could not be the subject of arbitration. The court stated: This provision violates the proscriptions contained in . the Code of Professional Responsibility, specifically Disciplinary Rules 2-107 and the practice of a lawyer which is inconsistent with the professional status of attorneys (see American Bar Association Opns on Professional Ethics, No. 300 [1961]). Moreover, it is a division of legal fees without regard to services actually rendered. Such agreements are void and against public policy (see Moffat v. Cresap, 33 AD2d 54, affd 29 NY2d 856; Orenstein v. Albert, 39 Misc2d 1093, affd 20 AD.2d 720; Clark v. Robinson, 252 App Div 857). As lawyers playa vital role in society (see Code of Professional Responsibility Preamble) public policy requires that violations of the rules of professional conduct not be subject to negotiation and arbitration, but that such violations come before the scrutiny of the courts. Lawyers should not traffic in clients (see American Bar Association 32 (Jd.). Opns on Professional Ethics, No. 300 [1961]), nor make payments by one partner to another in a law firm depend on a percentage of legal fees earned after dissolution of the partnership without any professional responsibility for handling of the cases (cfOrenstein v. Albert, supra; Matter of Haber, 27 AD2d 576, affd 23 N.Y.2d 763, cert denied 394 U.S. 975). Following Haber, courts were rarely called upon to assess the same sort of conduct that was condemned in that decision, and which Leo engaged in, arguably because the impropriety of the conduct is so obvious. A handful of reported decisions did involve claims to either enforce or rescind private law practice sales agreements, where one or more of the attorneys was suspended or disbarred. Although the litigants attempted to frame the issue in terms of ethical considerations, the courts in those cases did not directly address the ethical question, and resolved the cases on other legal grounds. For example, in Glinkenhouse v. Karp (60 AD3d 630, 877 NYS2d 88 [2d Dept 2009]), the former partners and three others entered into a purchase agreement under which the former partners acquired the interest of a "retired" partner, Karp, for $1,200,000 payable in installments over eight years. One month later, Karp pleaded guilty to second degree commercial bribery, and was suspended for three years, during which the former partners continued to pay Karp 33 pursuant to the agreement. After the period of suspension was over, the parties entered into an amendment to the agreement under which Karp would receive a total of $1 ,090,449 in specified payments. At no time did any of the parties seek a judicial determination of the quantum meruit value of Karp's services. The former partners sued to rescind the purchase agreement, as illegal and against public policy, citing the Haber decision. The Second Department held that whether or not the agreement was illegal, "where the parties enter into illegal bargains, the courts generally do not grant relief." (Id. at 632 [citations omitted]). In Decolator, Cohen & DiPrisco, LLP v. Lysaught, Lysaught & Kramer P.e. (304 AD2d 86, 756 NYS2d 147 [1 st Dept 2003]), a second successor law firm sought to impose a lien on a disbarred attorney's share of the contingent fee recovery in a settled case, on the basis that his agreement with the first successor firm was contrary to public policy under the Haber decision. The First Department determined that the second successor law firm lacked standing to challenge the assertedly illegal private agreement between the disbarred attorney and the first successor law firm, and, moreover, even assuming the disbarred attorney's agreement with the first successor law firm was improper, he was still entitled to recover the quantum meruit value of his pre-disbarment work in the matter. (Id. at 89-91). 34 The case of Glinkenhouse v. Silver (2011 NY Misc LEXIS 6477, 2011 NY Slip Op 33546 [Sup Ct Nassau County Dec. 30,2011]) concerned an iteration of the same successor law firm involved in the Glinkenhouse v. Karp matter discussed above. In this case~ the law firm sought to rescind an agreement between the firm and a partner, Silver, dated June 6, 2001, which provided for a buyout of Silver's interest in the law firm with specified payments to Silver. However, Silver was the subject of a disciplinary proceeding, which was resolved by an order of the Second Department dated May 21,2001, suspending Silver effective June 7, 2001, the day after the dissolution agreement. The law firm framed its claim in terms of the applicable ethical considerations, and asserted that under Haber the agreement was void as against public policy. The court determined that the issue before it was not of that nature; that it was instead an action for rescission of a contract and a counterclaim for enforcement. It ruled that "[a]s a practical matter, whether the agreement was 'legal or 'illegal' is not particularly relevant." The court found that unlike in Haber, Silver did not retain a vested interest in the subsequent successor law firm. It ruled against the law firm on the basis that it failed to establish any of the traditional grounds for the rescission of a contract. (Jd. at *22-23). Manifestly, Leo's scheme to resign while under disciplinary investigation, 35 but sell his law practice and "retire" before the effective date of his disbarment, in order to avoid advising his clients of his disbarment, and enable him to collect legal fees without judicial authorization during his disbarment, is precisely the conduct condemned in Haber. Through artful interpretation and parsing of the rules with a gimlet eye, Leo threaded his way through the interstices of the rules, and refashioned his disbarment into a "retirement" by resignation. His maneuvers and evasions nullified and circumvented the intent and consequences of the rules governing a resignation while under investigation and the conduct of a disbarred attorney. In short, Leo violated the court rules by evading them. By his admissions, Leo acknowledged that he misused the sale of his law practice. Leo distorted the sale into a vehicle by which to transfer his law firm intact to his son, who would act as caretaker until Leo's eventual reinstatement. Leo also misused the sale as a conduit for him to receive money without court approval during his disbarment, by pll:rporting to include legal fees from pending contingency fee cases as part of the "consideration" for the purchase of the practice. Further evidence that the sale was a charade is that Leo's son paid nothing for the law practice, since no part of the stated sales price of $100,000 was paid. Rather, the son supposedly remitted to Leo incurred disbursements, which were not even covered by the sales agreement, and·a share of legal fees 36 from the pending cases. For his part, Leo relies on the holding in In re Lieber (834 NW2d 200 [Sup Ct Minn 2013]), in support of his contention that he violated no rules. In Lieber, the Minnesota Supreme Court reinstated a disbarred attorney who, relying on the advice of ethics counsel, sold his law practice before his suspension and subsequent disbarment. The sale was intended to promote several goals: continue the law practice to provide employment to the firm's employees; prevent the clients from seeking new representation; and overall efficiency instead of a piecemeal file-by-file transference, which was also in the interests of the clients. (Id. at 206). Lieber's ethics counsel advised him to complete the sale quickly while Minnesota Rule of Professional Conduct 1.17, governing the sale of a law practice, was still an available process, as it might be unavailable to a suspended or disbarred attorney. (Id.). In addition, Lieber submitted an affidavit after his suspension and disbarment, claiming he had no clients to give the required notice of his disbarment under the applicable Minnesota rule. The decision in Lieber is not what Leo would have it be. First, the sales agreement in Lieber was an arms length business transaction between two unrelated attorneys. Second, unlike Leo's sales agreement, the agreement in Lieber did not contain terms under which the disbarred attorney continued to 37 receive legal fees and disbursements requiring court approval. Instead, the agreement, as described in the opinion, provided for a set stock purchase price payable in specified installments. Third, the purchaser of the law practice in Lieber actually made payments towards the purchase price, establishing it as a bona fide sale of the practice. In addition, the purchaser made lease payments to the disbarred attorney, who retained ownership of the building where the practice was located. (Id. at 207). Fourth, there is no indication from the description of the facts that Lieber sent a misleading letter to his clients. Fifth, the parties in the reinstatement proceeding stipulated that Minnesota's client notification rule was satisfied by the attorney's affidavit. (Id.). Thus, the facts in Lieber are dissimilar from, and distinguishable from, those in this case. The court in Lieber did not sanction deceptive and misleading conduct. The multiple indicia of dissembling that permeate Leo's conduct are absent in the facts described in the Lieber opinion. Indeed, the Lieber court noted that the attorney "has made efforts to maintain transparency and honesty in his conduct." (Id. at 206). Unlike Leo, the attorney in Lieber did not surreptitiously sell his law practice with the intent to avoid advising his clients of his disbarment, and in order to continue receiving payments without judicial oversight. Significantly, research has disclosed no other jurisdiction that has followed the 38 Lieber holding. Leo implicitly admits that his conduct evidenced a lack of the requisite character and fitness for reinstatement, where he cites in mitigation his reliance on the advice of counsel. But this is unavailing. It was Leo, not his counsel, who chose to devise a way to protect himself and his son and minimize the effects of his disbarment. It was Leo who chose to create the illusion of a voluntary retirement, in order that he not suffer the infamy associated with disbarment; and to pass the law practice intact to his son so that he could continue to reap legal fees from it. Leo's counsel merely provided him the technical means to attain his improper ends. Leo was not so much reliant on the advice of counsel, as he was willfully blind to the questionable practices his counsel recommended. Leo, alone, is responsible for the decision to adopt this "seemingly ingenious scheme to subvert the normal and orderly operation of an impending disciplinary order of the Court." (Haber, 27 AD2d at 578). Leo's logic that there was no express prohibition in the rules regarding his conduct is fallacious. It deflects and misdirects attention from the actual issue of Leo's evasion of the rules that did apply to his resignation and conduct as a disbarred attorney. It is Leo's disobedience of the rules that applied to him, not the absence of rules prohibiting his evasion of them, that was the issue in his 39 reinstatement proceeding. That something is not expressly prohibited does not ipso facto imply that it is permitted. For example, there is no specific rule that prohibits an attorney from submitting a voluntary resignation in good standing, where the attorney has been arrested or is facing pending criminal charges, and has not yet been convicted. Some attorneys in these circumstances have sought to insulate themselves from the disciplinary consequences of a subsequent conviction by submitting voluntary affidavits of resignation in good standing. But the courts nevertheless forbid attorneys from exploiting this gap. "When an attorney is under the cloud of a criminal proceeding, entertainment of an application to resign is inappropriate." (Matter of KourI and, 172 AD2d 77, 79, 577 NYS2d 264 [1st Dept 1991]; accord Matter of Au, 41 AD3d 67, 69, 79 NYS2d 782 [1 st Dept 2007] [holding that the attorney was under '''the cloud of a criminal proceeding' at the time he sought to resign," and that his failure to meet his "affirmative obligation" to provide this information "amounted to a fraud on the court, and the resignation was granted under false pretenses."]). Payment of Legal Fees to a Disbarred Attorney Under rules of the Appellate Division, Second Department, a disbarred attorney such as Leo "may not share in any legal fee for legal services performed by another attorney during the period of his removal from the bar. However, a 40 disbarred attorney may recover legal fees for services in client matters rendered prior to disbarment, as well as disbursements." (22 NYCRR 691.10[b]). But the disbarred attorney may not set the amounts of the fees and disbursements by private agreement. Such amounts must be fixed by a court, as the rule prescribes: (Jd.). A disbarred, suspended or resigned attorney may be compensated on a quantum meruit basis for legal services rendered and disbursements incurred by him prior to the effective date of the disbarment or suspension order or his resignation. The amount and manner of payment of such compensation and recoverable disbursements shall be fixed by the court on the application of either the disbarred, suspended or resigned attorney or the new attorney, on notice to the other as well as on notice to the client. Such applications shall be made at special term in the court wherein the action is pending or at special term in the Supreme Court in the county wherein the moving attorney maintains his office if an action has not been commenced. Decisional law reaffirms this doctrine. "The contention that court intervention is not required in order to share fees with a disbarred or suspended attorney is erroneous. We have held that compensation to a disciplined attorney is capped by the rule of quantum meruit and that fee-splitting agreements between such attorneys are not binding on the Court." (Matter of Adams, 42 AD3d 1, 7, 833 NYS2d 645 [2d Dept 2007] [citations omitted]). A private agreement may not, by itself, fix the fees and recoverable disbursements payable to a suspended or 41 disbarred attorney, although it may be a factor considered by the court in assessing recoverable fees earned prior to the effective date of suspension or disbarment. The case of Padilla v. Sansivieri (31 AD3d 64, 815 NYS2d 173 [2d Dept 2006]) involved the award of an attorney's fee to outgoing counsel in a fee dispute between incoming and outgoing counsel in a personal injury action that was settled after outgoing counsel was disbarred. The trial court awarded compensation under a division of fees agreement. The Second Department modified the trial court's order, ruling that the fee division agreement was not binding on the court, and that the compensation to the disbarred attorney was limited to a portion of the contingent fee calculated according to the rule of quantum meruit. The Second Department stated: Under this Court's rules, a disbarred attorney may recover legal fees for services rendered prior to disbarment (see 22 NYCRR 691.10[b]). However, such fees are capped by the . rule of quantum meruit, and no private agreement as to compensation is binding on the court. An award in quantum meruit should in all cases reflect the court's assessment of the qualitative value of the services rendered, made after weighing all relevant factors considered in valuing legal services. An agreement as to compensation is one such factor. Further, an agreement as to compensation will provide guidance as to the most appropriate method by which to compute an award in quantum meruit; that is, for example, whether compensation should be fixed as a portion of a contingent fee, or should be calculated based on the number of hours worked times a 42 reasonable hourly rate. (Id. at 65). To similar effect is the holding in Keinz v. Hobaica (114 AD3d 1250,980 NYS2d 856 [4th Dept 2014], leave to appeal denied, reargument denied, 117 AD3d 1506,986 NYS2d 372 [4th Dept 2014]). The defendant attorney Hobaica purchased attorney Keinz's law practice pursuant to an agreement dated November 2, 2006. On June 22, 2010, Keinz resigned while under disciplinary investigation, and his name was later stricken from the roll ofattomeys on July 2, 2010. (Matter ojKeinz, 75 AD3d 1113,903 NYS2d 760 [4th Dept 2010]). Hobaica ceased making payments to Keinz under the agreement, and Keinz sued. The trial court dismissed the complaint. The Appellate Division, Fourth Department upheld the trial court's determination that the payments provided for in the agreement were part of a fee sharing arrangement, rather than a portion of the purchase price of the law practice. Since Keinz resigned from the practice of law and was no longer permitted to share in fees during the period of his removal, the provision in the agreement for the payments at issue was not binding on the court. (Id. at 1251). Leo's contention that he could avoid court approval of payments for pre- disbarment legal fees and disbursements, by folding these amounts into the purchase price for his law firm, is negated by the above described legal authorities. 43 Moreover, factually, the sales agreement expressly excluded from the sale the accounts receivable from services he rendered before the agreement. (R.235). Thus, his testimony to the subcommittee, and his argument here, that he considered the payments of legal fees as part of the consideration for the sale, is factually unsupportable. F or the same reasons, Leo's argument that court approval was not required to establish the measure of the consideration for the sale or the payment of the consideration, is legally and factually flawed. Leo and his son may have had wide latitude to calculate the consideration for the purchase, insofar as it applied to the valuation of the chattels of the firm and its "goodwill." "When applied to law firms, the term 'goodwill' refers to the 'ability to attract clients as [a] result of [the] firm's name, location, or the reputation of [its] lawyers." (Dawson v. White & Case, 88 NY2d 666,670,649 NYS2d 364 [1996] [citing Black's Law Dictionary 695 [6th ed]). The term "goodwill" represents an elusive concept, but is broadly defined as "the advantage or benefit, which is acquired by an establishment, beyond the mere value of capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement, which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from some other accidental circumstances or necessities, 44 or even from ancient partialities or prejudices." (Id. at 671, n. 2 [citations omitted]). But, Leo could not, by contract, fix the amount of his recoverable disbursements and legal fees earned prior to his disbarment, and paid to him after his disbarment, under the rubric of "consideration" for the purchase of the law firm. Since Leo is a disbarred attorney, only the courts could fix those amounts. Leo's "Retirement" Letter Leo's argument that his "retirement" letter to his clients was not expressly covered by any rule is specious. Even assuming that no rule governed the "retirement" letter, that did not give Leo license to engage in deception to evade the rule that applied to his disbarment and which required that he advise his clients of his disbarment. Leo intentionally misled his clients that he voluntarily "retired" in good standing, when in reality he resigned while under disciplinary investigation and faced imminent disbarment. Leo admitted that he knew he had to disclose his disbarment to clients. His "retirement" letter, designed and intended to circumvent this requirement, by its very purpose, violated 22 NYCRR 691.10(c) and (d). Leo's conduct in this regard was prohibited under former Disciplinary Rule 1-102(A)(4) (22 NYCRR 1200.3[a][4]), proscribing conduct involving dishonesty, fraud, deceit, or misrepresentation; former Disciplinary Rule 45 1-102 (A)(5) (22 NYCRR 1200.3[a][5D, proscribing conduct prejudicial to the administration of justice; and former Disciplinary Rule 1-102(A)(7) (22 NYCRR 1200.3 [a] [7D, proscribing other conduct that adversely reflects on a lawyer's fitness as a lawyer. Sale of a Law Practice Leo assumes, without discussion, that he was eligible to sell his law practice under former Disciplinary Rule 2-111 (22 NYCRR 1200.15-a). That rule permitted only three categories of people to sell a law practice. The category pertinent here is a "lawyer retiring from the practice of law." (DR 2-111[A] [22 NYCRR 1200.15 -a[aD. "Retirement shall include the cessation of the private practice of law in the geographic area" where the practice has been conducted. (Id.; see 22 NYCRR 118.1 [g] [defining "retired" for purposes of the filing requirements for attorney registration as: "An attorney is 'retired' from the practice of law when, other than the performance of legal services without compensation, he or she does not practice law in any respect and does not intend to ever engage in acts that constitute the practice oflaw."D. Section 1200.15-a of the Code of Professional Responsibility "expressly applies only to the sale of a practice by a retiring attorney." (Decolator, 304 AD3d at 88). Leo was not a "retiring" attorney in the sense of a voluntary cessation of the practice of law, as 46 contemplated under the rule. Rather, his status was that of a "resignor" attorney while under disciplinary investigation pursuant to 22 NYCRR 691.9, whose resignation would lead to disbarment and the compulsory cessation of the practice of law. Leo claims that the sale of his law practice promoted the goals of the Ethical Considerations that were in effect at that time. (EC 2-34, 2-35). Although the Ethical Considerations were aspirational only, Leo's conduct violated them. Under EC 2-34, among other things, the sale of a law practice is permissible "provided certain conditions, designed primarily to protect clients, are satisfied." Leo's stated purpose in structuring the sale was the antithesis of this goal. Leo desired to minimize the effect of his disbarment to protect himself and his son, and not to protect his clients. 47 POINT TWO THE DENIAL OF REINSTATEMENT TO A DISBARRED ATTORNEY IN THIS MATTER COMPLIED WITH APPLICABLE DUE PROCESS STANDARDS. As his second point for reversal, Leo posits that the denial of his application for reinstatement violated due process, in that the Appellate Division's determination departed from legal standards, was contrary to the evidence, and it did not provide a written decision sufficiently explaining the rationale for the denial. As discussed below, Leo was afforded adequate notice and opportunity to be heard. The Appellate Division had the entire record upon which to base its determination, which contained ample evidence to support its conclusion that Leo lacked the requisite character and fitness to practice law. There is no authority for the proposition that due process mandates that the Appellate Division provide a written decision detailing its factual findings and legal conclusions. Since Leo was already afforded all the process that was due, the Appellate Division complied with due process in summarily adopting the findings of the Committee on Character and Fitness. The Procedures Applied to Leo's Application for Reinstatement Judiciary Law § 90(1) provides that upon the certification of the board of 48 law examiners that a person has passed the bar examination, the Appellate Division shall admit that person if it is "satisfied that the person possesses the character and general fitness required" for an attorney. Judiciary Law § 90(2) further provides: "The supreme court shall have the power and control over attorneys and counsellors-at-law." This power includes the admission of applicants to the bar, and the suspension or disbarment of admitted attorneys. (Judiciary Law §§ 90[1], [2D. The reinstatement of disbarred or suspended attorneys is also a matter for the Appellate Divisions. The four departments have each promulgated rules governing the procedures for reinstatement, which, in the case of the Second Department, is its rule 691.11 (22 NYCRR 691.11). As relevant to the issues in this appeal, rule 691.11 of the Second Department provides that "[ n]o attorney disbarred after a hearing or on consent ... may apply for reinstatement until the expiration of at least seven years from the effective date of the disbarment or removal." (22 NYCRR 691.11 [aD. Reinstatement may be granted only upon a showing "by clear and convincing evidence, that the applicant has complied with the provisions of the order disbarring or suspending him or her, or striking his or her name from the roll of attorneys, and that he or she possess the character and general fitness to practice law." (22 NYCRR 691.11[c][lD. "The court shall refer 49 an application for reinstatement after ... a disbarment to a Committee on Character and Fitness in this judicial department ... for a report before granting that application." (22 NYCRR 691.11[d]). Whether an attorney is a first time applicant for admission, or a disbarred attorney seeking reinstatement, the Appellate Division must determine, in its discretion, whether the attorney has the requisite character and fitness for the law. There is no unqualified right to be admitted as an attorney. Admission to practice is not determined by the rote application of statutes and court rules. "One is not licensed to practice law merely because he is a resident and possesses certain legal knowledge. He may be required to demonstrate that he is a person of good moral character. Investigations by 'character committees' and other licensing agencies are not intended to be perfunctory." (Tang v. Appellate Division of New York Supreme Court, First Department, 373 F Supp 800, 802 [SDNY 1972], affd 487 F.2d 138 [2d Cir 1973], cert denied 416 US 906,94 S Ct 1611,40 L Ed2d 111 [1974]). "Membership in the bar is a privilege burdened with conditions. A fair and professional character is one of them. Compliance with that condition is essential at the moment of admission; but is equally essential afterwards. Whenever the condition is broken, the privilege is lost." (Matter ofRouss, 221 NY 81, 84, 116 NE 782 [1917], cert denied 246 US 661, 38 S Ct. 332, 62 L Ed 50 927 [1918]). Fitness is "conduct reasonably viewed as incompatible with a lawyer's duties and responsibilities as a member of the Bar." (Matter of Anonymous, 74 NY2d 938,940,550 NYS2d 270 [1989]). Alternatively, fitness is "no more than 'dishonorable conduct relevant to the legal profession.'" (Law Students Civil Rights Research Council v. Wadmond, 401 US 154, 159,91 S Ct 720,27 L Ed2d 749 [1971] [citations omitted] [holding that requirement of character and fitness under Judiciary Law § 90[1][a] is not void for vagueness]). Insofar as the Appellate Division is vested with the authority to determine fitness, this Court has noted that: The Appellate Division is the finder on issues of character and fitness and its discretion is inclusive; our review "is limited to ensuring that the proceedings have been conducted in accordance with statutory and regulatory requirements, that no right of the petitioner has been violated, and that there is evidence to sustain the decision of the Appellate Division." (Matter of Anonymous, 79 NY2d 782, 783, 579 NYS2d 648 [1991] [quoting Matter of Anonymous, 74 NY2d at 940]). The record in this appeal demonstrates that Leo's reinstatement application followed the procedures provided in the Second Department's rules. It 51 shows, furthermore, that he received the full panoply of due process available to a disbarred attorney seeking reinstatement. Finally, it contains more than sufficient evidence to sustain the Appellate Division's decision that Leo lacks the character and fitness compatible with a lawyer's duties as a member of the bar, and that he has engaged in dishonorable conduct relevant to the profession. At every step of the process, Leo had adequate notice of the rules applicable, their consequences to him, and his obligations under the rules. Thus, upon submitting his affidavit while under investigation in 2004, Leo was on notice that pursuant to the Second Department's rule 691.9(b) (22 NYCRR 691.9[bD, that affidavit would result in his disbarment. He clearly was on notice of rule 691.10 (22 NYCRR 691.10), governing the conduct of disbarred attorneys. In fact, his entire scheme was calculated to avoid the application of this rule to him. Furthermore, in its June 28, 2004 decision and order accepting his resignation and disbarring him, the Second Department, among other things, notified Leo that he , must "promptly comply with this Court's rules governing the conduct of disbarred, suspended, and resigned attorneys (22 NYCRR 691.10)." (Matter o/Leo, 9 AD3d at 220). After Leo filed his written application for reinstatement, by its January 23, 2012 order the Appellate Division referred the matter to the Committee on 52 Character and Fitness "to investigate and report on his current character and fitness to be an attorney, including but not limited to, the sale of his law practice to his son and the business income reported on his tax returns." (R. 13). Thus, Leo received notice of the issues to be investigated. While represented by counsel, Leo was able to address the issues presented at a full hearing before the subcommittee delegated the investigation. That hearing lasted two days and generated a 106 page transcript, together with numerous exhibits. During the first day of the hearing, Leo was examined about the issues, and permitted to present his testimony about the facts and circumstances surrounding his "retirement" letter to his clients, the sale of his law practice, and his receipt of disbursements and legal fees from his son. During this hearing, the subcommittee advised Leo about its concerns regarding the payments received and his noncompliance with the rule pertaining to those payments during his disbarment. He was given an entire year to remedy his failure to obtain court approval for the payments to him of disbursements and legal fees during his disbarment. Then, he was given a second day of hearing testimony, where he presented evidence of his nunc pro tunc compliance with the rules governing his conduct in disbarment, as well as numerous character letters. Leo received the subcommittee's report, containing its factual findings and 53 legal conclusions on the issues of his "retirement" letter and receipt of payments. That report reflected the subcommittee's determination that Leo's business agreement did not comply with the rules concerning the payment of compensation to disciplined attorneys. But it recommended reinstatement, notwithstanding Leo's violation of the rules, premised on,its conclusion that Leo's belief in the propriety of his actions, derived from the advice of counsel, mitigated his violation of the rule, and that he corrected the situation with the nunc pro tunc orders. The full Committee on Character and Fitness thereafter provided Leo with its written determination, recommending against reinstatement, based on his violation of the rules pertaining to his disbarment, as discussed in the report of the subcommittee. Leo was afforded further opportunity to be heard, through his submission to the Appellate Division of written motion papers, including an affirmation of his counsel, his own affidavit, a memorandum of law, and several exhibits, seeking reinstatement notwithstanding the recommendation of the full committee. In these papers, Leo demonstrated a full understanding of the principal issues involved: his "retirement" letter to his clients; the sale of his law practice to his son; his receipt during his disbarment of payments for disbursements and legal fees; and whether his conduct conformed with 22 NYCRR 691.10 and 691.11. The Appellate Division denied reinstatement, noting that it based its 54 decision upon all the papers and exhibits submitted. Thus, the Appellate Division considered Leo's papers in support of his motion for reinstatement and the papers filed in relation to that motion; the report of the Committee on Character and Fitness and the exhibits annexed to that, which included the subcommittee report and the hearing exhibits in connection with the hearing; and Leo's papers filed in support of his motion for reinstatement notwithstanding the recommendation of the Committee on Character and Fitness. In sum, Leo was afforded a fair and open process giving him notice of the issues, a hearing to present testimony and evidence, and review of this evidence by the Appellate Division, the ultimate arbiter of reinstatement of a disbarred attorney. The Adequacy of the Decision of the Appellate Division Leo's disparagement of the Appellate Division's decision as a "conclusory squib," is based on the false assumption that there is a due process mandate that the Appellate Division issue a detailed statement of its reasons for denying reinstatement. This Court has previously ruled that the Appellate Division need not specify its reasons for denying admission or reinstatement to the bar, provided the applicant has access to the papers or reports the Appellate Division relied on, so 55 that the applicant may correct any errors in the underlying reports or address concerns about reinstatement. These criteria were met in this case. In Matter o/Citrin (94 NY2d 459, 706 NYS2d 72 [2000], motion/or clarification denied 95 NY2d 897, 716 NYS2d 36 [2000]), a disbarred attorney, whose two applications for reinstatement were denied, appealed the denial of his request for access to the reports of the Committee on Character and Fitness which were considered by the Second Department in its denials. In the attorney's first application, the matter was referred to the Committee on Character and Fitness to investigate the attorney's fitness to practice law. That committee appointed a two- member subcommittee, which held a hearing at which the attorney testified, and issued a report to the full committee. The full committee issued its own report, which it provided to the court but not the attorney, recommending reinstatement. This fact was not disclosed to the attorney. The Appellate Division nevertheless denied the application "[ u ]pon the report of the Committee on Character and Fitness and the exhibits annexed thereto." (Id. at 462-463). The attorney filed a second petition for reinstatement, submitting additional evidence and documents relating to his character and fitness to practice law. The Second Department denied this application as well, without a hearing, finding "that the petitioner does not demonstrate the requisite fitness and character to 56 practice law." It also denied a subsequent request by the attorney for access to all reports prepared by the Committee on Character and Fitness. (Id. at 463). This Court concluded that the failure to provide the attorney with the report preceding the rejection of the attorney's reinstatement application was arbitrary. It reasoned that since the report was the only document mentioned by the Second Department in denying the first application, it must also be deemed to have factored into the second denial. The attorney should have had access to the report to correct any error in it and to afford him the means to satisfy his burden of showing he had the necessary character and fitness to practice law. That the report recommended reinstatement did not justify its denial to the attorney, since the report may be equivocal or raise other concerns about the attorney's character that the Appellate Division will weigh. (Id. at 464-465). Pertinent to the issue on this appeal, the Court in Citrin rejected the attorney's claim that he was denied a right to a detailed decision from the Second Department: "We do not agree with the petitioner, however, that the Appellate Division was required to provide him with a more detailed statement of reasons for denying his applications." (Id. at 465). In Matter of Anonymous for Admission to the Bar of the State of New York (97 NY2d 332, 740 NYS2d 286 [2002]), the petitioner appealed the Appellate 57 Division order denying his application for admission to the bar, notwithstanding the written report of the Committee on Character and Fitness recommending his admission. Although Citrin concerned reinstatement, the Court applied the principles of that case to admission, and reiterated the Citrin rule: "As we stated in Citrin, the Appellate Division need not give its reasons for denying an applicant admission to the Bar." (Id. at 334). Also consistent with Citrin, in this case the applicant was denied copies of the reports of the subcommittee and full Committee on Character and Fitness, so the matter was reversed and remanded to the Appellate Division, in order that the applicant receive the reports relied on by the Appellate Division, and have an opportunity to respond, before the court finally ruled on the application. (Id. at 334-335). Other courts have reached similar conclusions. In Mildner v. Gullota (405 F Supp 182, 195 [EDNY 1975],judgment affirmed 425 US 901, 96 S Ct. 1489,47 L Ed2d 751 [1976]), three New York attorneys, who had been sanctioned in attorney disciplinary proceedings, brought a broad-based constitutional challenge to Judiciary Law § 90. A three-judge panel of federal judges was convened to hear the case. In a two to one decision, the constitutionality of section 90 was upheld. Among their claims, the attorneys asserted that due process was violated where the Appellate Division disaffirmed, without detailed reasoning or a statement of 58 factual findings, the conclusions of the hearing referees. This claim was rejected: [W]ith respect to the criticism that the court provided no reasons or new findings in overruling the referees in the Mildner and Levin cases, we have not been referred to and are unaware of any authority for the proposition that the absence of such a statement in ajudicial [italics in the original] context offends due process. The rule of administrative law cases, many of which are cited by plaintiffs, is of little help in disciplinary proceedings. Special factors applying to administrative proceedings which call for a written statement of findings and reasons are not present here. However terse the Appellate Division's decisions in these cases, they made clear that that Court disagreed with the respective referees' ultimate conclusions in Mildner and Levin as to what the compiled evidence showed on the issue of professional misconduct - a mixed question of law and fact as to which the Appellate Division is the statutory arbiter. That the final decision was adverse to the attorneys is not evidence that the court reached it in a manner incompatible with due process. (Id. at 195 [footnote and citations omitted]. Accord Weisner v. Nardelli, 2007 US Dist LEXIS 5801, *21 [SDNY January 29,2007], affd 307 Fed Appx 484 [2d Cir 2008] [rejecting due process claim by unsuccessful applicant for admission to New York bar that the Appellate Division was required to provide some reason for denial of admission other than summarily adopting the report of the Committee on Character and Fitness, citing this Court's opinions in Citrin and Matter oj Anonymous]; and GerzoJv. Gulotta, 87 Misc2d 768, 777, 386 NYS2d 790 [Sup Ct Nassau County 1976], mod 57 AD2d 821, 395 NYS2d 26 [1 st Dept], appeal 59 dismissed 42 NY2d 960,398 NYS2d 146 [1977], appeal dismissed 42 NY2d 973 [1977] [analogizing an attorney disciplinary proceeding in which a referee is appointed to hear testimony and present findings to the court, to procedures followed in civil actions where a referee is appointed to report under CPLR 4320; and holding, among other things: "Finally, plaintiff argues that he was entitled to a statement of reasons for the Appellate Division decision. This overlooks the fact that the Appellate Division's opinion [citation omitted] states that it found the charges against the plaintiff were sustained by the evidence contained in the record and the referee's report. The referee's report contains detailed findings of fact, much as is required by CPLR 4320 in civil actions."]). There Is Sufficient Evidence in the Record to Support the Determination that Leo Lacked the Requisite Character and Fitness for Reinstatement The due process requirement that there be sufficient evidence in the record to support the conclusion reached is also satisfied here. The facts of Leo's conduct are not in dispute. The statement of those facts defines his lack of character and fitness as a lawyer. In essence, Leo used the contrivance of a sales agreement for his law firm to minimize the adverse consequences of his impending disbarment, and to protect himself and his son. By doing so, Leo bypassed the rules that governed his conduct in disbarment, including that he notify his clients 60 of his disbarment, and obtain court approval of the payment to him of disbursements and legal fees. Based on these undisputed facts, the Appellate Division reasonably concluded that Leo failed to sustain his burden to prove by clear and convincing evidence that he possessed the necessary character and fitness for reinstatement. It reasonably determined, based on the entire record before it, that Leo demonstrated a pronounced lack of character and fitness, through his impermissible plot to circumvent and nullify its rules pertaining to disbarred attorneys. Instead of a full, clear, and straightforward admission that, in hindsight, his conduct was unprofessional, Leo persisted in his assertion that he violated no rules, and that, even if he did, his conduct should be excused because he relied on the advice of counsel. Contrary to Leo's argument on this appeal, the Appellate Division could disagree and reject the subcommittee's acceptance of his advice of counsel argument. The Appellate Division in its discretion could find that Leo's misconduct was so egregious his mitigation evidence was insufficient to excuse or absolve him. The Appellate Division acted well within the parameters of its discretion in inferring from the evidence that Leo's purported innocent reliance on the advice of counsel did not perforce mean that he was innoculated against any finding that he lacked character and fitness. Furthermore, contrary to Leo's 61 argument, the Appellate Division could properly and rightly draw an adverse inference from his reliance on counsel argument, and find that it was really a tactic to deflect and dispel the perception that he lacked the necessary character and fitness. In this regard, that the Appellate Division reached a conclusion from the undisputed facts adverse to Leo "is not evidence tha~ the court reached it in a manner incompatible with due process." (Mildner, 405 F Supp at 195). Due Process Standards in Attorney Matters The procedures applied in Leo's reinstatement application, and its denial, comported with due process standards applicable in attorney proceedings. This Court has stated that as a general principle, "due process is a flexible constitutional concept calling for such procedural protection as a particular situation may demand." (Medicon Diagnostic Laboratories, Inc. v. Perales, 74 NY2d 539, 546, 549 NYS2d 933 [1989] [citations omitted]). In the case of attorneys facing discipline, they are not entitled to the full panoply of protections that apply to a criminal prosecution. (Jacobs v. Grievance Committee for the Eastern District of New York, 44 F3d 84,89 [2d Cir 1994], cert denied 516 US 862, 116 S Ct 173, 133 L Ed2d 113 [1995]). Rather, the demands of due process are tempered by the nature of the relationship between courts and attorneys, and the nature of the proceedings relating to their admission, discipline, and 62 reinstatement. The nature of the relationship between courts and attorneys derives from the fact that the courts are exclusively vested with the power to admit attorneys, who, upon admission, become officers of the court, subject to court regulation of their professional conduct. In exercising this power, the courts engage in a delicate balancing of competing interests - the attorneys' right to practice law and the protection of the public from attorneys lacking the character and fitness to practice law. "The practice of law is a privilege, and while an attorney subject to discipline is entitled to due process, the protection of the public from the unscrupulous practitioner may interdict relief from certain unfairness that may arise in the course of the imposition of professional discipline." (Matter ofDondi, 63 NY2d 331, 339,482 NYS2d 431 [1984]). The intimate and delicate relationship between courts and lawyers has long justified the judiciary's careful scrutiny of the integrity and qualifications of those who appear before it. Thus, it would be peculiar, if not unreasonable, for the New York Legislature to place responsibility for disciplining attorneys and review of disciplinary proceedings elsewhere than in the courts. No other body is as well qualified or as interested in determining whether an attorney is qualified to practice law. (Javits v. Stevens, 382 F Supp 131, 141 [SnNY 1974]). 63 The scope of due process protections is also affected by the nature of attorney disciplinary and reinstatement proceedings. "Perhaps the most important element of such proceedings, and that which gives them their unique status, is the universal recognition that the same court before whom attorneys, acting as its officers, are admitted and practice is the tribunal which must sit in judgment of charges of professional misconduct against them. There can be no doubt about such court's inherent power of autonomous control over the conduct of its officers." (Mildner, 405 F Supp at 191). Rather than lawsuits between parties, attorney disciplinary proceedings "are in the nature of an inquest or inquiry as to the conduct of the respondent. They are not for the purpose of punishment, but rather seek to determine the fitness of an officer of the court to continue in that capacity and to protect the courts and the public from the official ministrations of persons unfit to practice." (In re Ming, 469 F2d 1352, 1353 [7th Cir 1972] [citing Ex parte Wall, 107 US 265, 2 S Ct. 569,27 L Ed 552 [1882]). The power to deprive an attorney of a law license may not abrogate federally protected rights. (Mildner, 405 F Supp at 192). At the same time however, the license to practice law in a particular State is so local in nature, even to the point of localized admission to practice before the various courts, that federal constitutional standards have not altered the traditionally wide discretion afforded State courts "in the 64 establishment and application of standards of professional conduct and moral character to be observed by their court officers. " (Id. [citing Erdmann v. Stevens, 458 F2d 1205, 1210 [2d Cir 1972]). Recognizing the special relationship between courts and lawyers, and the interests to be balanced, courts have found that procedures that are features of due process in other contexts are not necessarily warranted in attorney admission, discipline, and reinstatement proceedings. For example, it is not constitutionally required that the Appellate Division, as the final arbiter of the facts in a proceeding, have personally heard the accused attorneys and other witnesses at a hearing, or allowed oral arguments on motions to confirm. (Mildner, 405 F Supp at 195). Similarly, in a federal grievance committee proceeding, based on a New York State court order suspending the attorney, due process does not require that the attorney be served with a complaint containing a statement of charges. It is sufficient that the order to show cause served on the attorney appends the opinion of the New York Appellate Division order suspending the attorney, which clearly set out the charges against the attorney. (Jacobs, 44 F2d at 90). Due process does not require that a petition in an attorney disciplinary proceeding specify the particular canons the attorney is accused of violating, where the facts alleged give the attorney sufficient and specific notice of the charges alleged. (Javits, 382 F 65 Supp at 138-139). So, too, attorneys are not constitutionally entitled to review of adverse detenninations pursuant to CPLR Article 78. (Id. at 140-141). In Matter a/Rowe (73 NY2d 336,540 NYS2d 231 [1989]), this Court distinguished between an applicant for admission and an attorney seeking reinstatement after suspension or disbannent. Rowe involved an attorney suspended because of mental disability, who sought reinstatement on the basis that he no longer suffered from mental illness. The Appellate Division denied the application without a hearing or a written decision. This Court reversed and remitted the case for a hearing to resolve the factual issue of whether the mental disability persisted. In doing so, the Court found that an attorney suspended because of mental disability did not fit the category of either a first time applicant for admission or one seeking reinstatement. As to these two categories, the Court stated: It is settled that a State cannot exclude a first time applicant from the practice of law in a manner that contravenes due process. When the criteria for admission have been met, an application should not be rejected upon charges of unfitness without an opportunity by notice for a hearing and an answer [internal citation omitted]. In contrast, an attorney once admitted but subsequently disbarred for professional misconduct or commission of a felony cannot claim a similar right to reinstatement. The disbarred attorney has been granted the right to practice law but has been proven unfit because of some violation of the public trust. He or she 66 (Id. at 338). has no right to a hearing on reinstatement, therefore, and approval or denial of the application is a matter wholly within the discretion of the Appellate Division. In determining the process that is due attorneys in proceedings related to their admission, discipline and reinstatement, the courts have balanced the competing interests of the attorney's right to practice; protection of the public; and preserving the authority of the courts over their appointed officers. In sum, an attorney is entitled to notice of the charges or.allegations against him or her, and an opportunity to be heard at a hearing of some kind. The First Department succinctly stated the due process requirements for attorney proceedings in a decision rendered a century ago: The Appellate Division is thus given power to remove an attorney and counselor at law, the only limitation upon that power being that, before he is suspended or removed, a copy of the charges against him must be delivered to him personally, and he must be allowed an opportunity of being heard in his defense. The method of procedure before the Appellate Division is not regulated by statute, but, while the attorney cannot be removed until he is found guilty of deceit, malpractice, crime, or misdemeanor, the regulations governing the trial of a criminal action or proceeding are not made applicable to a proceeding to disbar an attorney. A proceeding for such disbarment is thus instituted under the Code of Civil Procedure. It is necessarily a judicial determination of a question of fact which is presented for determination by the Appellate Division. 67 (In re Spencer, 137 App Div 330, 122 NYS 190 [lst Dept 1910]). One hundred years later, this analysis is still applicable. In Matter of Anonymous (244 AD2d 549, 664 NYS2d 622 [2d Dept 1997], appeal denied 91 NY2d 86, 669 NYS2d 261 [1998]), the attorney challenged the issuance to him of a letter of caution after a disciplinary investigation. At the grievance committee level, he was given the opportunity to challenge this in a hearing before a subcommittee, rather than before the full committee as requested by the attorney. The Second Department rejected the attorney's due process argument that he was entitled to a hearing before the full committee, stating, "[m]oreover, the petitioner's contention that the denial of his request for a hearing before the full Committee deprived him of due process is without merit, as he clearly received notice of the nature of the complaint against him and was granted a hearing at which he could appear and present witnesses." (Id. at 550 [citations omitted]). Similarly, in Matter of Padilla (67 NY2d 440, 503 NYS2d 550 [1986]), this Court affirmed the interim suspensions of two attorneys pending resolution of disciplinary proceedings, against due process claims challenging the procedures used in imposing the suspensions. It outlined the requisite due process standards as: Finally, the requirements of due process here were 68 (Id. at 449). plainly satisfied. Both appellants had notice of the applications for suspension and the evidence upon which those applications were based, as well as ample opportunity to respond. In both cases there was substantial basis in the record for the conclusion reached, including both evidence of misconduct and a threat to the public. The Equal Protection Claim Although not explicitly stated and only tangentially discussed in his brief, to the extent that Leo tentatively raises an equal protection claim, this, too, is unpersuasive. There is no constitutional mandate that the legal profession be regulated identically to other callings and occupations. "[I]t is clear that a Legislature may regulate different professions in different ways where appropriate." (Javits, 382 F Supp at 140). Similarly, Leo's allegation that there is an impermissible disparity among the four Appellate Divisions regarding attorney admissions or reinstatements fails to state a constitutional claim. While Leo may desire to impose a regime of lockstep uniformity among the Appellate Divisions, this is not constitutionally required. Pertinent to the admissions of attorneys, this Court has observed: "The individualized aspects of any inquiry into moral character and personal fitness - factors which often involve local perceptions and criteria - permit, even suggest, that both investigation and ultimate determination 69 with respect thereto appropriately be the responsibility of the Appellate Divisions at the departmental levels." (Matter a/Shaikh, 39 NY2d 676,681-682,385 NYS2d 514 [1976]. See also Weisner v. Rosenberger, 1998 US Dist LEXIS 15666, *17-18 [SDNY October 3, 1998], affd 1999 US App LEXIS 29259 [2d Cir 1999] [rejecting equal protection claim that processing attorney admissions in four separate judicial departments allows for disparate results among similarly situated bar applicants D. The Appellate Division Acts in a Judicial Capacity in a Reinstatement Proceeding Leo errs in his contention that expansive due process principles he believes applicable to administrative proceedings should be imported into attorney admission, disciplinary, or reinstatement proceedings. Leo provides an extensive historical tour through court decisions from which he culled isolated quotations, and from these concludes, erroneously, that the Appellate Division has been reduced to a mere ministerial function in determining fitness and character for the practice of law. In an unbroken historical line of decisions, New York and federal courts have held that courts are exclusively charged with the admission, discipline, and reinstatement of attorneys appearing before them, and that this power is judicial, 70 not ministerial, in nature. "[S]ince the Constitution of 1777 attorneys may be regulated and controlled by 'rules and orders of the courts. '" (Matter 0/ Anonymous, 47 AD2d 83,85,366 NYS2d 239 [4th Dept 1975D. This authority derives from the inherent powers of the courts; constitutional provisions; and legislative enactments. (See generally People ex ref. Karlin v, Culkin, 248 NY 465, 162 NE 487 [1928] and Matter a/Brennan, 230 AD 218, 243 NYS 705 [2d Dept 1930] [both opinions detailing the history of the relationship of the courts to the examination of applicants for admission to the bar and the regulation of attorneys D. A few examples suffice to illustrate the point. As early as the 1860's, this Court found that the appointment of attorneys was a judicial function, not an administrative one, even where the original source of the power derived from legislation. [W]here any power is conferred upon a court of justice, to be exercised by it as a court, in the manner and with the formalities used in its ordinary proceedings, the action of such court is to be"regarded as judicial, irrespective of the original source of the power. The legislature, by conferring any particular power upon a court, virtually declares that it considers it a power which may be most appropriately exercised under the modes and forms of a judicial proceeding. * * * * * * Attorneys and counsellors are not only officers of the court, but officers whose duties relate almost exclusively to proceedings 71 of a judicial nature. And hence their appointment may with propriety be entrusted to the courts, and the latter in performing this duty may very justly be considered as engaged in the exercise of their appropriate judicial functions. (Matter o/Cooper, 22 NY 67,84 [1860]). In 1867, citing this Court's decision in Cooper, the Supreme Court of the United States declared: The order of admission is the judgment of the court that the parties possess the requisite qualifications as attorneys and counsellors, and are entitled to appear as such and conduct causes therein. From its entry the parties become officers of the court, and are responsible to it for professional misconduct. They hold office during good behavior, and can only be deprived of it for misconduct ascertained and declared by the judgment of the court after opportunity to be heard has been afforded. Their admission or their exclusion is not the exercise of a mere ministerial power. It is the exercise of judicial power, and has been so held in numerous cases. (Ex Parte Garland, 71 US 333, 378-379, 18 L Ed 366 [1867]). This analysis of the nature of the courts' admission and disciplinary functions pertaining to attorneys has not changed with the passage of time. "With this background of precedent there is little room for doubt as to the scope and effect of the provision in the Constitution of 1777 that attorneys might be regulated by the rules and orders of the courts. The provision was declaratory of a jurisdiction that would have been implied, if not expressed." (People ex reI. 72 Karlin v. Culkin, 248 NY 465,467, 162 NE 487 [1928]). "The sense of the opinion by Chief Judge Cardozo in the Karlin case is that the court has very broad inherent powers of supervision and that the statute [referring to Judiciary Law § 90] is not restrictive but expressive of that power." (Matter a/Anonymous, 21 AD2d 48,51,248 NYS2d 368 [lst Dept 1964]). Our basic difficulty with movant's interpretation is that it runs contrary to the unbroken tradition and history that control of membership in the Bar rests in the courts and not in any administrative agency. To be a member of the Bar connotes more than an "employment license, permit, or other authority or privilege." Members of the Bar are officers of the court. (Mattera/Sugarman, 51 AD2d 170,171, 380NYS2d 12 [lstDept], appeal denied 39 NY2d 707 [1976]). [T]he process of admission from its inception to its culmination is a judicial function. We do not think that the Legislature, by its enactment of FOIL, intended to interfere with the historic relationship between the courts and the Bar by making available to anyone who might seek the information one of the essential bases on which admission is bottomed. (Pasikv. State Board a/Law Examiners, 102 AD2d 395,401,478 NYS2d 270 [1 st Dept 1984]). "As previously indicated, we must view disciplinary proceedings as judicial rather than administrative in nature. (Mildner, 405 F Supp at 191 [italics in 73 original; citation omitted]). As the above cited decisions show, in denying Leo's application for reinstatement, the Appellate Division acted in a judicial, and not administrative capacity. As such, it enjoyed broad and inclusive discretion in evaluating Leo's character and fitness for membership in the bar of this state. 74 CONCLUSION F or the reasons stated, the decision and order denying the application for reinstatement to the practice of law by Leo, a disbarred attorney, should be affirmed in all respects. Dated: Hauppauge, New York December 4, 2015 75 Respectfully submitted, Mitchell T. Borkowsky, Chief Counsel, Attorney for Petitioner- Respondent Grievance Committee for the Tenth Judicial District 150 Motor Parkway, Suite 102 Hauppauge, New York 11788 631-231-3775 ByB/dJ.CI/£ Robert H. CabbIe, Esq. Assistant Counsel