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Rubenstein v. Statewide Grv. Comm.

Connecticut Superior Court, Judicial District of New Britain at New Britain
Jun 10, 2003
2003 Conn. Super. Ct. 7915 (Conn. Super. Ct. 2003)

Summary

In Rubenstein v. Statewide Grievance Committee, 2003 WL 21499265 (Conn.Super.2003), the court upheld public reprimands against two attorneys who engaged in the business practice of making such loans to their personal injury clients.

Summary of this case from Hernandez v. Guglielmo

Opinion

No. CV-02-0516965 S

June 10, 2003


MEMORANDUM OF DECISION


This matter is before the court on the plaintiffs' appeal, pursuant to Rule of Practice § 2-38 (a), from decisions by the Statewide Grievance Committee which reprimanded the plaintiffs, Bruce D. Rubinstein, and Katherine B. Sendy, who are attorneys and principals in a law firm. For the reasons stated below, the court finds that the reprimands issued by the Statewide Grievance Committee are fully supported by the record.

I. Background

This matter arises from complaints by former employees of the plaintiffs, which resulted in reprimands issued to the plaintiffs, for violations of Rules of Professional Conduct 1.8(e) and 7.2(c), by a reviewing committee of the Statewide Grievance Committee. Pursuant to Practice Book § 2-35(g), the plaintiffs filed a request for review by the Statewide Grievance Committee (Grievance Committee). The Grievance Committee issued its decisions on July 19, 2002, in which it affirmed the reviewing committee's decision, except that the Grievance Committee declined to find that Rubinstein had violated Rule 7.2(c). See Record, p. 1455-1422.

In addition, the plaintiffs were ordered to attend three credit hours of a continuing legal education course in legal ethics.

The record of the grievance proceedings was filed in this court on September 10, 2002 (#105). In this memorandum of decision, the court refers to pages of that Record as "Record, p ___."

This appeal ensued. The parties submitted briefs and the court heard oral argument in connection with the appeal on May 6, 2003.

II. Standard of Review

Practice Book § 2-38(f) provides, in pertinent part, [u]pon appeal, the court shall not substitute its judgment for that of the statewide grievance committee or reviewing committee as to the weight of the evidence on questions of fact. The court shall affirm the decision of the committee unless the court finds that substantial rights of the respondent have been prejudiced because the committee's findings, inferences, conclusions, or decisions are: (1) in violation of constitutional, rules of practice or statutory provisions; (2) in excess of the authority of the committee; (3) made upon unlawful procedure; (4) affected by other error of law; (5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." Practice Book § 2-38(f).

While the Uniform Administrative Procedure Act (UAPA), General Statutes § 4-166, et seq., does not apply to the Grievance Committee, the same principles as to the scope of judicial review are applicable. See Pinsky v. Statewide Grievance Committee, 216 Conn. 228, 234-35, 578 A.2d 1075 (1990). The court's role "is limited to reviewing the record to determine if the facts as found are supported by the evidence contained within the record and whether the conclusions that follow are legally and logically correct." (Internal quotation marks omitted.) Weiss v. Statewide Grievance Committee, 227 Conn. 802, 812, 633 A.2d 282 (1993). "The burden is on the . . . committee to establish the occurrence of an ethics violation by clear and convincing proof." Id. Allegations of attorney misconduct must be proven by clear and convincing evidence, regardless of the nature of the sanctions ultimately imposed. See Statewide Grievance Committee v. Presnick, 215 Conn. 162, 171-72, 575 A.2d 210 (1990). "Neither this court nor the trial court may retry the case or substitute its own judgment for that of the administrative agency on the weight of evidence or questions of fact." (Internal quotation marks omitted.) Dolgner v. Alander, 237 Conn. 272, 280, 676 A.2d 865 (1996).

"An administrative finding is supported by substantial evidence if the record affords a substantial basis of fact from which the fact in issue can be reasonably inferred . . . The substantial evidence rule imposes an important limitation on the power of the courts to overturn a decision of an administrative agency . . . and to provide a more restrictive standard of review than standards embodying review of weight of the evidence or clearly erroneous action." (Internal quotation marks and citations omitted.) Dolgner v. Alander, supra, 237 Conn. 281.

"[A] reviewing court must defer to the discretion of the fact finder, whether it be the trial court or the committee, because the fact finder is in the best position to evaluate the evidence and the demeanor of the parties . . . [E]very reasonable presumption should be given in favor of the correctness of the [fact finder's] ruling." (Internal quotation marks and citations omitted.) Statewide Grievance Committee v. Egbarin, 61 Conn. App. 445, 458, 767 A.2d 732, cert. denied, 255 Conn. 949, 769 A.2d 64 (2001).

III. Discussion

A. Rule 1.8

1. Interpretation

Rule of Professional Conduct 1.8(e) provides: "A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) A lawyer may pay court costs and expenses of litigation on behalf of a client, the repayment of which may be contingent on the outcome of the matter; (2) A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client."

Throughout the balance of this memorandum of decision, reference is made to the Rules of Professional Conduct by their full title or simply as the "Rules."

The Grievance Committee found that Rubinstein and Sendy had provided financial assistance to clients in connection with pending litigation in violation of Rule 1.8(e) (1) "by providing bus tokens to clients for transportation to medical appointments and by advancing medical costs to clients and to providers for physicians' treatment, prescriptions, and medical supplies." See Record, pp. 01416, 01418. For ease of reference, the court will refer to these expenditures as the "medically related costs."

Rubinstein and Sendy do not take issue with the underlying facts found by the Grievance Committee. In their brief, they acknowledge that "both Attorney Sendy and Attorney Rubinstein testified that they advanced Medically Related Costs to their clients with the belief that such practice was sanctioned by applicable law and the Rules of Professional Conduct. Specifically, Plaintiffs advanced the Medically Related Costs in reliance on Informal Opinion 93-12 (March 26, 1993) which, they submit, is factually indistinguishable from the case at bar." Plaintiffs' Brief. pp. 10-11. Further, they "acknowledge that if a client were unable to do so, RS [their law firm] would advance Medically Related Costs relating to injuries that were the subject of lawsuits being prosecuted by RS." Plaintiffs' Brief, p. 12.

References to Informal Opinions are to those of the Connecticut Bar Association Committee on Professional Ethics.

"[I]t is not a defense to an ethical violation that the attorney did not act in bad faith or intend to violate the code." (Internal quotation marks omitted.) Daniels v. Statewide Grievance Committee, 72 Conn. App. 203, 211, 804 A.2d 1027 (2002). See Statewide Grievance Committee v. Rozbicki, 219 Conn. 473, 488, 595 A.2d 819 (1991), cert. denied, 502 U.S. 1094, 112 S.Ct. 1170, 117 L.Ed.2d 416 (1992) (lawyers are chargeable for deviations from the codes governing their conduct).

The Rules of Professional Conduct are "regulation[s] governing attorney conduct." Schoonmaker v. Cummings Lockwood of Connecticut, 252 Conn. 416, 438, 747 A.2d 1017 (2000). "The question of whether a particular statute or regulation applies to a given state of facts is a question of statutory interpretation . . . Statutory interpretation presents a question of law for the court." (Internal quotation marks omitted.) Biller Associates v. Rte 156 Realty Co., 52 Conn. App. 18, 26, 734 A.2d 566 (1999), affirmed, 252 Conn. 400, 746 A.2d 785 (2000). In ascertaining the meaning of the Rule, the court is guided by the principles governing statutory interpretation. See Doe v. Connecticut Bar Examining Committee, 263 Conn. 39, 61, 818 A.2d 14 (2003).

In that process, courts "seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. In seeking to determine that meaning, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject . . . Thus, this process requires us to consider all relevant sources of the meaning of the language at issue, without having to cross any threshold or thresholds of ambiguity. Thus, we do not follow the plain meaning rule. In performing this task, we begin with a searching examination of the language of the statute, because that is the most important factor to be considered. In doing so, we attempt to determine its range of plausible meanings and, if possible, narrow that range to those that appear most plausible. We do not, however, end with the language. We recognize, further, that the purpose or purposes of the legislation, and the context of the language, broadly understood, are directly relevant to the meaning of the language of the statute." (Internal quotation marks and citation omitted.) Id., 61-62.

In construing the Rules of Professional Conduct, the court must adhere to the traditional rule of interpretation "that statutory exceptions are to be strictly construed." Commission on Human Rights and Opportunities v. Sullivan Associates, 250 Conn. 763, 787, 739 A.2d 238 (1999). "[W]e have long held that . . . exceptions to statutes are to be strictly construed with doubts resolved in favor of the general rule rather than the exception . . . [W]here express exceptions are made, the legal presumption is that the legislature did not intend to save other cases from the operation of the statute." Falco v. Institute of Living, 254 Conn. 321, 330, 757 A.2d 571 (2000). As our Supreme Court has stated, "[w]hen a statute creates an exception to a general rule, it is to be construed strictly and its language is not to be extended beyond its evident intent." (Internal quotation marks omitted.) Kulis v. Moll, CT Page 7919 172 Conn. 104, 110, 374 A.2d 133 (1976).

Under the circumstances, the court must ascertain whether the interpretation of Rule 1.8(e) (1)'s exceptions advanced by the plaintiffs here extends the Rule's language beyond its evident intent. Our Supreme Court has cautioned against construction of an exception in a manner which would "swallow the [Rule] whole and render it meaningless." Commission on Human Rights and Opportunities v. Sullivan Associates supra, 250 Conn. 787.

In essence, the plaintiffs argue that the "medically related costs" are "court costs and expenses of litigation" which they were permitted to advance, under Rule 1.8(e) (1)'s exceptions to the general rule proscribing the provision of financial assistance to a client in connection with litigation. In their discussion of the ethical concerns underlying Rule 1.8(e), the plaintiffs note those of "stirring up litigation," Plaintiffs' Brief, p. 18, and that "a lawyer's financial assistance could encourage a client to pursue lawsuits that might otherwise be forsaken." (Internal quotation marks omitted.) Plaintiffs' Brief p. 14. In their reply brief, at pages 4-5, they note another ethical concern, that of placing an attorney in a conflict between his own financial interest and that of his client.

Although Rule 1.8 does not define the meaning of "court costs and expenses of litigation," it does not exist in a vacuum. As the preface to our Rules of Professional Conduct notes, the Rules are derived from the American Bar Association's (ABA) Model Rules of Professional Conduct: "[t]he Rules contained in the Rules of Professional Conduct as adopted by the American Bar Association and as recommended, with revisions, by the Connecticut Bar Association for adoption were approved by the judges of the superior court, effective October 1, 1986."

Under "Scope," the Rules provide, "[t]he Rules of Professional Conduct are rules of reason. They should be interpreted with reference to the purposes of legal representation and of the law itself. Some of the Rules are imperatives, cast in the terms `shall' or `shall not.' These define proper conduct for purposes of professional discipline." As noted above, Rule 1.8(e) is one of those rules which proscribes certain conduct, by using the words "shall not."

The "Scope" section also notes that "[f]ailure to comply with an obligation or prohibition imposed by a Rule is a basis for invoking the disciplinary process. The Rules presuppose that disciplinary assessment of a lawyer's conduct will be made on the basis of the facts and circumstances as they existed at the time of the conduct in question and in recognition of the fact that a lawyer often has to act upon uncertain or incomplete evidence of the situation. "

The official Commentary to Rule 1.8 makes it clear that Rule 1.8's prohibition has its basis in common-law champerty and maintenance. Under "Acquisition of Interest in Litigation," the Commentary notes that "[s]ubsection (j) states the traditional general rule that lawyers are prohibited from acquiring a proprietary interest in litigation. This general rule, which has its basis in common law champerty and maintenance, is subject to specific exceptions developed in decisional law and continued in these Rules, such as the exception for reasonable contingent fees set forth in Rule 1.5 and the exception for certain advances of the costs of litigation set forth in subsection (e)."

Rule 1.8(j) provides: "A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client except that the lawyer may: (1) Acquire a lien granted by law to secure the lawyer's fee or expenses; and (2) Contract with a client for a reasonable contingent fee in a civil case."

"Maintenance at common law signifies an unlawful taking in hand or upholding of quarrels, or sides, to the disturbance or hindrance of common right. The maintaining of one side, in consideration of some bargain to have part of the thing in dispute, is called champerty. Champerty therefore is a species of maintenance. Richardson v. Rowland, 40 Conn. 565, 570 (1873)." (Internal quotation marks omitted.) State v. One 1981 BMW Automobile, 15 Conn. App. 589, 601 n. 12, 546 A.2d 879 (1988).

Our appellate courts have provided guidance to lawyers and to the courts as to how to determine a Rule's meaning and applicability. As an aid to interpreting the Rules they repeatedly have looked to the ABA/BNA Lawyer's Manual on Professional Conduct (the "Lawyer's Manual"). See Pinsky v. Statewide Grievance Committee, supra, 216 Conn. 236; Statewide Grievance Committee v. Presnick, supra, 215 Conn. 172; Statewide Grievance Committee v. Fountain, 56 Conn. App. 375, 381, 743 A.2d 647 (2000). The Lawyer's Manual also has been repeatedly referred to in such matters by the Superior Court. See Rohan v. Rosenblit, Superior Court, judicial district of Waterbury at Waterbury, Docket No. CV93-0116887S (Aug. 13, 1999, Vertefeuille, J.) ( 25 Conn.L.Rptr. 287); Falvey v. O'Brien, Shafner, Stuart, Kelly Morris, P.C., Superior Court, judicial district of New London at New London, Docket No. 543675 (Nov. 12, 1998, Mihalakos, J.) ( 23 Conn.L.Rptr. 409); Statewide Grievance Committee v. Hochberg, Superior Court, judicial district of Hartford/New Britain at Hartford, No. CV 97-0575688 S (Apr. 17, 1998, Berger, J.); Clark v. Ferris, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV92 0126235 S, 7 Conn.L.Rptr. 854 (Nov. 23, 1992, Rush, J.) ( 7 CSCR 1360); Legal Service Plans, Inc. v. Heneghan, Pikor, Kennedy Allen, Superior Court, judicial district of New Haven, Docket No. 29 94 48, 2 Conn.L.Rptr. 268 (Aug. 3, 1990, Hodgson, J.).

The Lawyer's Manual, since at least 1995, soon after the time at which Sendy testified that her firm put its medically related costs practices into effect in 1994, has contained the following commentary concerning the purpose of Model Rule of Professional Conduct 1.8, which was adopted nearly verbatim in Connecticut's Rule. "The ethics rules themselves are designed to prevent lawyers from enticing clients with the promise of monetary advances." Lawyer's Manual (1995), 51:803, No. 154, p. 13. Further, "[t]he rules can also be said to protect lawyers from client requests for help, and also from the competition of other lawyers who might be willing to provide monetary assistance to their clients. Client loans could place the lawyer in the conflicting roles of counselor and creditor, thereby inducing the lawyer to steer the litigation and protect the lawyer's own interests rather than those of the client." Id. As another respected treatise has noted concerning Model Rule 1.8, "[w]hen a lawyer acquires a stake in the outcome of a lawsuit, an additional danger arises. In meritorious but close cases, a lawyer's representation may be skewed by his concern to protect the investment of his time and effort. For example, this concern might lead a lawyer to urge acceptance of an inadequate settlement." 1 G. Hazard W. Hodes, The Law of Lawyering: A Handbook on The Model Rules of Professional Conduct (hereafter "Hazard") (3d. Ed. 2001), § 12.11, p. 12-28.

See Plaintiffs' Brief, p. 12, n. 23.

Our Supreme Court has referred to Hazard as a "leading treatise." Schoonmaker v. Cummings Lockwood Of Connecticut, 252 Conn. 416, 439, 747 A.2d 1017 (2000).

Our Supreme Court also has provided similar guidance concerning attorney conflicts. "The disciplinary guidelines to our Rules of Professional Conduct are punctuated with exhortations that an attorney's loyalty to the client is to be undivided and unaffected by other interests that would impair the attorney's independent judgment." Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 727 n. 16, 627 A.2d 374 (1993).

In addition, the Lawyer's Manual also contains, and has since at least 1995, commentary and references to decisional law concerning the meaning of the exceptions provided in Model Rule 1.8(e) (1) for "court costs and expenses of litigation" (which are identical to those set forth above in Connecticut's version of the Rule, except that Connecticut's Rule adds "on behalf of a client" after the word "litigation"). "The exception for `costs' and `expenses' of litigation encompasses most of the financial charges directly associated with litigation. Costs include filing fees, fees for service of process, and other disbursements that are taxable and includable in the judgment . . . Expenses cover such charges as the `costs of investigation, expenses of medical examination, and the costs of obtaining and presenting evidence.' DR 5-103(B). Fees for expert witnesses are also expenses of litigation . . . Fees for legitimate travel related to litigation have also been held to be an expense for which lawyers may provide financial assistance . . . but the advancement of funds for transportation to a medical office for treatment has been held to violate the ethics rules. Attorney Grievance Commission of Maryland v. Kandel, 563 A.2d 387, 389 (Md.Ct.App. 1989)." (Citations omitted.) Lawyer's Manual (1995), 51:804, No. 154, p. 14.

DR 5-103(B) refers to the Model Code of Professional Responsibility, the predecessor to the Model Rules of Professional Conduct. Connecticut's version of DR 5-103, in the predecessor Code of Professional Responsibility, contained similar provisions.

Attorney v. Grievance Commission of Maryland v. Kandel, supra, is discussed further below.

Thus, according to the Lawyer's Manual, Rule 1.8(e) (1)'s exceptions apply only to "financial charges directly associated with litigation," such as "expenses of medical examination." Id. In contrast, they do not extend to "the advancement of funds for transportation to a medical office for treatment." A clear distinction is made between an expense for examination and an expense for treatment.

The Lawyer's Manual also notes Connecticut's Informal Opinion 90-3 ("lawyer may not advance money to client for rent payments even under threat of eviction"). Id. Informal Opinion 90-3 also states that subsection 1.8(e) is to be"[s]trictly construed."

Most recently, the Oklahoma Supreme Court, in State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, 2000 Okla. 95, 17 P.3d 456 (Okla. 2000), found the loan of funds by an attorney to a workers' compensation client, while his claim was pending, for "living expenses," without which he would have been "unable to continue his medical treatment," id. at 457, to violate Oklahoma's Rule 1.8(e) (revised in 1993), which contains the same "court costs and expenses of litigation" exceptions as set forth in Connecticut's Rule 1.8(e) (1). Id., 458. The court noted that "[m]ost authorities prohibit a lawyer from providing financial assistance for living expenses during representation." (Footnote omitted.) Id. It also stated that Connecticut is one of twenty-nine states which "have adopted the current version of ABA Model Rule 1.8(e) which allows repayment of litigation costs to be contingent on the outcome of the case but forbids advances for living expenses." (Footnote omitted.) Id., 459. There, the court rejected the respondent's argument, which is also raised by the plaintiffs here, see Plaintiffs' Brief, p. 15, that the ethical concerns underlying Rule 1.8 were not applicable since the loan was made after the attorney-client relationship was established. See State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 462. Citing Lousiana State Bar Association v. Edwins, 329 So.2d 437 (La. 1976), which is relied upon by the plaintiffs here and which is discussed further below, the Oklahoma court stated that "[o]nly one state has refused to discipline a lawyer for advancing funds to clients for living expenses during representation." (Footnote omitted.) State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 461.

The distinction between advancing the expense of an examination and advancing the expenses of treatment is reflective of the fact that "[r]ule 1.8(e) in its present form is the result of a series of compromises, each adding to or subtracting a little from the common law rules against champerty and maintenance." Hazard (2d. Ed. 1990, 1996 Sup.), § 1.8:601, p. 273. As Hazard noted, DR 5-103(B) of the Code of Responsibility allowed the advancement of out-of-pocket litigation expenses. "Advancement of the costs of litigation was permitted lest indigent or even middle class plaintiffs forego meritorious claims because they could not afford to `invest' the costs of modern day litigation. In other words, an unqualified rule against maintenance — even by lawyers — would have overprotected defendants." Hazard (2d. Ed. 1990, 1996 Sup.), § 1.8:601, p. 274.

Thereafter, the formulators of the successor Model Rule 1.8 apparently considered and rejected the type of policy argument advanced by the plaintiffs here, that "[i]f Rule 1.8 proscribes the advance of Medically Related Costs that are necessary to obtain evidence and present a case, it places the client at the mercy of more wealthy opponents and of the system." Plaintiffs' Brief, p. 14. In drafting the Model Rules of Professional Conduct, authorization of broader advancement of monies by lawyers to clients was considered, and rejected. "[T]he Proposed Final Draft of the Model Rules would have loosened the rule still more. A lawyer would have been allowed to advance living expenses as well as litigation costs, and was explicitly permitted to make repayment of either contingent on the outcome. This proved to be too much of a liberalization, however. The ABA House of Delegates amended Rule 1.8(e) to permit advancement of litigation costs with no guarantee of repayment, but advances for living expenses were once again prohibited altogether." (Emphasis in original; footnotes omitted.) Hazard (2d. Ed. 1990, 1996-97 Sup.), § 1.8:602, pp. 274-75.

The plaintiffs claim that they relied on Informal Opinion 93-12, which, as noted, they term as "factually indistinguishable" from their actions in advancing the medically related costs. In their brief, at page 16, they assert that, in that opinion, Rule 1.8's exception for "costs and expenses of litigation" "has been narrowly construed to include those expenses which are integral to a lawsuit such as . . . an MRI." According to the plaintiffs, the same rationale should apply to advancing costs "which enable a client to continue to treat and to document his injuries." Plaintiffs' Brief, p. 18.

An MRI is a "magnetic resonance imaging" examination. Cohen v. Yale-New Haven Hospital, 260 Conn. 747, 751, 800 A.2d 499 (2002). See General Statute 19a-690 (concerning MRI accreditation).

For several reasons, the court is unpersuaded by the reference to Informal Opinion 93-12. First, such an informal "committee opinion is purely advisory and not binding." Marsh, Day Calhoun v. Solomon, 204 Conn. 639, 646-47 n. 4, 529 A.2d 702 (1987). Second, the facts on which Informal Opinion 93-12's conclusions are based are distinguishable, making its advisory opinion of limited significance. Third, the plaintiffs' interpretation of the opinion extends it far beyond its conclusion, the very opposite of a narrow construction of the same.

As to the facts, Informal Opinion 93-12 states, "[t]he inquiry provided the following facts: The treating physician recommended an MRI. The MRI provider refused to accept a letter of protection and refused to discuss a payment schedule . . ." The Ethics Committee approved advancing the costs of an MRI, stating " under the facts presented allowing lawyers to advance the cost of an MRI does not violate the policy behind Rule 1.8(e) . . ." (Emphasis added.) Here, the plaintiffs do not contend either that letters of protection were sought or that medical care providers declined proposed payment schedules.

Most important, the plaintiffs' argument for the applicability here of Informal Opinion 93-12 goes far beyond its rationale for approval of advancing the cost of "an MRI" to apply it also to what may be months or years of medical treatment. Such a result is an overly broad extension of its conclusion, contrary to the precept of narrowly construing exceptions to the Rules.

The plaintiffs correctly state, in their reply brief, at page 7, that Informal Opinion 00-21, dated September 25, 2000, cited by the Grievance Committee, see Defendant's Brief, p. 7, was issued after the determination of probable cause was made in these proceedings by the Grievance Panel on February 2, 1999. Thus, it was unavailable to the plaintiffs when they considered whether the advancement of the medically related costs was allowed under Rule 1.8(e). This court has not relied on that opinion in this memorandum of decision.

As the plaintiffs note, Informal Opinion 00-21 cites Attorney Grievance Commission of Maryland v. Kandel, supra, ("Kandel"), 317 Md. 274, 563 A.2d 387 (Ct.App.Md. 1989), which was previously discussed, in 1995, in the Lawyer's Manual. While the plaintiffs are correct in saying that, when they advanced the medically related costs, they did so without Informal Opinion 00-21's guidance, they were not then without access to the Lawyer's Manual, which as noted above, Connecticut's courts have looked to, again and again, for guidance as to the Rules of Professional Conduct.

In their brief, the plaintiffs attempt to downplay Kandel's significance, arguing that "the Kandel court did not rule on the propriety of advancing Medically Related Costs." Plaintiffs' brief, p. 21. Kandel considered various instances in which an attorney advanced monies to his client. On at least two occasions, the purpose of the advances was to provide money to the client for car repairs "in order that he would have means of transportation to the treating physicians' offices." Id., 317 Md. 277, 563 A.2d 388; see also 317 Md. 278, 563 A.2d 389. The Maryland Court of Appeals concluded, "The advancement of funds for medical treatment, or for transportation to a medical office for treatment, is a violation of DR 5-103(B). Monetary advances for automobile maintenance or repairs is not authorized by the Code. There is no express exception for this type of advancement under the Maryland Code of Professional Responsibility. See DR. 5-103(B). The monies advanced in the present case were not necessary expenses of litigation. In fact, [the trial judge] analyzed each advance in relation to the specific status of each case when the advances occurred. When payments of the two advances in the first accident were made, the initial examination had been conducted and it was clear that the monies were used to assist [the client] in transportation for the express purpose of medical treatments. The trial judge concluded the second two advances, coming about in the second accident, both of which were made in cash, were for transportation expenses related to medical treatment, and were therefore violations. We agree." Id., 317 Md. 279-80, 563 A.2d 389-90. Clearly, the Kandels court found that client advances for the purposes of medical treatment were not authorized "expenses of litigation." See Rule of Professional Conduct 1.8(e) (1) and Lawyer's Manual, supra.

In addition, the plaintiffs argue that there is an inherent inconsistency in Rule 1.8 if it may be interpreted to allow an attorney to pay for an independent medical evaluation or other medical evaluation, but not for medical treatment, which may also produce evidence which is beneficial to a client's case. See Plaintiffs' Brief, pp. 19-20. Both sides cite the views expressed by a divided Mississippi Supreme Court on the subject of advances to clients in Mississippi Bar v. Attorney HH, 671 So.2d 1293 (Miss. 1995), withdrawn, substitute opinion, rehearing denied, 1996 Miss. LEXIS 75 (Miss. 1996) (opinion substantially unchanged; imposing private reprimand). The Oklahoma Supreme Court, in State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 462, recently cited the Mississippi Supreme Court's opinion with approval. This court is also persuaded by the logic of the majority's reasoning there. "We are sensitive to the concern over leveling the playing field for injured parties. We also recognize the logical inconsistency of asserting that a lawyer's interest in recovering moneys lent to a client for living and medical expenses would affect his judgment while the prospect of losing possibly vast sums advanced in the form of litigation expenses would not. Our concern is that unregulated lending to clients would generate unseemly bidding wars for cases and inevitably lead to further denigration of our civil justice system. We invite the bench, bar and public to suggest a mechanism for dealing with the problem of the impecunious civil litigant with a viable and valuable claim. In the meantime we enforce our standards of conduct as written." Mississippi Bar v. Attorney HH, supra, 671 So.2d 1298.

Following our Supreme Court's guidance concerning construing such exceptions narrowly, Rule 1.8(e) (1)'s exceptions should not be read to authorize expenditures for a client's medical treatment. Payment for ongoing medical treatment, which the plaintiffs advocate, is much closer to the advancement of living expenses than it is to customary out-of-pocket court costs and litigation expenses. See State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 457-58. Such payments were not intended to be included in Rule 1.8(e) (1)'s exceptions, notwithstanding the fact that evidence of medical treatment may be admissible in or useful in reaching settlement of a personal injury action.

In addition, the court is unpersuaded that Rule 1.3, cited by the plaintiffs, which provides that a lawyer "shall act with reasonable diligence and promptness" recommends that an attorney advance medically related costs. See Plaintiffs' Brief, pp. 18, 24. Rule 1.8 deals specifically with the issue; Rule 1.3's general reference to "diligence" should not be read to modify or limit Rule 1.8. See Velez v. Commissioner of Correction, 250 Conn. 536, 550, 738 A.2d 604 (1999).

What the plaintiffs acknowledge they did here was to select from their clientele various individuals whom they concluded needed to have medical treatment expenses advanced in order to better develop the clients' claims. This amounted to the "unregulated lending to clients" which must be discouraged and which is prohibited by Connecticut's Rules.

2. Constitutionality

The plaintiffs argue also that "[a] finding that subsidizing medical examination or treatment that is calculated to yield evidence furthering the client's litigation, or travel thereto, represents a breach of ethical duty would violate the spirit, if not the letter, of [Art. I Sec. 10 of] the state Constitution. " Plaintiffs' brief, p. 27. Art. I Sec. 10 provides, "All courts shall be open, and every person, for an injury done to him in his person, property or reputation, shall have remedy by due course of law, and right and justice administered without sale, denial or delay."

The Grievance Committee did not find that advancing the cost of a medical examination was a violation of Rule 1.8. As stated above, it found that the plaintiffs violated the rule "by providing bus tokens to clients for transportation to medical appointments and by advancing medical costs to clients and to providers for physicians' treatment, prescriptions, and medical supplies." See Record, pp. 01416, 01418.

Citing two decisions by appellate courts in Louisiana, the plaintiffs argue that such a finding would deny the right of access to the court. According to the plaintiffs, "[i]ndividuals without the financial wherewithal to pay for those costs would be prematurely forced to abandon their claims or accept unfair settlements; well-off individuals escape such pressures." Plaintiffs' brief, p. 27.

In a footnote, the plaintiffs state, without citation to any authority, that "the U.S. CONST. Amend XIV, § 1, the Equal Protection Clause, may be violated by the application made of Rule 1.8(e) in the instant case." Plaintiffs' Brief, p. 27, n. 41. This court cannot consider an argument, such as this, which is merely mentioned and not briefed. "Where an issue is merely mentioned, but not briefed beyond a bare assertion of the claim, it is deemed to have been waived." (Internal quotation marks omitted.) In re Jeffrey C., 261 Conn. 189, 197 n. 6, 802 A.2d 772 (2002). The Oklahoma Supreme Court rejected an equal protection argument as to Rule 1.8 in State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 463.

"It is well settled that a party who challenges a statute on constitutional grounds has no easy burden for every intendment will be made in favor of constitutionality, and invalidity must be established beyond a reasonable doubt." Shelby Mutual Insurance Co. v. Bishop, Kirk Saunders, Inc., 13 Conn. App. 189, 193, 535 A.2d 387 (1988). The same standard is applicable to a regulation or ordinance, and, therefore, to a disciplinary rule. See Ramos v. Vernon, 254 Conn. 799, 814, 761 A.2d 705 (2000) (every presumption in favor of constitutionality is to be indulged). If possible, the Rule is to be construed to comport with the constitution's requirements. See State v. Ayala 222 Conn. 331, 345, 610 A.2d 1162 (1992).

Lousiana State Bar Association v. Edwins, 329 So.2d 437, 446 (La. 1976), cited by the plaintiffs, considered the question of whether a lawyer's payments for necessary medical treatment violated DR 5-103(B) and concluded that it did not. It did not find the disciplinary rule to be unconstitutional. Instead, it expressed "some doubt as to its constitutionality," stating that "a court-adopted bar disciplinary rule which places an unreasonable burden on an individual's right to enforce claims allowed him by law might be deemed violative of the access to courts guaranteed to all our people by our state constitution." (Footnote omitted.) Id. In support, the Louisiana court cited the United States Supreme Court decision in Brotherhood of Railway Trainmen v. Virginia, 377 U.S. 1, 84 S.Ct. 1113, 12 L.Ed.2d 89 (1964). Brotherhood of Railway Trainmen v. Virginia, supra, is not apposite since it dealt with First Amendment associational rights, which are not at issue here. See Walters v. National Association of Radiation Survivors, 473 U.S. 305, 334-35, 105 S.Ct. 3180, 87 L.Ed.2d 220 (1985); Grievance Committee v. Dacey, 154 Conn. 129, 148, 222 A.2d 339 (1966), appeal dismissed, 386 U.S. 683, 87 S.Ct. 1325, 18 L.Ed.2d 404 (1967).

A subsequent Louisiana decision, Depuis v. Faulk, 609 So.2d 1190 (Ct.App.La. 1992), similarly ruled as to Louisiana's Rule of Professional Conduct 1.8(e) (1).

Our Connecticut Supreme Court previously has addressed Art. I, Section 10 of our state's constitution. See Doe v. State, 216 Conn. 85, 579 A.2d 37 (1990). "The provision was never intended to guarantee the right to litigate entirely without expense to the litigants . . ." Id., 98. Here, our courts are "open" and personal injury plaintiffs have "access to them." (Internal quotation marks omitted.) Id., 99. As the Supreme Court of Alaska recently stated, "nothing in Rule 1.8(e) prohibits potential plaintiffs from filing suit or requires plaintiffs to pay for court access. Indeed, Rule 1.8(e) (2) expressly permits a lawyer to pay the court costs and litigation expenses of indigent clients, presumably so that they will not be denied access to the courts due to their indigency." (Emphasis in original.) In the Matter of K.A.H., 967 P.2d 91, 95 (Alaska 1998), cert. denied, 525 U.S. 817, 120 S.Ct. 57, 145 L.Ed.2d 50 (1999). The Alaska decision also notes that Lousiana State Bar Association v. Edwins, supra, relied on by the plaintiffs, and discussed above, "stands virtually alone in its interpretation of DR-103(B)," the predecessor to Rule 1.8. (Internal quotation marks omitted.) In the Matter of K.A.H., supra, 967 P.2d 94 n. 12.

The plaintiffs also rely on a dissenting opinion in State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, 1992 Okla. 116, 837 P.2d 894 (Okla. 1992), which argued that that State's Rule 1.8(e) was unconstitutional. See Plaintiffs' Brief, pp. 27-29. The state bar in Oklahoma subsequently considered allowing lawyers to make or guarantee loans to clients for medical expenses; its Rules of Professional Conduct Committee and its board of governors rejected the proposal. See Lawyer's Manual (1995), 51:807, No. 154, p. 17. As noted above, more recently, in 2000, the Oklahoma Supreme Court considered that state's revised Rule 1.8 and concluded that it was not unconstitutional. See State of Oklahoma ex rel. Oklahoma Bar Association v. Smolen, supra, 17 P.3d 463.

The plaintiffs have not shown that Rule 1.8(e), as interpreted by the Grievance Committee, is unconstitutional. They have not sustained their burden of proof on this aspect of their challenge to the Grievance Committee's decisions.

The Grievance Committee's findings as to the plaintiffs' violations of Rule 1.8 are supported by clear and convincing evidence and are correct as a matter of law. Accordingly, this aspect of the appeal must be dismissed.

B. Rule 7.2

As noted, the Grievance Committee found that payments made by Sendy to employees for client referrals violated Rule 7.2(c) of the Rules of Professional Conduct, since it amounted to payment for recommending the firm. In its decision, the Grievance Committee affirmed the decision of the reviewing committee, and found clear and convincing evidence that in violation of this Rule, Sendy had made $50.00 cash payments to firm employees for the referral of cases to the firm. See Record, pp. 01418, 01420.

Rule 7.2(c) provides, "A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertisements or communications permitted by this Rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization. "

In its commentary on ABA Model Rule of Professional Conduct 7.2(c), Hazard notes that "[o]rdinarily, paying for a recommendation of a lawyer's services is a form of solicitation prohibited under Rule 7.3 . . . The first paragraph [of Model Rule 7.2(c)] permits the payment of ordinary advertising costs, while by implication prohibiting payments to `touts,' `shills,' `runners,' and others who receive compensation for the actual `recommendation' itself." (Footnote omitted.) Hazard (3d ed. 2001), § 56.5, p. 56-58. Similarly, the Pennsylvania Supreme Court, in considering several ethics rules violations, including that of soliciting clients through an "investigator," has found that such conduct breached attorneys' ethical duties and violated the public trust. In re Oxman, 496 Pa. 534, 437 A.2d 1169, 1170 n. 1, 1174-75 (1981), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 849 (1982). See also In re Schlossman, 85 App.Div.2d 702, 445 N.Y.S.2d 765, 767-68 (N.Y.App.Div.2d Dept 1981) (same).

Sendy does not dispute the Grievance Committee's factual finding, but continues to contend that her conduct did not violate the Rule. In her brief, she notes that, in her testimony, "Attorney Sendy . . . explained that there were occasions when an employee was given such a bonus with the referral of a case to the office." Plaintiffs' Brief, pp. 31-32. In her testimony, she stated, "I do give it to my staff if they refer a case, and it would be usually to a family member, or I actually — they've learned to understand this is what I do. Now I know after hearing the testimony, and it would be whether or not we took the case, completely unrelated it was as a flat sum of fifty dollars to employee. It was a token. And it was dinner for two. And I didn't always give it to them. And that's how I viewed this." Record, p. 00968.

The record also reflects Sendy's acknowledgment that the practice in which she engaged, of paying employees for referrals, was improper. On cross-examination, the following testimony was elicited:

Q Is it appropriate under our Rules of Professional Responsibility for you to give fifty dollars to an employee when that employee refers a case to the firm?

A In light of what I now understand I have to say even dinner for two is a, yes.

Q Yes, meaning?

A That it would be inappropriate.

Q Do you still have any occasions where you give to an employee any kind of a gratuity, or payment, for referral of cases?

A No.

Q When did you stop that?

A As soon as the litigation began, and as soon as I realized at the unemployment hearing, how the dinner for two to me was interpreted, it was interpreted as money for cases, and I said, I had no idea. And I said, I obviously can't do this. And I didn't realize until it was after the hearing I — that I realized it.

Record, p. 00972.

In her brief, Sendy argues that the conduct in which she engaged was not contrary to Rule 7.2 and is "more directly within the purview of Rule 5.4 than Rule 7.2 as employees are alleged to be the source of the referrals." Plaintiffs' Brief p. 32. In support, Sendy relies on Informal Opinion 93-1, which stated that "it seems clear that the bonus paid by a law firm to its nonlawyer employees from the firm's net or gross profits would not violate Rule 5A (a) of the Connecticut Rules of Professional Conduct provided such employees are not involved in the receipt of particular fees, do not engage in any activity having to do with fees of the firm and make no professional determination of the end product of their work for the firm."

Rule of Professional Conduct 5.4(a) provides, "A lawyer or law firm shall not share legal fees with a nonlawyer, except that: . . . (3) A lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement." Rule of Professional Conduct 5.4(c) provides: "A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."

In her testimony, Sendy stated that, prior to the institution of the disciplinary proceedings, she relied on this informal opinion in forming the belief that there was nothing unethical in providing bonuses. See Record, p. 01047-01057. She acknowledged that Informal Opinion 93-1 does not address at all the issue of giving bonuses in connection with referral of cases into an office. See Record, p. 01055, ll. 5-8.

The reference in the informal opinion to Rule 5A (a) appears to be a typographical error. Earlier in the opinion, the ethics committee referred to Rule 5.4(a) (3) and quoted it. See footnote 19.

As noted above, such opinions are purely advisory and not binding on the court. However, again the court notes that the facts underlying the referenced opinion differ materially from those present here. There, the facts presented did not concern monies paid to employees for case referrals. Instead, the facts in Informal Opinion 93-1 involved proposed payments to a paralegal of $40.00 for every set of bankruptcy schedules drafted and $5.00 per hour for billable hours on client work other than for Chapter 7 and Chapter 13 debtor clients.

Clearly, Informal Opinion 93-1 did not address the ethical concern covered by Rule 7.2. It is immaterial that the employees at Sendy's firm who received remuneration for referring clients to the firm did not participate in decision-making concerning the firm's fees, did not share in particular fees of the firm, and did not make professional judgments and undertake professional responsibilities that were reserved for and exercised by the firm's attorneys. See Plaintiffs' Brief, pp. 33-34. Informal Opinion 93-1 provides no support for Sendy's argument concerning Rule 7.2.

Sendy also references Informal Opinion 92-24, which does consider Rule 7.2, in the context of a client's referral. See Plaintiffs' Brief p. 32. That informal opinion notes that the Rules address "a lawyer's responsibilities when recommended by a lay person," noting that Rule 7.2(c) provides that "[t]he lawyer shall not give anything of value to a person for recommending the lawyer's services . . ." It also quotes the commentary to the Rule, which provides, in pertinent part, "A lawyer is allowed to pay for advertising permitted by this Rule, but otherwise is not permitted to pay another person for channeling professional work." The opinion also states, "Rule 7.2(c), by its own language, makes no distinctions among lay persons based on their relationship with the lawyer."

A "lay person," in this context, clearly means a non-lawyer, such as a paralegal or other non-attorney employee of a law firm. To ascertain common meaning, "it is appropriate to look to the dictionary definition of the term." In re Darlene C., 247 Conn. 1, 12 n. 29, 717 A.2d 1242 (1998). Webster's Third New International Dictionary (Webster's) has been cited by the Supreme Court as a source for such definitions. Id., 12. Black's Law Dictionary ("Black's") also has been cited with approval. See State v. Pare, 253 Conn. 611, 628, 755 A.2d 180 (2000). Black's, at page 896, defines "lay person" by referring to "layman," which, in the closest reference, is defined as "a person who is not a member of a profession or an expert on a particular subject." Similarly, Webster's, at page 1281, defines "layman" as meaning "one not belonging to some particular profession or not expert in some branch of knowledge or art."

Rule 7.2's prohibition is not somehow modified by Rule 5.4. Rather, these Rules are to be construed as consistent with one another. See Hatt v. Burlington Coat Factory, 263 Conn. 279, 315, 819 A.2d 260 (2003). While Informal Opinion 92-24 does refer to the policy reasons underlying Rule 5.4, concerning a lawyer's professional independence, as being applicable also to Rule 7.2's prohibition, it does not limit that prohibition or Rule 7.2's purview by that reference. To the contrary, Informal Opinion 92-24 repeatedly emphasizes Rule 7.2's prohibition. It notes that Revised Formal Opinion No. 5, "reaffirmed the absolute prohibition contained in the rule." Near the end, it states, "The rule, therefore, prohibits gifts and anything else which provides value to the referrer." Rule 7.2's absolute prohibition is clearly applicable to the case at bar.

Sendy argues that the finding of a violation here would establish an untenable rule permitting certain bonuses, but precluding others. See Plaintiffs' Brief, p. 34. The court is unpersuaded. Rule 7.2 prohibits payments for case referrals. A bonus paid in response to such a referral is improper.

The Grievance Committee's finding as to Sendy's violation of Rule 7.2 by paying employees for case referrals is supported by clear and convincing evidence and is correct as a matter of law. Accordingly, it should not be disturbed.

CONCLUSION

For the reasons stated above, the court finds that the decisions issued by the Statewide Grievance Committee are fully supported by clear and convincing evidence. Accordingly, the plaintiffs' appeal is dismissed. Judgment may enter in favor of the defendant, the Statewide Grievance Committee. It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO JUDGE OF THE SUPERIOR COURT


Summaries of

Rubenstein v. Statewide Grv. Comm.

Connecticut Superior Court, Judicial District of New Britain at New Britain
Jun 10, 2003
2003 Conn. Super. Ct. 7915 (Conn. Super. Ct. 2003)

In Rubenstein v. Statewide Grievance Committee, 2003 WL 21499265 (Conn.Super.2003), the court upheld public reprimands against two attorneys who engaged in the business practice of making such loans to their personal injury clients.

Summary of this case from Hernandez v. Guglielmo
Case details for

Rubenstein v. Statewide Grv. Comm.

Case Details

Full title:BRUCE D. RUBENSTEIN ET AL. v. STATEWIDE GRIEVANCE COMMITTEE

Court:Connecticut Superior Court, Judicial District of New Britain at New Britain

Date published: Jun 10, 2003

Citations

2003 Conn. Super. Ct. 7915 (Conn. Super. Ct. 2003)
35 CLR 34

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