Archive for the ‘Professional Liability’ Category

Disbarment for Not Paying Workers’ Compensation Lien and Lying About it

Monday, March 10th, 2014

disbarredWe briefly mentioned Norristown attorney Gregory Noonan in a previous blog post due to his arrest on charges of selling Oxycodone.  Noonan has just been disbarred on consent.  Noonan’s disbarment, although it has copies of the Oxycodone arrest documents appended to it, has nothing to do with the alleged illegal drug sales.  Noonan’s disbarment relates to a personal injury action he pursued on behalf of a client who received Workers’ Compensation benefits for the same injuries as the personal injury claim.  Although Noonan received a letter informing him of the existence of the lien, he did not negotiate the lien prior to settlement.  Noonan settled the matter for $55,000 and distributed all of the funds without providing notice or funds to the Workers’ Compensation carrier.  After settlement, Noonan was contacted by the Workers’ Compensation carrier.  Despite knowing the matter already settled, Noonan responded with a proposal that he would pay $5,000.00 if the case settled for between $40,000 and $55,000; $12,500 if the case settled for between $55,000 and $70,000; and a 50/50 split for any settlement in excess of $70,000.00.  The Workers’ Compensation carrier and its representatives sent several follow-up letters to Noonan which he either ignored or responded he was having difficulties with the settlement.  Eventually, the carrier filed a petition for review of compensation benefits, and after a hearing, the Workers Compensation Judge order reimbursement of the total amount of the Workers’ Compensation lien.

The Disciplinary Board found Noonan violated Rules of Professional Conduct including Rule (former rule) 1.15(b) and 1.15(c) relating to disbursement of funds, RPC 4.1(a) relating to knowing false statements, and RPC 8.4(c) relating to dishonest conduct.  Counsel are reminded that making false statements about client funds is among the many excellent ways for attorneys to become disbarred.

-Josh J.T. Byrne, Esquire

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Deweys and Don’ts

Friday, March 7th, 2014

One of the malpractice avoidance tips I give in nearly every lecture is to not put anything into an e-mail you would not want to see blown-up as an exhibit at trial.  Yesterday brought added support for this maxim in the form of indictments against four of the former heads of the now dissolved Dewey & LeBoeuf.  We wrote about the spectacular melt-down of Dewey as it was happening in 2012.  The 106 page indictment includes references to a number of incriminating e-mails.  In one e-mail the former chief financial officer wrote to Steven Davis, Dewey’s former chairman and Stephen DiCarmine, the former executive director (both were indicted): “Keep in mind though that at these levels we will not have the cash to pay the partners by Jan 31 since $25M is fake income.”  Another e-mail asked: “Can you find another clueless auditor for next year?”  Joel Sanders, the former chief financial officer, sent an e-mail to employee asking: “Can you also bring the list of ‘accounting adjustments’ you’ve come up with so far for the 2:30.”

While it is entirely possible these attorneys would have been indicted without respect to the e-mails they sent, the e-mails do create a very clear impression of culpability.  As always, the best practice is not to be involved in financial fraud in the first place.  However, attorneys engaging in behavior which might be even questionably improper are well advised not to discuss it in e-mails.

-Josh J.T. Byrne, Esquire

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New Jersey Bill Seeks to Limit Statute of Limitations in Legal Malpractice Actions

Wednesday, March 5th, 2014

billNJ A1254 has been referred to the Judiciary Committee of the New Jersey State Assembly.  The bill seeks to make the statute of limitations for all professional liability actions two years, down from the current six for actions against professionals causing only economic damage.  The bill also seeks to return New Jersey to the “American Rule,” and prevent plaintiffs’ attorneys from recovering the cost of litigation through “Saffer fees.”  Similar bills have failed in the past, and the current bill faces strong opposition.

-Josh J.T. Byrne, Esquire

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New CLE Ethics Requirement

Monday, February 17th, 2014

Pa.R.C.L.E. 108 (e) has changed to increase the number of credits lawyers may earn by remote methods from four to six credits a year.  The ethics component of the annual CLE requirement was increased from one to two credit hours.  The total number of CLE credits required annually remains twelve hours.   The amendments to the rules and regulations take effect with CLE compliance periods that begin in 2014 and have requirement deadlines in 2015.

-Josh J.T. Byrne

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$23.7 Million Settlement in Pennsylvania Legal Malpractice Lawsuit

Tuesday, February 11th, 2014

K&L_Gates_Center_PittsburghK & L Gates and attorney Sanford Ferguson entered into a $23.7 million settlement with bankruptcy trustee Mark Kirschner late last month.  The legal malpractice action arose out of representation by K & L Gates to investigate the possibility of financial mismanagement of a company known as Le-Nature’s Beverages, Inc.  The bankruptcy trustee contended Ferguson ignored evidence of the illegal activities of Le-Nature’s  CEO Gregory Podlucky before the company was forced into bankruptcy.  Podlucky and six of his family members and business associates are currently serving a federal prison time for a fraud estimated to be between $600 and $900 million.

In 2012, the Superior Court reversed an order sustaining preliminary objections in favor of K & L Gates.  In sustaining the preliminary objections, the trial court found K & L Gates was retained by the investors in Le-Nature’s Beverages, Inc., and the bankruptcy trustee did not bring the legal malpractice action on behalf of the investors.  The Superior Court disagreed finding:

K & L Gates was retained to investigate the exact type of injury being inflicted upon Le-Nature’s.  By negligently conducting its investigation, K & L Gates affirmatively caused harm to Le-Nature’s, by concealing the looting of the Company and wrongdoing by Podlucky, and affirmatively representing that no evidence of fraud or misconduct existed.

Kirschner v. K & L Gates LLP, 46 A.3d 737 (Pa. Super. 2012).   The Superior Court opinion permitted the lawsuit to proceed against K & L Gates on both direct liability and vicarious liability claims, including a claim that K & L Gates was vicariously liable for the work of accounting and financial experts it retained as part of the investigation.  Ferguson was criticized for not giving appropriate scrutiny to Podlucky’s statements, and for sharing information with Podlucky who was suspected by his business partners who hired K & L Gates of fraud.

Among the potential lessons to be learned from this action is the danger of uncritically accepting statements from clients (or in this case the CEO of the firm you were retained to investigate).  It is an old, and not entirely true, adage that an attorney’s client is the attorneys worst enemy.  However, in terms of legal malpractice avoidance it is often in the best interest of the practitioner to examine a client’s claims with a critical eye.

-Josh J.T. Byrne, Esquire

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Suppression of Evidence in Mesothelioma Cases

Wednesday, February 5th, 2014

On January 10, 2014, a U.S. Bankruptcy Judge George Hodges entered a sixty-five page “Order Estimating Aggregate Liability” for Garlock Sealing Technologies, LLC.  Garlock manufactured asbestos gaskets, and became a frequent defendant in mesothelioma cases.  Judge Hodges noted that generally the gaskets were sealed under other asbestos, and “released asbestos only when disturbed, such as by cutting, scraping, wire brushing or grinding- procedures that were done sporadically and then generally only after the removal of the thermal insulation products which caused a ’snowstorm’ of asbestos dust.”

The purpose of the order was to “determine Garlock’s responsibility for causing mesothelioma and the aggregate amount of money that is required to satisfy its liability to present claimants and future victims.”  Judge Hodges determined that liability to be $125 million.  The opinion notes Garlock’s own proposed Plan of Reorganization included at fund of $270 million for resolution of present and future asbestos related claims (Garlock was subject to claims by over 4000 existing mesothelioma claimants, and was involved as a defendant in twenty thousand mesothelioma cases, before entering into bankruptcy).  The Asbestos Claims Committee (”ACC”) created for the bankruptcy action, members of the plaintiffs’ law firms representing the present mesothelioma claimants, estimated Garlock’s liability at $1- $1.3 billion.

Judge Hodges held a hearing “that took place over seventeen trial days and included 29 witnesses and hundreds of exhibits.”  Judge Hodges’ opinion discussed:

1) The “science” evidence relating to asbestos and asbestos disease; 2) The “social science” evidence relating to practices in asbestos tort litigation; 3) The case law in asbestos estimation cases; and 4) The resulting estimation of Garlock’s aggregate liability.

Judge Hodges’ opinion includes an eighteen page discussion of the science of asbestos exposure and its relationship to mesothelioma.  The judge then explored the history of asbestos claims.  Judge Hodges notes that as other manufactures went bankrupt, including those who created the insulation surrounding Garlock’s gaskets, Garlock became a more frequent primary target of lawsuits.  Although the rest of Judge Hodges’ opinion is interesting reading, the part of the opinion significant to this blog, does not appear until page 30 of the opinion.  Beginning at page 30 of the opinion, Judge Hodges engages in a lengthy discussion of the fact that in cases against Garlock:

[O]ften the evidence of exposure to those [other] insulation companies’ products also “disappeared.”  This occurrence was a result of the effort by some plaintiffs and their lawyers to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants’ asbestos trusts until after obtaining recoveries from Garlock (and other viable defendants).

Judge Hodges detailed the facts of several specific cases in which evidence was suppressed by plaintiffs’ counsel, including a Philadelphia case:

A Philadelphia case involved a laborer and apprentice pipefitter in the Philadelphia shipyard which Garlock settled for $250,000. The plaintiff did not identify exposure to any bankrupt companies’ asbestos products. In answers to written interrogatories in the tort suit, the plaintiff’s lawyers stated that the plaintiff presently had “no personal knowledge” of such exposure. However, just six weeks earlier, those same lawyers had filed a statement in the Owens Corning bankruptcy case, sworn to by the plaintiff, that stated that he “frequently, regularly and proximately breathed asbestos dust emitted from Owens Corning Fiberglas’s Kaylo asbestos-containing pipe covering.” In total, this plaintiff’s lawyer failed to disclose exposure to 20 different asbestos products for which he made  Trust claims. Fourteen of these claims were supported by sworn statements, that contradicted the plaintiff’s denials in the tort discovery.

Judge Hodges noted in every one of the fifteen previously settled cases for which he permitted “full discovery,” plaintiffs had not disclosed other exposures to asbestos.  Garlock “identified 205 additional cases where the plaintiff’s discovery responses conflicted with on of the Trust claim processing facilities or balloting in bankruptcy cases.”  Judge Hodges noted:

The limited discovery allowed by the court demonstrated that almost half of those cases involved misrepresentation of exposure evidence. It appears certain that more extensive discovery would show more extensive abuse. But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.

Based upon his findings, Judge Hodges found the exposure of Garlock for liability to existing and future claims would be very limited.

On the same day Judge Hodges released his opinion, Garlock filed under seal a fraud and RICO complaint against four law firms, including Philadelphia based Belluck & Fox and the Shein Law Center.  This is not the first case of asbestos defendants suing plaintiffs’ lawyers, as we reported last year, an award of $1.3 million was entered against Robert Peirce & Associates due to an alleged conspiracy with radiologist Ray Harron to fabricate evidence.  Although we are not aware of any asbestos plaintiffs’ lawyers who have faced disciplinary action as a result of suppression or destruction of evidence, it is not an uncommon basis for disciplinary actions or even criminal prosecution.

-Josh J.T. Byrne, Esquire (H.T. – N.P.R. and B.C.B)

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Article About Assignment of Legal Malpractice Cases

Monday, February 3rd, 2014

LegalIntelligencerSwartz Campbell partner, Josh J.T. Byrne, Esquire, is the author of a Legal Intelligencer article on the law regarding assignment of legal malpractice cases in Pennsylvania.

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Pennsylvania Disciplinary Statistics for 2013

Tuesday, January 28th, 2014

It was another busy year for the Disciplinary Board of the Supreme Court of Pennsylvania.   Over the last year thirty-six attorneys were disbarred, fifty were suspended, five Justicereceived public censure, and eleven were place on probation.  The Disciplinary Board also issued eighty informal admonitions and public and private reprimands.  The numbers for suspensions and disbarments were slightly increased over 2012.

-Josh J.T. Byrne, Esquire

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Attorneys Selling Drugs

Tuesday, January 14th, 2014

pill bottleThe news yesterday that Malvern attorney Arthur D. Goldman was charged with selling high-end wine without a liquor license is somewhat unusual in that it involved 2,426 bottles of wine valued between $150,000 and $200,000.  What is not terribly unusual is an attorney’s alleged involvement in the illegal sale of a narcotic.  In December of last year, Norristown attorney Gregory Noonan was arrested for selling Oxycodone to an undercover officer.  Ironically, Noonan was arrested a month after representing Dr. Richard Ruth at his trial for unlawful prescription of Oxycodone.  In October 2013, a Towson, MD attorney, Jill Swerdlin, was charged with sneaking drugs to clients in jail.  In September 2013, the Illinois Attorney Registration and Disciplinary Commission recommended a four-year suspension for attorney Robert Huff (one of the three member panel recommended disbarment), convicted of conspiracy to distribute 1,000 kilograms or more of marijuana.

As has repeatedly been noted on this blog, it is a violation of Rule of Professional Conduct 8.4(b) to “commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.”  Drug and alcohol offenses are generally deemed to fall within Rule 8.4(b).  See, Pennsylvania Disciplinary Counsel vs. Yanoff, No. 71 DB 2012 (October 4, 2012).  Because Rule 8.4 deals with the attorneys conduct, rather than the conviction, an attorney can face discipline even if acquitted of charges.

-Josh J.T. Byrne, Esquire

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Alfred Hitchcock Presents, Legal Malpractice

Thursday, January 9th, 2014
Tippi Hedren

Tippi Hedren

Tippi Hedren, the actress best known for her part in Alfred Hitchcock’s The Birds, recently had a nearly $1.5 legal malpractice verdict affirmed on appeal.  Ms. Hedren was injured on set in June 2006, when a tarp holding a gallon of water gave way and dropped on her head.  In a Hitchcock like twist, the accumulation of water was blamed on a bird’s nest blocking a condensation tube in an air conditioning system.  Ms. Hedren alleged the water caused a return of recurring headaches (Ms. Hedren had spinal fusion prior to 2006 to treat her chronic headaches).

In October 2006, Ms. Hedren retained Joseph D. Allen, Esquire to represent her in a personal injury action against the owner and lessee of the sound stage where the injury occurred.  A timely complaint was filed in March of 2007.  Thereafter, Mr. Allen entered into an agreement to dismiss the lawsuit without prejudice, but did not obtain an agreement tolling the statute of limitations.  It is not clear from the court opinion why Mr. Allen agreed to dismiss.  When Mr. Allen refiled the lawsuit, a demurrer was sustained on the basis of the statute of limitations.

In the legal malpractice action, Mr. Allen conceded negligence, and the trial “essentially involved trying the underlying case to determine what Hedren reasonably could have expected to recover but for Allen’s negligence.”  The jury awarded Ms. Hedren $1,483,708, which included $213,400 for past lost earnings; $170,000 for future medical expenses; $440,308 for future lost earnings and lost earning capacity; $300,000 for past noneconomic loss, including physical pain and mental suffering; and $360,000 for future noneconomic loss, including physical pain and mental suffering.

On appeal, Mr. Allen argued the court erred in refusing to instruct on superseding causation and comparative fault.  Mr. Allen also argued Ms. Hedren’s medical expert’s opinion on causation had no basis.  Finally, Mr. Allen argued the court erred in allowing speculative expert testimony regarding economic loss, and that the jury’s award was excessive as a matter of law.  The California Court of appeals rejected all of Mr. Allen’s arguments and affirmed the award.

Failure to calendar, know deadlines, and/or timely file consistently account for nearly a third of all legal malpractice actions.  Malpractice avoidance requires counsel be aware of the applicable statute of limitations.

-Josh J.T. Byrne, Esquire

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