Opinion
Nos. 92-425 and 92-426
Submitted June 3, 1992 —
Decided September 16, 1992.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline of the Supreme Court, Nos. 90-56 and 90-58.
In separate complaints filed on October 18, 1990, relator, Toledo Bar Association, charged each of the respondents, Michael E. McGill (Attorney Registration No. 0001839) and E.J. Leizerman (Attorney Registration No. 0011300), with one count of violating DR 5-103(B). In the complaints filed by relator, it was alleged that respondents violated the rule by guaranteeing financial assistance to clients while representing them in connection with contemplated or pending litigation. Respondents answered the complaints by essentially admitting the allegations therein, but denying that such conduct violated DR 5-103(B). In addition, respondents asserted, inter alia, that the Disciplinary Rule was unconstitutional under the United States Constitution as applied to FELA ("Federal Employees Liability Act") cases. The matters were thereafter heard by a panel of the Board of Commissioners on Grievances and Discipline of the Supreme Court on October 21, 1991.
In its findings of fact, the panel found that respondent, Michael E. McGill, was admitted to the practice of law in Ohio in 1974. Prior to obtaining his license, he had worked as an insurance adjuster. Since 1981, his practice has consisted primarily of plaintiffs' personal injury and FELA cases. He has no prior disciplinary violations and has fully cooperated with relator's investigation.
Respondent, E.J. Leizerman, was admitted to the practice of law in Ohio in 1976. He is also admitted to practice in Tennessee and Michigan. Like his partner McGill, Leizerman's primary area of practice is "virtually exclusively personal injury" and he estimated that a majority of his income is derived from FELA cases. He also has had no prior disciplinary violations and has fully cooperated with relator's investigation.
The panel further found that the respondents signed as co-makers on notes to Toledo Trust Company, a.k.a. Trustcorp Bank, Ohio, n.k.a., Society Bank, for the purpose of obtaining and guaranteeing loans of funds to clients who needed the funds in order to be able to withstand delays in litigation. The total amount of the notes due for the twelve clients named in the complaint as of November 15, 1989 was $93,800 in principal sum. It was stipulated with respect to these notes that in nine instances, involving federal FELA cases, the funds were procured by both attorneys. It was further stipulated that with respect to the three notes involving non-FELA (uninsured/underinsured motorist) cases, the funds were procured by McGill. All the notes were generally rolled over periodically and renewed, with additions if necessary, on a ninety-day basis. The testimony before the panel was uncontroverted that Leizerman signed notes in the non-FELA cases after funds had been disbursed to clients in order to protect the integrity of other (FELA) loans at the bank, and that his signing did not directly result in the advancing of money to those clients.
The testimony was also uncontroverted that all the loans were given only to already existing clients who needed the money to withstand delays in litigation. There was no evidence of improper solicitation. Once it was determined loans were needed, they were facilitated openly from a recognized financial institution. These loans were made only after the clients personally convinced the respondents that the loans were needed. The panel also found that there was no evidence of any interference with respondents' independent professional judgment.
Affidavits from ten of the twelve clients involved were submitted with the stipulations. These affidavits attested to the facts that the monies borrowed were used for medical expenses, living expenses during pending litigation, or settlement negotiations; that each client understood his ultimate responsibility to repay his or her loan; and that each client was satisfied with the handling of his or her case by respondents.
The panel concluded that the constitutional challenge to the Disciplinary Rule in question was beyond its jurisdiction to consider, and that the conduct of respondents in guaranteeing loans to clients for expenses other than those of litigation violated DR 5-103(B), which provides as follows:
"While representing a client in connection with contemplated or pending litigation, a lawyer shall not advance or guarantee financial assistance to his client, except that a lawyer may advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and costs of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses."
The panel therefore recommended to the board that each respondent receive a six-month suspension from the practice of law.
The board adopted the findings of fact and conclusions of law of the panel, but recommended that the six-month suspensions be stayed on condition that there are no further violations of DR 5-103(B).
Jonathan B. Cherry and Peter L. Moran, for relator.
Charles W. Kettlewell, for Michael E. McGill.
Charles W. Kettlewell and Mark H. Aultman, for E.J. Leizerman.
John J. Rossi and James L. Cox, Jr., urging dismissal pro hac vice, for amicus curiae Academy of Rail Labor Attorneys.
Bob Gibbins and Jeff White, urging dismissal pro hac vice, for amicus curiae American Trial Lawyers Association.
We agree that respondents committed the disciplinary violations found by the board. Nevertheless, we find some merit in respondents' assertion that DR 5-103(B) should perhaps be re-examined. While the actions undertaken by respondents constituted violations of DR 5-103(B), the arguments raised by them, regarding this rule, warrant some review.
Other states have reexamined their disciplinary rule to consider the policy issues raised by DR 5-103. For example, Minnesota's version DR 5-103 permits loans to clients if:
1. The client demonstrates substantial financial hardship; and
2. Without the loan the client would be forced to accept an inadequate settlement; and
3. The fact that the loan may be available is not advertised by the lawyer.
See Minnesota Rules of Professional Conduct, Rule 1.8(e)(3) (amended Sept. 1, 1985); see, also, District of Columbia Rules of Professional Conduct, Rule 1.8(d)(2) and Comment [5].
Accordingly, we reject the recommendation of the board, and order that both respondents be publicly reprimanded. Costs taxed to respondents.
Judgment accordingly.
SWEENEY, DOUGLAS, H. BROWN and BRYANT, JJ., concur.
WRIGHT, J., concurs in judgment only.
MOYER, C.J., and HOLMES, J., dissent.
PEGGY BRYANT, J., of the Tenth Appellate District, sitting for RESNICK, J.
I dissent from the majority opinion and would adopt the recommendation of the Board of Commissioners on Grievances and Discipline that respondents be suspended for six months and that the suspension be stayed on the condition that they engage in no further conduct that constitutes a violation of DR 5-103(B).
The majority has sanctioned respondents with a public reprimand apparently because the majority believes that DR 5-103(B) "should perhaps be re-examined." While I do not disagree with the majority's conclusion in that respect, I do disagree with the majority's conclusion that because we believe that a Disciplinary Rule should be reviewed and perhaps be amended in the future, such possibility of re-examination constitutes a valid reason to reduce a sanction for past conduct that clearly violates the existing rule.
Believing that there has been a serious violation of existing DR 5-103(B), I dissent from the majority opinion. The majority readily states that such violations occurred, but radically tempers the sanction on the basis that this court may, in the future, alter the applicable Disciplinary Rules. This seems to be a most unusual manner to administer our Disciplinary Rules.
The basic purpose underlying the Disciplinary Rule addressed in this matter is to curtail or regulate the unprofessional solicitation of clients through the advancement of monies, or the direct assistance in attorney monies, during the course of litigation. This rule has been generally accepted as a reasonable rule to effect the intended result. Until properly reviewed and amended by rule of this court, DR 5-103(B), as interpreted by the Board of Commissioners on Grievances and Discipline here, should be followed.
Therefore, I would accept the recommendation of the board in this matter that each respondent receive a six-month suspension from the practice of law, but that the suspension be stayed on the condition that there are no further violations of DR 5-103(B).
MOYER, C.J., concurs in the foregoing dissenting opinion.