Ethics Ohio Land Title Association September 2015 Presented by - - PDF document

1

Ethics

Presented by

Amelia A. Bower

Ohio Land Title Association

September 2015

Overview of Disciplinary Process

• Disciplinary Process
• Sanctions/Interim Suspensions
• Mitigation/Aggravation
• Cases/Issues
• Rules of Professional Conduct/Advisory

Opinions

Board of Professional Conduct

2

Disciplinary Process

3

4

Defending Disciplinary Cases

• Cooperate, cooperate, cooperate
• Refrain from blaming your former client
• GET A LAWYER
• Read rules and know what your penalty

could be

• Present evidence of mitigation [Gov. Bar

Rule V Section 13]

Sanctions

• Public reprimand
• One-year term suspension
• Two-year term suspension
• Indefinite suspension
• Disbarment

Interim Suspensions

• Lawyers can be immediately suspended for

being convicted of felonies in any jurisdiction,

• r failing to pay child support. Gov. Bar Rule

V Section 18

• Interim

remedial suspensions can be imposed when attorney “has committed a violation ... and poses substantial threat of serious harm to the public. Gov. Bar Rule V Section 19

5

Defending Disciplinary Cases

• Cooperate, cooperate, cooperate
• Refrain from blaming your former client
• GET A LAWYER
• Read rules and know what your penalty could

be

• Present evidence of mitigation [Gov. Bar Rule

V Section 13]

Aggravation

• Prior discipline
• Dishonest or selfish motive
• Pattern of misconduct
• Multiple offenses
• Lack of cooperation
• Submission of false evidence
• Refusal to acknowledge wrongful nature of

conduct

• Harm to clients/victims
• Failure to make restitution

Mitigation

• Absence of prior discipline
• Absence of dishonest or selfish motive
• Timely, good faith effort to fix misconduct
• Full and free disclosure
• Character or reputation
• Imposition of other penalties/sanctions
• Qualified medical disorder with causation
• Treatment/prognosis/rehab

6

Cases - Issues

• Attorney client relationship
• Who is client?
• Dual representation in real estate transactions

and title matters

• Duty, duty, duty
• Notary nightmares
• Fraud/defalcation/theft
• Conflicts

Who do you Represent?

• Can an attorney represent both sides in a

real estate transaction?

• Yes, if both sides give knowing consent in

writing (RPC 1.6 & 1.7).

• In Disciplinary Counsel v. Collins, 71 Ohio
• St. 3d 310 (1994) lawyer was publicly

reprimanded for representing both sides and then potentially being a witness in a lawsuit involving property.

Title Agent Representation

• Can an attorney title agent represent one

party in a sale and do the closing?

• Attorney
• wns

a title agency. You represent one of the parties in a sale

• transaction. Can your agency issue title

insurance for the transaction?

Continued

7

Title Agent Representation

• OSBA

Formal Opinion 37 (1989) interpreting old rules says “yes,” provided you take care

• f conflict issues – full

disclosures, knowing waivers, etc.

Duty, Duty, Duty & Title Searchers

• What if you are engaged to do a title search by

lender who was financing the purchase of the property for the buyer and you discover that an easement that provides access to the property terminates at a point in time but you do not disclose that fact to the buyer and sellers have no knowledge of the termination. Are you liable to the buyer? or is there a lack of privity under the Thomas v. Guarantee Title and Trust? What is the duty?

Continued

Who Decides if There is an Attorney-Client Relationship?

• In Davis v. Montgomery, 7th District Court of

Appeals held that summary judgment could not be granted for lawyer in a malpractice case as there was a question of fact as to whether the buyer believed that the lawyer was acting for him because he had used that lawyer for all of his real estate dealings in the past.

8

Duty, Duty, Duty: Advice to Buyer

• Can attorney – closing agent give advice to

the buyer?

• You are closing a transaction. Buyers ask

you for advice about whether they should back out of deal.

• What should you do? Is there an attorney-

client relationship if you give the buyer legal advice? Are you bound to be neutral?

Cuyahoga County Bar Assn

• v. Hardiman
• Contrary

to respondent’s view, neither a formal contract nor payment of a retainer is necessary to trigger the creation

• f

the attorney-client relationship. See, i.e., In re Disciplinary Action Against Giese (N.D.2003), 662 N.W.2d 250.

Continued

Cuyahoga County Bar Assn

• v. Hardiman
• While

it is true that attorney-client relationships may be formed by express terms

• f a contract, it “can also be formed by

implication based on conduct of the lawyer and expectations of the client.” Guttenburg & Snyder, The Law

• f

Professional Responsibility in Ohio (1992) 62, Section 3.1

Continued

9

Cuyahoga County Bar Assn

• v. Hardiman
• Determination of whether an attorney-client

relationship was created turns largely on reasonable belief of prospective client. See, i.e., Disciplinary Counsel v. Furth (2001), 93 Ohio St.3d 173, 184, 754 N.E.2d 219, where we found, inter alia, a violation of DR 6– 101(A)(3) based upon reasonable belief of “client” that respondent was representing him and his son in a legal matter.

Deed Preparation / Attorney-Client Relationship

• You are asked for a title agency to prepare

deeds on a per deed basis. Your arrangement is that agency will email you title exam or commitment with name(s) of buyers. You will prep deed for a fee and send it back. You do not participate in execution of document(s) and are not otherwise involved in the deal.

Continued

Deed Preparation / Attorney-Client Relationship

• In one particular deal, daughter and mother are

in title in survivorship. Daughter wants to refinance but lender does not want mom on

• loan. You asked to prepare two deeds, one to

take mom out of title and other to put her back in title after mortgage is filed.

• You draft both deeds but do not include

survivorship language in the 2nd deed.

Continued

10

Deed Preparation / Attorney-Client Relationship

• Mom

dies and daughter comes to you complaining that property should have passed to her and now there is an estate and she has to share with her siblings.

• Is this an ethics violation or malpractice or

neither?

Continued

Deed Preparation / Attorney-Client Relationship

• In State ex rel Weiner v. Kopp, 1997 WL

346095, the 1st District Court of Appeals held that where there is no privity between attorney and person, there is no attorney- client relationship.

Continued

Deed Preparation / Attorney-Client Relationship

• In our example, there is no attorney client-
• relationship. But note, under RPC 4.3, if you

have any communications with mom

• r

daughter at the time deeds are drafted, you must advise them that you are not their counsel and advise them to get counsel if they so choose.

• They must understand what your role is in

preparing deeds.

11

Acknowledgments: Duty, Duty, Duty

• You are an attorney title agent hired by lender

to close a refinance. You are in a hurry at closing and notarize mortgage but forget to write in names

• f

mortgagors in acknowledgment at closing and mistake is not caught before mortgage is filed. Mortgagors subsequently file for bankruptcy and mortgage is invalidated.

• Have you violated ethics rules?

Continued

Getting Acknowledgments Wrong: There is a Duty

• In Office of Disciplinary Counsel v. Roberts,

117 Ohio St. 3d 99 (2008), court said that failing to properly notarize documents can violate former rules 1-102(A)(4) which is now RPC 8.4(c) [a lawyer shall not engage in conduct that is prejudicial to justice].

• This

broad statement has generally been applied to situations where attorney notarizes documents when he has not seen it signed or in blank.

Notarization: Rule #1

• NEVER notarize something that you do

not see person sign

• YOU includes your STAFF

Continued

12

Notarization Question

• Man comes into your office and wants a deed
• notarized. He is not an existing client. He says

he will sign it in your presence but his wife is at work and signed it already. He wants you to notarize it. You tell him that you can notarize his signature but his wife will have to come into the

• ffice and acknowledge that she signed the
• deed. He agrees and leaves. The next day he

comes back, again without his wife. You are out but your secretary agrees to notarize the deed without his wife being present.

Violation?

• Have you violated the ethics rules?
• RPC 5.3 says that you must make a

reasonable effort to ensure that your assistant’s conduct is compatible with your professional obligations and that you are responsible for actions

• f

your assistant if you order specific conduct, ratify conduct or fail to take steps to mitigate conduct.

Duty & Law Related Services

• Comment 3 to this rule emphasizes lawyer’s

duty to instruct nonlawyer employees about ethical aspects of their job.

• Rule 5.7 – “law related services” are subject

to ethics rules as well. So if you own a title agency, which might be determined to be a “law related service,” you are bound by these rules.

Continued

13

Lawyers Sanctioned for Faulty Notarizations

• Attorney’s

conduct, notarizing documents without having witnessed signatures, violated rules prohibiting conduct involving dishonesty, fraud, deceit,

• r

misrepresentation and prohibiting conduct that adversely reflects on attorney’s fitness to practice law. RPC 8.4(c,h). Akron Bar Assn. v. Binger, 139 Ohio St. 3d 186 (2014); Disciplinary Counsel v. Flowers, 139 Ohio St. 3d 338 (2014)

Forged Signatures

• Notary RULE #2: You cannot notarize a

signature that you forged

• Attorney

who signed name

• f

her granddaughter’s mother to an affidavit, notarized it without noting that she had signed it with affiant's authorization, and filed it in court violated Rules

• f

Professional Conduct (RPC) that prohibited attorney to make a false statement of fact to a tribunal, engage in dishonesty, fraud, deceit,

• r

misrepresentation, and engage in conduct that was prejudicial to the administration

• f justice. RPC 3.3(a)(1), 8.4(c,d); Disciplinary

Counsel v. Wilson, 2014-Ohio-5487

Other Ethics Issues

• Participating

in mortgage fraud is dangerous

• In Mahoning Cty Bar Assn v. Helbley, 141

Ohio St. 3d 156 (2014), attorney/title agent was convicted of wire fraud as part of mortgage-related fraud scheme involving straw buyers. Bad guy hired title agent for closings and instructed agent to prepare HUD that were “false.”

Continued

14

Mortgage Fraud

• Attorney

discovered that he was being manipulated by bad guy when straw buyer came to his office. Agent questioned bad guy but continued to handle his transactions until he ultimately realized there was a

• problem. Attorney/agent was indefinitely

suspended from the practice of law.

Thou Shall Not Steal From Your Escrow Account

• Attorney

deposited escrow funds into his

• perating account and used them to cover his

personal and business expenses, and, with each successive misappropriation, repaid part

• r all of previous misappropriation to prevent
• detection. R.C. § 3953.231; RPC 8.4(c, h).

Disciplinary Counsel v. Streeter, 138 Ohio St. 3d 513 (2014)

Continued

Be Wary: Fake Court Orders Exist

• “On the morning of November 28, 2001, the

escrow officer reviewed the fabricated Agreed Magistrate’s Order that respondent had sent to the title company. Convinced that it was legitimate, the escrow officer arranged for the closing payoff in accordance with the fabricated order. She also prepared a separate statement for the couple’s signatures to confirm that the couple intended for the sale proceeds to be disbursed to respondent’s client.”

15

Fake Court Order

• “On

the closing settlement statement presented on November 28, however, the line item for the ‘attorney’s fee’ was no longer

• blank. It contained a figure of $3,650 to be

paid to (the attorney). The escrow officer testified before the panel that she had filled in this line item at respondent’s specific direction after he assured her that he was entitled to $3,650 as an ‘attorney’s fee’ in the transaction.”

Fake Court Order

• “Respondent represents that the new Agreed

Magistrate’s Order was the product

• f

misunderstanding and confusion;” however, neither the panel nor the board believed that the fabricated order was a completely innocent mistake. To the contrary, as the board

• bserved: “It is often said and is certainly true

in this case that the ends may not justify the means.

Continued

Fake Court Order

• The creation of a journal entry by fabricating

the signatures of opposing counsel and a judicial officer is abhorrent to our legal system. We concur in this assessment, especially because we are convinced that respondent consciously took advantage of Roy’s unwitting efforts to reach an agreeable division

• f

property in what had been a contentious divorce.”

Continued

16

Fake Court Order

• Disciplinary Counsel v. Hutchins,

102 Ohio St. 3d 97 (2004).

• Six month suspension imposed.

Rule 1.4: Communication

• Requires prompt notice of information which

requires clients’ informed consent.

• Requires attorney to reasonably consult with

client and to keep client reasonably informed.

• Lawyer shall explain matters to client to the

extent reasonably necessary to permit client to make an informed decision.

• Lawyer must disclose whether he/she has

malpractice insurance.

Rule 1.6: Confidentiality of Information

• Lawyer shall not reveal information relating to

representation of a client, including privileged information, unless client gives informed consent.

Continued

17

Rule 1.6: Confidentiality of Information

• Lawyer may reveal information to prevent

certain death

• r

bodily harm, to prevent commission of a crime, to mitigate substantial injury to financial interests or property of another that has resulted from client’s illegal or fraudulent act, to secure legal advice about compliance with these rules, to establish a defense or if is there is a dispute between lawyer and client.

Rule 1.7: Conflict of Interest Current Clients

• Conflict is created when lawyer accepts

representation of a client that is directly adverse to another client or if there is substantial risk that lawyers’ ability to represent a client will be limited by his/her responsibilities to another client.

Continued

Rule 1.7: Conflict of Interest Current Clients

• Lawyer shall not represent a client if he/she

cannot provide competent and diligent representation because

• f

a conflict and unless each affected client consents in writing to the conflict. Waiver must constitute “informed consent.”

18

Rule 4.1: Truthfulness in Statements to Others

• Lawyer shall not make false statements of

material fact or law to a third party, or fail to disclose a material fact when disclosure is necessary, to avoid assisting an illegal or fraudulent act by a client.

Duty To Report: Opinion 2007-1

• Duty to report professional misconduct under

Rule 8.3 arises when lawyer has unprivileged knowledge

• f

violations

• f

Rules

• f

Professional Conduct that raises a question regarding lawyer’s honesty, trustworthiness

• r fitness as a lawyer.

Where to Report Violations

• Lawyer’s ethical duty to report professional

misconduct under Rule 8.3 is fulfilled by informing Disciplinary Counsel or a certified grievance committee of a bar association. Lawyer’s ethical duty to report professional misconduct under Rule 8.3 is not fulfilled by informing a tribunal.

Continued

19

Where to Report Violations

• However, lawyer’s duty of candor to a tribunal,

under Rule 3.3, requires lawyer to disclose to tribunal any information required by Rule 3.3, thus, there will be instances in which lawyer’s misconduct must be reported to disciplinary counsel or a certified grievance committee of a bar association pursuant to lawyer’s duty to report under Rule 8.3 and disclosed to a tribunal pursuant to lawyer’s duty of candor toward a tribunal under Rule 3.3.

Questions?

Thank You!

Amelia A. Bower Plunkett Cooney (614) 629-3004 abower@plunkettcooney.com