VII. THE TROUBLE WITH LAWYERS DISCIPLINING LAWYERS
For clients who are cheated or misadvised by their attorney, few effective methods of redress are available. Since no proactive body to investigate wrongdoing exists, the burden is always on the client to do one of the following:
- Sue for malpractice;
- Notify a grievance committee primarily comprised of lawyers of the alleged wrongdoing;
- Submit to a fee arbitration process — which, in New York, is not binding on the attorney;
- In the case of outright theft, file with a special State Theft Fund — which has very limited resources;
- Sue for breach of contract;
- Submit to a fee hearing in court.
The first option is to sue for malpractice. A client choosing this route must usually hire yet another lawyer and pay still more legal expenses. Divorce clients who are unable to afford high legal fees to begin with obviously cannot afford to pay even more to sue for malpractice. And then there’s the emotional trauma of yet another court battle. Moreover, under the narrow legal interpretation of what constitutes malpractice, legitimate grievances may fall between the cracks. In May 1991, the American Bar Association’s Commission on Evaluation of Disciplinary Enforcement, which investigated lawyer discipline, brought these problems to light: “Even when the claim is for a large sum, full civil proceedings are a slow and expensive method of resolving the dispute. Also, many types of lawyer conduct that are legitimate grounds for client dissatisfaction and dispute may not constitute malpractice.”
A client’s second option is to file a formal complaint with the Appellate Division’s Grievance Committee, comprised mostly of lawyers who discipline other lawyers. (Complaints in Manhattan and the Bronx are handled by the Disciplinary Committee’s First Department; in Staten Island, Queens and Brooklyn, complaints go to the Second and Eleventh Judicial Districts’ program.) This process is admittedly a slow and secretive affair, according to both the Report of the [ABA] Commission on Evaluation and Disciplinary Enforcement and Hal Lieberman, who oversees lawyer discipline in the Appellate Division’s First Department.
Lieberman additionally notes that his office is backlogged with cases and cannot handle any more than the 3,000 complaints it currently receives each year from residents of Manhattan and the Bronx.
The grievance process is also flawed because of the lack of any communication between the complainant and the Disciplinary Committee, other than the mailed complaint. In the following weeks or months, all the complainant gets is a dismissal letter or, in a rare instance, a letter disclosing a public reprimand. There are no progress reports for complainants. As the ABA Commission pointed out, “The complainant has no way of judging how much consideration the complaint has received. Even in those cases in which charges are filed and further proceedings held, complainants are not routinely informed of the status or development of the case.”
But the major disadvantage of the current grievance process is that the aggrieved party can obtain no individual redress. No money is returned. A bad divorce settlement resulting from, say, a conflict of interest isn’t transformed into a good one.
In serious cases of wrongdoing, such as where fraud is alleged, the Disciplinary Committee may hold a hearing, much like a trial. It then imposes sanctions against the lawyer if it determines that the attorney has violated the Code. These sanctions range from private admonishment, the least severe, all the way up to disbarment. The complainant is ultimately informed by mail of the outcome.
This grievance procedure is at the center of a major controversy about the profession’s ability to rule against fellow members. Critics say the disciplinary system cannot serve the public well because potential conflicts of interest arise when fraternalism gets in the way of executing justice. In 1970, a Committee under retired U.S. Supreme Court Justice Tom C. Clark concluded that disciplinary action was “practically nonexistent in many jurisdictions.” Among other findings cited by Stanford Professor Deborah Rhode were “widespread unwillingness by members of disciplinary agencies to make findings against prominent lawyers, firms or individuals with whom they are ‘professionally and socially well acquainted.'”
Rhode more recently reported:
Twenty years after the Clark committee issued its report, many of the problems it had identified remained pervasive. Although most disciplinary agencies revised their procedures, increased their budgets, and imposed sanctions with greater frequency, almost every major study found serious inadequacies in the regulatory process. . . According to the ABA Commission on Professionalism’s 1986 Report, state disciplinary agencies ‘cannot do much more than deal with charges of theft, neglect or the commission of a felony. . .’
The American Bar Association’s Commission on Professionalism also concluded that, even though lawyers have an ethical duty to report other lawyers who violate the code, they are reluctant to file disciplinary charges against their colleagues.
The Grievance Committee for the Second and Eleventh Judicial Districts reported to us that, in 1990, 2,550 individual complaints were filed against lawyers in Brooklyn, Queens and Staten Island. Of that total, only 26 resulted in public sanctions.
Another grievance procedure deficiency, particularly in New York, is extreme secrecy. Complaints, investigations, and disciplinary hearings are kept secret. Advice To Complainants, a pamphlet issued by the Grievance Committee operating in the Second Department, explains why: “An attorney cannot do good work for his client if he does not have a good reputation, and a good reputation is easily destroyed and very hard to repair. For that reason, your complaint and our investigation are kept secret.” But because of this secrecy, a client has no way of knowing if complaints have been previously filed against the attorney. This secrecy especially hurts clients who have paid advance retainers to lawyers facing disbarment or suspension shortly before the discipline was publicly imposed. This problem was acknowledged by legal officials who oversee the New York State Lawyer’s Fund For Client Protection. These unsuspecting clients had no way of knowing that their lawyers were soon to be found guilty of theft, according to the Fund’s 1990 Annual Report.
The ABA itself supports making grievances public after the charge is filed, and before public hearings, according to Professor Stephen Gillers. Gillers also notes that this is the majority viewpoint in most states, and New York is one of the few states still holding the minority view that nothing should be public until or if the court so chooses.
Recent reforms to open the system have been spearheaded by the ABA’s Commission as well as by organizations such as the Washington, D.C.-based client advocacy group, HALT, which calls itself “An Organization of Americans For Legal Reform.” HALT has fought for an open grievance system, and also believes it should be run by non-lawyers. Each State’s Bar Association decides whether to adopt new rules or guidelines for its members and to recommend these to the court. And it is up to the courts to impose binding rules. Thus, such reforms have not yet reached New York.
A third remedy, applicable in case of fee disputes, requires consumers to take their cases to one of the four Boards of Fee Conciliation Services, which offer arbitration. These boards, run exclusively by lawyers, are practically worthless to the consumer because no attorney is legally required to participate or comply with the arbitrator’s decision.
Since these fee conciliation services do not keep track of how many matrimonial cases they receive, there is no way to gauge from them the extent of the fee dispute problem in divorce cases.
The fourth alternative is to go to the New York Lawyer’s Fund For Client Protection. The fund, provided for under a State statute, is drawn from lawyers’ registration fees. But this alternative is of little possible benefit to divorce clients since reimbursement from the Fund is limited to situations where a consumer can prove that a “lawyer took legal fees without the intent to provide the legal services that the lawyer promised,” or where lawyers have engaged in outright thievery. We have no indication that outright lawyer theft is any more prevalent among matrimonial attorneys than with other lawyers. The problems we have outlined relate to fee disputes, not theft.
Indeed, the Fund’s 1990 annual report notes that 40 percent of fee dispute claims are deemed ineligible, adding: “Fee disputes in New York rarely result in discipline or awards of reimbursement.” The Fund’s trustees wrote that they have been overwhelmed by claims seeking refunds for unearned legal fees, which constitute 30 percent of its caseload.
The Fund has additional limitations. Eligible claims are restricted to cases where the client’s lawyers have actually been disbarred or suspended from practice, or where the lawyer has fled. The Annual Report noted that “lawyer theft has risen dramatically since 1987″ and that the fund was contemplating lower levels of reimbursement to prevent insolvency.”
A client’s fifth option is to sue for breach of contract. But there are widely varying interpretations of what degree of failure to perform constitutes a breach of contract, according to the ABA’s Malpractice Coordinator, Alice Hughey. Of course this requires hiring yet another lawyer and paying more fees in the risky pursuit of old ones, which many desperate clients can’t afford.
A sixth option is to submit to a fee hearing, in which a judge or special referee determines how much money the client owes the lawyer. Fee hearings usually arise after a lawyer seeks to withdraw from the case for nonpayment of his/her fees and then refuses to turn over the client’s file, according to Steve Liebman. As mentioned earlier, fee hearings are also held when a retaining lien is converted to a charging lien.
VIII. LESSONS FROM OTHER JURISDICTIONS
Because no laws govern divorce lawyer fees or practices — and since the alternatives discussed just above are more form than substance — clients are left largely unprotected from fee abuses. This was once also true in personal injury cases, until many states, including New York, started cracking down. Personal injury lawyers in New York are now required to cap their fees at certain levels. They must file a statement disclosing their fees to the State Office of Court Administration, must provide the client with a copy of the written retainer, and also must provide a closing statement if the client did not recover a judgment. People who oppose extending these rules to matrimonial matters argue that a comparison with personal injury cases is not apt because personal injury lawyers, unlike divorce lawyers, work on a contingency fee basis.
Florida has taken personal injury client protection even farther. Clients have a three-day “cooling off” period during which time they can back out of a contract to retain a lawyer. The lawyer must give the client a “closing statement” during this period that lists all the financial details of the entire case, and, until the client approves the closing statement, the client doesn’t have to pay anything. The client can also demand a reasonable estimate of future necessary costs, and if the lawyer lends the client money to prepare a case, the client has a right to know periodically how much money the lawyer has spent. The client also has a right to decide how much money will be spent to prepare the case. The personal injury lawyer must also give the client a Bill of Rights, before the client signs the contract. In 1986, after widespread criticism of California’s lawyer discipline system, the Legislature created a State Bar Discipline Monitor to evaluate disciplinary processes and make recommendations. The eventual reforms have resulted in increasing number of complaints being filed, investigated and publicly sanctioned, and with fewer delays than under prior procedures.”
Some states have started opening their disciplinary bodies to the public. In West Virginia, the records of dismissed complaints have been available to the public and press since 1984. In Florida, such records have been publicly available for over a year. Oregon has had an open disciplinary system for 15 years. Records are public there from the time a complaint is received. According to the Report of the ABA Commission on Evaluation of Disciplinary Enforcement, Oregon “proudly supports its open bar.” And the President of the Oregon State Bar testified to the Commission: “If the lawyer has been disciplined, a prospective client should be allowed to determine whether that action justifies not going to the lawyer for assistance.” Bar Associations have traditionally objected to an open system for fear that lawyers’ reputations will be damaged, but the Commission believes that this fear is totally unfounded: “However, we find in Oregon, Florida, and West Virgina ample experience to demonstrate the public proceedings or public records of dismissed complaints do no harm to innocent lawyers’ reputations. On the contrary, secrecy does great harm to the reputation of the profession as a whole.”
Stanford Professor Rhode has reported that the New Jersey Supreme Court “replaced its lawyer-managed county discipline system with a centralized administration that has implemented some significant reforms.”
Massachusetts is applying its State consumer protection statute to crack down on deceptive lawyer practices and, so far, a handful of cases have been tried, resulting in awards to clients. Mandatory fee arbitration programs have sprung up in five states, including Alaska, California, Maine, New Jersey and South Carolina. The Boston Bar Association, unlike its State counterpart, offers binding arbitration in fee disputes.
As the above partial list of disciplinary process reforms in other jurisdictions makes clear, New York has a long way to go before our process becomes “consumer-friendly.” Here are several proposals that the Appellate Divisions could take to prevent the worst kinds of financial abuse of divorce clients, and that would help equalize the now imbalanced relationship between divorce lawyers and their distressed clients:
A. Require Fee Disclosure
We will ask the Appellate Divisions to amend their rules to require divorce lawyers to provide written, itemized retainer agreements. Every lawyer would be required to file a copy of this document with the New York State Office of Court Administration.
We will also ask that divorce lawyers be required to give their clients billing statements every month. These statements would contain a full breakdown of all fees for personnel, materials and outside services.
With this rule in place — a proposal supported by New York University Law School Ethics Professor Stephen Gillers and former New York State Bar Association President Whitney North Seymour Jr. — a client would know specifically how many people have been working on her or his case, how much they were charged for the lawyer’s research, drafting, court and travel time, whether a partner, associate or paralegal did the work, how much it cost to copy each page of a needed document, how much was spent on messengers, and so on. These itemizations would cover all the standard divorce case procedures for which a client is billed. The bill would also have to provide the prices according to their dollar amounts, rather than confusing tenth-of-an-hour time-units. For example, a 15-minute phone call at $200 an hour would show $50 instead of .22. Because clients kept in the dark are more easily bilked than informed clients, such a rule would go a long way toward detering potential fee abuse by divorce lawyers of divorce clients.
Price disclosure would benefit both lawyers and clients. Not only would such disclosures improve lawyers’ accountability to their clients, but it would also reduce the likelihood of fee misunderstandings and costly, time-consuming fee disputes.
We will also ask the Appellate Division to require lawyers to provide a good faith explanation of possible future costs at the various stages of a divorce case. Whenever possible, clients should be advised of the approximate cost of a court procedure well before the procedure is undertaken. For example, the client should be told well in advance of a deposition session that depositions typically cost “x” number of dollars per hour, afternoon, or per day. Lawyers should also be able to provide estimates of other procedures, such as pendente lite motions; lawyers would tell their clients that such a motion could cost, say, anywhere from $2,000 to $15,000 or even higher, depending on the law firm’s rates and circumstances of the case. Although individual factors weigh on how much time is needed for such a motion, a high and low fee range could be estimated.
Some lawyers object, arguing that estimates are very difficult to make, and can even be misleading. But many experts we spoke to disagree. For example, Adria Hillman, co-chair of the New York State Coalition on Women’s Legal Issues, told us, “A lawyer won’t be able to guarantee exact figures, but they can easily provide a range.”
B. Provide for mandatory arbitration in fee disputes, at the election of the client
Mandatory arbitration in legal fee disputes has been proposed by both the ABA’s National Commission on Lawyer Discipline and New York State’s Fund For Client Protection. The Trustees of the Client Protection Fund have urged fee dispute arbitration that “produce[s] decisions that are binding on the parties to the same extent as court judgments.”
Akin to Small Claims Court, mandatory arbitration would give consumers a chance to avoid paying excessive fees without having to spend even more money on another court proceeding. Mandatory arbitration is widely used in the securities industry to avoid expensive lawsuits. Applied to divorces, it would finally give New Yorkers embroiled in fee disputes a chance to avoid the Catch-22 of going further into debt with more litigation to obtain real economic justice. Since arbitration doesn’t require formal courtrooms (proceedings are held in the arbitrator’s office), doesn’t require judges or, usually, a stenographer, it is far less costly to the parties and to the taxpayers than bringing fee disputes to court. Also, the courts are so seriously backlogged — with delays of a year or more to schedule a trial — that arbitration affords much quicker justice. Of course, because even this type of arbitration would be primarily controlled by lawyers, it should be provided at the option of the client.
Until New York State does adopt mandatory arbitration, the Consumer Affairs Department urges divorce parties to patronize only those attorneys who agree to sign a statement that they will abide by a fee arbitration decision.
C. Provide a divorce client “Consumer Bill of Rights.”
Because of the inherent advantages divorce attorneys have over divorce clients, there is a special need for clients in matrimonial cases to understand their basic legal options. But many consumers don’t even know where to file a complaint against their lawyer. Therefore, we urge the Appellate Division to require divorce lawyers to hand out a written statement explaining the consumer’s legal rights, and how and where to file a grievance.
Consumer Affairs has proposed similar affirmative disclosure rules for consumers of tax preparer services, fast-food restaurants, weight loss centers and over-the-counter cigarette sales. And, the Legal Services Corporation, a federal agency that sets policy guidelines for federally funded legal aid programs, requires the Legal Aid Society (the civil division) and Legal Services to post signs in their offices — in English and Spanish — which tell consumers where to file a complaint.
Until such a leaflet is required, we will be issuing our own Consumer Bill of Rights for Divorce Clients. Besides explaining how to file a grievance, this statement informs consumers of their rights. (See Appendix A.)
Manhattan lawyer Myra Freed, co-chair of Matrimonial Committee of the New York State Women’s Bar Association (WBASNY), said that “I personally have no objection with the principle that attorneys give clients some form of Bill of Rights, and I don’t think most attorneys would object to it either.”
D. Prohibit coercive tactics that force clients to waive their right to dispute a fee.
We will urge the Appellate Division to prohibit lawyers from requiring their divorce clients to sign promissory notes or Confessions of Judgment or General Releases when a fee is in dispute. Attorneys should not be allowed to condition the return of documents on the client’s waiver of the right to dispute the fee.
E. Encourage judges to grant fair, timely counsel fees to non-monied spouses from monied spouses.
We urge that the courts grant final as well as interim counsel fees to the attorney representing the non-monied spouse and from the monied-spouse. The former should be awarded fees in a timely manner and at an amount at least equal to the hourly rate ordinarily and customarily charged by the non-monied spouse’s attorney for such services. This reform would encourage much quicker settlements because it would financially deter the monied-spouse from dragging out the case merely to win a war of attrition. Why allow one side of a litigation to use the common marital property to outspend and exhaust the other side? It would also assure that attorneys representing the non-monied spouse be fairly compensated for their legal services.
F. Establish a blue ribbon panel to study systemic change.
While these measures will help reduce billing abuses, ultimately more major reforms should be considered given the depth and durability of the problem of excessive client costs. This more fundamental approach should involve a reappraisal of the adversarial system itself in divorce cases since it requires both sides in a divorce to have substantial funds at their disposal to do legal battle. While perhaps fine for comparably large corporations fighting each other in cases involving many millions or billions of dollars, this same adversarial system in divorce cases impoverishes weaker spouses and can devastate families. As an alternative to the adversarial system, all financial matters concerning matrimonial assets, for example, could be turned over to a trustee, as is done in bankruptcy proceedings. “Appoint someone as a trustee in the dissolution,” suggests Steve Liebman. “Control of the assets would be left to a third party. It would put the non-monied and monied-spouse on an equal playing field — the children could have their school tuition paid appropriately.”
We urge the Appellate Divisions and the Bar to establish a Blue Ribbon Panel of independent experts, from multi-disciplinary fields which would include divorce “victims,” to explore how to more fundamentally reform this deeply flawed system. Some cost-cutting measures may be quite simple: court rules changes, for example, could streamline some of the paperwork required for motions, according to experts we interviewed. Judges need to begin penalizing lawyers or their clients for missed deadlines if the exchange of financial information is to be expedited. Experts have suggested to us the creation of an ombudsman position in State Supreme Court — an office for consumers to get information and to go for help. This could be established at virtually no cost by using pro bono lawyers provided by the Bar Associations.
As part of a fresh re-appraisal of the divorce law and lawyer system, such a panel should consider amending the equitable distribution law to establish the presumption that the marital assets should be divided equally in a marriage of five years or longer unless there are mitigating circumstances. This inquiry would of course involve a close look at any other jurisdiction, such as Wisconsin, which has such a system.
Such a civic panel could also consider the conclusion of the legal advocacy group, HALT, which believes that lawyers should not be in charge of disciplining lawyers. “The problems so rampant in the current system are clearly a result of self-regulation. As long as lawyers are in charge of disciplining lawyers, consumers will lose out,” says the organization.
Whitney North Seymour Jr. has proposed that all legal fees in excess of 33 1/3 percent of the settlement be subject to mandatory arbitration, if the client so chooses, based on court rules applying to personal injury cases. That rule states that any legal fees in excess of 33 1/3 percent of the settlement should be presumed to be “unconscionable” and “excessive” according to Section DR 2-106 of the Disciplinary Rules.
Another idea deserving consideration: Instead of both sides obtaining their own experts, clients could use court-appointed experts, which the monied-spouse would pay for.
Attorney and reform activist Gloria Jacobs suggests that, to curb the concealing of assets, lawyers should be required to swear that statements of net worth and any other financial disclosure documents they helped prepare fully disclose all marital assets to the best of their knowledge. Certified Public Accountants already have to certify their asset appraisals in connection with equitable distribution matters, the New York State Society of CPA’s reported in their Newsletter (November 1984).
Lawyers depleting the marital pot they are hired to divide is like the U.S. General in Vietnam who said he had to burn the village in order to save it. So what can middle-class, divorcing couples do who cannot afford the fees and court costs of contested divorces? The Blue Ribbon panel should seriously consider a system where if a contested divorce involves assets, say, of $30,000 or under, a court-appointed trustee would be appointed to hold a brief hearing, and then come to a decision, because inexpensive justice is better than no justice at all. The Bar also ought to advocate more pre-paid legal service plans such as those at DC-37, mentioned earlier. Lawyers in such plans are paid on salary, and the needs of the client are not contigent on the ability to pay high hourly fees. There is another solution already available for cost-conscious couples with uncomplicated cases: lawyer fees can be eliminated entirely with inexpensive do-it-yourself divorce kits. Perhaps the courts could provide standard divorce kits at a minimum cost and assign a matrimonial clerk to assist litigants choosing this option.
The harm done under the current system spans generations, to the children of the litigants. The damage can last a lifetime. One 33-year-old Manhattan woman recounted to us the humiliation she suffered as a child when her mother and three siblings were forced onto welfare after her father abandoned the family and moved to a new house in Scarsdale with his former secretary: “As a 12-year-old I knew that the fraud was wrong and the family situation was devastating, suddenly being on welfare. But what was worse was knowing that my father was living in the comfort of Scarsdale with a maid, a gardener, a swimming pool, and his new girlfriend. My father’s assets were cleverly hidden by his lawyers and he convinced my mother that nothing could be done. Although we’ve all gotten on our feet now, we still suffer from the indignity of that situation.”
George Bernard Shaw once wrote that “All professions are conspiracies against the laity.” To challenge this popular stereotype, we hope that relevant bar associations and matrimonial lawyers will open-mindedly consider reforms that can both assist women in divorce and bolster the reputation of lawyers who, contrary to their oath of office, too often elevate self-service over public service.