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In re Disciplinary Proceeding Against Placide

Supreme Court of Washington, En Banc

April 12, 2018

In the Matter of the Disciplinary Proceeding Against CARLLENE M. PLACIDE, an Attorney at Law.

          JOHNSON, J.

         Attorney Carllene M. Placide appeals the unanimous recommendation of the Washington State Bar Association Disciplinary Board (Board) that she be disbarred from the practice of law. The misconduct charged includes misappropriation, repeated lying, failure to deposit flat fees received from clients into a trust account, failure to deliver property to which a third party was entitled, and charging an unreasonable fee. We uphold the Board's unanimous recommendation and disbar Placide.

         Facts and Procedural History

         Placide was admitted to the practice of law in 1999. In November 2006, Placide joined the law firm of Dorsey & Whitney LLP as a "non-equity" partner with base yearly compensation of $225, 000. Decision Papers (DP) at 51 (Hr'g Officer's Am. Findings of Fact, Conclusions of Law, & Recommendation (AFFCLR)). Placide's practice emphasized labor and employment law and immigration law. Dorsey had a firm policy stating that all compensation received by Dorsey partners, associates, or other attorneys was property of the firm. That policy states, in relevant part:

Checks for legal services should be made payable to the Firm, and in any instance in which a check for legal or any other services representing compensation which is the property of the Firm is made payable to an individual payee, it should be endorsed immediately by the individual payee to the order of the Firm and delivered to the Finance Department with the Check for Deposit form. Similarly, any cash or other property representing any such compensation should be delivered immediately to the Finance Department with the appropriate identification.

Office of Disciplinary Counsel's (ODC) Ex. A-109, at 20. Placide knew of these policies and agreed to comply with them by signing the offer of employment letter. For several years prior to 2011 and while a partner at Dorsey, she represented individual immigration clients who hired her personally (outside clients) and who paid her directly. She failed to disclose the existence of these clients to Dorsey. Placide attempted to conduct conflict checks, but those attempts were "wholly inadequate." DP at 53 (AFFCLR). She retained the funds she received as compensation from her outside clients instead of turning them over to Dorsey. She represented outside clients on a flat fee basis, with fees and expenses paid in advance. Placide's engagement letters or agreements with outside clients failed to include the language required by RPC 1.5(f)(2) in order to designate such fees as the lawyer's property on receipt. She failed to deposit funds she received from outside clients in a trust account as required by RPC 1.5(f) and RPC 1.15A(c)(2); she did not have an interest on lawyer's trust account and either retained or deposited into a personal bank account all such payments. On at least one occasion, Placide was unable to refund unearned fees to a client because she failed to deposit and hold those funds in a trust account.

         Placide occasionally used Dorsey's office space, equipment, e-mail, letterhead, and the time and labor of Dorsey employees when working on outside client matters. She attempted to conceal her representation of outside clients while at Dorsey. In November 2011, Dorsey representatives learned about Placide's outside clients. Dorsey's internal investigation revealed that Placide had received more than $56, 700 in fees from outside clients. At a November 8, 2011 meeting with Dorsey representatives, Placide repeatedly denied representing outside clients. Each time the Dorsey administrators presented Placide with an e-mail or other document that showed her contact with outside clients, she would admit to representing that client, but no others. Placide claims that "under the pressure of the moment some of her statements were inaccurate but denies there was any intent to deceive." Opening Br. of Appellant at 4-5.

          Dorsey terminated its relationship with Placide around November 14, 2011. The separation agreement shows that Placide agreed to repay Dorsey $50, 923 by December 30, 2012, a sum that included $56, 700 in fees that Placide received from outside clients and also certain benefits that Placide had already received from Dorsey, less any November partnership income already paid to Placide. Dorsey filed an ethics complaint against Placide, alleging that Placide operated her off-the-books practice from Dorsey's Seattle office, made significant efforts to hide the practice from others in the office, was dishonest, and violated trust account procedures for unearned fees.

         Placide did not complete the work she agreed to perform for client P.S., an outside client, before her separation from Dorsey. P.S. paid a $2, 500 flat fee to Placide to perform work on an immigration matter. Dorsey attorneys completed the work instead. After learning that other Dorsey attorneys had completed the work, Placide asked P.S. if she should return his fee, and P.S. indicated that he wanted Placide to give the fee to Dorsey. Placide nevertheless did not return those funds to Dorsey, claiming that the funds were covered by the above-referenced separation agreement.

         Prior to November 2011, and while still a partner at Dorsey, Placide was in contact with the law firm of Ogletree, Deakins, Nash, Smoak & Stewart regarding potentially leaving Dorsey and joining Ogletree. Although Placide believes she was terminated by Dorsey at least in part because Dorsey found out about her intention to move her practice to Ogletree, the hearing officer found no evidence that Dorsey was aware of Placide's contacts with that firm. Placide falsely told Ogletree representatives that Dorsey had terminated her because it had learned of her discussions about moving her practice to Ogletree. In December 2011, Placide accepted employment with Ogletree as a shareholder. While Ogletree had no written policy prohibiting shareholders from representing clients in legal matters outside of the firm, it intended and expected its shareholders to provide legal services exclusively for Ogletree clients. The hearing officer found that Placide knew of this expectation but began representing outside clients as she had at Dorsey, and had performed legal services for at least seven outside clients.

         Placide received fees equal to at least $10, 000 from outside clients while at Ogletree, did not disclose those clients to Ogletree, and did not maintain a trust account to hold those outside clients' payments. She deposited all fees into her personal bank account. She did not perform conflict checks before representing those clients; no evidence exists that her client engagement letters complied with RPC 1.5(f)(2). Placide did not discuss with her outside clients, either at Dorsey or Ogletree, whether their fees would be placed in a trust account, where the funds would be deposited, or the fact that their flat fee arrangement did not alter the client's right to terminate the client-lawyer relationship. In November 2012, Dorsey notified Ogletree that it had filed an ethics complaint against Placide. When Ogletree's general counsel contacted Placide to discuss the Dorsey ethics complaint, Placide repeatedly lied, stating that Dorsey had approved her representation of outside clients and that Dorsey terminated her because it became aware of the discussions with Ogletree regarding potential employment.

         Ogletree requested that Placide provide a copy of her Dorsey separation agreement, reviewed Placide's Ogletree e-mails, and discovered that Placide had performed legal services for at least seven or eight outside clients. Ogletree representatives then met with Placide without disclosing the purpose of the meeting in advance. At that meeting, Placide acknowledged that she knew she was prohibited from representing outside clients while at Ogletree, initially denied representing outside clients while at Ogletree, and then admitted to representing outside clients when shown documentary evidence.

         In January 2013, Placide and Ogletree entered into a settlement agreement, in which Placide promised to pay to Ogletree a specified amount based on the payments she received from her outside clients. The hearing officer noted that Placide had made no payments pursuant to the agreed-upon schedule as of the time of the disciplinary hearing.

The ODC charged Placide with eight counts of misconduct:
Count 1: "By unlawfully appropriating funds belonging to Dorsey, Respondent violated RPC 8.4(b) by committing crimes of theft (RCW 9A.56.040 and/or RCW 9A.56.050 and/or RCW 9A.56.060), and/or violated RPC 8.4(c), and/or violated RPC 8.4(i)."
Count 2: "By misrepresenting the extent of her 'off-the-books' practice to Dorsey personnel, Respondent violated RPC 8.4(c)."
Count 3: "By failing to deposit advance flat fees in trust, as is required in the absence of a flat fee agreement that conforms with RPC 1.5(f)(2), Respondent violated RPC 1.15A(c)(2)."
Count 4: "By failing to return unearned portions of [client P.S.]'s fee on termination of representation and/or in failing to promptly return unearned portions of Client A's fee, Respondent violated RPC 1.15A(f) and/or RPC 1.16(d)."
Count 5: "By keeping $2, 500 in legal fees paid to her by [client P.S.] without performing the work she agreed to perform on his behalf, Respondent charged an unreasonable fee in violation of RPC 1.5(a)."
Count 6: "By unlawfully appropriating funds belonging to Ogletree, Respondent violated RPC 8.4(b) by committing crimes of theft (RCW 9A.56.040 and/or RCW 9A.56.050 and/or 9A.56.060), and/or violated RPC 8.4(c), and/or violated RPC 8.4(i)."
Count 7: "By misrepresenting to Ogletree that she did not represent outside clients while employed at Ogletree and/or the number of outside clients she represented while at Ogletree, Respondent violated RPC 8.4(c)."
Count 8: "By failing to deposit advance flat fees in trust, as is required in the absence of a flat fee agreement that conforms with RPC 1.5(f)(2), Respondent violated RPC 1.15A(c)(2)."

DP at 37-38, 42, 43 (First Am. Formal Compl. (FAFC)).

          Following the disciplinary hearing, Hearing Officer Carl Carlson entered his findings of fact, conclusions of law, and recommendation, which he later amended. The hearing officer found that Placide was not a credible witness in part based on her denying any knowledge of the Dorsey policies about representing outside clients or turning all fees for legal services over to the firm, her belief that she was permitted to perform legal services for outside clients while at Ogletree, her efforts to conceal those clients from both firms, and her denials of such representation when questioned by Dorsey and Ogletree representatives.

         For counts 1 and 6 (theft), the hearing officer concluded that Placide's legal services she provided to outside clients did not become '"property of another, '" and although her conduct in performing services for outside clients "breached her contractual and fiduciary duties to her respective law firms, " it did not constitute "the theft of her services." DP at 68, 69 (AFFCLR). The hearing officer also found that "the outside clients ... intended to hire [Placide] personally" and "intended to pay their fees directly to [Placide]. . . with one exception" and that although the firms "owned the contractual right to be paid all of the fees, " the firms "did not own the fees themselves before they were turned over to the firm." DP at 69 (AFFCLR) (emphasis added). The hearing officer concluded that Placide's "receipt and retention of fees for her legal services to outside clients breached her contractual obligations and fiduciary duties to Dorsey and Ogletree, but did not constitute the crime of theft." DP at 70 (AFFCLR).

         As related to the exception in count 1 (theft from Dorsey), the hearing officer concluded that Placide "acted knowingly in committing the crime of theft by exerting unauthorized control over the $2, 050 of client P.S.'s fee which was not covered by Respondent[']s Settlement Agreement with Dorsey, and by appropriating $2, 050 of that fee which had been misdelivered to her." DP at 73 (AFFCLR). The hearing officer concluded that standard 5.1[1] of the American Bar Association's Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) applied to Placide's actions, but concluded that the presumptive sanction is suspension over disbarment per ABA Standards std. 5.12 because Placide's "failure to turn $2, 050 of Client P.S.'s fee over to Dorsey [could not] be characterized as 'serious criminal conduct.'" DP at 74 (AFFCLR).

         For counts 1, 2, 6, and 7 (dishonesty, deceit, misrepresentation), the hearing officer concluded that Placide acted knowingly in committing conduct involving dishonesty, deceit, and misrepresentation. The hearing officer concluded that Placide's conduct caused Dorsey and Ogletree actual and potential injury and that Placide's "ongoing pattern of dishonesty, deceit and misrepresentations was so extensive and consistent that it 'seriously adversely reflects on the lawyer's fitness to practice.'" DP at 76 (AFFCLR). The hearing officer applied ABA Standards std. 5.11(b) in concluding that the recommended sanction for these violations is disbarment.

         For counts 3 and 8 (trust account violations), the hearing officer found that Placide, by failing to deposit client flat fee payments into a trust account and not providing clients with the information and disclosures required by RPC 1.5(f)(2), was negligent and violated RPC 1.15A(c)(2). The hearing officer concluded that Placide's violations caused clients actual injury (inability to refund unearned fees) and potential injury (exposure to risk of inability to timely refund unearned fees). The hearing officer applied ABA Standards std. 4.1 and concluded that the presumptive sanction for these violations is a reprimand.

         For count 4 (failure to return property), the hearing officer concluded that Placide knowingly failed to deliver $2, 050 of client P.S.'s fee to Dorsey after client P.S. told Placide to do so, causing Dorsey actual injury and thereby violating RPC 1.15A(f). The hearing officer further concluded that ABA Standards std. 4.12 (dealing improperly with client property) applied, and that the presumptive sanction for this violation is suspension.

         For count 5 (charging unreasonable fee), the hearing officer concluded that Placide knowingly retained client P.S.'s $2, 500 in fees without performing the work to earn the fees, thereby charging an unreasonable fee in violation of RPC 1.5(a). The hearing officer applied ABA Standards std. 7.2 in concluding that the presumptive sanction is suspension.

         The hearing officer considered the following aggravating factors set forth in ABA Standards std. 9.22: (1) dishonest or selfish motive, (2) pattern of misconduct, (3) multiple offenses, (4) false statements or other deceptive practices during the disciplinary process, (5) refusal to acknowledge wrongful nature of conduct, (6) substantial experience in the practice of law, and (7) indifference to making restitution. The hearing officer concluded that the first factor considered- dishonest or selfish motive-did not apply. The hearing officer found (1) Placide's absence of a prior disciplinary record and (2) her timely good faith effort to make restitution as applied to count 5 only, to be mitigating factors.

         The hearing officer recommended that Placide be disbarred. The Board voted unanimously to adopt the hearing officer's decision. The Board noted that "the existence of a contractual or fiduciary duty between Placide and the partners at Dorsey and/or Ogletree [was] not necessary to establish the violations and to the Board's decision." Bd. Order Adopting Hr'g Officer's Decision (Board Order) at 1-2. The Washington State Bar Association (WSBA) then petitioned this court for an interim suspension of Placide under ELC 7.2(a)(2), which we granted.

         Placide now appeals. In her opening brief, Placide makes 11 assignments of error.

         Issues

         1. Does Placide's conduct identified in counts 1 and 6 qualify as an "intrapartnership dispute" not susceptible to the Board's or this court's disciplinary authority?

         2. Did the Board correctly determine that Placide knew about Dorsey's and Ogletree's policies regarding representation of outside clients?

         3. Did the Dorsey separation agreement release Placide from her obligation to repay $2, 050 she received from client P.S. for legal work not performed?

         4. Did the Board correctly determine that RCW 9A.56.020(1) applies to the theft at issue in count 1?

         5. Did the Board correctly determine that under RPC 1.5(a), Placide charged an unreasonable fee by never performing legal services client P.S. was entitled to receive?

         6. Did counts 1 and 6 give Placide sufficient notice of the charges against her?

         7. Did the Board correctly determine that Placide engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation regardless of the existence of policy manuals or firm policies at Dorsey and Ogletree?

         8. Was the Board's recommendation of disbarment for counts 2 and 7 disproportionate?

          9. Does the challenged aggravating factor of false statements or other deceptive practices during the disciplinary process apply?

         10. Did the hearing officer properly exclude Placide's proposed testimony about her conversation with the "Ethics Hotline" under APR 19(e)(5)?

         11. Did the hearing officer apply the correct standard to determine the presumptive ...


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