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2008-B-2513 IN RE: RICHARD J. GARRETT
State: Louisiana
Court: Supreme Court
Docket No: 2008-B-2513
Case Date: 01/01/2009
Preview:FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #025 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 5th day of May, 2009, are as follows:

PER CURIAM:

2008-B -2513

IN RE: RICHARD J. GARRETT (Disciplinary Proceedings) Upon review of the findings and recommendations of the hearing committee and the disciplinary board, and considering the record, briefs, and oral argument, it is ordered that Richard J. Garrett, Louisiana Bar Roll number 5946, be and he hereby is disbarred. His name shall be stricken from the roll of attorneys and his license to practice law in the State of Louisiana shall be revoked. All costs and expenses in the matter are assessed against respondent in accordance with Supreme Court Rule XIX, '10.1, with legal interest to commence thirty days from the date of finality of this court=s judgment until paid.

05/05/09

SUPREME COURT OF LOUISIANA NO. 08-B-2513 IN RE: RICHARD J. GARRETT

ATTORNEY DISCIPLINARY PROCEEDINGS

PER CURIAM
This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel ("ODC") against respondent, Richard J. Garrett, an attorney licensed to practice law in Louisiana.

UNDERLYING FACTS Respondent is a solo practitioner handling primarily plaintiff's personal injury cases. In July 1999, respondent hired Marcia Jordan to work in his office as a legal assistant. At the time he employed Ms. Jordan, respondent knew that she had graduated from law school in 1996 and passed the Louisiana bar examination, but had not been admitted to the practice of law.1 After hiring Ms. Jordan, respondent separated his client's files into so-called "Garrett files," those for which he retains primary responsibility, and "Jordan" or "J
In 1999, we denied Ms. Jordan's application for admission to the bar, finding she had not satisfied her burden of proving her good moral character. In re: Jordan, 97-1564 (La. 2/12/99), 730 So. 2d 873 ("Jordan I"). In 2000, Ms. Jordan filed a second application for admission, which we denied because she made no showing of facts relating to her character and fitness to practice law that changed after the denial of her application in Jordan I. In re: Jordan, 00-3006 (La. 12/15/00), 775 So. 2d 1065 ("Jordan II"). In 2004, Ms. Jordan filed a third application for admission ("Jordan III"). Finding she had demonstrated a change in circumstances, we appointed a commissioner to take evidence in the matter. The commissioner ultimately recommended to this court that the application be denied because Ms. Jordan had engaged in the unauthorized practice of law while employed by respondent and participated in a fee-sharing arrangement prohibited by the Rules of Professional Conduct. We held the commissioner's recommendation under advisement awaiting the outcome of the instant proceeding. In a separate opinion rendered this day in In re: Jordan, 04-0542 (La. 5/5/09), ___ So. 3d ___, we now deny Ms. Jordan's application for admission to the practice of law.
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files," those for which Ms. Jordan maintains primary day-to-day responsibility. Pursuant to the employment agreement between respondent and Ms. Jordan, her compensation differs depending on whether she is working on a "Garrett file" or a "J file." The agreement provides: 8. The terms of payment for the services of Jordan for Garrett are as follows: a. On Garrett's files where he has chosen to do all of the work to conclusion himself [the "Garrett files"], he may assign hourly work in those files to Jordan. Jordan may bill Garrett for any tasks that he assigns to Jordan in those files and be paid for those tasks at the end of each work week. The tasks assigned by Garrett to Jordan in #8(a) may include preparing drafts of interrogatories, scheduling recorded statements and performing legal research. Garrett will assign files to Jordan to handle to a conclusion under his supervision. On files which Garrett assigns to Jordan [the "J files"] to perform any of the tasks listed above in #6,[2] Jordan will provide Garrett with the total number of hours worked each week at the end of each week. On those cases referred to in #8(c), Jordan will be paid out of Garrett's net income from the cases referred to in #8(c) when each such case is negotiated to a final disposition. Garrett will apply up to 1/3 of his net income for each of those cases referred to in #8(c) against the total number of hours worked to date. Jordan's hourly rate of pay will be $40 per hour.

b.

c. d.

e.

f.

g.

Applying these terms to the practices of the parties, for tasks that she is asked to perform on one of the "Garrett files," Ms. Jordan bills respondent an hourly fee of $40. For example, if Ms. Jordan spends three hours drafting discovery responses for a "Garrett file," she gives respondent an invoice for $120. For this type of work, Ms.

These tasks include, for example, meeting with clients, preparing drafts of letters, ordering copies of police reports and medical records, setting up doctor's appointments, preparing settlement packages, "relay[ing] settlement figure counter-offers to an adjuster with Garrett's permission," preparing discovery, performing legal research, and the like. 2

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Jordan collects a check at the end of each week, drawn on respondent's operating account. The sum paid to Ms. Jordan is attributed to the particular "Garrett file" on which she worked and reduces the amount respondent receives as attorney's fees when the case ultimately settles. By contrast, Ms. Jordan is not paid for the work she does on her "J files" until the cases are settled. Ms. Jordan keeps a running tally of the number of hours that she works on "J file" cases. When a "J file" case finally settles, respondent compensates Ms. Jordan for her time by paying her up to one-third of the contingency fee he receives on the case. If the one-third amount is not sufficient to cover all of the hours Ms. Jordan has accumulated, then the remaining hours "roll over" until the next "J file" settles. Respondent and the ODC stipulated that from 1999 until some time in 2004, the payments made to Ms. Jordan on the "J files" came from respondent's client trust account. Respondent admitted this practice constituted fee sharing but asserted that his violation was inadvertent. The payments to Ms. Jordan on the "J files" are now made from respondent's operating account.

DISCIPLINARY PROCEEDINGS In June 2006, the ODC filed one count of formal charges against respondent, alleging that he facilitated Ms. Jordan's unauthorized practice of law, in violation of Rule 5.5(a) of the Rules of Professional Conduct, and improperly shared legal fees with a nonlawyer, in violation of Rule 5.4(a). Respondent answered the formal charges and denied any misconduct. He contended that he maintained ultimate responsibility for all files in his office,

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regardless of whether the files were designated as "Garrett files" or "J files."3 Respondent contended that Ms. Jordan had no property interest in the "J files," did not enter into separate agreements with the clients under her own name, and was limited concerning the activities she was able to perform because she was not a licensed attorney. Respondent also denied that he deferred to Ms. Jordan's judgment concerning the evaluation of the client's claims, permitted her to negotiate with insurance adjusters, or authorized her to negotiate personal injury settlements. With regard to Ms. Jordan's compensation, respondent denied that Ms. Jordan received a contingency fee, asserting that "the value of her services was always measured by the hour. The limitation to one-third of Mr. Garrett's fee was made merely as a convenience to Mr. Garrett so that he would not incur additional overhead expense." Respondent continued: While Mr. Garrett acknowledges that the up-to-one-third of his fee payment to Ms. Jordan upon settlement was made out of his own fee, he also maintains that he was unfortunately ignorant concerning the possibility that he might be creating ethical issues by doing so. When he was made aware that an interpretation of the ethical precepts may preclude him from paying Ms. Jordan on "Jordan files" from the fee he earned, he ceased doing so. She is now paid strictly out of an Operational Account. It is notable that no client was ever prejudiced in this respect, and that Ms. Jordan's compensation was always ultimately measured on an hourly basis on all cases. [Emphasis in original.]

Formal Hearing Most of the documentary evidence introduced at the hearing was obtained by the ODC in the course of its investigation of Ms. Jordan's bar admission proceeding. In that matter, the ODC took sworn statements from Ms. Jordan, from respondent, and from respondent's wife, Anne Garrett, who is the bookkeeper and office manager for

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Respondent suggested the division of the files was "merely a convenience." 4

her husband's law firm. These three witnesses also testified at the hearing before the commissioner in Ms. Jordan's bar admission proceeding. The transcripts of all of the sworn statements, and of the hearing before the commissioner, were introduced into evidence at respondent's formal charge hearing. Regarding the "J files," Ms. Jordan testified during her sworn statement that she takes calls from prospective clients (typically individuals who have been involved in an automobile accident) when respondent is unavailable. Ms. Jordan interviews the caller and then prepares a written memo for respondent relating the details of the matter. Respondent reviews the memo and decides whether to accept the case. If he does accept the case, respondent signs a letter of representation which is sent to the insurer and schedules a meeting with the new client to sign the medical release forms and a contingent fee agreement. The client's file is then assigned to Ms. Jordan and is designated a "J file." Ms. Jordan testified that of the 250 or so files respondent's firm opens each year, approximately 90 of these are assigned to her as "J files." Ms. Jordan testified that she always works under respondent's supervision, but she has the primary day-to-day responsibility for handling the "J" files. She orders the accident report, maintains contact with the clients, responds to inquiries from third parties for additional information concerning the case, and does legal research. She drafts correspondence, pleadings, and discovery for respondent to review and sign. Ms. Jordan also participates in the taking of recorded statements of the client by an insurance adjuster.4

Ms. Jordan stated that she sits with the client and takes notes during these statements but does not ask any questions or make objections. During her sworn statement, Ms. Jordan testified that respondent is generally not present at the time the client statement is taken, and in fact, he may not even be in the office. However, Ms. Jordan retreated from this testimony at the hearing before the commissioner, during which she claimed that she never does client statements if respondent is not in the office. 5

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When the client is released from treatment by his medical provider, Ms. Jordan begins the process of drafting the settlement proposal. She obtains the client's medical reports, wage loss information, and the like, does a quantum study, and then drafts a settlement demand letter to the insurance company. Ms. Jordan gives the letter with the attached documentation to respondent for his review and signature, then sends it to the insurance adjuster. Respondent and Ms. Jordan frequently disagree when it comes to the quantum analysis; asked whether he defers to Ms. Jordan's judgment in that regard, respondent agreed that he does.5 Ms. Jordan testified that she generally speaks with the insurance adjuster about the settlement of a client's case; however, the adjuster always knows that Ms. Jordan is not a lawyer. She explained that respondent establishes a minimum settlement amount for each case and notes that information on the inside of the client's file. When the adjuster calls to discuss settlement, Ms. Jordan rejects the insurer's offer if it is below the minimum amount and makes a counteroffer. Ms. Jordan testified that ultimately she will accept "anything over the minimal amount," but "there is no authority to accept less than that." Ms. Jordan admitted that respondent has given her the authority to handle the settlement negotiations with the adjuster "so long as the discussion stays within the range of the low and the high," with the caveat that respondent has to approve the final settlement amount before she can formally accept it on the client's behalf. After the case is settled, respondent's secretary prepares a settlement disbursement statement and gives it to respondent along with the release and the settlement check. Respondent discusses the breakdown of the settlement with the
During the character and fitness hearing, Mrs. Garrett commented that Ms. Jordan and respondent are "very competitive" with each other. Asked what Mrs. Garrett might have meant by her comment, Ms. Jordan explained that she is better at evaluating the worth of a case than is respondent, whom she believes "low balls" settlement demands. Ms. Jordan proudly testified that she usually obtains better settlements on the "J files" than respondent does on the "Garrett files." 6
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client by phone, then makes an appointment for the client to come into the office to meet with Ms. Jordan and sign the settlement documents.6 Ms. Jordan reviews the settlement documents with the client, provides copies of the documents, obtains the client's endorsement on the settlement check, and then gives the client a post-dated check for his share of the settlement. Regarding Ms. Jordan's compensation on the "J files," she offered the following explanation in her March 2005 sworn statement: . . . Mrs. Garrett has a tablet in the front [of the file] and I'll say, you know, "This week I worked `X' amount of hours on this, `X' amount of hours on that" and I'll keep it up in front of the file so that, at the end, once the file settles, I have all these hours that I've worked that I've not been compensated for. Once the case has settled, then, once
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