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IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 74 September Term, 2004

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. THOMAS W. KINNANE

Bell, C.J. Raker Wilner Cathell Harrell Battaglia Greene, JJ.

Opinio n by Bell, C .J. __________________________________________ Filed: December 23, 2005

Bar Counsel, with the approval and direction of the Attorney Grievance Commission of Marylan d, the pe titioner, see Rule 16-751,1 filed a Petition For Disciplinary or Remedial

Md. Rule 16-751 (a) provides: "(a) Commencement of Disciplinary or Remedial Action. "(1) U pon A pprov al of C omm ission. Upon approval or direction of the Commission, Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court of Appeals. "(2)Conviction of Crime; Reciprocal Action. If authorized by Rule 16-771(b) or 16-773(b), Bar Counsel may file a Petition for Disciplinary or Remedial Action in the Court of Appeals without prior approval of the Commission. Bar Counsel promptly shall notify the Commission of the filing. The Commission on review may direct the withdrawal of a petition that was filed pursuant to this subsection." Bar Co unsel prev iously had filed a "Statem ent of Ch arges" aga inst the respo ndent. Adopted November 30, 2000, effective July 1, 2001, Maryland Rule 16-741 governs the filing of "statements of charges." It provides: "(a) Filing of Statement of Charges. "(1) Upo n comple tion of an in vestigation, B ar Coun sel shall file with the Commission a Statement of Charges if Bar Counse l determines that: "(A) the attorney either engaged in conduct constituting p rofessiona l miscondu ct or is incapacitated; "(B) the professional misconduct or the incapacity doe s not warra nt an imm ediate Petition for Disciplinary or Remedial Action; "(C) a Co nditional D iversion A greemen t is either not appropriate under the circumstances or the parties were unable to agree on one; and "(D) a reprimand is either not appropriate under the circumstances or (i) one was offered and rejected by the attorney, or (ii) a proposed reprimand was disapproved by the Commission and Bar Counsel was directed to file a Statem ent of C harges ." The fi ling of th e "statem ent of c harges " trigger ed the p eer revi ew pro cess, see Rules 16741(b), 16-742, and 16-743, which was competed prior to the filing of the Petition for Disciplinary or Remedial Action.

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Action against Th omas W . Kinnane , the respond ent, charging him with violations of various of the Maryland Rules of Professional Conduct, as adopted by Maryland Rule 16-812. The Petition alleged, specifically, that the respondent violated R ules 1.5 (e) (Fees), 2 and 8.4 (b) and (c) (Miscond uct).3 We referred the case, pursuant to Rules 16-752,4 for hearing to the Hon orable Ro nald A. Silkworth , a judge of the Circuit Court for Anne Arundel County. Following the hearing, at which the responde nt appeare d and par ticipated, the h earing cou rt made fin dings of f act,

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Rule 1.5 (e) provides: "(e) A division of a fee between lawyers who are not in the same firm may be made only if: "(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation; "(2) the client agrees to the joint representation and the agreement is confirmed in writing; and "(3) the total fee is reasonable."

Rule 8.4 (b) and (c) provides th at "[i]t is professional misconduct for a lawyer to: ... commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects [and] engage in conduct involving dishonesty, fraud, deceit or misrepresentation" Rule 16-752 provides, as relevant: "(a) Order. Upon the filing of a Petition for Disciplinary or Remedial Action, the Court of Appeals may enter an order designating a judge of any circuit court to hear the action and the clerk responsible for maintaining the record. The order of designation shall require the judge, after consultation with Bar Counsel and the attorney, to enter a scheduling order defining the extent of discovery and setting dates for the completion of discovery, filing of motions, and hearing."
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see Rule 16-757 (c)5 , as follows : "Petition er's Exhibit 1 is a Stipulation of F acts prepared by the parties. The C ourt finds that the facts contained therein have been proven by clear and convincing evidence. The Stipulation states: "The Responden t, Thomas W . Kinnane, Esquire (`R espondent') was admitted to the Bar of the Court of Appeals of Maryland on June 5, 1996. He is also adm itted to the V irginia Bar and District of Columbia Bar. "Prior to becoming an attorney, Respondent was a uniformed officer in the United States Secret Service for two years then a police officer in the Anne Arundel County Police Department for eight years. "While attending law school, Re sponden t began w orking for the law firm of Alexander & Cleaver in Fort Washington, Maryland. Once he was admitted to the Maryland Bar, he became an associate of that firm, where he remained until February 2000. He then practiced w ith another law yer in the firm, Howes & Kinnane, P.C. and la ter becam e a solo practitioner, with his office in Anne Arundel County. Throughout the course of his law

Rule 16-757 (c) provides: "(c) Findings and conclusions. The judg e shall prepa re and file or dictate into the record a statement of the judge's findin gs of fact, in cluding fin dings as to any evidence regarding remedial action, and conclusions of law. If dictated into the record, the statement shall be promptly transcribed. Unless the time is extended by the Court of Appeals, the written or transcribed statement shall be filed with the clerk responsible for the record no later than 45 days after the conclusion of the hearing. The clerk shall mail a copy of the statement to each party."

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practice, Responden t has concentrated a significan t portion of his practice representing energy companies in connection with matters pending befo re governmen t regulatory agencies. "In or about 1998, while employed by Alexander & Cleaver, Respondent met Andrew N. Chau, Esquire ( `Mr. Chau'), the manager of regulatory affairs for Shell Energy Services (`Shell Ene rgy'). Mr. Ch au also held himself ou t to the Responde nt and others as an attorney. Respondent performed legal services for Shell Energy and other s imilar clients while at Alexan der & C leaver. He continued to represen t Shell Ene rgy after leaving th e firm. Respon dent's primary po int of conta ct at Shell Ene rgy continued to be Mr. Chau. Respondent later performed work for Tractebel Power where Mr. Chau accepted employment after leaving Shell Energy. During the c ourse of h is representa tion of Sh ell Ene rgy, Respondent submitted approximately 15 invoices for legal services. It was Responden t's practice to invoice Shell Energy for work after it was performed, rather than to receive a retainer for future work. "In or about July 2001, Respondent and Mr. Ch au met in Wash ington, D.C., at Mr. Cha u's request. Mr. Chau informed Respondent that he had been authorized by Judith Burow, vice preside nt of She ll Energy, to pay Responden t a $70,000.00 retainer for f uture work. He instructed Respondent to prepare an invoice for that amount. Respondent prepared an invoice from Howes & Kinn ane, P.C. to S hell Energy dated July 26, 2001. The description of services read, `Nevada regulatory and government relations activities, 2001 session and implementation.' On August 8, 2001, Shell Energy paid $70,000.00 to

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Respondent by electronic transfer. Respondent held the $70,000.00 in the firm's escrow account. Respondent had never rece ived a retaine r from Sh ell Energy bef ore this payme nt. "On or about August 22, 2001, Mr. Chau called the Respondent. He directed the Respondent to take the entire retainer as a bonus fo r work he had done before at a discounted rate, but to issue a check for $35,000.00 to Mr. Chau. Mr. Chau asked for the $35,000.00 payment to compensate him for referring future business from Shell Energy and its affiliated companies as w ell as Tractebel Powe r. "Respondent transferred $70,000.00 to the firm's operating account. Respondent issued a $35,0 00.00 check to Andrew Chau & Associates, P.C. on August 22, 2001. The statement accomp anying the ch eck indicate d that it was for `professional fees: con sulting'. In fact, M r. Chau provid ed no c onsultin g servic es to Re spond ent or h is firm. Respondent drew a ch eck to him self for $3 5,000.00 f rom the firm 's operating ac count. "Howes & Kinnane, P.C. issued an invoice to Shell Energy on August 8, 2001. That invoice identified the $35,000.00 payment to Andrew Chau as a `consulting fee'. Respondent also issued a form 1099 to Mr. Chau, reporting the payment of the purported consulting fee. Respondent claimed the $35,000.00 on his annual state and federal tax returns. "In the fall of 2001, Respondent received a telephone call from Judith Burow and a Mr. Estes of S hell Energy. They informed the Respondent that the $70,000.00 payment had not been a uthoriz ed by Sh ell Energy. Mr. C hau called Respondent shortly afterward and indicated that the invoice `m ight not hav e been ap proved'. R esponde nt believed this to be an in ternal dis pute amo ng C hau and his superviso rs at S hell E nerg y.

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"Mr. Chau was subsequently discharged b y Shell Energy. Criminal charges w ere brought against both M r. Chau and the Respondent. Respondent was charged with felony theft on April 30, 2003. Harris County (Texas) District Court entered a deferred adjudication of guilt on July 11 , 2003. Re sponden t has paid res titution of $35,000.00, as well as a $2,000.00 fine. Respondent also provided all informa tion he had to assist in the prosecution of Mr. Chau. Respo ndent has also coop erated fully with Bar Cou nsel's investigation of this matter." From the foregoing facts, which it found by clear and convin cing ev idence , Attorney Griev. Comm'n v. Culver, 381 Md. 241 , 266, 849 A.2d 4 23, 438 (2004), Rule 16-757 (b),6 the hearing court conclu ded tha t the resp onden t violated Rules 1 .5 (e)7 and 8.4 (b) and (c), as charged. T he Ru le 1.5 (e) violation was established, it stated, by the evidence that the respondent split his fee fro m Shell E nergy with M r. Chau, Sh ell's in-house counsel. Further explaining , the hearing court pointe d out:

Maryland Rule 16-757(b) provides: "The petitioner has the burden of proving the averments of the petition by clear and convincing evidence. A respondent who asserts an affirmative defense or a matter of mitigation or extenuation has the burden of proving the defense or matter by a preponderance of the evidence."

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Although the respondent had not been charged with violating Rule 1.8 (e), which proscribes a lawyer's providing financial assistance to a client, only Rule 1.5 (e), the hearing court's conclusion of law referred to Rule 1.8 (e), throughout. That must be, and we so construe it as, a typographical error. 6

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"Mr. Chau perform ed no services to earn that portion of the fee. Respondent has acknow ledged tha t the paymen t was made at Mr. Chau's direction to pay him to make future referrals of work to Respondent's firm. While Respondent characterizes the payment as the equivalent of purch asing adv ertising with his own funds received from clients' payments, that position is contradicted by Respondent's billing statement submitted to Shell Energy, which disclosed that $35,000.00 was paid to Chau for consulting services. The client never authorized Responden t to share the fee with M r. Chau. In fact, the payment was an incentive fo r Mr. Ch au to refer w ork to Res ponden t also from Tractabel Power, a compa ny unrelated to Shell Energy. Mr. Chau was not a member of Respondent's firm. The division of fees w as not in proportion to the w ork performed since Mr. Chau was bein g compe nsated for making f uture referra ls of work. There was no written agreement between Respondent and Shell Energy for Resp ondent an d Mr. C hau to assume joint responsibility for the work. The fee charged by Respondent was not reasonable because no services were performed for the fee. Rather, it was a `bonus' not authorized by the client, but only offered by the corrupt employee who was seeking the improper kickback of half of the fee. Respondent's conduct violated Rule 1.8(e) of the Marylan d Rule s of Pro fession al Con duct." As we hav e seen, the re sponden t was cha rged with , and foun d guilty of, felony theft, in respect of which he made restitu tion and pa id a fine. Th at criminal co nduct, the hearing court concluded, "reflects adversely on [the respondent's] honesty, trustworthiness and fitness as a lawyer." It also involved, the court noted and determined, dishonesty and It elucidated:

misrepresentation, proscribed by Rule 8.4 (c).

"Responden t's invoice for $70,000.00 retainer made no reference to the fact that it was to be a retainer fo r future serv ices. Nothin g on the bill w ould alert the client to the fact that the payment requested was not for services already performed. In fact, the charging of a reta iner was in consistent w ith Respondent's previous dealings with the client, who had only paid fees after services were rendered. Respondent then accepted that `retainer' as a bonus for work long since performed and paid for, solely on the authorization of the client's employee w ho was d emandin g that he split th e `bonus' w ith him pers onally. Particularly in light o f the fact th e client had never paid a bonus to him before, the large amount of the payment, the fact the payment was 7

submitted for other purposes and the client had consistently insisted on paying extremely low fees to the Respo ndent, Respondent could not reasonably have believed that Mr. Chau had authorization from Shell Energy to pay a bonus to Respon dent, to be shared with M r. Chau. R esponde nt's acceptance of the $70,000.00 and his sharing of the unearn ed funds with M r. Chau led to Respondent['s] entering a p lea of guilty to felony theft and receiving a deferred adjudication by the Texas court. Respondent's invoicing of the $70,000.00 fee and his taking it as a fee at the direction of Mr. Chau to Shell Energy were dishonest acts and crimes adversely reflecting on Respondent's character and fitness as an attorney. His invoices, which did not reflect that the $70,000.00 was unearned and which described the $35,0 00.00 paid to Mr. Chau as a professional fee for co nsulting services, were dishonest misrepresentations. Respondent and Mr. Chau participated in a fraudulent scheme which constitu ted felo ny theft in Texas ." Unlike the Petit ioner, w hich took no exceptions to the hearing court's findings or conclusions, the respondent filed Respondent's Exceptions To The Findings Of Fact and Conclusions Of Law. In that pleading, he excepted to the hearing court's conclusion that he could not have believed reasonably that Mr. Chau had been authorized by Shell Energy to pay him a bonus, "to be sh ared with Mr. Chau." There is not, he asserts, any evidence in the record to support the conclusion, while, on the other hand, there is evidence to the contrary, his testimony, "that [he] had no knowledge upon payment of the bonus that Chau later required [be] split." He also mainta ins that his actio ns, all of them - "providing invoices and statements through normal channels; providing a 1099 Form to Chau; depositing and processing the funds appropriately in firm accounts; and reporting the income on respondent's annual state and federal taxes,"

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