Filed October 15, 2007

In re Alfred S. Vano
Commission No. 04 CH 142

Synopsis of Hearing Board Report and Recommendation

NATURE OF THE CASE: 1) conversion; 2) breaching fiduciary duties to law firm; 3) engaging in conduct involving dishonesty, fraud, deceit or misrepresentation; 4) engaging in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.

RULES DISCUSSED: Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct and Supreme Court Rule 770.

RECOMMENDATION: One year suspension with last six months stayed by probation. Dissent would recommend dismissal of charges.

DATE OF OPINION: October 15, 2007.

HEARING PANEL: William H. Hooks, Debra J. Braselton, and David A. Dattilo.

RESPONDENT'S COUNSEL: Warren Lupel.

ADMINISTRATOR'S COUNSEL: Wendy Muchman.

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

ALFRED S. VANO,

Attorney-Respondent,

No. 2889943.

Commission No. 04 CH 142

REPORT AND RECOMMENDATION OF THE HEARING BOARD

INTRODUCTION

The hearing in this matter was held on January 10 and March 13, 2007 at the offices of the Attorney Registration and Disciplinary Commission ("ARDC"), 130 East Randolph, Chicago, Illinois before a hearing panel consisting of William H. Hooks, Chair, Debra J. Braselton and David A. Dattilo. Wendy Muchman represented the Administrator of the Attorney Registration and Disciplinary Commission. Respondent Alfred S. Vano appeared and was represented by Warren Lupel.

PLEADINGS

On December 8, 2004, the Administrator filed a ten-count Complaint against Respondent. On August 2, 2005 an eleven-count Amended Complaint was filed. Counts I and V alleged that Respondent, while employed by the law firm of Leahy, Eisenberg and Fraenkel, Ltd., diverted legal fees belonging to the law firm to an outside lawyer. Counts II-IV and VI-X asserted that he accepted and retained referral fees which belonged to the firm. Count XI alleged that Respondent, while employed by the law firm of Chilton, Yambert, Porter and Young, LLP, handled cases in contravention of firm policy and used firm funds to pay filing fees for those cases. Each of the eleven counts charged Respondent with converting funds belonging to law

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firms, breaching his fiduciary duty to the firms, acting in a dishonest manner, and engaging in conduct which tends to defeat the administration of justice or brings the courts or legal profession into disrepute.

Respondent filed an Answer to the Amended Complaint in which he admitted some of the factual allegations but denied engaging in any professional misconduct.

THE EVIDENCE

The Administrator's case in chief consisted of two witnesses and fifty-three exhibits. The exhibits included a stipulation regarding the testimony of two additional witnesses and a video evidence deposition of another witness. Respondent testified on his own behalf, called four witnesses, and submitted eighteen exhibits. The Administrator then called three rebuttal witnesses.

Background

Respondent testified he graduated from law school in 1977 and became licensed to practice in Illinois that same year. From 1977 to 1989 he focused primarily on casualty defense work, but also handled some plaintiffs' personal injury cases. (Tr. 346-48, 556).

In 1989 Respondent joined the law firm of Leahy, Eisenberg & Fraenkel, Ltd. and continued with that firm until 2003, at which time he was discharged. He then worked at the Chilton, Yambert & Young firm for approximately one and one half years. (Tr. 347, 466; Dep. Tr. 93).

In September 2004, Respondent partnered with Frank Santilli to form the law firm Santilli and Vano. His practice at that firm focuses on plaintiffs' work. (Tr. 555).

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Counts I-X

Respondent's Employment by the Leahy Firm

Charles Fraenkel

Charles Fraenkel testified, by way of evidence deposition, that he has been an attorney with the law firm of Leahy, Eisenberg and Fraenkel, Ltd. (the "Leahy firm"), or its predecessor firms, for thirty-three years. The Leahy firm, which is a professional corporation comprised of about twenty attorneys, specializes in insurance defense. Fraenkel stated that while the firm is not a legal partnership, he often refers to his co-owners as "partners" rather than "shareholders." He is informally referred to as the firm's managing partner. (Dep. Tr. 7-10, 13-14).

Fraenkel stated that, although the Leahy firm occasionally handles plaintiffs' personal injury cases, those cases have never made up more than about two percent of the firm's total practice. According to Fraenkel, the firm would not take a plaintiff's case if it handles cases for the defendant's insurer and the insurer objected to the representation. Plaintiffs' cases are handled on a contingent fee basis. (Dep. Tr. 11-14, 123).

Fraenkel stated when a case is brought into the firm, a file is opened, and work done by any of the firm's attorneys is handled in the firm context. The firm, on occasion, will refer cases to other lawyers and receive a referral fee which is deposited into the general firm account. At the end of the year, those fees are distributed to the shareholders in the form of profits. The distribution is not based upon which attorney generated the business. (Dep. Tr. 12, 15).

Respondent became a minority shareholder of the Leahy firm in October 1989. At that time the firm was interested in expanding its personal injury defense practice and Respondent had experience in that area. Fraenkel stated that, prior to hiring Respondent, each partner interviewed him and a determination was made that he was trustworthy. (Dep. Tr. 16-18).

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Fraenkel was aware that Respondent would bring cases with him to the Leahy firm because the subject was discussed during the interview process and after Respondent began work at the firm. Respondent was informed that his existing and future cases had to be integrated into the firm's system, and that fees generated by existing cases which still required a significant amount of work would go to the firm. As to cases which required de minimis work by Respondent, the fees would go to Respondent. Respondent's new cases, i.e. the ones he obtained after he joined the firm, would be business that belonged to the firm. Fraenkel stated that the same rule applied to every shareholder. (Dep. Tr. 18-21).

Fraenkel documented the foregoing discussions in a letter to Respondent, dated November 14, 1989. The letter spelled out their agreement "concerning the handling of plaintiff's personal injury cases, and any fees generated from those cases, brought into the firm by [Respondent] at the time of [his] employment effective October 23, 1989." The six paragraphs which comprised the terms of the agreement provided:

  1. That you are bringing with you thirty-six (36) open plaintiff's bodily injury/property damage cases, a list of which is attached to this letter.

  2. That those cases will be opened and integrated into the [Leahy] file system. . . .

  3. That nineteen (19) of the cases have been referred by you to other attorneys for handling, and that your participation in those cases, if any, is very limited. . . . Any fees generated on such cases belong entirely to you, so long as any hours expended by you are de minimis. In the event that you take over handling of any of these cases, any fee generated will be distributed as provided in paragraph 4 herein.

  4. That any fee generated by settlement, judgment, or otherwise on all other cases will be split equally between [Leahy] and you regardless of the amount of time expended by any [Leahy] attorney, including but not limited to yourself, on or after October 23, 1989. All fees to be split will be based on the net fee to you, after deduction of any referral fees or other expenses.

  5. That you will account to the firm for all fees generated by settlement, judgment, or otherwise, regardless of whether the case falls into paragraph 3

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or 4 above. Each case closed will include a statement of the fee disbursement, and will be signed or acknowledged by both you and a representative of the firm. A copy of all checks or drafts received by you will be inserted in the file.

  1. That any plaintiff's bodily injury or other legal business of any kind produced by or referred to you during your employment with [Leahy] will belong exclusively to [Leahy]. As we have told you, this is the same with all owners of the firm.

Fraenkel acknowledged that no other attorney at Leahy had a similar contract with the firm between 1989 and 2003, but he stated the arrangement was not unusual. (Dep. Tr. 21-22, 41-46, 124-25, 128, 167; Adm. Ex. 1).

Fraenkel identified a four-page addendum to the letter, which lists the thirty-six plaintiffs' bodily injury/property damage cases Respondent brought to the firm, as having been drafted by Respondent. Other than the thirty-six cases identified in the agreement, and some possible defense business, Fraenkel had no knowledge that Respondent was involved in any other cases when he joined the firm. (Dep. Tr. 22, 24, 42, 45; Adm. Ex. 1).

Fraenkel identified handwritten notations, which appear next to case names listed in the addendum and which specify whether the case falls within the third or fourth paragraph of the agreement, as having been made by Respondent at the time the document was generated or shortly thereafter. Fraenkel testified that he trusted Respondent to categorize the cases correctly. Additional handwritten notations, such as the date the case was closed, the amount of recovery, the time spent on the case by Respondent, and the allocation of fees, were placed on the addendum by Fraenkel as the various cases were resolved. As to the allocation of fees, certain notations indicate that fees were divided between Respondent and the firm, while other notations indicate that Respondent received the entire fee. (Dep. Tr. 24-40).

Fraenkel described Respondent's compensation package at the firm and stated that, like other shareholders, Respondent received a base salary, as well as a year-end distribution of

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profits based on his percentage of firm ownership. Fraenkel estimated Respondent's base salary from 1989 to 2003 to be in the range of $100,000 to $150,000, and his share of profits to be anywhere from zero to $60,000. The firm paid for Respondent's malpractice insurance and the salaries of his support staff. (Dep. Tr. 47-48).

Respondent

Respondent testified that while he was at the Leahy firm, he was aware that the firm did not routinely handle plaintiffs' cases and that he was not to handle a plaintiff's case if it was in conflict with an insurance company with which the firm did business. He stated he became head of the casualty department and, in that role, he was the one who determined whether the firm would handle plaintiffs' cases that were brought in by attorneys. (Tr. 497-98, 550).

At the time Respondent joined the Leahy firm, he negotiated and signed an agreement, drafted by Charles Fraenkel, regarding thirty-six plaintiffs' cases he was bringing to the firm. Regarding the list of cases attached to the agreement, Respondent identified handwritten notations as having been made by both himself and Fraenkel. Pursuant to the agreement, the cases were integrated into the firm. (Tr. 350-51).

Respondent believes his agreement with the firm was unique, but acknowledged he had no discussions with other Leahy attorneys concerning their handling of referral fees, their arrangement with the firm, or his own retention of referral fees. The agreement did not impose an obligation to advise the firm when he collected a referral fee, other than in connection with the original thirty-six cases. Further, the agreement did not require that he consult with or inform any other shareholder before making a referral. (Tr. 349, 501, 509-10, 549-50).

Respondent acknowledged that, when he gave a sworn statement in 2004, he made no reference to the 1989 agreement but explained he did not have a copy of the agreement at that time. Prior to his deposition in January 2006 he located the 1989 agreement. (Tr. 501, 504, 548).

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Respondent's Payments to Russell Jersey

Charles Fraenkel

Fraenkel testified that in December 2002, an investigator, John Dore, requested payment of $600 for his services in connection with a case entitled Liboy v. Barajas. Fraenkel had no knowledge of the case and, after investigating, learned that it was a plaintiff's personal injury matter that Respondent had handled. He further learned that the case had been closed and the funds had been disbursed. Fraenkel identified the complaint in the Liboy matter and the fee agreement which specified that Liboy retained Respondent and the Leahy firm and agreed to pay one-third of any recovery. Fraenkel stated that the one-third fee should have gone to the firm. (Dep. Tr. 50-52; Adm. Ex. 2, 3, 13)

When Fraenkel obtained the Liboy file, which had been marked "closed," he found a statement of settlement which reflected that the case had settled for $20,000 and that Leahy would receive a $3,000 fee. Fraenkel noted that the fee was not in accord with the retainer agreement which specified a one-third fee. A list of plaintiff's specials attached to the statement, which typically includes medical bills, included a disbursement of $3,000 to Russell M. Jersey. The file also contained a motion to adjudicate a lien, which listed certain medical entities, but did not include Jersey's name or the Leahy firm. When Fraenkel questioned Respondent about Jersey, Respondent told him that the disbursement to Jersey was made for the purpose of paying off a "chaser" who had signed up the plaintiff. (Dep. Tr. 54-58, 148-50; Adm. Ex. 5-9).

Upon further investigation Fraenkel discovered that the settlement check from the defendant had not been deposited into the firm trust account consistent with firm policy, but instead, had been placed in Respondent's account at Old Kent Bank. When Fraenkel questioned Respondent about his use of Old Kent Bank, Respondent said he did not want to inconvenience the office manager. Fraenkel found that answer "amazing." (Dep. Tr. 60-63).

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A copy of a check written on the Old Kent Bank account and made payable to Jersey reflects that the check was paid "in satisfaction and release of medical services and attorney's lien" for the Liboy case. Fraenkel determined that Jersey was an attorney, but believed he had no connection with medical services for Liboy. He believed that legal fees were diverted from the firm to someone who had no involvement with the case. He stated that, in such a situation, Respondent should have informed the shareholders that the fee to the firm was being cut. (Dep. Tr. 62, 149-52; Adm. Ex. 10).

Other checks disbursing the Liboy settlement funds were also written on the Old Kent Bank account. Fraenkel was not aware of any other plaintiffs' personal injury cases at the firm that involved disbursements made in that manner. He stated that Carol Thomas has been the office manager of the Leahy firm for about thirty-seven years. On the rare occasions when the firm handles a plaintiff's personal injury matter, Thomas's responsibilities include disbursing the necessary checks. Fraenkel has never had a problem with Thomas disbursing checks, nor did Respondent ever complain of such a problem or any other problem related to Thomas. (Dep. Tr. 64; Tr. 593-94; Adm. Ex. 11).

Fraenkel stated that he was concerned that Respondent's handling of the Liboy matter might be part of a larger pattern and, therefore, on January 8, 2003, he presented a series of written questions to Respondent concerning Respondent's use of outside bank accounts, the identity of the "chaser," Respondent's contact with the "chaser," his relationship with Jersey, and the terms of the fee agreement. Following his review of the Liboy file, Fraenkel prepared an additional list of questions for Respondent. (Dep. Tr. 65-70; Adm. Ex. 14).

Respondent responded with a letter, dated January 13, 2003, in which he stated that Jersey's partner, Bob Lunz, had been contacted by a relative of Liboy and had signed Liboy as a client. Because of his concern with the "prior sign-up" and his years of friendship with Jersey,

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Respondent agreed to split the fee 50/50. Respondent's letter further stated that he and had been making annual trips to Las Vegas with Jersey for ten years; he did not recall any prior legal matters with Jersey or Lunz; his other recoveries/settlements were processed through the Leahy trust account; and he had reimbursed Leahy for the $621 paid to the investigator. Fraenkel did not recall Respondent making any statements contrary to those in the letter. (Dep. Tr. 72-79; Adm. Ex. 15).

Fraenkel stated that neither he nor anyone at the Leahy firm has worked with Jersey or Lunz. When Fraenkel called Jersey to question him, Jersey was not willing to provide any information. Fraenkel later learned that Respondent had made other distributions involving Jersey. (Dep. Tr. 73, 75, 78).

Fraenkel stated that the firm received a refund of $3,000 from Jersey. In a letter accompanying Jersey's check, Jersey wrote that he learned he had been paid by mistake. The firm then disbursed an additional $500 to Liboy. Fraenkel acknowledged that as far as he knew, after the payment by Jersey, the Leahy firm had received the entire amount of attorney's fees that were paid in the Liboy case. (Dep. Tr. 64-65, 79-80, 158; Adm. Ex. 17-18).

After Fraenkel learned about the Liboy matter and the payment to Jersey, he asked Respondent if any other payments had been made to Jersey. Although Respondent denied having done so, Fraenkel learned in March 2003 that a payment had been made to Jersey in connection with the Kueker case. He identified a copy of a check from the Kueker file, dated December 3, 2001, payable to Jersey for $860.70. Fraenkel stated that when he questioned Respondent, Respondent informed him that Jersey had no involvement with the Kueker case. Further, Respondent had no substantive explanation for the check, and did not tell Fraenkel that he consulted Jersey for his experience with the Municipal Division of the Circuit Court. Fraenkel

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did not communicate with Jersey about the check and did not receive any refund from Jersey. (Dep. Tr. 81-83, 87, 164-65; Adm. Ex. 25, 26).

Fraenkel stated that the Kueker file involved two complaints, one in which the client was the plaintiff and another in which he was the defendant. Time records indicated that time spent on the case had been disproportionately billed to the plaintiff's part of the case. Fraenkel learned that the fee generated from the settlement of the plaintiff's case was used to pay a settlement of the defense case, without authority from the firm, and therefore the firm's fee had been reduced. The firm did not authorize a reduction in the fee. Neither a motion to adjudicate liens or the resulting order, both of which were found in the file, mentioned any payment to Jersey. (Dep. Tr. 84-91, 163; Adm. Ex. 19-20, 23-24).

Fraenkel stated that Respondent's inability to provide an explanation for the payment to Jersey was "the straw that broke the camel's back" and his services with the firm were terminated that day. (Dep. Tr. 93).

Respondent

Regarding the Liboy case, Respondent testified he learned from a secretary at the Leahy firm that her friend's brother, Norell Liboy, was hospitalized as a result of injuries sustained in a motorcycle accident. After speaking to Liboy and his sister, Respondent concluded that attorneys Russell Jersey and/or Jersey's partner Bob Lunz were involved in the case. Respondent knew both attorneys and, after speaking with them, decided he would handle Liboy's case and split any fee with Jersey. The agreement was not reduced to writing, and the client did not sign off on any division of fees. (Tr. 424-28, 511-12).

Respondent acknowledged that Jersey was a personal friend with whom he has taken trips to Las Vegas. He had no knowledge why Jersey took the Fifth Amendment when he was asked about their relationship. (Tr. 510-11).

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Respondent identified a motion and order, entered December 1, 2000, relating to the adjudication of liens in the Liboy case. The documents reflect that the case settled for $20,000 and the attorney's fees were $6,666.66. As to the thirteen medical lien holders listed in the motion, the court adjudicated the liens to a proportionate recovery of $6,666.66. Respondent stated he received a check for $20,000 from USAA Insurance Company payable, per his request, to himself and Liboy. (Tr. 428-30, 516; Adm. Ex. 5, 6).

Respondent identified several documents relating to the distribution of the settlement funds. A final bill addressed to Norell Liboy indicates that the Leahy firm's fee for legal services was $3,000.00. A settlement statement, dated May 1, 2001, lists the fee to the Leahy firm as $3,000 and payments to lienholders as $9,666.65. A "List of Plaintiff's Specials" attached to the settlement statement lists the thirteen medical lienholders identified in the motion to adjudicate liens, as well as Russell Jersey. The payment amount to Jersey is listed as $3,000. (Tr. 431-32, Adm. Ex. 8, 9).

On Sunday, May 6, 2001, Respondent took the settlement check to Old Kent Bank in Woodridge Illinois, where he maintained several accounts, because he wanted to expedite the processing of the disbursements. He felt that asking the Leahy office manager to disburse the checks, most of which were for small amounts, would have been difficult and the manager would have made his life miserable. He requested that the bank issue seventeen cashier's checks pursuant to the settlement statement. (Tr. 435-36, 512-14).

Respondent stated that checks were distributed in accordance with the list. The check to Jersey includes the following notation by Respondent on the memo line: "In satisfaction and release of medical services and attorneys lien upon Norell C. Liboy." Respondent agreed that Jersey never provided any medical services in connection with that case. (Tr. 433-34, 515; Adm. Ex. 11).

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Respondent placed all of the documents regarding the disbursements, including copies of the checks, into the Liboy file. Regarding the check made payable to the Leahy firm, Respondent stated he gave it to the office manager and informed her that it pertained to the Liboy case. Respondent denied personally receiving any funds from the settlement of that case. (Tr. 434-37; 514).

Respondent reviewed an invoice from J.J. Dore, an insurance adjuster, for services relating to the Liboy matter. He recalled that the invoice, which was presented several months after the Liboy file was closed, precipitated questions from Fraenkel concerning the file and the payment to Russell Jersey. Respondent submitted a written response describing his relationship with Jersey and their agreement to split the fee. His response also noted that all documents regarding the Liboy matter remained in the law firm file. Respondent paid Dore's fee of $621. (Tr. 437-42; Adm. Ex. 13-15).

Regarding a payment to Jersey in the Kueker v. Day matter, Respondent identified Kueker as a friend he has known for approximately twelve years. In or about 1999 he represented Kueker in an action brought by Kueker's landlord, Brookdale Square, for failure to pay rent. That case was resolved by Kueker's agreement to pay $8,500 to his landlord. Kueker intended to pay that amount with funds he would receive in connection with the settlement of a personal injury case, which Respondent filed on his behalf in 2000. (Tr. 450-53; Adm. Ex. 19, 20).

Six months after Kueker's rent case was resolved, the personal injury case was settled for $15,000. In September 2001, Respondent filed a motion in the personal injury case to "adjudicate and extinguish all liens," which totaled over $14,000 and included medical liens and the judgment lien for $8,500 asserted by the plaintiff in the rent case. Jersey was not referenced in the motion or in the resulting order. (Tr. 453-55; Adm. Ex. 21).

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Respondent identified several pages of handwritten calculations regarding his efforts to determine how to distribute the $15,000. He also identified a handwritten note he wrote to the firm's office manager, Carol Thomas, asking her to deposit funds from the settlement draft into the trust account and to issue drafts to Brookdale Square, Kueker, Jersey, John Dore and the Leahy firm. The final Statement of Settlement reflects the following disbursements: $965.45 to the Leahy firm for expenses; $10,173.85 to four lien holders; $1500 to the client; $1500 to the Leahy firm for its fee; and $860.69 to Russell Jersey. The check to Russell Jersey was signed by a Leahy partner, Stephen Eisenberg. (Tr. 455-59, 463-64; Adm. Ex. 23).

Respondent testified he had sought assistance from Jersey concerning a stay of the judgment in the rent case pending resolution of the personal injury case. The rent case had been filed in the Municipal Department of the Cook County Circuit Court, and Respondent was unfamiliar with the judges and procedures in that department. Respondent acknowledged he had no records to document Jersey's assistance, and he did not receive a bill from Jersey. (Tr. 458, 516-17).

Concerning the specific amount paid to Jersey, Respondent testified it was the amount left after the other lienholders and expenses were paid. Respondent denied personally receiving any of the proceeds of the settlement. (Tr. 464-65, 517; Adm. Ex. 25).

Russell Jersey

The parties stipulated that, if called to testify, attorney Russell Jersey would assert his Fifth Amendment rights as to any questions about his relationship with Respondent, the Liboy case and the Kueker matter. (Jt. Stip.)

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Respondent's Receipt of Referral Fees

Charles Fraenkel

After Respondent's termination from the Leahy firm on March 27, 2003, Fraenkel was responsible for sorting through the files in Respondent's office. Fraenkel stated he was surprised to find notes and other indications that Respondent handled plaintiffs' personal injury cases during his employment at the firm, but outside the scope of the firm. The other shareholders did not know of Respondent's involvement in those cases. (Dep. Tr. 93-94).

When Fraenkel questioned Respondent, he learned Respondent had received over $9,000 in referral fees in connection with the Einersen cases, which consisted of a personal injury and worker's compensation matter which arose after Respondent began work at the Leahy firm. Prior to the discovery of the Einersen cases, the firm had no knowledge that Respondent had received referral fees on any case he obtained during his tenure at the firm. Although Respondent represented to Fraenkel that he had not cashed the checks he received in connection with the Einersen cases, Fraenkel subsequently determined that Respondent had cashed the checks at or near the time he received them. (Dep. Tr. 95-100; Adm. Ex. 30).

On April 16, 2003, Fraenkel and two other Leahy attorneys met with Respondent. Fraenkel believed they asked Respondent if he had referred any other cases out of the office which generated referral fees, and Respondent did not identify any further cases. (Dep. Tr. 99-101; Adm. Ex. 29).

In May 2003 Fraenkel contacted the ARDC regarding Respondent's conduct because the partners felt they had an obligation to report Respondent's dishonesty. One or two years later, Fraenkel notified the ARDC of the existence of the 1989 letter agreement. As a result of the ARDC's investigation, Fraenkel subsequently learned that Respondent had obtained referral fees in connection with ten or twelve other plaintiffs' cases during the time of his employment with

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the firm, and that those fees were not shared with the firm. Fraenkel determined that Respondent was paid approximately $400,000 in referral fees without the firm's knowledge. (Dep. Tr. 101-02, 128; Tr. 622; Adm. Ex. 1).

Fraenkel identified numerous checks payable to Respondent which represented fees for referrals made by Respondent, without the firm's knowledge, while he was a shareholder at the Leahy firm. Those checks, and additional documents, reflected that Respondent received the following fees in connection with the noted client matters: $250,000 (Maxine Palcis); $3,500 (Richard Greene); $831.76 (Jill Means); $12,973.55 (John Motkowicz); $15,555.56 (Patricia Sherry); $40,000 (Marie Zellow); $5,833.34 (Donald Wallace); and $10,728.81 (Stephen Einersen). As to the Motkowicz' cases, Fraenkel testified that the client came into the firm through a partner, Ronald Strohm, who then discussed the matter with Respondent. The client was referred to Cooney & Conway (the "Cooney firm"), a firm with which Respondent had contact. According to Fraenkel, the Leahy firm received referral fees on the Motkowicz' cases, but Strohm did not receive any extra portion. The firm did not know that Respondent was receiving additional fees on the Motkowicz cases. (Dep. Tr. 102-06; Adm. Ex. 30).

Fraenkel acknowledged that Respondent was in charge of the casualty department at the firm and was involved in the determination of whether a plaintiff's personal injury case would be referred to another attorney, but stated Respondent did not have authority to refer such a matter out and keep the entire referral fee. He denied that the firm would have given him that authority, or that any other shareholder ever kept 100% of referral fees with the firm's knowledge. The lawyers who generated referral fees did not receive any direct payment, but shared in the fees as owners of the firm. Fraenkel was certain Respondent knew he was sharing in referral fees brought in by other lawyers because financial issues were discussed at the firm's year-end meetings. (Dep. Tr. 115-16, 138; Tr. 595, 598).

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Respondent

Respondent testified that while he was working at the Leahy firm, he referred a personal friend, Patricia Sherry, to the Cooney law firm. Respondent did not consult with anyone at the Leahy firm regarding the referral. Sherry signed a contingency fee agreement with the Cooney firm, as well as a rider which provided that fees would be divided with Respondent. Respondent did not recall telling Sherry that the arrangement was to remain between the two of them. He stated he did receive a referral fee in that case. (Tr. 517-19, Adm. Ex. 39).

Respondent also referred the Motkowicz case to the Cooney firm. He acknowledged that Motkowicz came to the Leahy firm through another shareholder, Ron Strohm. Motkowicz' fee agreement with the Cooney firm indicates that the Leahy firm would receive 25% of the attorney's fees and Respondent would receive 10% of the fees. Strohm received no percentage of the referral fee. (Tr. 520-22; Adm. Ex. 38).

Respondent testified he referred Maxine Palcis to the Cooney firm and, in March 1998, received $250,000 as his share of the fees in that case. The check was sent to his home address in Woodridge, Illinois. Respondent never consulted with any Leahy shareholder regarding the referral or informed anyone that he had received the fee. (Tr. 522-24; Adm. Ex. 35).

Respondent further testified that, while at the Leahy firm, he referred Jill Means, Richard Green, Stephen Einersen and Marie Zellow to the Cooney firm. Checks for his share of the attorney's fees in the Means, Green and Einersen cases were sent to his home address. As to each of the foregoing matters, Respondent acknowledged he did not consult with any shareholder of the Leahy firm regarding the referrals. Respondent stated he did not refer any cases that the Leahy firm was willing to handle. (Tr. 519-20, 524-27, 550; Adm. Ex. 36-37, 40-41).

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Respondent testified that, based on his 1989 agreement with the Leahy firm and his own practice while at the firm for fourteen years, he believed he was entitled to keep referral fees. (Tr. 500-02; Adm. Ex. 1).

Kevin Conway

The parties stipulated that, if called to testify, Kevin Conway would state he is an attorney with Cooney and Conway, a law firm which focuses on plaintiff's personal injury matters. He would further state that Respondent referred matters to the Cooney firm involving the following personal injury plaintiffs: Maxine Palcis, Richard Green, Jill Means, John Motkowicz, Patricia Sherry, Stephen Einersen, Marie Zellow and the Estate of Donald Wallace. With the exception of the Motkowicz matter, Conway and Respondent never discussed the referral fee arrangement Respondent had with the Leahy firm. (Jt. Stip.)

Patricia Sherry

Patricia Sherry testified she contacted Respondent in connection with a personal injury matter and he referred her to the Cooney firm. She identified her signature on a contingent fee agreement which states that the Cooney firm would receive one-third of any recovery. She also signed a rider to the agreement stating that the fee would be divided with Respondent. Sherry recalled that both Kevin Conway and Respondent were present when she signed the documents in January 1998. Concerning the referral agreement, Respondent told her that "it stayed in that room." (561-63, 572; Adm. Ex. 39).

Leahy's Civil Action Against Respondent

Charles Fraenke

Charles Fraenkel testified that his firm decided to initiate litigation against Respondent. On October 12, 2004, the firm filed a complaint for accounting and other relief, alleging that Respondent breached his fiduciary duty to the firm. A subsequent amended complaint added a

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cause of action for breach of contract. According to Fraenkel, Respondent owed the firm approximately $400,000. (Dep. Tr. 107, 111; Tr. 598; Adm. Ex. 31).

Settlement negotiations involved a proposal by Respondent that the Leahy firm agree to a summary judgment in his favor. Fraenkel testified that the firm rejected that proposal. Eventually the parties agreed to execute mutual releases and a stipulation of facts, and further agreed that the firm would receive approximately $150,000. The payment was to be comprised of about $98,000 in fees being held by the Cooney firm in connection with the Motkowicz case, $5,000 in fees from the Kelly case, future fees from the Motkowicz and Einersen cases, and a $40,000 contribution from Respondent. Fraenkel stated that the firm agreed to a settlement because it reviewed Respondent's financial records and had concerns about being able to collect on a judgment. The settlement was finalized in December 2006. (Dep. Tr. 108-10, 139-40, 170; Tr. 600, 607; Adm. Ex. 32, 33).

The stipulation of facts, which Fraenkel signed, contains the following paragraph:

The written [1989] agreement between the parties can be interpreted as permitting [Respondent] to have retained any and all fees generated on all personal injury cases referred by [Respondent] to other attorneys so long as any hours spent by [Respondent] working on those files would be de minimis."

Fraenkel testified that the foregoing paragraph was not consistent with his intent or his discussions with Respondent at the time the agreement was signed, nor is it consistent with his own interpretation of the agreement. He stated that an initial stipulation was much lengthier than the one he signed, and included provisions with which he did not agree. He rejected the use of the word "reasonably" before "interpreted" because he did not believe the 1989 agreement could be "reasonably" interpreted to allow Respondent to retain the fees at issue. Although Fraenkel did not believe the paragraph reflected the "correct" interpretation of the 1989 agreement, he agreed that it's literally true that "anybody can interpret anything any way they want" and "the

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agreement could be interpreted as permitting [Respondent] to have retained the fees he retained." Fraenkel signed the stipulation as a compromise, and because Respondent made it a condition precedent to the settlement. (Dep. Tr. 112-14, 137; Tr. 619-24; Adm. Ex. 32).

As to the signing of releases, Fraenkel stated that the firm asked for mutual releases in the event Respondent might believe the firm owed him money. Fraenkel did not believe any money was owed to Respondent because when a shareholder leaves the firm under circumstances similar to Respondent's, the shareholder would not receive anything for his shares. He acknowledged that such a situation had not previously occurred. He further acknowledged that the firm had a contract with Respondent which required it to pay him for his shares of stock except in the event of dishonesty. (Dep. Tr. 141-46).

Fraenkel stated he was not aware that a summary judgment order had been entered in favor of Respondent. When he was shown a court order to that effect, which apparently had been entered that morning, he denied knowing that the order was going to be entered, consenting to the entry of the order, or previously seeing the order. The court order contains the same language as the stipulation with respect to the interpretation of the 1989 letter agreement. (Dep. Tr. 129-31, 137, 169-70).

Fraenkel stated that the Leahy firm had been represented by attorney John Muldoon, and Fraenkel was not aware of the circumstances surrounding the entry of the judgment order. He understood that the firm was agreeing to the stipulation of facts and did not know of any other instructions given to Muldoon. He acknowledged he was Muldoon's principle contact with respect to the lawsuit, but stated he did not follow the litigation as closely as the settlement. Fraenkel denied ever speaking to the attorney who represented Respondent in the civil litigation. (Dep. Tr. 130-33, 136, 140, 170).

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Respondent

Regarding the civil suit brought by the Leahy firm, Respondent testified that the 1989 agreement was not initially referenced in any complaint. The amended complaint alleged that Respondent breached his contract with the firm, and asks for an accounting. (Tr. 351, 353, Adm. Ex. 31).

After the Leahy firm filed its complaint, Respondent filed a request to produce documents which sought, among other things, the firm's tax returns for the years 1989 to 2003, as well as 1099 forms received by each of the shareholders. Respondent wanted the information in order to establish that other shareholders received fees in the same manner that he received fees. He stated that the firm did not supply that information. (Tr. 398-402; Resp. Ex. 15).

Respondent also filed a Request to Admit Facts which asserted, among other things, that no agreement required Leahy partners to report referral fees to other partners; other partners generated referral fees which were not reported; Respondent had the authority to determine whether the Leahy firm would undertake representation of a particular plaintiffs' personal injury case; other partners were not required to report the referral of cases; and referral of cases was not a business opportunity belonging to the Leahy firm. The firm did not respond to the Request to Admit. (Tr. 466, Resp. Ex. 14).

After the Leahy firm failed to respond to discovery requests, Respondent filed a Motion for Summary Judgment in January 2006, and then spent an entire year attempting to have the motion heard by the Court. He wanted the Court to make a determination prior to his disciplinary hearing as to whether he had a contractual right to act as he did, but he met with delays and stumbling blocks by the Leahy firm. The delays, along with the ongoing settlement negotiations, resulted in numerous continuances. In September 2006 Respondent filed a supplement to his summary judgment motion to include language from the November 1989

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agreement. The Leahy firm did not respond to his motion or to the supplement. Respondent acknowledged that no sanction orders were entered against the Leahy firm. (Tr. 366-72, 494-96; Resp. Ex. 11).

Respondent stated that in early December 2006 he and John Muldoon, the attorney for the Leahy firm, were working out the parameters of a settlement. They discussed the release of funds being held by the Cooney law firm in connection with a case referred to it by Respondent; Respondent's payment of monies to the Leahy firm; the signing of mutual releases and a stipulation; the authoring of a letter to the ARDC by the Leahy firm; and the entry of a court order without objection by the Leahy firm. (Tr. 378-82, 490-91).

Respondent stated he drafted a letter for the Leahy firm to send to the ARDC and delivered it to Muldoon. After Muldoon requested some changes, Respondent faxed a revised letter to Muldoon. To the best of Respondent's knowledge, the letter was never sent to the ARDC even though the parties signed a mutual release in which the Leahy firm agreed to author a letter to the ARDC stating that a settlement of all matters in controversy had been effectuated. (Tr. 384-88; Adm. Ex. 33).

Respondent testified that he and a representative of the Leahy firm signed a Stipulation of Facts stating that the November 14, 1989 agreement authored by Fraenkel "can be interpreted" as permitting Respondent to retain any and all fees generated on personal injury cases referred to other attorneys, so long as his time on those files was de minimis. Regarding the monetary aspect of the settlement, Respondent recalled that the Leahy firm initially demanded payment of $400,000, but in April 2006 the demand was reduced to $300,000. Respondent eventually agreed to pay $40,000, and additional funds were to be turned over by the Cooney firm. (Tr. 374-76, 381, 397-98; Resp. Ex. 1, 2, 12).

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On December 19, 2006 the Court heard Respondent's Motion for Summary Judgment without objection or response from the Leahy firm. Respondent stated that no witnesses were called and no evidence was presented, other than the Stipulations of Facts. The Court entered an order for judgment in Respondent's favor which tracked the language of the stipulation regarding the interpretation of the 1989 agreement. Respondent acknowledged that he would not have settled the case without the summary judgment order. (Tr. 369-70, 487-89; Resp. Ex. 3).

Respondent testified that Fraenkel was scheduled to appear for a deposition at the ARDC at the same time as the court hearing on December 19, 2006. Although Respondent requested that the deposition be postponed pending the disposition of his summary judgment motion, he was informed that Fraenkel would not agree to a postponement because he planned to retire as of December 31, 2006 and wanted to conclude the matter. Respondent acknowledged that he appeared at Fraenkel's deposition with a copy of the summary judgment order that had been entered minutes earlier. (Tr. 377, 485-86; Resp. Ex. 8).

Respondent stated that, as part of the settlement agreement, the Leahy firm agreed that its representative would execute a release of attorney's lien for each of the plaintiffs' cases at issue that were still pending. Respondent drafted the releases and sent them to both Muldoon and the Leahy firm but, with one exception, he has not received signed releases. (Tr. 413-14; Adm. Ex. 22, 33).

At or about the time Respondent joined the Leahy firm, he purchased shares of stock in the firm and signed a document entitled "Amended and Restated Restricted Stock Transfer and Deferred Compensation Agreement." Paragraph six of the agreement states, in part: "[in] the even that the employment of a Shareholder with the Firm shall be terminated for any reason other than death, the Firm will redeem all of the Shares standing in the name of such Shareholder." Respondent understood from the agreement that, in the event of his departure from the firm, the

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firm would repurchase his shares. The firm, however, refused to pay him. As a condition of the settlement of the civil suit brought by the Leahy firm, Respondent released the firm from any claim for breach of contract relating to the stock transfer agreement. (Tr. 357-58, 362-64; Adm. Ex. 33; Resp. Ex. 5).

John Muldoon

John Muldoon, an attorney, testified that he was retained in 2004 to represent the Leahy firm in an action against Respondent. A complaint was filed in 2004, and settlement discussions commenced when Respondent hired an attorney in the fall of 2005. In January 2006, Respondent filed a summary judgment motion. (Tr. 311, 327-30, Resp. Ex. 11).

Muldoon stated that during settlement negotiations in December 2006, Respondent presented a proposed letter to be sent to the ARDC. After revisions were made, Muldoon delivered the letter to his client. Muldoon stated that his client never signed the letter. (Tr. 313-15, 318, 336).

On December 5, 2006, Muldoon notified Respondent that the Leahy firm had authorized him, upon receipt of a signed release of funds being held by the Cooney firm and a deposit of $40,000 in escrow, to sign a Stipulation of Facts, to refrain from filing a response to Respondent's summary judgment motion, and to forgo any objection to the entry of an order agreed upon by the parties. Muldoon identified his signature on an undated document entitled "Stipulation of Facts." He then reviewed a nearly identical document, also entitled "Stipulation of Facts," signed by Charles Fraenkel on behalf of the Leahy firm. Muldoon confirmed that the final paragraph had been changed at Fraenkel's request, but the first five paragraphs of both stipulations were the same. (Tr. 311-13, 324; Resp. Ex. 1, 2, 9).

Muldoon stated he did not file a response to Respondent's summary judgment motion. On December 19, 2006, the two stipulations signed by Muldoon and Fraenkel, Respondent's

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summary judgment motion, a complete set of the pleadings, and a proposed order were presented to the court. The order, which had been approved by the Leahy firm, stated that with regard to Respondent's motion for summary judgment:

this Court specifically finds that a contract existed between the parties dated November 14, 1989 which was authored by the plaintiff and which can be interpreted as permitting defendant to retain any and all fees generated on all personal injury cases referred to other attorneys so long as any hours spent by defendant working on those files would be de minimis.

The proposed order further stated that the motion for summary judgment was granted and judgment was entered in favor of Respondent and against the Leahy firm. (Tr. 326, 328, 333, 338; Resp. Ex. 1-3).

Muldoon stated he was not present in court on December 19, 2006, but his partner attended the hearing. Muldoon understood that after the documents were presented, the judge reviewed them and neither party made any additional statements. No witnesses were called, and the court entered the order that was presented. (Tr. 327, 34-35; Resp. Ex. 3).

Muldoon testified that Fraenkel's deposition in connection with Respondent's disciplinary case was scheduled to take place at the offices of the ARDC on December 19, 2006. By letter of December 13, 2006, he had advised Respondent that Fraenkel would not agree to a postponement of the deposition. Muldoon was aware that Respondent made an appearance at Fraenkel's deposition with a copy of the court order entered that day. (Tr. 318-19, 335-36; Resp. Ex. 8).

Muldoon stated that the Leahy firm received $40,000 in cash from Respondent, and approximately $98,000 that was being held in escrow by the Cooney firm. He further stated the firm would recover a check for $16,000, and $45,000 that was being held in his client fund account. The Leahy firm paid no monies to Respondent. (Tr. 321, 331-32).

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When asked how much time he spent on settlement discussions, Muldoon stated he did not keep track of his hours, but he noted that the parties engaged in a lot of discussion. He felt that he earned his fee in the case. (Tr. 331-32).

Thomas Finn

Thomas Finn, an attorney, testified he has been a partner with the Leahy firm since approximately 1992. In December 2006 he was involved in the settlement of the firm's lawsuit against Respondent, and met with Fraenkel and Muldoon regarding potential parameters for settlement. Concerning a proposed condition that summary judgment be entered in favor of Respondent, the firm's original position was that it would not agree to any type of settlement that was contingent upon that condition. Finn further stated that he and Fraenkel refused to send a letter to the ARDC stating that the firm and Respondent had a "simple misunderstanding," because that was not accurate. They also rejected similar language that was proposed for the Stipulation of Facts. Finn stated that he never received any demand for payment from Respondent in connection with the firm's shareholder agreement. (Tr. 575-88).

Count XI

Larry Chilton

Larry Chilton, an attorney, testified he is a partner at Chilton, Yambert, Porter and Young (the "Chilton firm") where his practice consists of litigation defense for large petrochemical companies. The Chilton firm performs work for most of the large insurance companies, including State Farm, Farmers Country Companies, West Bend and Progressive. Chilton is aware of only one plaintiff's case that the firm has handled. (Tr. 73-74).

Chilton testified he met Respondent years ago when they were representing co-defendants. In April 2003, he was contacted by Respondent about a position with the Chilton firm. When Chilton met with Respondent, Respondent explained that his current firm, Leahy,

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Eisenberg and Fraenkel, was experiencing cash flow problems. Respondent did not disclose that he had been discharged from that firm. (Tr. 75-77).

Chilton understood that, as a trial attorney, Respondent handled large scale transportation and construction defense work and obtained favorable jury verdicts. He concluded Respondent would be a good fit with the Chilton firm and would expand the firm's business. During their meeting Chilton advised Respondent that, because the firm represents so many insurance companies, it does not handle plaintiffs' cases. Chilton did not recall any other discussions regarding work for plaintiffs. He denied being told that Respondent had eight or nine pending plaintiffs' cases he wanted to bring with him to the firm. When asked if he would have authorized Respondent to bring those cases to the firm, Chilton stated he could not "envision doing that." (Tr. 77-81, 84).

After meeting with Respondent, Chilton hired him as a non-equity partner with a starting salary of $125,000. Chilton stated that his understanding of Respondent's background formed the basis for the hiring. He acknowledged he did not perform any type of background check on Respondent before hiring him. (Tr. 84, 95).

Respondent began working at the Chilton firm shortly after April 2003. Chilton did not know whether Respondent brought any files with him when he joined the firm. He stated that Respondent did not generate business for the firm as expected, and eventually worked on Jon Yambert's larger insurance cases. Chilton denied knowing a lawyer named Laura DeAndrea-Iversen and never authorized Respondent to have DeAndrea-Iversen file plaintiffs' cases for Respondent. (Tr. 80, 82-83, 90).

Chilton testified that Respondent's employment with the Chilton firm was terminated when the firm discovered he was handling plaintiffs' cases. Respondent left the firm in or about August 2004. At that time the firm spoke to an attorney, Elliot Schiff, regarding the handling of

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the newly discovered plaintiffs' cases. Chilton was not aware what happened to those files and did not know whether Respondent billed time on the plaintiffs' cases when he was at the Chilton firm. (Tr. 87-89, 93, 96-97).

Jon Yambert

Jon Yambert, an attorney with the Chilton firm, testified that the firm's clients include large insurance companies which, because of potential conflicts, would not approve of the firm handling plaintiffs' work. Yambert stated he is aware of only two plaintiffs' cases handled by the firm and both cases were family-related matters. He acknowledged that the firm may have had other cases of which he was not aware. (Tr. 101-03, 247-48).

Regarding Respondent's tenure at the firm, Yambert testified that Respondent was expected to bring in some defense business, but generated only two or three cases. As a consequence, Respondent spent most of his time working on Yambert's cases. Yambert recalled having a conversation with Respondent, shortly after Respondent was hired, during which Yambert clearly stated that the firm does not handle plaintiffs' work. A couple of months later, the subject came up again and Yambert repeated to Respondent that the firm does not do plaintiffs' work. In August 2004, after Yambert determined that Respondent was handling some plaintiffs' cases, Yambert gave him the same information a third time. (Tr. 104, 106-08).

Yambert stated that during 2003 and 2004 the practices and policies of the Chilton firm were not in written form. Employees were informed verbally of the practices and policies, and they could observe other people in the environment. (Tr. 259-61).

In July 2004 Yambert became suspicious when he heard Respondent was sending out correspondence which was not connected to a file number. He confronted Respondent and directed him to use the firm's numbering system for all of his files. Yambert recalled that

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Respondent's files were supposed to begin with the series numbers "300" and "301." (Tr. 108-10, 125, 246).

Yambert testified he came to the realization that some of Respondent's files were plaintiffs' cases. In September 2004, Respondent was asked to leave the firm. Yambert rejected Respondent's attempts to explain his activities at that time, and has never since asked for an explanation. He believes Respondent did not earn his salary, improperly used the firm's money for filing fees, and caused Yambert to lose a client, (Tr. 105, 111-13, 248).

Yambert identified one of Respondent's case files, labeled Campagna v. Bana, and stated he received the file from Respondent after instructing Respondent to open firm files for each of his cases. Yambert doubted that the file was Respondent's working file, however, because it's pristine condition was not consistent with Respondent's poor organizational habits. An information sheet in the file indicated that the file was opened on August 20, 2004, but Yambert learned that work was done on the case before that time. The sheet also indicates that the case was being handled on a contingency basis pursuant to a fee contract, but Yambert never found a written fee contract. The Campagna complaint indicates that the plaintiff's attorneys are Respondent "and" the Chilton firm. Yambert stated that Chilton attorneys typically do not sign pleadings as if they are not part of the firm. (Tr. 114-20, 250, 258; Adm. Ex. 42).

Yambert learned from his firm's billing department that no expenses were advanced and no time was entered on the Campagna file. He never found a check for a filing fee and was not certain whether the plaintiff was a client of the firm. He did not ask Respondent how the filing fee was paid, but wondered if the fee was buried on another file. Yambert noted that although correspondence in the file from Respondent was supposedly typed by "kd," those initials belonged to a secretary who had left the firm in March 2004. Further, contrary to firm policy,

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one of Respondent's letters made no reference to the Chilton firm and was not written on firm letterhead. (Tr. 122-25, 127, 262-65).

Yambert identified six other plaintiffs' case files opened by Respondent and noted similar concerns with those files. He was particularly disturbed that several files involved communications with, or a claim filed against, insurance companies that were firm clients. As to files which contained checks for filing fees that Yambert had signed, he acknowledged signing the checks but stated he signs dozens of checks written to the clerk of the court on a weekly basis and does not question them. Had he known the purpose of the checks, he would not have signed them. (Tr. 128-43, 181-201, 173-75, 265-81, 284, 292; Adm. Ex. 43-48)

Yambert was alarmed that in one case, Kelly v. Cieielski, the civil action cover sheet, complaint and other documents, all of which were typed on the Chilton word processing system, indicate that attorney Laura DeAndrea-Iversen was representing the plaintiff. Yambert believed that Respondent signed DeAndrea-Iversen's name to certain of the documents in question. Two other files also contained documents with DeAndrea-Iversen's name or address on them. When Yambert was asked if he knows DeAndrea-Iversen, he stated that he believed she was a woman he saw at the firm with Respondent on weekends. Yambert vehemently denied ever authorizing DeAndrea-Iversen to do work for the Chilton firm. (Tr. 137-39, 142-43, 173, 180, 184, 195, 200; Adm. Ex. 44, 45, 48).

Yambert testified that, after Respondent was discharged from the firm, the firm consulted with attorney Elliot Schiff for guidance on legal issues and consequences relating to Respondent's actions. Yambert was concerned because the firm did not have contracts with the plaintiffs, the firm was exposed to potential malpractice issues, and the files needed to be removed from the office. Schiff became the point man for advising the firm on legal issues,

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turning the files over to Respondent, and filing motions to withdraw in the plaintiffs' cases. (Tr. 207, 211-13, 243).

Yambert was aware that Schiff communicated with Respondent in October 2004 regarding nine files that were left at the Chilton firm. Yambert and Schiff discussed items that were needed from Respondent, including authorization from the clients to transfer the files to Respondent, a substitution of attorneys executed by Respondent, and a copy of Respondent's certificate for professional liability insurance. Yambert was also aware that Schiff informed Respondent that the cost and time charged on the files would not be an impediment to transferring the files. Yambert did not recall whether Respondent complied with Schiff's requests, but he did remember signing substitution of attorney forms for some of the files. (Tr. 298-305; Resp. Ex. 19).

Yambert was questioned about a check for $271, sent by Respondent to Schiff in April 2005, for costs in the Campagna matter. On May 31, 2005 Yambert returned the check with a letter which stated he could not connect the check to any expenditure by the firm, and the firm never had a contract with Campagna. Yambert felt that by sending the check, Respondent was attempting to cloak an illegitimate file with legitimacy. (Tr. 202-03; 306-08; Adm. Ex. 49; Resp. Ex. 17).

Yambert testified that the Chilton firm did not receive any fees with respect to Respondent's plaintiffs' cases. He could not say with certainty whether Respondent received fees in those cases, but pointed out that one of the files contained a motion to adjudicate fees that was filed six months before Respondent left the firm. (Tr. 213, 290-91).

Yambert testified that in October 2006 the firm received a "Notice of Case Dismissal" in Pachter v. Delivery Pros, which was sent to Respondent at the Chilton firm address. Yambert stated that, prior to his receipt of the document, he was not aware of the particular case. That

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notice, as well as telephone calls regarding other matters, has led Yambert to believe that Respondent took some files with him when he left the firm. (Tr. 225-26, 257-58; Adm. Ex. 51).

Yambert testified that during Respondent's employment, the Chilton firm paid his base salary, his malpractice insurance, and his health insurance benefits, just as it did for other non-equity partners. Like the other attorneys at Chilton, Respondent did not pay rent to the firm. Yambert stated that Respondent never met the billable hours requirement for the firm, which was 160 or 170 hours per month. (Tr. 214, 227, 244-45).

Yambert testified that, as a result of his experience with Respondent, he has informed the firm's staff that they have a duty to bring suspicious circumstances to the attention of the partners. Further, he looks more carefully at billable hours and fires personnel quicker than he did before Respondent's employment. (Tr. 233).

Respondent

Respondent testified that when he joined the Chilton firm as a non-equity partner in 2003, he brought several defense cases and approximately seven plaintiffs' cases with him. He had no written agreement with the firm regarding those cases. He was aware that most insurance defense firms prefer not to handle plaintiffs' cases against one of the insurance carriers it represents, and he acknowledged that Larry Chilton informed him that he was not to file suit against any of the insurance companies with which the Chilton firm did business. Respondent did not recall having any discussion with Jon Yambert regarding plaintiffs' cases. When Respondent joined the firm he informed Larry Chilton of his dispute with the Leahy firm concerning fees. (Tr. 467-68, 498-99, 549).

Respondent recalled discussing the plaintiffs' cases with Larry Chilton and, as a result of that discussion, he brought the cases into the firm and opened files on an "as needed" basis as he began working on them. He stated he was handling three of the files on a pro bono basis for

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family or friends. During the time Respondent was at the Chilton firm, none of the plaintiffs' cases settled or went to trial, nor did he receive any funds from those cases. (Tr. 469, 472-74).

Concerning Respondent's relationship with Laura DeAndrea-Iversen, Respondent testified that she is his friend and current office mate. While at the Chilton firm, Respondent had DeAndrea-Iversen file a suit on behalf of one of his clients because he could not file an action against State Farm in the name of the firm. Respondent did not recall whether either Chilton or Yambert knew of his arrangement with DeAndrea-Iversen. (Tr. 499-500, 530).

Respondent was questioned about specific plaintiffs' cases that he handled while at the Chilton firm. Regarding the Campagna case, he acknowledged he did not have the firm's authorization to handle the matter, but denied that he needed authorization to file or handle a case. He identified a notice of lien letter, bearing the initials "kd" in the lower left hand corner, that he sent out on May 18, 2004. He noted that, as with the other letters that bear the initials "kd," the document was a form letter that his secretary retrieved from a disk. The disk was given to him by DeAndrea-Iversen, and "kd" referred to her secretary "Kerry Delbacho." Respondent believed his secretary changed certain parts of the letter to make it specific to the Campagna case, but forgot to change the secretary's initials. Respondent acknowledged that, when he appeared for his deposition in January 2006, he did not know the identity of "kd." (Tr. 531, 533, 536, 537-39, 549; Adm. Ex. 42).

Regarding the Kelly v. Cieielski file, Respondent testified that DeAndrea-Iversen filed the complaint for Kelly on Respondent's behalf because the defendant was insured by State Farm. Respondent stated that when he appeared in court on a motion to adjudicate the lien of a medical provider, he was not acting in an adversarial capacity and appeared with State Farm's approval. Respondent acknowledged signing DeAndrea-Iversen's name to pleadings on

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occasion. The Kelly file includes a Notice of Motion with a proof of service signed by "Keri DellBoccio." (Tr. 540-46, 552; Adm. Ex. 44).

Respondent testified that DeAndrea-Iversen also played a role in one of his cases that involved an underinsured motorist claim. DeAndrea-Iversen perfected the client's claim by addressing a letter to State Farm. (Tr. 552-53).

When Respondent left the Chilton firm, he took the plaintiffs' cases he had brought to the firm. The firm retained an attorney, Elliot Schiff, to expedite and assist in the transfer of the cases. By letter of October 1, 2004, Schiff requested that Respondent obtain each clients' authorization for transfer of the files to Respondent, and that Respondent execute a substitution of attorneys. Respondent stated he obtained the requested authorizations and executed substitution of attorneys for each case. (Tr. 474-75, 479-80; Admin. Ex. 18, 19).

Respondent understood from his discussions with Schiff and from Schiff's letter that the firm was not seeking reimbursement for any costs or fees expended in connection with the cases. Respondent testified he offered to repay the firm for expenses incurred, but his offer was refused. In April 2005, he sent the firm a check for $271 for filing fees associated with one of the cases. He later realized that he had paid those costs. (Tr. 474-76, 479-80; Adm. Ex. 19).

Evidence Regarding Mitigation

William Maddux, the presiding judge of the Law Division of the Circuit Court of Cook County, testified that Respondent has appeared before him as a defense lawyer for more than fifteen years. Judge Maddux described Respondent's reputation for truth and integrity as unimpeachable. He acknowledged he has not spoken to other lawyers about Respondent's reputation and that his opinion is based upon the absence of hearing any negative comments about Respondent. (Tr. 154-56).

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Kathy Flanagan, a judge of the Circuit Court of Cook County, testified that Respondent has appeared before her in connection with a variety of cases during the past seven to nine years. Judge Flanagan believes that Respondent has an excellent reputation for truth and veracity and a finding of misconduct would not change her opinion of him. (Tr. 159, 162, 168).

Ellen Cunningham, an assistant principal, testified she has been a friend and neighbor of Respondent and his wife for about twenty-three years. She stated that Respondent has a reputation for being truthful. Her knowledge of the disciplinary proceedings and charges does not change her opinion of Respondent's reputation. (Tr. 235-37).

Prior Discipline

The Administrator reported, pursuant to Commission Rule 277, that Respondent has not been the subject of any prior orders or opinions imposing discipline.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In attorney disciplinary proceedings the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. In re Ingersoll, 186 Ill.2d 163, 710 N.E.2d 390, 393 (1999). Clear and convincing evidence constitutes a high level of certainty, which is greater than a preponderance of the evidence but less than proof beyond a reasonable doubt. People v. Williams, 143 Ill.2d 477, 577 N.E.2d 762 (1991). Suspicious circumstances are not sufficient to prove misconduct. In re Winthrop, 219 Ill.2d 526, 848 N.E.2d 961 (2006).

The Administrator's eleven-count Complaint alleges several distinct types of misconduct by Respondent. For ease of discussion, we will group the Counts according to the conduct involved.

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Counts I and V

Counts I and V both allege that Respondent, while a shareholder with the Leahy firm, made improper payments to attorney Russell Jersey. The factual circumstances surrounding the payments, however, are distinct.

Count I involved Respondent's representation of Norell Liboy and his payment of $3,000 to Jersey in connection with that case. The evidence established that Liboy retained Respondent and the Leahy firm on a one-third contingency fee basis. Respondent subsequently settled Liboy's case for $20,000 and filed a motion to adjudicate liens in October 2000. Neither the motion nor subsequent order, which appears to have been drafted by Respondent, mentioned any amount owed to Jersey. In May 2001 Respondent prepared a settlement statement with an attached "List of Plaintiff's Specials" which identified the amounts owed to the thirteen lienholders referenced in his motion, as well as $3,000 owed to Russell Jersey. The settlement statement listed the Leahy firm's fee as $3,000.

After Respondent received the $20,000 settlement check, he took it to his own bank on Sunday, May 6, 2001 and requested that the bank issue checks in amounts which coincided with the settlement statement. On the check to Jersey, Respondent wrote on the memo line "in satisfaction and release of medical services and attorneys lien."

Respondent claimed that the payment to Jersey was a division of fees that he had agreed to pay to Jersey because Jersey, or Jersey's partner, had made some initial contact with Liboy regarding representation. With respect to Respondent's failure to turn over the check to the Leahy office manager for disbursement, he explained that such a request would have been "difficult" and the office manager would have made his life miserable.

We reject Respondent's explanation regarding his payment to Jersey as both lacking in corroboration and contrary to the evidence. After the payment to Jersey was discovered, Charles

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Fraenkel confronted Respondent and was told that Jersey was a "chaser" that was being paid off. Only at a later date, according to Fraenkel, did Respondent claim that Jersey had conversations with Liboy regarding representation and that the payment was a division of fees. We note that Jersey returned the payment to the firm, with a note that he had been paid by mistake.

Further, Respondent's explanations are belied by his own clear attempt to hide his actions. By including the payment to Jersey along with payments to medical providers in a list of "plaintiff's specials," and referencing "medical services" on the memo line of the check to Jersey, Respondent effectively obscured the payment. Taking the settlement check to his own bank, rather than tendering it to the office manager for disbursement, clinched the concealment. Significantly, we heard no specific details regarding Respondent's problems with the Leahy office manager that would have hindered a disbursement according to normal firm procedures.

As a shareholder of the Leahy firm, Respondent owed the firm a fiduciary duty of loyalty, honesty and good faith. See Couri v. Couri, 95 Ill.2d 91, 447 N.E.2d 334, 337 (1983) (a fiduciary relationship exists between partners and each is bound to exercise the utmost good faith and honesty in all dealings and transactions relating to the partnership"). Further, partners are prohibited from deriving any clandestine profit or advantage from the partnership without the full knowledge of other partners. Winston & Strawn v. Nosal, 279 Ill.App.3d 231, 664 N.E.2d 239, 244 (1st Dist. 1996) (a partner's fiduciary duty prohibits all forms of secret dealings and self-preference in any matter relating to and connected with a partnership). Once a fiduciary relationship is established, the burden of proof shifts to the fiduciary to show by clear and convincing evidence that a transaction is equitable and just. Lapovitz v. Dolan, 189 Ill.App.3d 402, 545 N.E.2d 304 (1st Dist. 1989).

Respondent made a payment to Jersey, which payment resulted in a reduction of the fee paid to the Leahy firm, without any clear basis for doing so and without disclosure or explanation

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to the Leahy firm. His attempts to conceal his action underscore the dishonest nature of the payment. We find, therefore, that the Administrator proved by clear and convincing evidence that Respondent breached his fiduciary obligation to the firm and engaged in dishonest conduct in violation of Rule 8.4(a)(4).

We do not find that Respondent's actions amounted to a conversion of law firm funds, nor do we believe that he engaged in conduct which tends to defeat the administration of justice or bring the courts or the legal profession into disrepute in violation of Supreme Court Rule 770. For the most part, this controversy involved a private dispute between a law firm and one of its shareholders. No harm resulted to any client nor was any court proceeding negatively impacted by Respondent's misconduct.

We have made our findings without drawing any negative inference from the fact that Russell Jersey asserted his fifth amendment privilege. With regard to that issue, other disciplinary cases have followed the analysis presented in Libutti v. United States, 107 F.3d 110 (2d Cir. 1997). See In re Milks, 99 CH 20, M.R. 18597 (November 14, 2003); In re Burnside, 98 CH 33, M.R. 16824 (September 22, 2000). In Libutti the court stated that while the issue of whether a negative inference can be drawn from a non-party witness' assertion of the fifth amendment depends upon the unique circumstances of each case, a number of nonexclusive factors may guide a court's determination. Those factors include the relationship between the witness and the party, the degree of control the party has over the witness, the similarity in interests between the party and the witness, and whether the witness played a controlling role in the underlying aspects of the litigation. The overarching concern is whether the adverse inference is trustworthy under all of the circumstances and will advance the search for the truth. The evidence in this case revealed little about Russell Jersey other than the fact he is Respondent's friend and they have vacationed together in the past. Any assumptions concerning

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issues of control, similarity in interest, or motivations for assertion of the privilege would be nothing more than speculation on our part. Without more specific information, we cannot conclude that a negative inference would carry the necessary indicia of trustworthiness in this case.

Turning to Count V, that count involved Respondent's payment of $860 to Russell Jersey in connection with two matters Respondent was handling for Terry Kueker. Kueker was the defendant in an action for failure to pay rent filed in the Municipal Department of the Circuit Court of Cook County, as well the plaintiff in a separate personal injury action filed in Kendall County. The rent case was resolved by Kueker agreeing to pay $8,500 to his landlord. Kueker intended to use his settlement proceeds from the personal injury action to pay the amount he owed in the rent case.

Kueker's personal injury matter was settled for $15,000. In September 2001 Respondent filed a motion to adjudicate "all liens," and specified four lienholders, including Kueker's landlord. Jersey was not referenced in the motion or in the resulting order. Respondent did list Jersey, along with the lienholders, in a settlement statement which set forth the disbursements of the settlement funds. The disbursement to Jersey was listed as $860.69.

After receiving the settlement check in the personal injury case, Respondent gave it to the Leahy office manager with instructions to deposit it into the firm's client trust fund account, and to disburse funds in accordance with the settlement statement. On December 3, 2001 checks were issued to Jersey and the lienholders from the Leahy trust account. Respondent testified that his payment to Jersey was compensation for advice he sought regarding municipal procedures in the rent case.

Unlike Count I, we do not believe the Administrator carried her burden of proof on this count. As to Respondent's reason for designating a payment to Jersey, our review of his work

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history shows that his area of practice had focused primarily on personal injury cases. We were not presented with any evidence to dispute his claim that he needed to consult with another lawyer to determine the proper procedures for staying enforcement of a judgment in a rent case pending in the Municipal Department. Further, after receiving the settlement check, he properly presented it to the office manager for deposit and disbursements in accordance with the settlement statement.

Although we are concerned that Respondent did not document the purpose of his payment to Jersey, we are not faced with the same overt attempts at concealment that clearly marked his behavior regarding the Liboy case. In light of his compliance with firm procedures regarding the settlement check and the fact that his explanation for the payment was not effectively refuted, we find that the charges of Count V were not proved.

Counts II - IV and VI - X

Counts II through IV and VI through X each allege that Respondent, while a shareholder at the Leahy firm and without notice to or approval by the firm, referred cases to another law firm, entered into referral fee agreements with the other firm, and accepted and retained referral fees. Since the charges of professional misconduct and Respondent's explanation for his behavior are identical for each instance, we can discuss those counts and the evidence collectively.

When Respondent joined the Leahy firm in 1989, he entered into an agreement with the firm regarding fees for thirty-six cases he brought with him. For some cases the fee was to be split equally between Respondent and the firm but for other cases, which had been referred to other attorneys and for which Respondent's work was to be minimal, Respondent was to retain the entire fee. The agreement required Respondent to account to the firm for all fees generated and, upon closing a case, to include a statement of the fee disbursement. The agreement further

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provided that, consistent with the policy for other shareholders of the firm, any plaintiff's personal injury or other business produced by Respondent or referred to him during his employment with the Leahy firm would belong exclusively to the firm.

During Respondent's employment at the Leahy firm, he was contacted by prospective clients Maxine Palcis, Richard Greene, Jill Means, Patricia Sherry, Stephen Einersen, Marie Zellow, and Donald Wallace regarding representation. In addition, another potential client, John Motkowicz, contacted one of Respondent's partners, who then asked Respondent to speak to Motkowicz concerning representation. In each of the foregoing instances, Respondent referred the individual to the Cooney and Conway law firm and entered into a fee agreement with that firm whereby he would receive a percentage of the fee earned. With the exception of the Motkowicz case, Respondent did not advise the Leahy firm of the referral or his agreement with the Cooney firm, nor did he advise the firm of his receipt of referral fees in any of the cases. As to Motkowicz, Respondent's fee agreement with the Cooney firm provided that the Leahy firm and Respondent would each receive a portion of the fees. The Leahy firm was not advised that Respondent would receive a share of the fees, and the Leahy partner who originally was contacted by the client was not included in the fee agreement.

Regarding his referral of cases, Respondent maintained that, as head of the casualty department, he had sole discretion to determine whether a case should be referred to another attorney. The firm's managing partner acknowledged that Respondent was involved in the determination of whether a plaintiff's personal injury case would be referred to another attorney, but denied that Respondent had sole authority to refer such a matter out and to keep the entire referral fee.

When the Leahy firm learned that Respondent had received and kept referral fees for cases that originated during his employment with the firm, the firm brought a civil action against

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Respondent for an accounting. Ultimately, the case was settled and, by agreement of the parties, summary judgment was entered in favor of Respondent.

As stated previously, a partner has a fiduciary duty to his firm to avoid any self-preference or secret dealings and to refrain from diverting to himself any business opportunity that belonged to the firm. Further, the partner has an obligation of full disclosure regarding financial profit or advantage. See Winston & Strawn v. Nosal, supra.

We believe that the disclosure of referral arrangements, especially ones which inure solely to one partner's advantage, and notification regarding the receipt and retention of referral fees are subjects which fall within the scope of a fiduciary's obligations. Respondent denies breaching any obligations, however, or engaging in any other misconduct. He bases his position on his interpretation of the 1989 agreement as well as the resolution of his motion for summary judgment in the civil action brought by the Leahy firm. We are not persuaded by either argument.

The plain language of the 1989 agreement states that any legal business generated by Respondent during his employment with the firm belongs exclusively to the firm. During his testimony before this panel, Respondent did not specify which paragraphs or phrasing of the agreement he was relying on to support a contrary position, but in his summary judgment motion filed with the circuit court he pointed to the third paragraph of the agreement which pertains to nineteen cases he referred to other attorneys for handling. That paragraph states: "any fees generated on such cases belong entirely to you, so long as any hours expended by you are de minimis." In Respondent's view, the words "on such cases" could be interpreted to mean that any cases like the original nineteen cases would be treated in the same manner as those cases, i.e. the fees generated on such cases would belong solely to him

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We believe that interpretation is contrary to the intent of the specific paragraph as well as the language of the remainder of the agreement which specifically provides that cases brought into the firm during Respondent's employment belong to the firm. Even if we accepted Respondent's interpretation that the language of paragraph three was intended to extend to future cases, then a subsequent paragraph requiring Respondent to "account to the firm for all fees generated" would also extend to future cases. To read the contract any other way would be disingenuous. Significantly, Respondent did not provide any such accounting for the fees generated by his later cases.

Respondent made much of the fact that a summary judgment was entered in his favor in the civil suit filed by the Leahy firm. While that judgment does not control our decision, it is a factor that we can consider in reaching our final conclusion. See In re Owens, 144 Ill.2d 372, 379, 581 N.E.2d 633 (1991) (while a civil judgment may not be the only factor of consideration for a hearing panel, it may be a component in the greater whole of the panel's decision). We also consider the circumstances leading up to and surrounding the entry of the judgment. The evidence clearly established that the entry of judgment in Respondent's favor was part of a negotiated settlement, and unopposed by the Leahy firm. The language of the order, which stated that the 1989 agreement could be interpreted as allowing Respondent to retain referral fees, tracked the language of a stipulation which was signed by a Leahy partner. That partner specifically denied that he agreed with the interpretation or that he considered the interpretation to be "reasonable"; rather, he consented to the language because he wanted to settle the matter and because he recognized that anyone can place his own interpretation on any given language.

Respondent argued that we are bound by the judicial admissions made by the Leahy firm in the civil proceedings. Those "admissions" resulted from the firm's failure to respond to a Request to Admit which asserted, inter alia, that other Leahy partners were allowed to keep

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referral fees. We recognize that Supreme Court Rule 216 requires, in the absence of a response, that assertions made in a Request to Admit be taken as true, but Respondent presented no authority which would require us to give overriding weight to those assertions in this proceeding. Again, we believe the better practice is to consider the assertions and the firm's failure to respond to the assertions in the context of the parties' settlement negotiations and in conjunction with the testimony we received during the disciplinary hearing. The managing partner of the Leahy firm testified that partners were not allowed to keep 100% of their referral fees; rather, they shared in the fees as owners of the firm. The testimony was credible and consistent with the language of the 1989 agreement which stated that, for all owners of the firm, business brought into the firm during employment belonged "exclusively" to the firm.

We find nothing in the 1989 agreement or Respondent's other arguments which negates or detracts from the fiduciary duties Respondent owed to the Leahy firm. In fact, the agreement is very much consistent with Respondent's obligations to disclose his dealings and place the firm's interests and opportunities ahead of his own interests. Even if the contract were interpreted in Respondent's favor, we do not believe it trumps his overriding duty to disclose his business dealings to his partners. See Labovitz v. Dolan, supra (rights and obligations in partnership agreement are encumbered by supreme fiduciary duty of fairness, honesty and good faith to partners).

In this case the clients whose business gave rise to the referral fees contacted Respondent after he became a partner/shareholder at the Leahy firm. As a part-owner of the firm, he owed a duty to his fellow owners to notify them of that business opportunity as well as any actions he intended to take regarding that opportunity. In failing to do so, he placed his own financial interests above the firm's interests and profitability. We find therefore, that by entering into

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referral agreements without notifying his firm and failing to report those fees to the firm, Respondent placed his own interests above those of the firm and breached his fiduciary duties.

We also find that by failing to disclose his receipt of the fees, which in a number of cases were paid by checks sent to his home address, Respondent acted dishonestly in violation of 8.4(a)(4). If we had any doubt regarding his intent to conceal his activities, his actions with respect to the Motkowicz and Sherry cases confirm his motivations. With respect to Motkowicz, Respondent entered into a referral agreement which provided that the Leahy firm would receive 25% of the referral fee and he would receive 10% of the fee. Notably, the agreement made no mention of the Leahy partner who generated the Motkowicz business and Respondent never disclosed the fact that he was taking a share of the referral fee. With respect to the Sherry matter, we heard testimony from Patricia Sherry that when she signed the referral agreement Respondent instructed her to refrain from discussing it outside the room.

Although we have found that Respondent breached his fiduciary duties in this case, we do not find that his retention of referral fees amounted to a conversion. In our opinion the most objectionable conduct in this case is Respondent's lack of disclosure and his failure to report his fees to the firm. Further, as with Counts I and V, we view this dispute as a private matter which did not tend to defeat the administration of justice or bring the courts or legal profession into disrepute.

Count XI

Count XI alleged that Respondent, while employed by the Chilton law firm, handled cases that were not in keeping with the policies of the law firm and used firm funds to pay costs associated with the unauthorized work.

When Respondent began work at the Chilton firm in 2003, he brought a number of plaintiffs' matters with him from his former firm. We heard conflicting testimony as to whether

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Respondent disclosed his handling of those cases to firm management. Larry Chilton denied that Respondent informed him, during their pre-employment discussion, of his intention to bring plaintiffs' cases to the firm. Chilton stated the topic did not come up and, if it had, he could not envision approving such a plan. He did recall advising Respondent that the firm does not handle plaintiffs' work. Conversely, Respondent testified that he did discuss his plaintiffs' cases with Chilton during the initial interview. He acknowledged being told by Chilton that he was not to file suit against any of the insurance companies with which the firm did business. Jon Yambert stated emphatically that Respondent, after beginning work at the firm, was informed on more than one occasion that the firm does not handle plaintiffs' work.

The foregoing testimony establishes that Respondent was informed as to the type of work the Chilton firm handled, as well as the firm's expectations regarding new cases once Respondent joined the firm. The evidence did not clearly show, however, that Respondent was fully apprised of his obligations regarding the pending cases he brought with him to the firm. We find it somewhat difficult to accept Chilton's testimony that the subject of Respondent's specific caseload was not broached during the initial interview. That a firm's managing partner would consider a lawyer for prospective employment without asking specific questions concerning the cases the prospective partner was handling and/or bringing to the firm, simply defies logic.

After beginning work at the Chilton firm, Respondent continued his work on the plaintiffs' cases he brought with him. Jon Yambert pointed out some irregularities, which he regarded with extreme suspicion, in the handling of those cases. We view some of those concerns, such as the manner in which Respondent signed his name on pleadings and his opening of firm files on an "as needed" basis, as a matter of personal style and a reflection of his unfamiliarity with firm protocol which, as Yambert admitted, was not reduced to writing. Regarding Respondent's use of correspondence with the initials "kd," a topic on which we heard

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much evidence, the record does reflect that a person with those initials had an association with Respondent's friend, Laura DeAndrea-Iversen. Thus we give credence to Respondent's explanation that he used correspondence from a disk given to him by DeAndrea-Iversen, and reject the implication that he improperly used the initials of a former Chilton secretary.

We are troubled by Respondent's association with DeAndrea-Iversen, and certainly do not condone his admitted signing of her name to pleadings or his failure to fully disclose their association to the firm. The evidence, however, indicates that his utilization of DeAndrea-Iversen's services was an attempt to avoid using the firm name in matters asserted against insurers who were clients of the firm, and to shield the firm from any complaints by clients. We did not perceive any effort or intent by Respondent to create the impression, either implicitly or explicitly, that DeAndrea-Iversen was a member of the Chilton firm.

The evidence established that with respect to at least four of Respondent's plaintiffs' cases, fees or costs totaling approximately $1300 were paid by the Chilton firm. Yambert acknowledged he signed the checks without questioning the payments. The documents pertaining to those cases reflect that Respondent opened a firm file and obtained a firm identification number for each case at or about the time the checks were drawn for payment of fees. The opening of a firm file and the use of the Chilton firm name on correspondence and pleadings indicates Respondent's intent to integrate the cases into the firm system. As such, we do not view the use of firm funds to advance the progress of those cases as inappropriate or dishonest, or as a conversion of firm funds. We note that Respondent had no agreement with the Chilton firm as to how any fees received from his plaintiffs' cases would be divided and those cases generated no fees while he was at the firm. If he had been shown to be the sole recipient or intended sole recipient of any fees, our opinion regarding conversion might be different since he

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would have used firm funds for cases that had no benefit to the firm. Without that information, however, we cannot assume that the firm had no stake in the cases.

We believe Respondent caused problems for himself by failing to ensure that the Chilton firm was fully apprised of his activities. We do not believe, however, that he was attempting to conceal his work on plaintiffs' cases, that he was placing his own interests above the interests of the firm, that he converted firm funds, or that any dishonest motives were associated with his use of an outside attorney. Indeed, in light of the evidence presented to us, we are not prepared to conclude that Respondent's actions at the Chilton firm were the result of anything other than a misunderstanding with respect to the firm's policies and expectations. We note that firm management also bears some responsibility for that misunderstanding for its failure to fully investigate and question Respondent's practice when he began work at the firm.

For the foregoing reasons, we find the Administrator did not prove by clear and convincing evidence that Respondent converted law firm funds; breached his fiduciary duties to the firm; engaged in dishonesty, fraud, deceit or misrepresentation in violation of Rule 8.4(a)(4); or engaged in conduct which tends to defeat the administration of justice or bring the courts or the legal profession into disrepute in violation of Supreme Court Rule 770.

RECOMMENDATION

Having concluded that some of the charges of misconduct were proved, we must determine the appropriate discipline warranted by the misconduct. In determining the proper sanction, we consider the purposes of the disciplinary process. The goal of these proceedings is not to punish but rather to safeguard the public, maintain the integrity of the profession and protect the administration of justice from reproach. In re Timpone, 157 Ill.2d 178, 623 N.E.2d 300 (1993). Another factor for consideration is the deterrent value of attorney discipline and the

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need to impress upon others the repercussions of errors such as those committed by Respondent in the present case. In re Discipio, 163 Ill.2d 515, 645 N.E.2d 906, 912 (1994).

We also take into account those circumstances which may mitigate and/or aggravate the misconduct. In re Witt, 145 Ill.2d 380, 583 N.E.2d 526, 535 (1991). In mitigation, the evidence established that Respondent cooperated in the proceedings, enjoys a reputation for truth and honesty, and has not been previously disciplined. See In re Lenz, 108 Ill.2d 445, 484 N.E.2d 1093 (1985); In re Clayter, 78 Ill.2d 276, 399 N.E.2d 1318 (1980).

In aggravation, we consider the harm or risk of harm caused by Respondent's actions. See In re Saladino, 71 Ill. 2d 263, 375 N.E.2d 102 (1978) (discipline should be "closely linked to the harm caused or the unreasonable risk created by the [attorney's] lack of care"). In this case Respondent caused financial harm to the Leahy firm by diverting fees to Russell Jersey. Further, by failing to disclose his referral of cases and his referral fees, he placed his own self interests ahead of the firm's interests and deprived the firm of potential business opportunities.

We turn now to a determination of appropriate discipline. The Administrator suggested that Respondent's misconduct warrants disbarment. Respondent disavowed any misconduct and therefore argued that any sanction would be unwarranted. He did acknowledge, however, that some cases have imposed mild sanctions for an attorney's failure to disclose and share fees with partners.

The Administrator cited several cases in which attorneys were severely sanctioned for improperly reaping financial gains. Generally, those cases involved conduct that either was far more egregious than the misconduct in this case, or went beyond the internal workings of a law firm and resulted in harm to clients. For instance in In re Nadell, 96 CH 348, M.R. 12524 (May 28, 1996) the attorney was suspended, on consent, for three years for charging clients $31,300 in expenses which he had not incurred on their behalf. Similarly, in In re Salomon, 94 CH 526,

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M.R. 10420 (September 23, 1994) the attorney was disbarred on consent for fraudulently billing clients more than $200,000 for expenses, overcharging a client by $37,000, and withholding fees from his partners. In In re Walsh, 94 CH 653, M.R. 16705 (June 30, 2000) the attorney, whose conduct resulted in a criminal conviction, was disbarred for engaging in multiple instances of fraudulent billing to clients as well as submitting false time sheets and expense reports to her law firm. In In re Quinlivan, 95 CH 154, M.R. 11283 (May 26, 1995) the attorney was disbarred on consent for organizing and recruiting two other attorneys to participate in an elaborate scheme to defraud his employer by submitting fictitious bills for services that were not performed. One of the participating attorneys in that scheme was also disbarred. In re Rice, 95 CH 210, M.R. 13391 (March 21, 1997).

We believe the cases cited by Respondent are more closely aligned with the present case and provide better guidance for our recommendation. In In re Hilliard, 04 CH 58, M.R. 19967 (March 18, 2005), the attorney was suspended on consent for five months for receiving and using, without authorization, a $15,000 retainer fee which he should have remitted to his law firm. In In re Morse, 99 CH 82, M.R. 17319 (March 22, 2001) the attorney was suspended on consent for five months, with conditions, after he personally received and used a $30,000 referral fee and a $4,059 cost reimbursement, without notifying his law firm. In mitigation the attorney had acted under a mistaken understanding of the firm's referral fee policy. In In re Schiller, 98 CH 132, M.R. 15876 (May 25, 1999) the attorney was suspended for five months on consent after the attorney received $4,586 in false expense reimbursements from his firm.

In In re Michod, 97 CH 99, M.R. 17317 (March 22, 2001), also cited by the Respondent, the attorney was suspended for five months for converting $112,500 in legal fees in which he and his partners had an interest. In determining a sanction the Review Board took note of the fact that no clients were harmed and "this case, at its core, involves a dispute between attorneys over

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fees." See also In re Johnson, 133 Ill.2d 516, 552 N.E.2d 702 (1989) (Court found that manner in which attorney dealt with his co-counsel was deserving of a sanction, but also considered the fact that "this is purely a dispute between two attorneys concerning the division of fees.")

We look to the foregoing cases for guidance but note that in Hilliard, Morse and Michod the attorneys misappropriated only one fee. Respondent's multiple instances of misconduct over a period of years weighs in favor of a lengthier suspension. On the other hand, this particular Respondent has practiced without discipline for thirty years and has maintained a reputation for truth and honesty. Further, because no actual harm resulted to any clients, we do not believe he presents a threat to the safety of the public or that his actions jeopardized the integrity of the legal profession.

Having considered the misconduct that was proved, the mitigating factors, the relevant caselaw, and the purposes of the disciplinary process, we conclude that Respondent's misconduct warrants a suspension from the practice of law for a period of one year. We further conclude that Respondent would benefit from further education regarding his ethical and fiduciary obligations, and from a monitoring of his accounting procedures with respect to his receipt of funds and allocation of fees. See In re Morse, supra (attorney who misappropriated law firm funds required to complete a course in professional responsibility). We therefore recommend that the last six months of the suspension period be stayed and Respondent placed on probation for a period of six months subject to the following conditions:

  1. Prior to the end of the probation period Respondent shall attend and complete the course in legal ethics and professional responsibility offered by the Illinois Professional Responsibility Institute;

  2. Respondent shall establish and utilize a system for the handling and accounting of funds belonging to third parties, including his partner(s), that is consistent with his fiduciary obligations;

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  1. Respondent shall attend meetings scheduled by the Commission probation officer as requested by the Administrator and submit quarterly written reports to the Administrator concerning the extent of his compliance with the conditions of probation;

  2. Respondent shall notify the Administrator within fourteen days of any change of address;

  3. Respondent shall comply with the Illinois Rules of Professional Conduct and shall timely cooperate with the Administrator in providing information regarding any investigation relating to his conduct;

  4. Respondent shall reimburse the Commission for the costs of this proceeding as defined in Supreme Court Rule 773 and shall reimburse the Commission for any further costs incurred during the period of probation;

  5. Probation shall be revoked if Respondent does not comply with the foregoing requirements. The remainder of the one-year suspension shall commence from the date of the determination that any term of probation has been violated.

In addition to the foregoing conditions, we highly recommend that Respondent complete a class in partnership obligations.

Date Entered: October 15, 2007

Debra J. Braselton, with David A. Dattilo concurring.

William H. Hooks, dissenting:

I respectfully dissent from the majority panel's findings of misconduct. I do not believe the Administrator proved by clear and convincing evidence that Respondent's actions breached any duty to the Leahy firm, or that they were intentionally dishonest. With respect to Count I, Respondent testified that Russell Jersey, or Jersey's partner, had some initial contact with Norell Liboy and therefore Respondent believed a division of fees was appropriate. Respondent's explanation for his action was not contradicted. As to Counts II through IV and Counts VI

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through X, the evidence showed that Respondent's actions were based on his interpretation of past practices and his written agreement with his law firm. The fact that he received his referral fees, which he believed were owed solely to him, by checks sent to his home address is not indicative of secrecy or malevolent intent. As the recipient of the fees, he chose a method of payment that was most convenient to him.

Although I would find a failure of proof by the Administrator, I believe the larger, and more significant, issue in this case is whether this action should have been brought in the first place. In reviewing the pleadings and evidence, I saw nothing more than a private dispute between an attorney and his employer/law firm over the appropriate amount of the attorney's compensation. This type of dispute is properly resolved in a civil proceeding and such an action was, in fact, brought by the Leahy law firm against Respondent in the Chancery Division of the Circuit Court of Cook County under case number 04 CH 16801. It is worth noting that the aforementioned lawsuit by the Leahy firm was settled and summary judgment was entered in favor of Respondent. For the Administrator to become involved in this dispute and scrutinize an employment relationship merely because Respondent is an attorney is, in my view, an inappropriate extension of that office and reaches beyond the oft-stated purposes of these proceedings, which are to safeguard the public, maintain the integrity of the profession and protect the administration of justice from reproach.

In this case, no clients were involved in or harmed by Respondent's actions, and thus the need for any public protection is unwarranted. Further, the Administrator's presentation was devoid of any proof that the private disagreement, or the resultant civil action which was resolved amiably by agreement of the parties, caused any harm to the reputation of the legal profession or to the administration of justice. The lack of any need to redress public concerns raises the

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question whether the prosecution of this case was more about exerting control over an attorney's business arrangement with his firm than about furthering the purposes of the disciplinary process.

Both the public and the legal profession would be best served if the Administrator utilized the Commission's resources to prosecute those attorneys who, in the course of practicing law or holding themselves out as a member of the legal profession, have abused the privilege of being a licensed attorney. Misconduct that occurs in the course of representing clients should be vigorously redressed through the forum of disciplinary proceedings because such actions affect the integrity of the profession and place the public in jeopardy of receiving inferior services. Similarly, the public must be protected from attorneys who engage in conduct which is illegal in nature, such as bribery or fraud.

The case before us is different. Of all potential groups of persons capable of protecting themselves, lawyers in partnerships with other lawyers are particularly qualified and fully capable or pursuing their claims against one another in partnership suits. Therefore, I find that the prosecution of attorneys who are involved in private financial disputes with their law firms, which disputes have no bearing on the quality of services provided to clients, is not only an injudicious use of resources but, in my mind, an abuse of prosecutorial power and authority.

Recently another hearing panel considered a fee dispute between an attorney and his law firm. In In re Lefkowitz, 05 CH 14, (September 8, 2006) the Hearing Board found that an attorney, by retaining fees in which his law firm also claimed an interest, did not convert those funds or engage in any other misconduct. Although the circumstances of that dispute differ from the case before this panel, the Board in that case took note of the fact that "no harm to clients or the public occurred," the matter "was a private contractual dispute between Respondent and [his firm]" and the controversy involved "an arrangement which was not workable from the outset." The charges against Lefkowitz were dismissed.

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Because I believe the particular Complaint fashioned by the Administrator in the instant matter amounts to heavy handed overreaching, I would recommend that the charges against Respondent be dismissed.

William H. Hooks