Filed April 29, 2010
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
Commission No. 09 CH 15
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on February 10, 2010 at the offices of the Attorney Registration and Disciplinary Commission ("ARDC") in Chicago, Illinois before a hearing panel consisting of Patrick M. Blanchard, Chair, Matthew J. Egan and Bernard Judge. Marcia Topper Wolf represented the Administrator of the Attorney Registration and Disciplinary Commission. Respondent Leonard Mason appeared and was represented by Warren Lupel.
On April 14, 2009, the Administrator filed a one-count Complaint against Respondent alleging that he engaged in misconduct by preparing a client's trust agreement which named him as a beneficiary. Specifically, the Complaint alleged that Respondent breached a fiduciary duty to the client, overreached their relationship, exerted undue influence and violated Rules 1.7(b), 1.8(c), 8.4(a)(5) and Supreme Court Rule 770.
On May 28, 2009 Respondent filed an Answer, with attached exhibits, in which he admitted some of the allegations, denied others, and denied engaging in any misconduct.
The Administrator presented two witnesses, including Respondent, and twenty-three exhibits, which were admitted into evidence. Respondent testified on his own behalf, called eight additional witnesses, and presented fifteen exhibits.
Respondent attended the University of Illinois and received a degree in accounting. After serving in the military from 1956 to 1958, he worked as an accountant at Inland Steel and also maintained a home office where he did accounting and tax work for clients. (Tr. 249).
In 1959 Respondent and his wife bought a condominium in a four-unit building in Skokie, and there they met Herman and Sylvia Margolis who were residents of the same building. Respondent performed accounting and tax work for the Margolises and reviewed their retirement plans. At the urging of Herman Margolis, Respondent attended a law school night program from 1964 to 1968, while maintaining his tax practice. Since becoming licensed to practice law in 1968, Respondent has been a sole practitioner focusing on corporate issues, real estate and estate work. (Tr. 86, 249-51, 255).
Prior to Herman Margolis's death in 1988, Respondent had prepared wills for the couple. In 1993 he prepared a will and living trust agreement for Sylvia Margolis. The 1993 documents named Respondent as executor of the will and successor trustee of the trust agreement. The trust agreement provided that after bequests of $25,000 to specific beneficiaries, Respondent would receive one-sixth of the remaining balance of the estate and, if he predeceased Sylvia, his children were to receive his share. (Tr. 89, 91; AX 1, 2).
From 1996 to 2006 Respondent prepared nine amendments to Sylvia's trust agreement. In each of the amendments, he was named as successor trustee. The specific bequests set forth in the first amendment included $10,000 to the Chicago Lyric Opera. Beginning with the second
amendment, the specific bequests included $50,000 to both Respondent and the Lyric Opera. The amount of Sylvia's bequest to Respondent remained the same in the third through eighth amendments. In the ninth and final amendment, Sylvia's total bequests of $300,000 included a $75,000 bequest to Respondent and a $50,000 bequest to the Lyric Opera. (AX 4, 6, 9-15).
Jonathan Siner, an attorney, testified he is the Director of Planned Giving at the Lyric Opera of Chicago. In that capacity, he participates in general fund raising and assists patrons who are interested in including the Lyric Opera in their wills and trusts. (Tr. 33).
Siner stated that Sylvia Margolis contacted the Lyric Opera in 1997 regarding the inclusion of that organization in her will. After sending information to Sylvia, Siner received a telephone call from Respondent, who indicated he represented Sylvia and was in the process of amending her trust to include the Lyric Opera. Siner recalled that initially Sylvia wanted to leave $20,000 to the Lyric, but later indicated she wanted to increase the gift to $50,000. (Tr. 36-38, 64).
On November 21, 1997 Siner sent a letter to Respondent confirming Sylvia's intent and enclosing a gift agreement for her signature. Several weeks later he received from Respondent the signed agreement as well as a copy of the second amendment to Sylvia's living trust, which included the $50,000 bequest to the Lyric Opera. Siner examined the three-page amendment to confirm the gift to the Lyric Opera and to verify the document was properly executed, but did not look at the remainder of the document, and therefore did not notice a bequest to Respondent. Siner had no further contact with Respondent prior to Sylvia's death in March 2008. (Tr. 39-44, 59-60, 66; Adm. Exs. 6-8, Resp. Ex. 5-7).
On April 10, 2008 Siner received a telephone call from Respondent informing him of Sylvia's death and additional amendments to her trust. Siner learned that due to Sylvia's
extensive home care nursing expenses, the amount of her estate had been reduced and the funds might not cover all her bequests. He also learned that Sylvia's trust included a bequest to Respondent for $75,000. Siner then reviewed the 1997 documents and saw a $50,000 bequest to Respondent. Several days later Siner received a letter from Respondent confirming the information Respondent had given him during their telephone call. (Tr. 45-48; Adm. Ex. 16).
Siner testified he knew of situations where an estate was depleted due to medical expenses, but had never seen a situation where an estate could not cover bequests because an attorney was also receiving a bequest. He brought the matter to the attention of his supervisors, who instructed him to refer the matter to the Lyric Opera's legal counsel, Jenner & Block. Siner sent Respondent a letter informing him that the matter had been turned over to the Jenner & Block law firm, and thereafter he had no further contact with Respondent. (Tr. 49-50).
Siner stated that the Lyric Opera received a partial distribution of $16,667 in June 2008. Upon advice of counsel, the check was not cashed. (Tr. 51-52; Adm. Ex. 17).
Siner identified a July 28, 2008 letter from Jenner & Block to Respondent with an enclosed draft complaint naming Respondent as a defendant in a suit brought by the Lyric Opera. The letter indicated that prior to filing the complaint, Jenner & Block would give Respondent an opportunity to demonstrate he had not exerted undue influence in the drafting of the trust agreement and the inclusion of a distribution to himself. Siner acknowledged that the complaint was never filed. (Tr. 52-53, 75-80; Adm. Ex. 19).
In early August 2008 the Lyric Opera, through its counsel, received a second distribution of $16,667 and a financial report from Respondent. The check was not cashed immediately but sometime that month, on advice of counsel, that check and the earlier distribution check were both cashed. On August 27, 2008 Respondent sent a final distribution letter to Jenner & Block along with a check for $16,666. The letter stated that Sylvia's specific bequests totaled $300,000
but because the amount available for distribution was only $286,941.66, Respondent was absorbing the shortfall of $13,058.34. Respondent's letter was the first time Siner was aware of Respondent's intent to reduce his own distribution. (Tr. 54-57, 81-82; Adm. Ex. 20-21).
Siner acknowledged that the Lyric Opera received its full bequest of $50,000. He explained that he felt obligated to report Respondent's conduct to the ARDC because he believed Respondent had engaged in unethical conduct by drafting a will naming himself as a beneficiary. Siner did not know the specific rule that was violated and was not personally familiar with Rule 1.8(c), but thought Respondent's action fell under the conflict of interest rules. (Tr. 57-58, 67-68, 81).
On July 14, 2008 Siner sent a letter to the ARDC regarding Respondent's conduct with respect to Sylvia. Siner received a copy of Respondent's July 29, 2008 response to the ARDC from Jenner & Block, which had received it from Respondent. Siner was not asked to reply to Respondent's letter, and had no contact with the ARDC until sometime after August 2008 when the Administrator's counsel requested his file. (Tr. 67-71, 74; Adm. Ex. 23; Resp. Ex. 12).
Respondent testified that the Margolises were approximately twenty years older than he and his wife and had no children. After Respondent and his family moved from Skokie to Northbrook in 1967, they saw the Margolises approximately every two months. Sometimes Respondent would visit them on his own in connection with their estate and tax matters. Respondent described the relationship between his family and the Margolises as extremely friendly and very close. (Tr. 87-88, 271-72).
The Margolises moved to Florida in the early 1970s, and thereafter Respondent spoke to them three or four times per year. Respondent and his family visited the Margolises in Florida on one occasion, but did not stay with them. (Tr. 88).
Sometime in the 1980s the Margolises moved back to Chicago. Respondent saw them for dinners, visited Herman in the hospital many times, and prepared the Margolises' wills prior to Herman's death in 1988. Upon Herman's death, Sylvia inherited all of his assets, and moved back to Florida. Thereafter, Respondent saw Sylvia only when she visited Chicago. Sylvia returned to Chicago in the early 1990s and from that time until 2006 Respondent visited her approximately once a month. (Tr. 88-91, 265-66, 270-71).
A letter from Respondent to Sylvia at her Lincolnwood, Illinois address dated January 18, 1993, indicates he had been trying to contact her at her brother's address in Florida but he was not able to reach her at the address she had given him, and could not locate a telephone number for the brother. The letter requested that she provide a Florida telephone number and confirm the Florida address. (Adm. Ex. 3)
In 1993 Respondent prepared Sylvia's will and her living trust agreement. He believed he was named as executor and successor trustee in those documents, despite suggesting other people to fill those roles, because of his friendship with Sylvia over the years and because she trusted him and had confidence in him. Respondent signed the trust agreement as successor trustee, and then signed and placed his seal upon the document as a notary public certifying that Sylvia was a person known to him and that she had signed the trust as a free and voluntary act. (Tr. 91-95, 274-75; Adm. Ex. 1-3).
Sylvia's will provided that her estate assets were to be distributed in accordance with the trust agreement, which set forth certain specific bequests and named Respondent as one of six residual beneficiaries who would share the balance of the estate unless he predeceased Sylvia, in which case his children were to receive his share. If any of the other five residual beneficiaries predeceased Sylvia, their shares were to be equally divided among the other beneficiaries. Respondent explained that Sylvia had a great affection for his children and had decided, along
with Herman, that Respondent's family would share a partial portion of her estate. He did not believe that Sylvia had any other close friends at that time. Prior to the 1993 trust agreement, Sylvia had not named Respondent as a beneficiary in any will or trust. (Tr. 94-96, 269, 273; Adm. Ex. 2)
Respondent stated that, at the time he prepared the 1993 will and trust agreement, he was not aware of Professional Rule 1.8(c), which prohibits a lawyer from preparing an instrument giving the lawyer or a person related to the lawyer any substantial gift except where the client is related to the donee. He acknowledged he was not a blood relative of Sylvia Margolis. He further acknowledged he did not tell Sylvia that he could not prepare instruments giving himself a substantial gift, that in preparing such a document he was creating a conflict of interest, or that her trust could be challenged if he prepared documents bestowing upon himself a substantial gift. He did not obtain any written waiver from Sylvia. (Tr. 97-99, 315-16).
Respondent testified he told Sylvia in 1993 that she should seek the services of another attorney to prepare the estate documents, but Sylvia vehemently rejected that suggestion, because she did not want to consult another attorney or have anyone else know her business affairs. Respondent stated he made the suggestion to Sylvia because, based on his instruction in law school and what he had learned from other practitioners, he was uncomfortable with preparing a document that named him as a beneficiary. Respondent has no written evidence of his conversation with Sylvia although he did recall mentioning her matter, but not her name, to another attorney with whom he shared an office. (Tr. 98-99, 309-13, 317).
Beginning in 1996, Respondent prepared nine amendments to Sylvia's living trust. The first amendment named Respondent as the successor trustee, provided for several specific bequests, including a bequest of $10,000 to the Chicago Lyric Opera, and stated that Respondent and two of Sylvia's nephews would each receive one-third of the estate that remained after
distribution to the specified beneficiaries. If any of the residuary beneficiaries predeceased Sylvia, that person's share was to be distributed to his surviving children. Respondent signed the amendment as successor trustee and notarized the document. (Tr. 100-02; Adm. Ex. 4).
Subsequent to the first amendment, Sylvia decided to increase her bequest to the Lyric Opera to $50,000, $20,000 of which was to be used to name two seats for herself and her husband. Respondent testified he discussed Sylvia's gift with Jonathan Siner of the Lyric Opera and on November 21, 1997, Siner sent Respondent a letter agreement for Sylvia's signature. On December 9, 1997 Sylvia signed a will and second amendment to her living trust, both of which were prepared by Respondent. Respondent signed the amendment as successor trustee and notarized the document. Under the second amendment, Respondent and the Lyric Opera were each named specific beneficiaries designated to receive $50,000. After Sylvia signed the letter agreement, Respondent approved it and sent it back to Siner along with a copy of the second amendment to Sylvia's living trust which had been executed on December 9, 1997. (Tr. 102-07; Adm. Ex. 6-8).
Respondent testified he prepared the third through eighth amendments to Sylvia's trust agreement and she signed the amendments on November 10, 1998, August 31, 1999, June 14, 2001, July 2, 2002, August 6, 2003, and July 9, 2004 respectively. Respondent signed each amendment as successor trustee and notarized each document. Respondent and the Lyric Opera both remained specific beneficiaries designated to receive $50,000 upon Sylvia's death. (Tr. 108-15; Adm. Exs. 9-14).
Respondent prepared a ninth and final amendment which Sylvia executed on May 17, 2006. Respondent signed the ninth amendment as successor trustee and notarized the document. Under the ninth amendment the bequest to Respondent was increased to $75,000, which was the largest share of the $300,000 bequeathed to individuals, and the Lyric Opera was to receive
$50,000. Two individuals were designated as residuary beneficiaries to receive any remaining balance after the bequests were distributed. (Tr. 115-17; Adm. Ex. 15).
With respect to the nine amendments, Respondent stated he may have raised the issue of independent counsel with Sylvia, but could not be certain that he did. He acknowledged that at a prior sworn statement he stated he had not advised Sylvia to seek independent counsel when he prepared the amendments to her living trust. In reviewing his deposition, however, he recalled an occasion sometime after 2006 when he was having lunch with Sylvia at the Hallmark and recognized an elderly attorney, Elmer Gertz, at another table. Respondent approached Gertz and spoke to him, but did not mention Sylvia's estate. When Respondent returned to his table, he advised Sylvia that Gertz would be a good person for her to consult regarding her estate. Sylvia, who Respondent described as being very strong-minded, replied that she did not want anyone to know her business. Respondent did not memorialize his advice in writing, no one overheard his conversation with Sylvia, and Gertz has since died. (Tr. 118-21, 314, 318).
With respect to Sylvia's mental condition, Respondent testified she was fine up to September 2006, and they had discussions concerning her finances and her husband's pension. In September he received a call informing him that Sylvia had left her apartment improperly dressed. He contacted Sylvia's doctor who examined her and recommended a nursing home or a 24-hour caregiver service. After discussing the options with Sylvia, Respondent arranged for a caregiver. (Tr. 286-88).
In the fall of 2006, Respondent began exercising his rights under a power of attorney Sylvia had signed ten years earlier. By that time she could no longer sign checks, so Respondent reviewed her bills with her and wrote many checks on her behalf. He explained that if any checks were made payable to him, they would only be for small amounts to reimburse him for cash he had expended. No checks were written for any purpose other than for Sylvia's benefit.
With respect to Sylvia's securities account, Respondent reviewed the monthly statements and spoke to her broker on the telephone regarding transactions. (Tr. 259-65, 289; Resp. Ex. 2).
Respondent was not aware of anyone visiting Sylvia between October 2006 and March 2008 other than her niece Jill and her cousin Clara. Following Sylvia's death on March 22, 2008, Respondent contacted the funeral home chosen by Sylvia, and located her burial garments. The funeral home register indicates that approximately twenty persons attended Sylvia's funeral, during which Respondent delivered a short eulogy he had written as well as one Sylvia wrote and requested him to read. After Sylvia's death Respondent received a sympathy card signed by several members of the hospice team that cared for Sylvia. (Tr. 118, 279-85; Resp. Ex. 9-11).
Respondent stated that he undertook the task of sorting through Sylvia's personal papers and clearing out her apartment, with no assistance from any of her family members or friends, because there was no one else to do it. He had Sylvia's jewelry appraised and sold, and had the proceeds added to the value of the estate. The costume jewelry that had no monetary value was given to Jill. (Tr. 278, 290-94).
On April 2, 2008 Respondent filed Sylvia's will. Shortly thereafter, he sent a letter to the beneficiaries notifying them of their interests in Sylvia's estate and the probability that the value of the estate would be less than the amount of the specific bequests, thereby resulting in a pro rata reduction for the specific beneficiaries. Respondent testified that prior to 2006 Sylvia's brokerage account was valued at $350,000 but because of her medical bills and the expenses of her full time care, the value at the time of her death had decreased to approximately $287,000. In his letter Respondent listed himself as one of the specific beneficiaries, but did not suggest that he would further reduce the distribution to himself so the other beneficiaries could take their full shares. (Tr. 118, 121-22, 284-85, 301; Adm. Ex. 16).
On June 27, 2008 Respondent sent another letter to the beneficiaries with checks representing a partial distribution of $100,000 in estate funds. Of that amount Respondent received $25,000, which was the largest share. On July 10, 2008 he sent a financial report to the beneficiaries. Again, no mention was made of Respondent taking less than his share of the estate so that the other beneficiaries could receive the full amount of their bequests. (Tr. 123-24; Adm. Exs. 17, 18).
Sometime in July 2008 Respondent received a letter from the ARDC and learned for the first time of Rule 1.8(c). Respondent stated that Jonathan Siner's July 14, 2008 notification to the ARDC, which precipitated the ARDC's letter to Respondent, did not mention Rule 1.8(c) nor did a July 28, 2008 letter to Respondent from counsel for the Lyric Opera regarding the filing of a lawsuit against Respondent for exerting undue influence over Sylvia. Respondent acknowledged that if he had learned of Rule 1.8(c) in 1997 when he sent Siner a copy of Sylvia's trust, he could have asked Sylvia to cancel the documents that had already been drafted. (Tr. 127, 299-302, 306; Adm. Ex. 19, 23).
On July 29, 2008 Respondent submitted a lengthy response to the ARDC in which he detailed his long time relationship with the Margolises and his preparation of the estate documents for Sylvia. He sent a copy of the response to counsel for the Lyric Opera. (Tr. 299-300, 304; Resp. Ex. 12).
On August 7, 2008 Respondent sent another financial report to the beneficiaries of Sylvia's estate along with a second distribution of $100,000 of estate funds. Respondent received another $25,000 and again made do mention of any reduction in his share. (Tr. 128, 292; Adm. Ex. 20, Resp. Ex. 13).
On August 27, 2009 Respondent sent a letter to the beneficiaries along with checks to cover the final distribution of estate funds. At that time Respondent reduced the distribution to
himself so that the Lyric Opera and the other specific beneficiaries would receive the full amount bequeathed by Sylvia. He testified that he made that decision because he believed the assets of the estate would be reduced if a lawsuit were involved. Respondent received a total of $61,941.66 from the estate, which was $13,000 less than the amount listed in the trust, and never offered to return any money to the estate. From the amount he received, Respondent gave $7,500 to each of his sons. (Tr. 128-30, 302-03; Adm. Ex. 21; Resp. Ex. 14).
Respondent stated he has two banker's boxes of documents which represent the work he performed for the Margolises over the years. He identified one of the boxes and stated that its contents include Sylvia's bank statements, personal funeral instructions, trust checkbook, medical bills, Merrill Lynch securities account file, pension check file, and her paid bills from October 2006 through her death in 2008. Respondent never charged Sylvia or Herman Margolis for any work he did on their behalf, nor did he charge Sylvia's estate for the work he did in connection with the accounting and distribution of funds. Respondent stated he does not charge family members for legal work and he considered the Margolises to be family. (Tr. 252-53, 256-58, 266-67, 298).
Phyllis Mason testified she has been married to Respondent since 1955. In 1959 they purchased a condominium in a four-unit building in Skokie. Phyllis and Respondent, and their two young sons Bruce and David, developed a relationship with Herman and Sylvia Margolis, who lived in the same building and who had no children. The Margolises babysat for Bruce and David, took the boys for walks, and attended their birthday parties. The families also shared meals in their respective homes and went out together. During the time Phyllis and Respondent lived in Skokie, Respondent worked as an accountant and performed tax and insurance work for the Margolises. (Tr. 133-38).
Phyllis and Respondent moved to Northbrook in 1967. Phyllis acknowledged that the distance changed their relationship with the Margolises, but recalled that they kept in touch and continued to have dinner every couple of months. In an earlier deposition, she testified that their dinners occurred two to three times per year. Phyllis stated that the Margolises insisted on an annual dinner with the Mason family and attended both Mason boys' bar mitzvahs. The families did not celebrate holidays together and the Margolises did not attend the boys' sporting events. (Tr. 138-42, 156-57).
Phyllis testified that the Margolises moved to Florida and lived there from approximately 1972 until 1988. During that time period they communicated by telephone and the Margolises traveled back to Illinois to attend Bruce's wedding. When Phyllis and Respondent traveled to Florida for a leisure trip, they had dinner with the Margolises, but did not stay with them. Phyllis stated that when the Margolises traveled to Europe, they brought back expensive gifts for her. (Tr. 141-44, 151, 158).
In 1988 the Margolises moved back from Florida and Herman passed away that year. Phyllis recalled that approximately ten people attended the funeral, including herself and Respondent, their sons Bruce and David, and their sons' wives. Following Herman's death, Sylvia lived in Florida for a few years and then returned to the Chicago area around 1992 to live in a senior residence in Lincolnwood. After approximately two years, Sylvia moved to the Hallmark, a residence for seniors on Lake Shore Drive in Chicago. At the urging of her cousins, Sylvia then moved to Vernon Hills for a short period of time, but when her cousins did not visit her as regularly as promised, she moved back to the Hallmark. (Tr. 144-49).
Phyllis recalled speaking on the telephone to Sylvia and visiting her at the Hallmark three times, including one occasion when she brought her grandchildren to meet Sylvia. She was aware that one of Sylvia's cousins also visited her. Phyllis stated that Sylvia did not visit her in
Northbrook, and she did not receive any gifts from Sylvia after Herman's death. The last time Phyllis saw Sylvia was several years before Sylvia died. Phyllis stated that she learned from Respondent, not more than a year prior to Sylvia's death, that he was a beneficiary under her trust, but she never heard them discuss Sylvia's estate. (Tr. 150-52, 159-60).
Phyllis testified that Sylvia was hospitalized for a couple of weeks prior to her death. Following the hospitalization, Sylvia went to a nursing home where she passed away after about a week. Phyllis knew of no one other than Respondent who visited Sylvia in the hospital and at the nursing home. She recalled that Respondent was contacted a number of times by Sylvia's caregivers. (Tr. 153, 160).
Phyllis stated that she and Respondent were among about twenty people who attended Sylvia's funeral. Respondent delivered a eulogy that had been written by Sylvia. (Tr. 154).
David Mason, Respondent's eldest son, testified he is an attorney practicing in the area of commercial finance. He recalled that during the first eight years of his life when his family lived in Skokie, Herman and Sylvia Margolis were like grandparents to him. They remembered his birthday and acted as baby-sitters, caregivers and disciplinarians. After David's family moved to Northbrook in 1967, the families visited each other and they met for annual dinners. David rarely saw the Margolises when they lived in Florida but upon their return, he saw them approximately once a year. The Margolises attended David's bar mitzvah in 1972 "like any other relative," and most likely attended his wedding in 1982. (Tr. 164-68, 172).
David recalled attending Herman's funeral. Following Herman's death, David saw Sylvia at social or family gatherings, such as his childrens' bar mitzvahs, but did not visit her, have dinner with her, or send her birthday cards. The last time he saw Sylvia was in 2002 or 2003. (Tr. 167, 173-74).
David was aware that his father visited Sylvia quite frequently during her later years and that Sylvia depended upon him for legal and general maintenance affairs. David did not know if Sylvia had any close personal friends. (Tr. 170-71).
With respect to Sylvia's last two years, David stated that when his parents traveled, his father left a folder with documents regarding Sylvia's estate and personal matters and instructions in case anything happened to her. David thought that, in reading through those documents, he must have learned that his father was a beneficiary of Sylvia's trust but he was not certain the information registered with him at the time. David has never been involved in estate planning and did not become aware of Rule 1.8(c) until his father informed him of the disciplinary proceedings. (Tr. 169-70, 176-77).
David stated he was vacationing when Sylvia passed away, and he did not attend her funeral. He was not aware, until he reviewed documents related to the disciplinary proceedings, that he was a successor to the successor trustee under Sylvia's trust or that he was to receive half of his father's share of Sylvia's estate if his father predeceased Sylvia. (Tr. 175-76).
Bruce Mason, Respondent's youngest son, testified he is an attorney with a firm that specializes in commercial real estate. Bruce recalled that when he was a young child his relationship with Herman Margolis was like a grandson to a grandfather. Herman babysat for him, and periodically took him to a park and out to lunch. Bruce recalled being in the Margolis home on a regular basis and receiving a magazine subscription from them on his birthdays. When the Mason family moved to Northbrook in 1967, they saw the Margolises less frequently, but Bruce remembered visiting them at their home to see slides of their travels, and meeting them annually for family dinners. (Tr. 185-92, 197).
Bruce testified that after the Margolises moved to Florida, he saw them only when they visited Chicago. The Margolises attended Bruce's bar mitzvah and wedding, and when Herman died, Bruce and his wife attended the funeral. Subsequently, when Bruce and his wife were visiting relatives in Florida, they took time to see Sylvia. When Sylvia moved back to Chicago, she did not visit Bruce's home and he saw her only rarely. Bruce recalled the last time he saw Sylvia was at his son's bar mitzvah in 2005. He did not attend her funeral, and was not aware until after her death that his father had prepared estate documents for her. (Tr. 190-99).
Pilar Porcioncula testified she worked as a caregiver for Sylvia Margolis from October 2006 until Sylvia's death in March 2008. When Pilar began caring for Sylvia, Sylvia's mental condition was good but she needed assistance with walking, bathing, and dressing. (Tr. 234-36).
Pilar testified that Respondent saw Sylvia two or three times each month to visit and look at her mail with her. His visits lasted between one-and-one-half and two hours. Other than Respondent, the only persons who came to see Sylvia were her niece Jill, who visited twice, and her cousin Clara, who visited once. Sylvia's nephew, Howard Verb, called on one occasion. Respondent was the person Pilar telephoned if Sylvia had a doctor's appointment, was injured, or was sick. Pilar never called anyone else, although she had telephone numbers for David Mason, and for Jill. (Tr. 237-40, 244).
Pilar recalled that she and Sylvia discussed Sylvia's intentions with respect to her estate. Sylvia told Pilar she would leave money to her niece Jill, her nephew Howard, her cousin Clara and Respondent. (Tr. 240).
Pilar was with Sylvia when she was hospitalized for nine days and recalled that Sylvia's only visitors were Pilar's own daughter and Respondent, who visited four or five times. When Sylvia left the hospital, she entered a nursing home and was there for one week before she died.
Pilar was with Sylvia during that time and recalled that Jill visited one time along with her father, and Respondent visited five times. When Sylvia died, Pilar contacted Respondent. (Tr. 241-44).
Pilar stated she did not meet Respondent's wife until Sylvia's funeral, and has never met Respondent's sons. (Tr. 244).
Marie Porcioncula testified she works as a caregiver and in that capacity she assists individuals with their daily living needs. From 2006 until March 2008 she worked at the Hallmark, an assisted living center for seniors. Beginning in October 2006 Maria's mother, Pilar Porcioncula, lived with and assisted Sylvia Margolis, a resident of the Hallmark. (Tr. 220-24).
Maria stated that during her free time from work, she spent time with her mother in Sylvia's apartment and sometimes helped her mother tend to Sylvia's physical needs. Maria visited Sylvia's apartment nearly every day and sometimes spent the night if she were working a late shift. When she stayed overnight she assisted her mother, who was having trouble getting enough sleep due to Sylvia's nighttime needs. (Tr. 224-26).
In February 2007, Maria was hired by Respondent to work for Sylvia at night. At that time Sylvia could remember some things, but over the next year her physical and mental condition worsened. In the six months before Sylvia died, she was forgetting everything. (Tr. 227, 232).
Maria recalled that Respondent visited Sylvia about twice each month, at which times he would see if she needed anything and check her mail and bills. Maria did not know of any other person who visited Sylvia and, in the case of any difficulty, knew of no one to contact other than Respondent. Based on her observations, Maria believed the relationship between Sylvia and Respondent to be that of family friends. (Tr. 228-29).
Maria stated that Sylvia was hospitalized in 2008 for more than one week and during that time Maria visited her about four times. Other than Maria's mother and Respondent, she saw no one else with Sylvia. After being released from the hospital, Sylvia went to a nursing home and was there approximately one week before she died. During Maria's trips to the nursing home, she saw no one visiting Sylvia other than Respondent. When Maria attended Sylvia's funeral, Respondent and his wife were the only persons she recognized. (Tr. 229-31).
Evidence Offered in Mitigation
Respondent has performed pro bono work for members of his synagogue, as well as for the synagogue itself, including real estate transactions for the acquisition of additional land and employment contracts for the rabbi and cantor. Respondent stated he has never been a plaintiff or defendant in a lawsuit, nor has any client ever complained about him. (Tr. 252-54).
Ron Cohen, an Illinois attorney specializing in domestic relations and real estate, testified he has known Respondent for fifteen years and used to share an office suite with Respondent and other attorneys. He recalled handling real estate transactions for Respondent's clients when Respondent was hospitalized for approximately one month. Cohen stated that Respondent's clients were satisfied that he was competent because Respondent had chosen him to represent them. (Tr. 202-05).
Cohen testified that Respondent's reputation for truth and integrity is beyond reproach. The charges in the complaint do not change his opinion of Respondent. (Tr. 203, 206).
Rabbi Sander J. Mussman
Rabbi Sander Mussman testified he was ordained in 1959. He has known Respondent through Congregation Beth Shalom for thirty-eight years. Respondent was president of the Board of Trustees at one time, and is a frequent participant in Synagogue activities. (Tr. 208-09).
Rabbi Mussman testified that Respondent is honest, caring, trusting, and a man of integrity. Respondent prepared Rabbi Mussman's personal estate documents and has assisted members of the congregation who were not able to pay for legal services. The allegations of the Complaint, even if true, do not change Rabbi Mussman's opinion of Respondent. (Tr. 211, 214).
Harvey Gold testified he is the executive director of Congregation Beth Shalom in Northbrook, and has been associated with that Synagogue for thirty-eight years. During those years he has had regular contact with Respondent. Gold stated that Respondent is held in the highest regard by the congregation and has received the "Kavod Award" which is given annually to recognize good deeds within the Synagogue and the general community. (Tr. 215-17).
Gold testified that Respondent drafted his will and prepared his personal tax returns, and has served as legal counsel for the congregation and for the rabbis. (Tr. 217-18).
The Administrator reported that Respondent has not been disciplined by the Illinois Supreme Court.
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).
Respondent is charged with violating Professional Rules 1.8(c), 1.7(b), 8.4(a)(5), and Supreme Court Rule 771, breaching his fiduciary duty to Sylvia, and overreaching the attorney client relationship. Although the Complaint also charged Respondent with exerting undue influence over Sylvia, the Administrator indicated at hearing that she was not pursuing that charge.
The evidence showed, and Respondent admitted, that in 1993 he prepared a will and living trust agreement for Sylvia Margolis, and from 1996 to 2006 he prepared nine amendments to the trust agreement. Each of the trust documents included a bequest to Respondent. In the earlier documents Sylvia designated Respondent as one of several residual beneficiaries to her estate, but in 1997 she named him as a specific beneficiary who was to receive $50,000, and in 2006 she increased the bequest to $75,000.
Professional Rule 1.8(c), as enacted in 1990, provides that "a lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee." Thus, under 1.8(c) an attorney is prohibited from preparing estate documents in which he is named as the beneficiary of a substantial gift, unless he is related to the testator. In the present case, Respondent drafted documents in which he was designated to receive a substantial amount of money, and he was not a relative of Sylvia. Thus, we find that he violated Rule 1.8(c).
Although Respondent claimed he was not aware of Rule 1.8(c), the Supreme Court has repeatedly stated that ignorance of the Code is not an excuse for misconduct. See In re Howard, 188 Ill. 2d 423, 721 N.E.2d 1126 (1999); In re Gerard, 132 Ill. 2d 507, 548 N.E.2d 1051 (1989).
At any rate, even if Respondent were not aware of the specific rule, he did testify that he had some concern about a conflict of interest, and had a "feeling" that something might be amiss. Had he consulted the rules at that point he would have realized his dilemma, and could have acted to protect both his client and himself. His failure to do so raises concerns regarding the priority he assigns to his ethical obligations. This is especially a concern in light of the fact that Respondent concentrates his practice, in part, on estate planning and was unaware of the prohibitions related to the preparation of testamentary instruments.
We also find that Respondent engaged in a conflict of interest in violation of 1.7(b). That rule provides that a lawyer shall not represent a client if the representation may be materially limited by the lawyer's own interests, unless the lawyer reasonably believes the representation will not be adversely affected, and the client consents after disclosure. In In re LaPinska, 72 Ill. 2d 461, 381 N.E.2d 700 (1978) the Court stated that "the rule against representing conflicting interests is a rigid one, designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to preclude the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties. He should undertake no adverse employment, no matter how honest may be his motives and intentions." LaPinska, 381 N.E.2d at 703, citing People v. Gerold, 265 Ill. 448, 107 N.E. 165 (1914). In drafting Sylvia's trust agreement and amendments, Respondent's independent judgment could have been limited by the prospect of his own substantial financial gain, and thus his interests were conflicting.
We do not believe the evidence supported any waiver of Respondent's conflict. Although Respondent testified he counseled Sylvia in 1993 to consult another attorney, and we accept his testimony as true, he did not repeat that advice when he drafted the subsequent amendments, nor did he advise her that by preparing documents in which he was named as a beneficiary he was creating a conflict of interest and jeopardizing the validity of her trust
agreement. Without full knowledge of the consequences, Sylvia's indication that she wanted to proceed with Respondent cannot qualify as an informed consent or waiver.
For the reasons that we found a conflict of interest, we also find that Respondent breached his fiduciary duty to Sylvia. The existence of the attorney-client relationship creates a fiduciary relationship between those parties as a matter of law. In re Imming, 131 Ill. 2d 239, 545 N.E.2d 715 (1989). As a fiduciary, the attorney owes his client a duty of loyalty, a duty of care and a duty to avoid conflicts of interest. See In re Vrdolyak, 137 Ill. 2d 407, 560 N.E.2d 840 (1990); In re Wyer, 00 CH 10, M.R. 18227 (Nov. 26, 2002). In addition, an attorney has a fiduciary duty to make full disclosures to his client. See In re Timpone, 208 Ill. 2d 371, 804 N.E.2d 560 (2004) (Supreme Court affirmed hearing board's finding that attorney breached his fiduciary duty by failing to advise his client that there are limits on the types of transactions an attorney can enter into with a client). As explained above, Respondent's financial interests were in conflict with his objective representation of Sylvia, and he failed to advise her of that divergence. We therefore find that he breached his fiduciary duty to Sylvia.
The Administrator alleged that Respondent's notarization of Sylvia's testamentary documents was prohibited by the Illinois Notary Act, 5 ILCS sec. 312/6-104(b) which provides that a notary public shall not acknowledge any instrument in which the notary's name appears as a "party to the transaction." We have found no cases interpreting that phrase as it applies to this case, nor were any cited to us. Nonetheless, we believe the statutory mandate is clear -- for each of Sylvia's testamentary instruments in which Respondent was designated as the recipient of a bequest, he was prohibited from acknowledging that instrument. His failure to comply with the statutory prohibition was not an isolated occurrence and he offered no explanation for his noncompliance with the statute. We regard Respondent's acts in this regard as further evidence that he engaged in a conflict of interest and breached his fiduciary duty to Sylvia.
Finally, we find that Respondent engaged in conduct which tends to defeat the administration of justice and brings the legal profession into disrepute in violation of Supreme Court Rule 771. Respondent's violation of the professional rules, along with his failure to consult the rules when he believed he might be acting inappropriately, reflects negatively on the profession.
We do not find that Respondent overreached the attorney client relationship. An attorney commits overreaching when he takes undue advantage of the position of influence he holds vis-a-vis a client. In re Rinella, 175 Ill. 2d 504, 677 N.E.2d 909 (1996). See also In re Stillo, 68 Ill. 2d 49, 368 N.E.2d 897 (1977). While we concluded that Respondent placed himself in a position of conflicting interests, we do not believe the evidence showed that he took advantage of his relationship with Sylvia in order to reap a profit for himself, or that he suggested to Sylvia that he leave part of her estate to him or his family. On the contrary, the evidence indicates that Sylvia and Respondent were long-time friends and that Respondent performed many services for her and her husband without charge. Sylvia's caretakers, who we regarded as impartial witnesses, testified that Respondent devoted time and care to Sylvia and her affairs, and he was the person to contact in case of problems. The primary caretaker recalled having a conversation with Sylvia during which Sylvia expressed her intent to leave money to Respondent. We therefore conclude that Sylvia's bequest to Respondent reflected her intent and was not the result of Respondent taking advantage of any position of influence.
We also find that the Administrator did not prove that Respondent engaged in conduct that was prejudicial to the administration of justice in violation of Rule 8.4(a)(5). The Supreme Court has stated that in order to find a violation of 8.4(a)(5), there must be clear and convincing evidence of actual prejudice, rather than mere speculation. See Vrdolyak, 137 Ill. 2d 407 (1990) ("a bare assertion of prejudice is insufficient to sustain the charge. There must be clear and
convincing evidence that the administration of justice was, indeed, prejudiced."); See also In re Storment, 203 Ill. 2d 378, 786 N.E.2d 963 (2002). Further, the Review Board has stated on several occasions that "prejudice to the administration of justice" refers to an impact on pending court proceedings. See e.g. In re Nemoy, 03 CH 19, M.R. 20413 (Nov. 22, 2005) ("Prejudice to the administration of justice within the meaning of Rule 8.4(a)(5) requires the involvement of a tribunal); In re Odom, 01 CH 69, M.R. 19772 (May 19, 2005) ("For there to be prejudice to the administration of justice within the meaning of this Rule, it is our judgment, until the Supreme Court states otherwise, that there must be a tribunal involved"). The Administrator, in this case, did not establish that Respondent's misconduct resulted in any actual prejudice. While it is true that absent Respondent's receipt of a specific bequest funds would have been available for distribution to the residual beneficiaries of the estate, we are not convinced that Sylvia's will and trust would have been drafted any differently by an independent attorney. In addition, with respect to the Review Board's holdings that Rule 8.4(a)(5) requires an impact on court proceedings, we note that no judicial proceedings were involved in this matter.
As a final comment, we noted previously that counsel for the Administrator represented to us, and to Respondent, that she was not pursuing the charge of undue influence. Although Administrator's counsel then observed in closing argument that the charge may not have been effectively rebutted by Respondent, we do not believe counsel's statement resurrected that charge. Indeed, any other conclusion would place Respondent at an unfair advantage. If we were to consider the issue, however, we would find that Respondent's evidence of a long friendship between his family and the Margolises was compelling, and that Sylvia's bequest to Respondent was consistent with that relationship.
Having concluded that Respondent engaged in misconduct, we must determine the appropriate discipline warranted by that misconduct. The Administrator urged us to recommend that Respondent be suspended for ninety days. Respondent, on the other hand, argued that no sanction should be imposed in this case.
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). Attorney discipline also has a deterrent value in that it impresses 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 (1994).
We also consider those circumstances which may mitigate and/or aggravate the misconduct. In re Witt, 145 Ill. 2d 380, 583 N.E.2d 526 (1991). In mitigation we note that Respondent has practiced law for more than forty years with no prior complaints, has cooperated in these proceedings, has performed significant pro bono legal work for his synagogue and members of the congregation, and has a solid reputation for integrity and honesty. 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 addition, no evidence was presented that Respondent's actions were the result of corrupt or dishonest motives. See In re Kink, 92 Ill. 2d 293, 442 N.E.2d 206 (1982).
Counsel for the Administrator offered several cases in support of her request for a suspension. One case which resulted in a suspension of ninety days, In re Beaupre, 03 SH 32, M.R. 20233 (Sept. 26, 2005), bears marked similarities to the present case although, as noted below, some differences also exist. In Beaupre, the attorney drafted a series of wills over a ten-year period for an elderly husband and wife, and then for the wife after the husband died. Each
of the wills named the attorney and the attorney's wife as beneficiaries. The final change to the wife's will occurred five months prior to her death and resulted in a dramatic change in favor of the attorney, who was to receive a specific bequest of $25,000 as well as the entire residuary estate valued at approximately $350,000. Like Respondent in the present case, the attorney had a long-standing friendship with the couple, initially advised them to consult with another attorney, did not charge for his services, testified he was not aware of the prohibitions of Rule 1.8(c), presented character evidence and had practiced for many years with no prior discipline. The attorney was found to have violated Rules 1.8(c) and 1.7(b), although the Rule 1.7(b) finding stemmed from the conflict between the attorney's representation of the estate and his representation of himself and other beneficiaries in attempting to uphold the will. We view that conflict as more pronounced and egregious than Respondent's conflict in this case. We further note that the attorney in Beaupre overreached the attorney client relationship, a charge that was not proved in the present case, and he did not demonstrate the level of care for his client that Respondent demonstrated in this case.
The other two cases cited by the Administrator are less apposite. In In re Kirk, 04 CH 23, M.R. 21351 (Jan. 12, 2007) the attorney was suspended for ninety days, on consent, for violating Rules 1.8(c) and 1.7(b) and overreaching the attorney-client relationship. The attorney not only prepared a trust document that named himself and his wife as residuary beneficiaries of his elderly client's estate, he also engaged in a conflict of interest by purchasing property from the client. With respect to the real estate transaction, the agreed upon purchase price was substantially below the property's appraised value, the sale was completed without the client having the benefit of another attorney, and the attorney resold the property a short time later for a substantial profit.
In In re Oklepek, 00 CH 2, M.R. 18353 (Nov. 26, 2002) the attorney was suspended for six months for violating Rule 1.8(c), overreaching the attorney-client relationship, and breaching his fiduciary duty. The attorney prepared wills and trusts for an elderly client naming himself and his wife as beneficiaries and, in addition, the attorney used funds belonging to his client to open a certificate of deposit which listed himself, his wife and his client as joint owners. The fact that the attorney had been previously reprimanded for preparing a will naming himself as beneficiary was a significant factor in the imposition of a six month suspension.
Other cases have resulted in lesser sanctions. In fact, the earlier Oklepek case, which resulted in a reprimand by the Hearing Board, is more closely analogous to the present case than the later Oklepek case. In In re Oklepek, 98 CH 133 (Apr. 14, 1999), the attorney was reprimanded for preparing a will for a friend/client which named the attorney and his wife as beneficiaries of one-half of the client's personal effects and residuary estate. The parties stipulated that the attorney overreached the attorney-client relationship and violated Rule 1.8(c) by preparing a will in which he and his wife were beneficiaries. The attorney had practiced law for about twenty-five years without prior discipline, provided volunteer services to his church for about fifteen years, cooperated during the disciplinary proceedings, admitted the misconduct, and expressed remorse.
Likewise, in In re Merlie, 00 SH 55 (Apr. 19, 2001) the attorney was reprimanded by the Hearing Board for preparing a will which included a bequest to himself. A joint stipulation of facts indicated that the testator was competent and alert, the gift was the testator's idea, the attorney renounced the bequest when the ARDC charges were filed against him, and he practiced forty-eight years with no prior discipline. The parties stipulated that the attorney violated Rules 1.8(c) and Rule 771. In In re Narmont, 94 SH 41, M.R. 9785 (Mar. 30, 1994) the attorney was censured, on consent, for engaging in conflicts of interest by preparing wills and a codicil that, in
final form, bequeathed to him all of the client's properties and accounts in which the attorney had some interest and made him the contingent beneficiary of the remainder of the client's estate. The evidence showed that the attorney and client had a longstanding personal and professional relationship, the gift was the client's idea, the attorney suggested that the client consult outside counsel, the attorney had practiced for twenty-six years without discipline, and performed 250 hours of pro bono work annually. After the client died and the will was probated, the attorney entered into an agreement to settle claims brought against him by the client's sons and widow.
The foregoing cases demonstrate there is a range of discipline for attorneys who prepare self-benefiting documents. While Respondent takes issue with the imposition of any discipline in this case, he did not provide us with cases to support his position. We find that a sanction in this case is necessary to maintain the integrity of the profession and to deter attorneys from undertaking representation without being fully apprised of the professional rules and without fully informing their clients of the consequences of representation. Respondent's failure to consult the rules is particularly disappointing since he admitted to having a suspicion that his actions might be improper.
While we find that discipline is necessary and appropriate in this case, we believe the particular circumstances warrant a sanction at the low end of the demonstrated range. Although Respondent did not renounce his gift, as the attorney did in Merlie or enter into a settlement with the beneficiaries, as the attorney did in Narmont, we do not believe that action was required. As stated previously, we believe Sylvia's bequest was consistent with her intent. At any rate, Respondent did voluntarily reduce his share of the estate so the other specific beneficiaries could receive their full shares.
Minimal discipline is particularly warranted because, in our opinion, Respondent poses no threat to future clients. Respondent's demeanor and attitude while testifying, the character
evidence presented, and his long history of practice with no complaints are convincing indicators that, in the future, he will be diligent in his adherence to the professional rules.
Finally, in settling upon our recommendation Respondent urged us to consider the fact that Rule 1.8(c), which has never prohibited an attorney from preparing an instrument naming himself as a beneficiary if he is "related" to a client, was recently revised to include a definition of the term "related." Under the rule in effect as of January 1, 2010, "related persons" include relatives or individuals with whom the client maintains "a close, familial relationship." Respondent pointed out that the current recognition that attorneys can prepare self-benefiting documents for non-relatives in certain situations is an indication that the public does not need to be protected from the acts engaged in by Respondent. We note, however, that the comments to the new rule provide that a non-relative client should have the detached advice of another lawyer, a procedure which was not followed in the present case. Thus, despite the new language in Rule 1.8(c), there remains a general concern regarding the potential for a clash between the attorney's interests and the client's interests.
We believe that a censure is appropriate in this case and will fulfill the purposes of the disciplinary process. Accordingly and for the reasons stated, we recommend that Respondent Leonard Mason be censured.
Date Entered: April 29, 2010
|Patrick M. Blanchard, Chair, with panel members Matthew J. Egan and Bernard Judge|