Filed July 26, 2011
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
SHAVEDA MONIQUE SCOTT,
Commission No. 09 CH 102
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on January 7, 2011, at the Chicago, Illinois offices of the Attorney Registration and Disciplinary Commission ("ARDC" or "Commission"), before a Hearing Board Panel of Lawrence S. Beaumont, Chair, Devlin Schoop, and Mark Fitzgerald. The Administrator was represented by Marita C. Sullivan. Respondent appeared in person and represented herself pro se.
On August 27, 2009, the Administrator filed a five-count complaint against Respondent pursuant to Illinois Supreme Court Rule 753(b) alleging misconduct related to her handling of various real estate closings. The charges in Count I are based on allegations that Respondent failed to properly disclose her own financial interest stemming from her role as agent for the title company in six transactions. The charges in Counts II through V are based on allegations that Respondent violated the rules regarding conflicts of interest by improperly representing both the buyer and seller in four of these same matters. Respondent filed an answer in which she
admitted some of the factual allegations, denied others, and denied all of the charges of misconduct.
The Administrator presented the testimony of Dortricia Penn and Percy Wicks, and introduced documentary Exhibits 1-24, which were admitted into evidence. Respondent appeared in person at the hearing but did not testify or introduce any other evidence.
Ms. Penn graduated from Howard University in 1998 and John Marshall Law School in 2001. She has been licensed to practice law in Illinois since 2001. After completing law school she was initially employed by the Cook County State's Attorney's Office for approximately three years where she did criminal work. She left that job in 2004 and spent about a year at the law firm of Mitchell, Bolden & Ballantyne where she handled misdemeanor and felony criminal matters. (Tr. 28-30). Respondent was also employed by the Mitchell firm and Ms. Penn and Respondent subsequently left together to form the Law Offices of Penn & Scott ("Penn & Scott"). Ms. Penn remained with Penn & Scott from 2005 until the firm ceased operating in 2009. (Tr. 30, 34).
Ms. Penn currently holds the position of Program Director of Criminal Justice at Westwood College where her responsibilities include managing 12 criminal justice instructors, serving as liaison between students and administration, and teaching classes. She began working at Westwood as an adjunct instructor in 2006 while she was still operating Penn & Scott. Respondent also became an adjunct instructor at Westwood at this same time. In October of 2008, Ms. Penn accepted a full-time position at Westwood and began to take on fewer cases at
Penn & Scott. After she accepted her current position as Director in 2009, this further reduced her ability to practice at the firm. (Tr. 31-33).
Penn & Scott handled criminal cases as well as various civil cases, including family law, personal injury, and real estate matters. Ms. Penn did the criminal work and Respondent handled the civil matters. Ms. Penn also occasionally did real estate work if someone she knew personally contacted her and asked her to represent them. (Tr. 34-35, 42, 52-53). Ms. Penn and Respondent each maintained their own case-loads and also covered each other's cases on occasion when one of them had a conflict. The firm was set up as a partnership and, aside from funds that went to cover the firm's overhead, Ms. Penn and Respondent shared in everything equally. (Tr. 35-36).
After the firm was formed, it became a title agent with Ticor Title Company ("Ticor"). Ms. Penn and Respondent accomplished this by going into one of Ticor's branch offices, speaking with an employee, and signing the necessary documents. (Tr. 36-37). They may have also attended a couple of training classes. The firm decided to become a title agent because it represented sellers in real estate transactions and there were instances when it was necessary for it to order and clear title. There was also a financial benefit to the firm from this arrangement because it was paid a commission by Ticor. (Tr. 37-38).
Ms. Penn is familiar with a letter sent to Respondent by the ARDC, dated April 17, 2008, which requests copies of files in connection with a pending investigation related to a client named Karen Van. Ms. Penn called Respondent when the letter came into the office and Respondent instructed her to open the letter and read it to her. (Tr. 38-39; Adm. Ex. 3). Respondent told Ms. Penn during that conversation that she did not think that she should be the only one named in any disciplinary complaint regarding these matters because they both shared
in the proceeds from these closings and she believed that they shared equal responsibility. Ms. Penn informed Respondent that she did not agree with her in light of the fact that they both had separate case-loads. She stated that if one of her criminal clients had a complaint about her which resulted in ARDC action, she would not believe that Respondent was responsible. After this letter came, Ms. Penn's relationship with Respondent began to deteriorate and their contact became very limited. While at one time they had a friendship, it now was simply a business relationship. (Tr. 40-41).
Ms. Penn testified that she did not do any work on the real estate transaction between Karen Van and Michael Dilworth ("Dilworth/Van"). (Tr. 42-43, 55; Adm. Exs. 10, 16). Although she attended the second day of the closing, she did not attend the first day. She stated that the reason she went on the second day was because certain complications had arisen at the first closing which resulted in Respondent staying at the title company for five to six hours. (Tr. 43-44, 56-57). Ms. Penn does not remember who suggested it, but she accompanied Respondent to the second closing in case Respondent needed her. Nothing came up at the second closing and she did not perform any duties. (Tr. 44, 56).
Ms. Penn did not do any work on the Rosie Boyd and Farrah Bledsoe-Whitlow transaction ("Boyd/Whitlow"), the Percy Wicks, Maggie Matos and John Holton transaction ("Wicks/Matos"), or the Phillip Miller and Nathaniel Maxwell transaction ("Miller/Maxwell"). Nor did she attend the closings in any of these matters. (Tr. 44-45; Adm. Exs. 11, 17, 13, 14, 19, 20).
Ms. Penn has reviewed the disciplinary Complaint filed in this matter as well as Respondent's Answer and there are statements in the Answer to Counts II through V that are not accurate. (Adm. Exs. 23, 24). With respect to each of these transactions, Respondent states in
her Answer that Ms. Penn worked up the case, attended the closing, and represented either the buyer or seller. This is incorrect. Although Ms. Penn attended the second closing in the Dilworth/Van matter, she did not attend any of the other closings or perform any work on any of these matters. (Tr. 48-51; Adm. Exs. 10, 11, 13, 14, 16, 17, 19, 20).
Ms. Penn acknowledged that her e-mail address appears on the title commitment issued by Ticor under the firm's name in the Wicks/Matos matter. This was due to the fact that they used her e-mail address for receiving notices when they initially became agents of Ticor. When title was ready, Ticor would send an e-mail to Ms. Penn and she would forward this to Respondent. (Tr. 46-47, 54-55; Adm. Exs. 13, 19).
In the summer of 2006, Mr. Wicks sold certain property located in Hazel Crest, Illinois, to Maggie Matos and John Holton. The property was listed at the time with a real estate broker named Tina Crosure. Mr. Wicks entered into a contract with the buyers regarding the purchase on July 24, 2006. He did not have a lawyer at the time because he did not think that he needed one. The buyers were represented by Respondent. (Tr. 58-61; Adm. Ex. 13 at 70-78).
The closing on the Hazel Crest property was set for August 24, 2006. Several weeks before the closing, Ms. Crosure informed Mr. Wicks that she had been contacted by Respondent regarding the need for him to obtain certain documents from his homeowner's association reflecting that assessment fees on the property had been paid. Mr. Wicks then contacted Respondent and asked her if she could help him obtain the necessary documentation. Respondent agreed to take care of the matter for a fee of $500. (Tr. 61-62). Respondent told Mr. Wicks early on in this conversation that she was representing the buyers but she did not mention the title insurance. Mr. Wicks believes that he had another conversation with Respondent in
which she indicated that she had taken care of this issue and that all the necessary paperwork would be in place at the closing. (Tr. 63-64).
Mr. Wicks first met Respondent at the closing on August 24, 2006. (Tr. 62-63). Respondent told Mr. Wicks that if he had any questions, she would answer them for him. He does not remember asking her any questions. Ms. Penn did not attend the closing and Mr. Wicks had never met her prior to the disciplinary hearing. (Tr. 64-66).
Respondent did not advise Mr. Wicks that she was an agent of Ticor, either at the closing or prior to the closing. Nor did she advise him that she was going to be receiving a commission from Ticor and he was not aware of this. Mr. Wicks did not sign any form advising him that Respondent had a business relationship with Ticor. (Tr. 64-65; Adm. Exs. 13, 19). Mr. Wicks was not aware that they were closing at Ticor until his real estate agent gave him the information for the closing. (Tr. 71-72).
Although Respondent indicated to Mr. Wicks in their initial conversation that she was the buyers' agent, she never explained to Mr. Wicks that his interests could be adverse to those of the buyers. Mr. Wicks testified that he understands the dual agency issue because he has taken classes to become a realtor and this was one of the subjects covered. He did not have any questions regarding the matter and Respondent did not provide him with any explanations. Respondent did not disclose to Mr. Wicks the possible effects of her representation of multiple parties or explain to him the risks involved in her common representation of him and the buyers. (Tr. 66-69).
At the closing, certain funds were held in escrow in connection with repairs that Mr. Wicks was supposed to make to the property. Mr. Wicks was to receive that money back if he took care of the repairs and the buyers were supposed to keep it if he did not. Mr. Wicks
completed the repairs in a timely fashion and received a $2,100 check from Respondent for the escrow money after he provided her with some documentation that the repairs had been done. (Tr. 67-68; Adm. Ex. 13 at 58).
Mr. Wicks testified that he believed he hired Respondent to take care of the homeowner's documentation rather than to be his lawyer at the closing. Then, when they got to the closing, due to the amount of money that he paid her, Respondent indicated that she was his lawyer and would be happy to answer any questions that he had. He believed that the $500 fee Respondent charged was for representing him as the seller of the property. Apart from getting the homeowner's documentation, he did not have any clear expectations regarding the services Respondent would provide for the $500. (Tr. 68-70).
Mr. Wicks also testified that he was not familiar with everything that needed to be done in order to close, but he could tell from his conversation with his realtor that there were some loose ends that needed to be taken care. When he contacted Respondent, he expected her to take care of whatever needed to be done for the closing to take place as scheduled. (Tr. 72-75). This included representing him as his lawyer at the closing, although he does not remember if Respondent actually said that to him. Based on the $500 fee, he believed that there must be something more involved than just getting a piece of paper. Everything that was needed was done and Mr. Wicks was pleased that it had been taken care of. (Tr. 73, 75-76).
Mr. Wicks is not aware of who ordered the title or prepared the seller's documents but he did not do so himself. All of the documents were already there when he arrived at the closing and were given to him by either Respondent or the closer to sign. (Tr. 70-71, 76-77).
Respondent's Sworn Statement and Deposition Testimony
Respondent gave a sworn statement regarding this matter on June 30, 2009 and a deposition on September 24, 2010. Although she did not testify at the hearing, her sworn statement and excerpts from her deposition were introduced into evidence by the Administrator. (Adm. Exs. 9, 22). The following is a summary of relevant portions of that testimony.
Respondent is an attorney but is not practicing law. (Adm. Ex. 9 at 7). She completed her last case and ceased practicing in June of 2009. (Adm. Ex. 9 at 18). At the time of her sworn statement, she had been working as an adjunct instructor at Westwood College since 2005 where she was teaching courses in criminal procedure, juvenile justice, and corrections two days a week. (Adm. Ex. 9 at 7-10). She was also working on a master's degree in accounting at Roosevelt University. (Adm. Ex. 9 at 10-17, 25).1
Respondent attended Williams College in Massachusetts for two years and completed her undergraduate education at Howard University in Washington, D.C. in 1997. She was enrolled in a pre-med program and graduated Phi Beta Kappa with a bachelor's degree in English with a minor in chemistry. (Adm. Ex. 9 at 20-21, 32). After being accepted into medical school, Respondent took a year off and subsequently decided to attend law school. She went to IIT Chicago Kent School of Law on a full scholarship and received her law degree in 2001. She was admitted to the bar that same year. (Adm. Ex . 9 at 22-24).
After completing law school, Respondent initially performed document review through a temporary agency and then worked as a bankruptcy reporter for Commerce Clearing House. She subsequently took a position as traffic manager with the Clerk of the Circuit Court of Cook County where her responsibilities included gathering files for the next day's court call and
reporting convictions to the Secretary of State. She spent less than a year in each of these positions. (Adm. Ex. 9 at 36-40).
In 2003, Respondent accepted a job with the Law Office of Eric A. Mitchell in Joliet, Illinois, where she spent two years doing primarily plaintiff's personal injury work. Ms. Penn also began working at that same firm about a year later. Respondent knew Ms. Penn prior to this because they attended Howard University together and had also reconnected when they studied for the bar exam. (Adm. Ex. 9 at 43-47). In the spring of 2005, Respondent and Ms. Penn both left the Mitchell firm to start their own practice, Penn & Scott. (Adm. Ex. 9 at 48-49). They also began teaching together at Westwood College around this same time. (Adm. Ex. 9 at 60-61).
At Penn & Scott, Respondent initially did personal injury work and residential real estate closings. Around 2008, she also started handling some uncontested divorce matters. Ms. Penn did criminal work and residential real estate closings. Although the firm's practice was predominantly criminal for the first couple of years, it then shifted and became about 50 percent criminal, 45 percent real estate, and 5 percent personal injury. (Adm. Ex. 9 at 56-59). Respondent estimates that the firm went from doing about 7-8 real estate closings in 2005, to 15-20 in both 2006 and 2007. The number of closings then declined after that to about 10-12 in 2008 and only 2 in 2009. (Adm. Ex. 9 at 62-63).
Although Penn & Scott initially represented only buyers, as the business expanded, they wanted to be able to also represent sellers. As attorney for the seller, it would be their responsibility to order title. Respondent understood from talking to other attorneys that in order to order title, the firm needed to become an agent with a title company. They chose Ticor and subsequently went through the necessary steps to become an agent. As a Ticor agent,
Respondent received a commission from Ticor for each transaction. The amount of the commission was tied to the purchase price for the property and the amount of the title policy that was written. (Adm. Ex. 9 at 65-77; Adm. Exs. 10-14, 16-21). Other than the training she received from Ticor, Respondent never attended any seminars or other presentations by bar groups on how to handle real estate closings. Since they were not doing complicated deals or transactions, they felt that they understood the process and did not feel the need for additional training. (Adm. Ex. 9 at 143-46).
With regard to the requirements of the Title Insurance Act, Respondent understands that she is required to disclose to the client that she is an agent of the title company and that she is earning a commission from the title company based on the transaction. She must also inform the client that they have the right to choose another title company and do not have to close at this particular company. Respondent has also learned since this investigation began that she is also required to obtain written disclosure forms and to maintain those in her files for three years. Respondent did not know about this requirement until she received the letter from the ARDC in 2008 and she has not typically seen this form at any of the closings that she has attended. (Adm. Ex. 9 at 84-92, 93-96, 100-01; Adm. Exs. 10-14, 16-21).
After receiving the ARDC's April 17, 2008 letter asking her to address her compliance with the Title Insurance Act, Respondent and Ms. Penn both looked up the provision at issue and had several conversations about the matter. They discussed the fact that they were not aware of the requirement and that neither Ticor nor anyone else had told them about it. (Adm. Ex. 9 at 102-08, 125-26). Respondent and Ms. Penn also talked to other attorneys about this issue and she does not believe that anyone was really using the form. (Adm. Ex. 9 at 106-08, 176-77).
Respondent believes that Ticor, as the title company that taught them what they needed to do as agents, should have told them about the requirement. She also noted that the title company is also required to retain the form and it cannot do so unless it makes sure that it is signed. (Adm. Ex. 9 at 107-10). Although Ticor has had the form on its web site since 2008, it was not there when Respondent and Ms. Penn first became Ticor agents. (Adm. Ex. 9 at 87-92, 116-19).
Although they did not use the disclosure form, Respondent testified that they always told their clients that they were agents of Ticor and that they were receiving commissions on these transactions. (Adm. Ex. 9 at 97-98; Adm. Ex. 22 at 112-13, 116). Respondent said that she made these disclosures after she was retained when she explained to the client the need to order title. She would inform the client that she orders the title through Ticor because she is an agent of Ticor and that she is paid a commission for this. (Adm. Ex. 9 at 127-28; Adm. Ex. 22 at 112-13, 116). Generally, the clients would only be concerned with whether they have to pay the commission. Respondent would advise them that Ticor pays the commission but that they will be responsible for some title charges for closing at Ticor. Respondent does not know whether the client understood that her commission comes out of what the client pays Ticor. (Adm. Ex. 9 at 128-30).
Respondent stated that the purpose of this disclosure was to let the client know where the closing was taking place and where the title insurance was coming from, and it was not necessarily focused on the commission. (Adm. Ex. 9 at 130-31). Respondent is not sure if the commission was always mentioned in this conversation, but she is sure that it was discussed at the closing when they went over the fees reflected on the RESPA (Real Estate Settlement Procedures Act) statement. She estimated that the commission was mentioned prior to the closing about 80 percent of the time. (Adm. Ex. 9 at 133-35).
Respondent understands that the purpose of the disclosure requirement is so that the client is not pressured to close at a particular location and to let the client know that the attorney representing them has a financial interest. (Adm. Ex. 9 at 135). She can only recall one occasion where a client decided not to retain the firm because they did not want to close a Ticor. (Adm. Ex. 9 at 97-98, 128-29).
Although Respondent has never really understood Ticor's commission rates, she estimates that the firm received a total of $15,000 to $20,000 in commissions during the time that she was an agent for Ticor. (Adm. Ex. 9 at 136, 142-43).
Counts II through V
Respondent admitted that she represented both the buyer and the seller in the four real estate transactions at issue in Counts II through V of the Complaint. (Adm. Ex. 9 at 146; Adm. Exs. 10, 11, 13, 14, 16, 17, 19, 20). Other than the Dilworth/Van matter, Respondent does not have any detailed recollection regarding these files and does not recall what happened or what was said at these closings. (Adm. Ex. 9 at 177-78). Generally, when her firm represents both parties, Respondent handles one of the parties and Ms. Penn handles the other. (Adm. Ex. 9 at 199-201, 203-04). Respondent believes that Ms. Penn was present at all four of these closings because they never went to a closing alone when the firm represented both the buyer and the seller. (Adm. Ex. 9 at 201-02, 220-21).
Respondent stated that she had essentially the same conversation with her clients whenever she represented both parties. She told the client that she also represented the other party and if there are any arguments or disagreements she cannot take sides and would have to remove herself from the matter. Most of the clients indicated that there was no conflict because
they were not negotiating any deals but were simply getting the documents together and doing the closings. (Adm. Ex. 22 at 82-83).
Respondent is aware that conflicts can arise between a buyer and a seller in a real estate transaction. If this occurred, she could not fight with herself as the attorney for both buyer and seller but would remove herself from the matter. Respondent stated that no conflicts arose in any of her files where she represented both parties. She still does not see any conflict in any of these cases. (Adm. Ex. 9 at 190-91; Adm. Ex. 22 at 86).
While doing research in preparing a response to the ARDC letter, Respondent found an ISBA ethics opinion which addresses the issue of representing both the buyer and the seller in a real estate transaction. Respondent believes that it recognizes that it is not absolutely inappropriate to represent both the buyer and seller in transactions, but is generally inappropriate with certain exceptions. (Adm. Ex. 9 at 296-97; Adm. Exs. 1-8, 15).
Dilworth/Van Transaction (Count II)
Respondent initially represented the buyer, Mr. Dilworth, in this transaction. She subsequently agreed to also represent the seller, Ms. Van. She told Mr. Dilworth that she did not see any apparent conflict with her representation of the seller and he agreed. Respondent did not say anything additional to Mr. Dilworth other than what she said in all the other transactions where she represented both parties. (Adm. Ex. 9 at 246-52; Adm. Exs. 10, 16).
Ms. Van had been referred to Respondent by the buyer's broker so she already knew that Respondent was also representing Mr. Dilworth. Respondent had a general conversation with Ms. Van about the contract and getting the payoff letter, but "[n]othing about the representation, any further than that." She stated: "There was no extended conversation about it. She knew I represented Mr. Dilworth and that was just it. We didn't talk about it any further than that."
(Adm. Ex. 9 at 253-54). With regard to whether she discussed with Ms. Van any issues stemming from her firm's representation of both the buyer and the seller, Respondent testified:
We didn't have an extended conversation about that. I said that I represented the buyer. I said, you know, if anything comes up—and this is the same thing I say to all of them is very—it's like a lay person's conversation. I said, if anything comes up as far as you all disagreeing with each other, I can't take anybody's side, and I will have to get off the situation.
I didn't explain it in any legal terms, or anything like that. I never have, you know, when I talk to my clients. I just say, if something comes up, and you all disagree, I can't take anybody's side, and I will have to get off. That's pretty much how I tell the clients. And they always say, "Well, nothing is going to come up. We are clear on the deal." So that's pretty much it.
I didn't have any extended conversation about how—how the law outlines what are conflicts of issue, and this and that, no, didn't use any legalese.
(Adm. Ex. 22 at 82).
Respondent does not remember the details of this transaction and assumes that it progressed normally up until the closing when complications arose due to the fact that the property was in pre-foreclosure and the pay-off letter was incorrect. Respondent talked to the lender several times and was trying to get an updated pay-off letter, but this did not occur so the deal did not close. (Adm. Ex. 9 at 255-56, 258). In addition to Respondent, the first closing was attended by Ms. Penn, Ms. Van, Mr. Dilworth, the real estate broker, and an individual named Latrell Harris, who was someone Ms. Van knew. Although Respondent had not previously met either Ms. Van or Ms. Harris, she had received a document that gave Ms. Harris power of attorney for Ms. Van. Respondent believes that she worked with Ms. Van while Ms. Penn worked with the buyer, Mr. Dilworth. (Adm. Ex. 9 at 256-58).
After spending all day at the closing, they left when the deal did not close. Respondent told Ms. Van that they would have to redraw all of the documents and come back and do it all over again. Ms. Van told Respondent that she did not think she would be able to come back and
that Ms. Harris would probably come for her pursuant to the power of attorney. Respondent told Ms. Van that this was fine. (Adm. Ex. 9 at 259-59).
After the issues with the payoff letter were resolved, a second closing was held. Ms. Van did not attend this closing and Ms. Harris came on her behalf. Respondent assumed that Ms. Harris was Ms. Van's friend and that Ms. Van had work or other obligations. The firm still represented both the buyer and the seller. Respondent was functioning as Ms. Van's lawyer and Ms. Penn worked with the buyer. (Adm. Ex. 9 at 260-61). Respondent explained the closing documents to Ms. Harris and she signed them on behalf of Ms. Van. Respondent assumes that Ms. Penn was explaining the loan documents to Mr. Dilworth. (Adm. Ex. 9 at 260, 265-66).
Respondent testified that she never saw the document containing the wire transfer instructions which provided for the transfer of funds from Ticor to Ms. Harris' account. She was not present when it was signed and was not a party to any discussions involving it. (Adm. Ex. 9 at 261-63). Respondent stated that her role as Ms. Van's attorney was to explain the seller's documents to her and she was not involved in how the funds were distributed. (Adm. Ex. 9 at 263-64).
The firm received $2,500 in attorney's fees from the Dilworth/Van transaction; $1,500 was for the first closing and $1,000 for the second closing. They charged an additional $500 for the first closing because they were there all day. The seller agreed to pay all of the attorneys' fees as part of the closing costs so the entire amount is reflected on the buyer's side of the settlement statement. (Adm. Ex. 9 at 266-73; Adm. Exs. 10, 16).
With regard to whether she thinks that there is a greater potential for mortgage fraud in a transaction where the lawyer represents both the buyer and the seller, Respondent stated that she is just an "innocent bystander" as the attorney. (Adm. Ex. 9 at 277-80). She had nothing to do
with Ms. Harris taking Ms. Van's money and does not believe that she could have done anything to prevent it. Ms. Van brought Ms. Harris to the closing as her friend and there was nothing to suggest that she was preying upon her. (Adm. Ex. 9 at 281-83). Even though Ms. Van did not get her money, Respondent feels that she has also been victimized because she was not aware of what was taking place and has now been called upon to answer for her actions. It angers her that her integrity and ethics are being questioned because she would never do anything like this. (Adm. Ex. 9 at 280-81, Adm. Exs. 1-8). Respondent stated said that as a result of the ARDC matter and the situation with Ms. Harris, she has made the decision that she will not be practicing law anymore. (Adm. Ex. 9 at 288-93).
Wicks/Matos Matter (Count III)
The Wicks/Matos transaction involved the purchase and sale of a townhome in Hazel Crest, Illinois. Maggie Matos and John Holton, the buyers, were Respondent's original clients. (Adm. Ex. 9 at 178-81; Adm. Exs. 13, 19). Mr. Wicks originally had his own attorney but he was not working on the file and was not returning her calls. When Respondent's clients were ready to proceed, she notified Mr. Wicks' agent that they did not have title. Once Mr. Wicks found out about this, he contacted Respondent and asked her if she could represent him in order to get the deal done. (Adm. Ex. 9 at 181-84, 186). Respondent informed Mr. Wicks that she charged $500 and he agreed to that. (Adm. Ex. 9 at 202-03). Everyone knew that Respondent was already representing the buyers. (Adm. Ex. 9 at 182-84).
After she was contacted by Mr. Wicks, Respondent spoke with her clients. Respondent testified:
Q: What did you say to Maggie and John as far as representing Mr. Wicks in addition to them?
A: What do you mean? That's all I did say. That we weren't able to proceed. His attorney had not done anything on the file and he contacted me and
wanted me to order title. That was the last thing that needed to be done to get the deal done. You know, did they have a problem with it? They did not.
That was the extent of the conversation. They wanted the deal done. They wanted to buy the home. They were already packed up and ready to leave and now all of a sudden there's no title and we can't do anything. So they had no problem with it. They said, "Yeah. Let's get this done."
Q: Did you say anything else to Maggie and John about representing them as well as Mr. Wicks?
(Adm. Ex. 9 at 184-85).
Respondent does not remember if she participated in the review of the real estate contract on behalf of the buyer but knows that she did not draft the contract. She also knows that she did not review it for the seller because she only represented him at the end. (Adm. Ex. 9 at 191-93). With regard to what she said to Mr. Wicks regarding the representation Respondent testified:
Q: So now I want to hear, because I don't think I asked you, what did you say to Mr. Wicks regarding—what, if anything, did you say to Mr. Wicks—
A: Nothing much. I mean—
Q: Wait. Let me finish.—about representing the buyers and the sellers in the same transaction?
A: One thing it's not like I remember particulars. I can't imagine that I would have mentioned anything too much. He is contacting me, so he's already aware that I represent the buyers.
You know, I could not say with certainty anything else I might have said, you know, outside of, you know, as long as this is an open-and-shut case and the only thing I have to do is order the title and we close, then fine.
(Adm. Ex. 9 at 194-95). Respondent did not obtain any written consents from the buyers or the sellers concerning her representation of both parties in this transaction. (Adm. Ex. 9 at 193-94).
Respondent testified that all she had to do for Mr. Wicks was get the title ordered. She contacted Ticor and told them she was representing Mr. Wicks as well as the buyers and ordered the title. (Adm. Ex. 9 at 183, 186). The only other issue that came up had to do with some
repairs that Mr. Wicks had agreed to make pursuant to the inspection report. The repairs had not yet been done at the time of the closing so funds equal to the cost of the repairs were held in escrow by Respondent. Mr. Wicks was supposed to complete the repairs and the funds would be released to him after the buyers verified that the repairs had been made. If the repairs were not done, the $2,100 in escrow would go to the buyers. (Adm. Ex. 9 at 188). Respondent stated that she had a "minor discussion" with Mr. Wicks about the escrow at the closing during which she let him know that she had to protect her buyer and that even though she was his attorney, she could not let him "slide on that." Mr. Wicks did not have any problem with this. (Adm. Ex. 9 at 203-04).
Respondent stated that if a dispute had arisen between the buyer and seller regarding whether the repairs had been made, she could have deposited the money with the clerk's office. The parties would then have to go to court to resolve the matter and Respondent would not get involved in that. (Adm. Ex. 9 at 188-90).
The RESPA reflects that $500 in attorney's fees was charged to both the buyer and the seller by Penn & Scott. (Adm. Ex. 9 at 195-99; Adm. Exs. 13, 19). Respondent did not do anything different at the Wicks/Matos closing because she was representing both buyer and seller. (Adm. Ex. 9 at 203).
Boyd/Whitlow Transaction (Count IV)
This was a transaction between Rosie Boyd and Farrah Bledsoe-Whitlow and involved property in located in Park Forest, Illinois. Respondent believes that both parties called her around the same time and asked for representation. She thinks they knew each other and did not just pick the same attorney by coincidence. Respondent explained her fees to them and they both
agreed to hire the firm. The real estate contract would then have been sent to the firm, usually by fax or e-mail. (Adm. Ex. 9 at 211-13; Adm. Exs. 11, 17).
Respondent does not recall exactly what she said to Ms. Bledsoe-Whitlow regarding her representation of both the buyer and seller, but she may have mentioned that she also represented the buyer. In some cases where she represents both parties, she tells the clients that if a conflict arises, she will have to remove herself and will not be able to represent either party. Respondent is not certain that she had this conversation with these particular parties. She also acknowledged that the issue of a potential conflict may not have come up at all during the initial contact. Usually, if the issue came up it would be down the line when something arose that was going to be a problem, but that never happened in this case. (Adm. Ex. 9 at 215-17).
With regard to whether she obtained any explicit consent to the conflict or advised the parties of the potential risks involved in such representation, Respondent testified:
Q: So you may not have even gotten their consent because it may not come up because they're both coming to you at the same time or closely because they both know you're representing the other side?
A: Well, as far as an explicit consent, no. I mean, when two parties are coming to you and they both know the other's coming, the consent is—you know, I think the undertone of consent is there as they are both aware of who is hiring who. I mean, they're coming to me and they both know they're coming to me.
Consent, no. Explicitly, no. But yeah, do you know that I represent the buyer or I represent the seller? Yes, that was said and they were aware of that.
* * *
Q: From what you're describing, I think it's safe to conclude that you didn't advise them of the potential risk inherent in representing a buyer and seller in the same transaction?
A: I'm not going to testify yes or no to that. My position is I don't recall and I don't know whether I did or did not in this particular case. That conversation has arisen before when I represented buyer and seller, but I can't say with certainty whether it did or didn't with Rosie Boyd and Farrah.
(Adm. Ex. 9 at 217-18). Respondent stated that while she does not have any specific memory of what she said to the buyer and the seller in this transaction regarding the representation, it would not have been anything more than indicating that she was representing both parties and if there was a conflict she could not represent them both. (Adm. Ex. 22 at 110-11).
With regard to her representation of the buyer in this case, Respondent would have explained the lender's documents, the buyer's side of the RESPA, and any other documents. (Adm. Ex. 9 at 220). She explained that there was no written correspondence in the file because there was no need to write to anyone else since she was representing both parties and would just talk to the parties when things arose. (Adm. Ex. 9 at 222-23).
The RESPA for this transaction reflects that both the buyer and seller paid $500 in attorney's fees to Penn & Scott and the firm also received $794 for the title agent commission. (Adm. Ex. 9 at 218-19, 228-31, Adm. Exs. 11, 17). Respondent stated that Ms. Penn was also involved in this transaction and attended the closing. (Adm. Ex. 22 at 100).
Miller/Maxwell Transaction (Count V)
Mr. Maxwell was the seller and Mr. Miller was the buyer in this transaction. Respondent does not remember who she represented first or if they came in closely together. (Adm. Ex. 9 at 231-32, 238-41). The RESPA reflects that the attorney's fees were $500 for each of them and that the firm received an additional $1,001 for the Ticor agent fee or commission. (Adm. Ex. 9 at 236-38; Adm. Exs. 14, 20).
Respondent stated that she would have had the same discussion with these clients as she had in every other buyer and seller transaction. (Adm. Ex. 9 at 239, Adm. Ex. 22 at 116). She would confirm that they were aware that she was representing both parties and ask them if they agreed with this. (Adm. Ex. 9 at 239-40). She would also have told them that if there is a
conflict she cannot represent them. (Adm. Ex. 22 at 116). With regard to whether any consent was given, Respondent testified:
Q: So do you remember—excuse me. Would there have been any sort of consent that you would have—
A: I can't remember. I mean, my thoughts on all of these deals is the consent is implicit because with the real estate closing all parties eventually have to come to the table together. And if there is an issue with my representation of both, even if it wasn't understood prior to or even if they weren't sure, once we got to that table and I'm sitting there with [Ms. Penn] and they see our office representing both, they can say something.
This is not done in secret. Both parties are there at the same time with the attorneys at the closing at the same time. So I can't speak specifically on this, but my understanding is that they had to have consent.
We closed. We were there at the same time. They knew I was there with the firm representing both parties. I can't remember any other conversations.
(Adm. Ex. 9 at 241-42). Respondent stated that she does not believe that it is unlikely that the client will get up and leave the closing if they have a problem with the firm's representation of both parties. (Adm. Ex. 9 at 242-45).
Evidence in Mitigation and Aggravation
Although Ticor now has the Title Insurance Act disclosure form on its web site, Respondent has not used it since this issue was raised because she has only done two closings and she represented buyers in those transactions. (Adm. Ex. 9 at 87-88, 113-116). Now that she is aware of the requirement, she has the Ticor form saved in her residential closings file and would use it if she did any seller closings. (Adm. Ex. 9 at 116-19, 126-27). Respondent makes the disclosures about her relationship with Ticor when she is first hired but believes that the actual form is not executed until the closing. Respondent does not believe that it is too late to get
the form signed at the closing because the client can still walk away. She agrees that it could be signed earlier and would do so if that is what is required. (Adm. Ex. 9 at 120-24).
With regard to her representation of both buyer and seller in the same transaction, Respondent stated that, if the ARDC matter were not an issue, she would not do anything differently in handling these transactions. In order to avoid problems with the ARDC, however, she would now have clients sign off on a written consent with regard to the conflict of interest issue. (Adm. Ex. 9 at 86-87). She would also explain the implications of common representation and the advantages and risks of such representation in a written document that would be signed by the client. (Adm. Ex. 9 at 91-92). She would not necessarily try to explain the matter in layman's terms but would make sure that everything was in the written document that she had the client sign. (Adm. Ex. at 93-94). Respondent stated that she would take these steps in order to avoid problems with the ARDC, not because she thinks that she should or that it would resolve any problems. (Adm. Ex. 9 at 86-88, 94-95). She also stated that, although she does not believe that she did anything wrong, in order to avoid ARDC problems she does not intend to represent both buyers and sellers anymore. (Adm. Ex. 9 at 95-96).
With regard to whether she is involved in any pro bono legal work, Respondent testified that she handled a real estate transaction and did some other legal work for her sister. She has not performed any other volunteer or charitable work or donated to any charitable causes in the past ten years. (Adm. Ex. 9 at 33-34).
The Administrator reported that Respondent has not been previously disciplined by the Illinois Supreme Court.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary matters, the Administrator must establish charges of misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill. 2d 163, 168, 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, 484-85, 577 N.E.2d 762 (1991). Evidence of suspicious circumstances, standing alone, is not sufficient to support a finding of misconduct. In re Winthrop, 219 Ill. 2d 526, 550, 555, 848 N.E.2d 961 (2006).
The charges in Count I are based on six2 real estate transactions in which Respondent represented one or both of the parties and also acted as an agent for Ticor, the title company that handled these transactions. The complaint is based on allegations that Respondent failed to adequately disclose the conflicts stemming from her own financial interests in these transactions and to obtain proper written disclosures as required by the Title Insurance Act, 215 ILCS 155/18. Respondent is specifically charged with the following misconduct: a.) failing to explain a matter to the extent reasonably necessary to permit the client to make informed decisions about the representation in violation of Rule 1.4(b); b.) representing a client where the representation of that client was materially limited by the Respondent's responsibilities to a third person or by Respondent's own interests in violation of Rule 1.7(b); and c.) engaging in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute in violation of Supreme Court Rule 770.
We find that all of the charges in Count I were proven by clear and convincing evidence.
First, the evidence as well as Respondent's own admissions established that Respondent represented clients in these six real estate transactions in which she also had a personal financial interest stemming from her role as a title agent for Ticor. Respondent admitted, and the evidence showed, that she not only received legal fees from her clients for representing them in each of these transactions, she was also paid substantial commissions based on her role as title agent for Ticor. For example, in the Dilworth/Van matter, Respondent's firm received legal fees in the amount of $2,500 for representing both the buyer and the seller and also received a title fee in the amount of $1,106. In the Wicks/Matos matter, Respondent received $1,000 in legal fees for representing the buyer and the seller and an additional $826 as a title fee. With respect to the Cousandra Armstrong transaction, Respondent received a legal fee of $863.52 for representing the seller and an additional $2,357.50 as a title fee. The evidence showed that Respondent and her firm were paid a total of $6,981 in title fees in connection with her handling of all six of these transactions. Respondent's own financial interest in these transactions stemming from her role as title agent created an obvious conflict of interest on her part with regard to her representation of her clients in these matters.
Rule 1.7(b) establishes that a lawyer shall not represent a client if the representation may be materially limited by the lawyer's responsibilities to another client or a third person, or by the lawyer's own interests, unless (1) the lawyer reasonably believes that the representation will not be adversely affected, and (2) the client consents after disclosure. The term "disclosure" is defined in the rules to mean "communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question." Terminology Section, Illinois Rules of Professional Conduct. In addition to Rule 1.7(b), the Illinois Title Insurance Act contains a specific provision which requires that certain disclosures regarding financial interests
be made to parties paying for title services. The Act requires that such disclosures include an estimate of the charges to be paid and be made in writing on certain prescribed forms prior to the time that the commitment for title insurance is made. 215 ILCS 155/18. See, e.g., In re Rukavina, 07 CH 96, M.R. 23585 (May 17, 2010).
There is no dispute in this case that Respondent failed to obtain the necessary written disclosures required by the Title Insurance Act with regard to any of the transactions at issue in Count I. Respondent admitted that she did not have her clients execute the required form and further admitted that she was not even aware of the requirement until she received the letter from the ARDC inquiring about the matter. In addition, the Administrator offered into evidence the files maintained by both Respondent and Ticor with regard to each of these matters and no such signed disclosures are included in those materials. Thus, we find that it was established by clear and convincing evidence that Respondent failed to comply with her disclosure requirements under the Title Insurance of the Act regarding her financial interests in these transactions.
We further find that Respondent violated Rule 1.7(b) by failing to comply with those written disclosure requirements or to otherwise adequately explain her conflict of interest to her clients and to obtain their informed consent to the representation. We note initially that although Respondent denied the charges in her answer, she elected not to testify at the hearing or to offer any other evidence. The Administrator, however, offered into evidence Respondent's sworn statement and excerpts from her deposition testimony. In this testimony, Respondent asserted that while she was unaware of the disclosure form required under the Title Insurance Act, she made verbal disclosures to her clients regarding her relationship with Ticor and her receipt of fees. We note that it is not clear, in light of the explicit statutory requirements in the Title Insurance Act, that such verbal disclosures would be sufficient to fulfill Respondent's ethical
obligations. In any event, even if we take into account Respondent's testimony in this regard and assume that these verbal disclosures were made, we conclude that they were inadequate to satisfy the requirements of Rule 1.7(b).
Although Respondent stated that she remembered very little about most of these transactions, she testified generally that whenever she represented a seller she told the client that she was an agent of Ticor and that this is where the closing would take place. She said that she also informed the client, at least as some point in time, that she would be receiving a fee from Ticor. She acknowledged that while she may not have always told the client about the fee prior to the closing, she would have explained it to them at the closing when she went over the settlement statement. We do not believe that these minimal statements constituted adequate disclosure of her conflict of interest as required by the rules. As noted, Rule 1.7(b) requires informed consent by the client after full disclosure. The purpose of such disclosure is obviously to provide clients with sufficient information to enable them to understand the matter so that they can make an informed decision about the representation. We believe that this requires, at a minimum, at least some explanation of the nature of the conflict, as well as an explanation as to how it might materially affect the attorney's representation of the client in the matter. Respondent here gave no indication in her testimony that she made any attempt at all to explain the nature of the conflict to her clients, or to explain how her receipt of a fee from Ticor might affect her representation of them in the transaction. Moreover, she conceded that in some cases she might not have even told the client about the fee at all until they were going over the documents at the closing. This is clearly too late to properly address this issue.
We also note that, at least with respect to the Wicks/Matos transaction, the evidence presented at the hearing suggested that Respondent did not even make these minimal disclosures
to her client. Mr. Wicks testified that Respondent never told him, either before or at the closing, that she was an agent of Ticor or that she would be receiving a commission for the transaction. He further stated that he was unaware that she had received a commission and did not even know that they were closing at Ticor until he received the information from his real estate agent. Moreover, it is clear from his overall testimony that he did not understand the nature of this conflict and did not give his informed consent. We note that Mr. Wicks was not a disgruntled client who had complained about Respondent, but was essentially a disinterested witness who was called to testify by the Administrator. We found Mr. Wicks to be a credible witness and believe that he testified honestly about the matter. Therefore, with respect to the Wicks/Matos transaction, we further find that Respondent violated Rule 1.7(b) by failing to disclose her relationship with Ticor and her receipt of a fee for acting as title agent in the matter.
Based on the foregoing, we find that Respondent violated Rule 1.7(b) by failing to adequately explain her own financial interest in these transactions to her clients and to obtain their informed consent. Based on these same actions, we also find that she violated Rule 1.4(b) by failing to explain these matters to her clients to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. We further conclude that Respondent's conduct brought the legal profession into disrepute in violation of Illinois Supreme Court Rule 770.
The charges in Counts II through V are all similar and are based on allegations that Respondent engaged in improper conflicts of interest as well as other misconduct by representing both the buyer and the seller in four separate real estate transactions. Respondent was specifically charged with the following misconduct: a.) breach of fiduciary duty; b.) failing to
explain a matter to the extent reasonably necessary to permit the client to make informed decisions about the representation in violation of Rule 1.4(b); c.) representing a client when the interests of that client are directly adverse to the interests of another client in violation of Rule 1.7(a); d.) representing a client when such representation may be materially limited by the lawyer's responsibilities to another client or third person or by the lawyer's own interests in violation of Rule 1.7(b); e.) representing multiple clients in a single matter, failing to explain the implications of common representation and the advantages and risks involved in violation of Rule 1.7(c); and f.) engaging in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute in violation of Supreme Court Rule 770. While Respondent admitted that she represented both sides in these transactions, she denied that her actions were improper or that she violated any of the ethical rules.
We find that all of the charges of misconduct in Counts II through V were proven by clear and convincing evidence.
First, there is no doubt that Respondent simultaneously represented conflicting interests in all four of the residential real estate transactions at issue. The evidence clearly established that Respondent agreed to represent and that she did represent both the buyer and the seller in each of these matters. It was also undisputed that she was paid separate attorneys' fees in each of these transactions based on her representation of both parties. Regardless of the particular facts and circumstances involved, it is clear that a buyer and the seller in a real estate transaction have adverse interests and that a conflict of interest necessarily arises if an attorney undertakes to represent both of them in the same matter. See In re Jeffers, 08 CH 103, M.R. 23537 (Jan. 21, 2010); In re Dixon, 07 CH 115, M.R. 22629 (Nov. 18, 2008); In re Murzyn, 05 CH 73, M.R.
21436 (Mar. 19, 2007). See also In re Demuth, 126 Ill. 2d 1, 9, 533 N.E.2d 867 (1988) (recognizing that it is obvious that a lender and borrower have conflicting interests).
The existence of this conflict triggers the application of Rule 1.7, which establishes the general prohibition on representing conflicting interests and also sets forth the limited circumstances under which such representation may properly be undertaken. Rule 1.7(a), which contains provisions similar to those in Rule 1.7(b) which we have already discussed, provides that a lawyer shall not represent a client if the representation will be directly adverse to another client unless the following requirements are met: (1) the lawyer reasonably believes that the representation will not adversely affect the relationship with the other client, and (2) each client consents after disclosure. Rule 1.7(c) further provides that "[w]hen representation of multiple clients in a single matter is undertaken, the disclosure shall include explanation of the implications of the common representation and the advantages and risks involved." As we have also previously noted, disclosure under the rules requires the communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question. See Terminology Section of the Rules of Professional Conduct.
Based on the evidence that was presented in this matter, we find that it was clearly established that Respondent did not meet the disclosure and consent requirements set forth in Rules 1.7(a), (b), and (c) in connection with her representation of both the buyer and seller in any of these transactions. Again, since Respondent did not testify at the hearing we look to her sworn statement and her deposition testimony introduced by the Administrator in considering these charges. This evidence reveals that Respondent typically said very little, if anything, to either the buyer or the seller about the implications arising out of her representation of both
parties in the same transaction. It also makes it clear that she did very little to obtain either parties explicit consent to the conflict.
For example, in the Dilworth/Van matter, Respondent stated that she simply told her original client, Mr. Dilworth, that she did not see any apparent conflict with her representation of the seller, Ms. Van, and he agreed. She also stated that Ms. Van already knew when she hired her that she was also representing Mr. Dilworth and that she did not have any "extended conversation" with her about this. With regard to the Wicks/Matos transaction, Respondent stated that she told the buyers was that Mr. Wicks wanted her to order title so that they could proceed with the transaction and they agreed to this in order to get the deal done. She further stated that Mr. Wicks already knew that she represented the other party and she could not imagine that she would have "mentioned anything too much" to him about this. With regard to the Boyd/Whitlow transaction, Respondent conceded that she did not obtain any explicit consent to the conflict but believed that there was an "undertone of consent" based on the fact that parties were aware that she was representing both of them. Similarly, in the Miller/Maxwell transaction, Respondent said that she could not remember whether she obtained any consent but she believed that consent was implicit in all of these transactions because the deals were not done in secret and the parties all eventually have to come together at the closing.
We note that Respondent also testified that she told her clients in these situations that she could not take sides and would have to remove herself from the matter if they had a disagreement or if a conflict arose. Even this general statement, however, is insufficient to satisfy the requirements of Rule 1.7. Rules 1.7 (a) and 1.7(b) require informed consent by the client to the conflict after full disclosure. Moreover, Rule 1.7(c) specifically requires that the disclosure include explanation of the implications of the common representation and the
advantages and risks involved. None of the general statements made by Respondent, without any further elaboration or explanation, constitute the kind of detailed admonitions that are necessary to meet the requirements of this Rule.
We note that the issue of whether it is ever ethically appropriate for a lawyer to represent both parties to a real estate transaction was specifically addressed in ISBA Advisory Opinion on Professional Conduct No. 86-15 (May 1987).3 The Respondent has relied on this opinion in asserting that such dual representation is not absolutely prohibited by the rules and may be permissible under some circumstances. We have reviewed this ethics opinion, however, and find that it only further supports our conclusion that Respondent's actions here were improper. Although the opinion does not completely rule out the possibility of concurrent representation of both parties, it makes it very clear that it views such instances where this can properly be undertaken as "extremely rare." With respect to whether a single attorney can ever adequately represent the interests of buyer and the seller, the opinion states:
Under normal circumstances involving an arms-length unrelated buyer and seller, we feel it by no means obvious that their interests can be adequately represented by a single attorney. We would, therefore, conclude under such circumstances that their dual representation would be improper, regardless of their consent thereto.
It further notes that even where it is "obvious" that each client can be adequately represented by a single attorney, such representation is proper only where each client consents after "full disclosure of the possible effect of such representation on the exercise of the lawyer's professional judgment on behalf of each client." It also cautions that when a lawyer embarks on such multiple employment, he is admonished to constantly monitor the representation to ensure that each client is adequately represented and that "each client is at all times fully informed of the possible effect of such multiple representation on the lawyer's independent professional judgment on behalf of each client."
Nothing in this opinion supports or justifies Respondent's actions here. Respondent's repeated representation of both the buyer and seller in multiple arms-length real estate transactions does not seem to involve the kind of "rare" circumstances envisioned in opinion. Moreover, the opinion specifically emphasizes the need for informed consent based on full disclosure, which includes disclosure of the possible effects that the representation might have on the lawyer's exercise of independent judgment on behalf of each client. As we have already discussed, it is evident from Respondent's own statements that, at best, she made only minimal disclosures to her clients concerning these matters.
We also note that Respondent asserted in her answer and in her sworn statement that Ms. Penn was also present at each of these four closings and worked with one party while she represented the other. It is unclear whether Respondent believes that this would somehow cure the conflict or if she is simply suggesting that Ms. Penn should also share in the responsibility for the misconduct. In either event, we find it unnecessary to address the issue because we find that the evidence does not support her claim. Ms. Penn testified at the hearing that she only attended the second day of the closing in the Dilworth/Van matter and that she did not attend any of the other closings. Moreover, she denied that she represented any of the parties or that she did any work on these files. Her testimony in this regard is corroborated by that of Mr. Wicks, who stated that Ms. Penn was not present at his closing and he had never met her prior to the disciplinary hearing. It is also supported by the documentary evidence that was submitted by the Administrator which contains no indication that Ms. Penn was ever actively involved in representing any of the parties in these matters. Based on the evidence, we conclude that Ms. Penn attended only one day of the Dilworth/Van closing and did not represent any of the parties in these transactions.
Based on the foregoing, we find that Respondent violated Rules 1.7(a), 1.7(b), and 1.7(c) by engaging in improper conflicts of interest with respect to each of the matters at issue in Counts II through V. We also find that Respondent breached her fiduciary duty to her clients in these matters because, as their attorney, she owed them a fiduciary duty to represent them with loyalty and to avoid conflicts of interest. See In re Vrdolyak, 137 Ill. 2d 407, 422, 560 N.E.2d 840 (1990). We further find that Respondent violated Rule 1.4(b) by failing to explain the conflict of interest issues to her clients to the extent reasonably necessary to permit them to make informed decisions about the representation. We also conclude that Respondent's conduct brought the legal profession into disrepute in violation of Illinois Supreme Court Rule 770.
Having found that Respondent engaged in misconduct, we must determine appropriate discipline. In making this recommendation, we take into account that the goal of the disciplinary process is not to punish the Respondent, but to safeguard the public, maintain the integrity of the profession, and protect the administration of justice. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993). We also consider the nature of the misconduct, the aggravating and mitigating factors, the deterrent value of the sanction, and whether the sanction will help preserve public confidence in the legal profession. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194 (2003). Although each case is unique and must be resolved in light of its own facts and circumstances, predictability and fairness require that we recommend sanctions that are consistent with those imposed in cases involving comparable misconduct. In re Howard, 188 Ill. 2d 423, 440, 721 N.E.2d 1126 (1999); In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473 (1994).
Respondent's misconduct here essentially involved multiple incidents where she engaged in improper conflicts of interest in handling various real estate matters. Count I involved six separate transactions where she represented the seller without making proper disclosures regarding her own financial interest as an agent for the title company. Counts II through V involved four of those same transactions where she improperly represented both the buyer and the seller. Respondent's misconduct is aggravated by the fact that it was not an isolated act, but involved multiple instances of the same type of improper behavior. See In re Cutright, 233 Ill. 2d 474, 491, 910 N.E.2d 581(2009). Thus, she demonstrated a pattern of failure to comply with applicable ethical rules.
We also find it aggravating that, with respect to the charges in Count II through V, Respondent failed to show any real remorse or to display any indication that she understood or appreciated the nature of her wrongdoing. See In re Lewis, 138 Ill. 2d 310, 347-48, 562 N.E.2d 198 (1990). While she acknowledged her mistakes in failing to obtain the required written disclosures, she continued to deny that she had done anything wrong by representing both the buyer and the seller in four of these matters. Of particular concern to us is Respondent's apparent failure to understand the reasons behind the prohibition on representing both sides in a transaction or to appreciate the potential problems associated with such a practice. Even in the face of these disciplinary proceedings, Respondent has still failed to demonstrate that she currently understands the rules regarding conflicts of interest and her ethical obligations there under. To the contrary, at one point during the hearing, Respondent indignantly implied that she should not be subjected to discipline beyond censure because she is a role model to her community. (Tr. 139-40). Such righteous indignation in the face of Respondent's utter failure to grasp the existence, much less the seriousness, of Respondent's engagement in blatantly obvious
conflicts of interest is of serious concern. The Court has recognized that a lawyer's failure to recognize his or her wrongdoing is a significant concern in the disciplinary process because it raises the possibility that the lawyer will repeat the behavior. See In re Mason, 122 Ill. 2d 163, 173-74, 522 N.E.2d 1233 (1988).
In mitigation, we note that Respondent has been licensed to practice law since 2001 and has not been previously disciplined. The fact that this is her first instance of misconduct is a mitigating factor. Demuth, 126 Ill. 2d at 14. In re Young, 111 Ill. 2d 98, 105, 488 N.E.2d 1014 (1986). We also note that she was relatively young and inexperienced at the time that the misconduct occurred. See, e.g., In re Armentrout, 199 Ill. 2d 242, 254-55, 457 N.E.2d 1262 (1983) (inexperience a factor in mitigation). Other than this, however, there is very little in the way of any additional mitigation to take into account. Respondent did not testify herself at the hearing or offer any other evidence in mitigation. We also note that she indicated in her sworn statement that she has not been involved in any significant pro bono legal work or other charitable activity or community service.
With regard to a specific sanction, the Administrator has suggested that Respondent be suspended for 30 days and be required to complete the ARDC Professionalism Seminar. In support, she relies primarily on cases where attorneys have been censured for improperly representing conflicting interests in a single transaction. The Administrator suggests that a 30-day suspension rather than a censure is warranted in this case due to the fact that Respondent's misconduct did not stem from an isolated lapse, but it involved multiple transactions. Although Respondent agrees that the ethics seminar is appropriate, she suggests that she should only be censured and not suspended. She cited no case law or other authority in support of this sanction.
The cases cited by the Administrator reflect that attorneys have normally been censured for single instances of misconduct similar to that at issue here involving improper conflicts of interest. Of the cases cited, we find In re Jeffers, 08 CH 103, M.R. 23537 (Jan. 21, 2010), In re Dixon, 07 CH 115, M.R. 22629 (Nov. 18, 2008), and In re Greenberg, 05 CH 26, M.R. 20776 (Mar. 21, 2006), to be most factually similar to the misconduct at issue in this case.
The respondents in Jeffers and Dixon were both disciplined for improperly representing the buyer and the seller in the same real estate transaction. In Jeffers, the respondent was already representing a buyer in connection with the sale of a single-family home when he was subsequently contacted by the seller and asked to represent her in the same transaction. The respondent told the seller that he already represented the buyer but agreed to also represent her at the closing at a reduced rate. Similarly, the respondent in Dixon agreed to represent both the buyers and the sellers in a real estate transaction after receiving a request to do so from the buyers' loan officer. In both of these matters, the respondents failed to properly advise the buyers and the sellers that their interests could be adverse or that their representation of one party could be limited by their responsibilities to the other party. Neither of the respondents had been previously disciplined and they each expressed remorse for their misconduct. In both of these cases, which were resolved on consent, the respondents were censured and required to complete the ARDC Professionalism Seminar.
In Greenberg, 05 CH 26, the respondent was disciplined for misconduct stemming from her representation of the same client in three different real estate closings while also serving as attorney for the title company. The respondent received over $8,000 in commissions from Ticor for her services and also received an additional $1,750 in attorney's fees from the seller. She failed to inform her client that she was an agent for Ticor or that she was receiving a financial
benefit as a result of her use of Ticor for issuance of the title policies. The respondent had not been previously disciplined and expressed remorse for her conduct. The respondent was censured for those actions, as well as for additional misconduct in failing to initially respond to the Administrator's requests for information regarding that same matter.
We agree with the Administrator that precedent suggests that something more than a censure and the ethics course is warranted here, particularly given Respondent's lack of remorse and utter failure to recognize the seriousness of her misconduct. As the cited cases demonstrate, a censure would normally be the appropriate sanction for just a single incidence of this type of misconduct. Respondent's misconduct was clearly more serious than in Jeffers, Dixon, or Greenburg because it involved four separate transactions in which she represented the buyer and seller as well as well as six instances where she also failed to properly disclose her financial interest as an agent for the title company. In addition, unlike Respondent, the attorneys in Jeffers, Dixon, and Greenburg, all acknowledged their wrongdoing and expressed remorse for their behavior. This is a significant distinction. As already noted, we are very troubled here by Respondent's continued failure to see anything wrong with much of her conduct and by her failure to show any remorse.
Based upon applicable precedent as well as the particular facts and circumstances of this case, we conclude that an appropriate sanction for Respondent's misconduct is a suspension for a period of 60 days. We also recommend, however, that this suspension be stayed in its entirety upon Respondent's successful completion of the ARDC Professionalism Seminar. In formulating this recommendation, we have taken into account the goals of the disciplinary process as well as the fact that the ultimate objective of discipline "is not to be harsh or to punish the respondent, but to impose a sanction that is uniquely tailored to the precise facts of each
particular case." In re Jordan, 157 Ill. 2d 266, 274, 623 N.E.2d 1372 (1993). In this case, we believe that Respondent's misconduct stemmed primarily from her lack of knowledge and understanding of her ethical obligations rather than any bad faith or deliberate disregard of the rules on her part. While we also have significant concerns that she still fails to understand or appreciate her duties and responsibilities to her clients, we believe that these concerns can be best addressed by encouraging Respondent to obtain additional education and training in this regard. We believe that this sanction takes into account the seriousness of Respondent's actions and also accomplishes goals of the disciplinary process without unduly punishing the Respondent.
For the foregoing reasons, we recommend that Respondent, Shaveda Monique Scott, be suspended for 60 days, with the suspension stayed in its entirety subject to the condition that Respondent satisfactorily completes the ARDC Professionalism Seminar within one year of the date of the Court's order imposing discipline. In the event that Respondent fails to complete the seminar within this one-year period, the stay of the suspension shall be vacated and the 60-day period of suspension shall immediately commence.
Date Entered: July 26, 2011
|Lawrence S. Beaumont, Chair, with Devlin J. Schoop and Mark Fitzgerald, Hearing Panel Members.|
1 At the time of her sworn statement Respondent was also pursuing a position as a special agent with the Drug Enforcement Agency. She reported at the hearing that she exceeded the age limit for that position before completing the process and was no longer pursuing this job. At the conclusion of the hearing, Respondent's intent to further pursue her legal career was unclear.
2 Although the original Complaint is based on seven transactions, the Administrator withdrew the charges as they relate to the Oscar Towne matter at the beginning of the hearing.
3 We note that this opinion involved an interpretation of Rules 5-105(a) and (b) of the Illinois Code of Professional Responsibility, the predecessor to Rule 1.7. The language in the former rule is similar although not identical to the version of Rule 1.7 at issue here.