Filed August 24, 2012
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
Commission No. 08 SH 117
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on January 12 and 13, 2012, at the offices of the Attorney Registration and Disciplinary Commission, Springfield, Illinois before a Hearing Board Panel consisting of Paul C. Hendren, Chair, Janaki H. Nair and Ted L. Eilerman. The Administrator was represented by Gary S. Rapaport. The Respondent appeared and was represented by William F. Moran, III.
On December 8, 2008 the Administrator filed a one-count Complaint against the Respondent. In summary, the Complaint alleged the facts set out below.
From January to June 2004, the Respondent had an attorney-client relationship with James Throgmorton, and performed various legal services for Throgmorton's companies Tectonic, Computer Warehouse, Scientistsuperstar Enterprises, and M.O.C.C.I. Box. During the same period, Throgmorton was providing computer services to the law firm of Rhode & Jackson, P.C., of which Respondent was a partner. Throgmorton assigned James Mayer, who was
Throgmorton's lead employee at Computer Warehouse, to attend to the computer needs of the law firm.
In March or April 2004, the Respondent formulated a plan with James Mayer to start a computer service business, Network Consulting Solutions (NCS), that she knew would compete directly with Throgmorton's Computer Warehouse. The Respondent used confidential information she learned from Throgmorton to further her plan with Mayer. Respondent did not advise Throgmorton of her plan to go into business with Mayer or that her interests with Mayer would conflict with her representation of Throgmorton.
On May 29, 2004, Respondent wrote a letter to Throgmorton terminating the legal services Rhode & Jackson, P.C. was providing to him. For several weeks thereafter, Throgmorton called and left messages for the Respondent, but she did not return his calls.
On June 9, 2004, the Respondent and Mayer signed documents registering NCS as a corporation with the Illinois Secretary of State. On June 17, 2004, Platinum Consulting Services borrowed $10,000 from a bank to provide start-up funding for NCS. The Respondent was a member of Platinum Consulting Services, which was a company she used to provide start-up management services to individuals starting a new business in the area. Both the Respondent and her law partner signed personal guaranties for the loan.
The Respondent knew that Mayer intended to hire Throgmorton's employees at Computer Warehouse as employees of NCS. The Respondent also knew that Computer Warehouse employees had no employment agreement that restricted their ability to take clients they had served at Computer Warehouse to NCS. By the end of June 2004, three former Computer Warehouse employees went to work at NCS. By August 2005, numerous former Computer Warehouse clients became clients of NCS. In August 2005, Throgmorton closed Computer Warehouse due to lack of business.
Based upon the above, the Administrator alleged that the Respondent committed the following misconduct: (a) breached her fiduciary duty; (b) represented a client where the representation of that client may be materially limited by the lawyer's own interests, to wit: owning a competing computer services company, in violation of Rule 1.7(b) of the Illinois Rules of Professional Conduct (1990); (c) during her professional relationship with a client, James Throgmorton, used confidences and secrets of that client without that client's consent, in violation of Rule 1.6(a); (d) after having represented a client, James
Throgmorton, used information relating to that representation to the disadvantage of Throgmorton, in violation of Rule 1.9(a)(2); (e) as a partner in law firm, failed to make reasonable efforts to ensure that the firm had in effect measures giving reasonable assurance that the conduct of all lawyers in the firm conformed to the Rules of Professional Conduct, in violation of Rule 5.1(a); (f) as a partner in a law firm, knew of conduct at a time when its consequences can be avoided or mitigated, but failed to take reasonable remedial action, in violation of Rule 5.1(c)(2); and (g) engaged 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.
The Respondent filed an Answer on February 2, 2009, in which she admitted some of the factual allegations in the Complaint, denied others, and denied all of the charges of misconduct.
The Administrator presented the testimony of James Throgmorton, Franciene Sabens, David Mack, and James Mayer. The Administrator's Exhibits 1 through 10, and 13 through 26 were admitted into evidence. (Tr. 8, 73, 97, 198, 200, 293). The Respondent testified in her own behalf and presented the testimony of Shari Rhode and Shawn Patrick. She also presented the stipulated testimony of David Clover, and the deposition testimony of three character witnesses.
Respondent's Exhibits 1 through 14, and 17 through 33 were admitted into evidence. (Tr.294, 466).
Mr. Throgmorton testified that he is 40 years of age, resides in Carbondale, and is currently in school studying cinematography. He previously worked as a computer network engineer. He received a certification of training from Microsoft. (Tr. 26-27, 48).
In 1997 he purchased a company named Computer Warehouse. The company provided on-site networking and also had a retail store. By 2004, Computer Warehouse had about seven employees, including James Mayer and David Mack. Mayer was the manager, and a "key employee." Mack was the "lead network engineer." At that time, the employees of Computer Warehouse had no contract, there was no employee handbook, and there was no non-compete or confidentiality agreement. (Tr. 28-32).
In 2004, Throgmorton also owned Tectonic Computers, which was the "consulting arm behind Computer Warehouse," and Scientistsuperstar Enterprises, which was "kind of a brain child for web-based work." (Tr. 33-34). He and Mayer were involved in an entity called M.O.C.C.I. Box, which is an anagram for Mobile Onboard Central Command Interface. They were developing an interface for a car computer. Throgmorton and Mayer were considering a partnership in this entity. However, M.O.C.C.I. Box never developed because Mayer ultimately did not sign the legal paperwork for it. (Tr. 34-35, 43-44)
In January 2004, Throgmorton had his first meeting with the Respondent. She hired Computer Warehouse to work on the computer system of the Rhode & Jackson law firm. The Respondent was the principal contact for the law firm. Throgmorton assigned Mayer to the computer work at Rhode & Jackson. (Tr. 36-37). About the same time the Respondent hired Computer Warehouse, Throgmorton hired the Respondent to provide legal services to him. He
wanted the Respondent to prepare a contract for his employees, including a non-compete provision, and an employee handbook. (Tr. 30-31, 37-38). Throgmorton acknowledged that Mayer was communicating with the Respondent about the foregoing matters, and that he was authorized to do so. (Tr. 60).
On April 9, 2004, Franciene Moore (now Sabens), an employee of Rhode & Jackson, sent an e-mail (Adm. Ex. 2) and a copy of a "first draft of the Employees Manual" to Throgmorton and Mayer. Throgmorton reviewed the draft, which he said resembled the draft in Administrator's Exhibit 4, but without the handwritten notations. (Tr. 38, 41, 68). Throgmorton did not send a response regarding the draft, but Mayer did so. (Adm. Ex. 2: Tr. 38-39, 64). Throgmorton said he trusted Mayer to work on the employee manual. The Respondent and Mayer worked together on the employee manual. The draft employee manual contained a "non-disclosure/Confidentiality Agreement." (Adm. Ex. 4 at 16; Tr. 39-40, 64). Throgmorton said he "would need to be able to review [the employee manual] to be able to apply it to the business," but he never attended a meeting to discuss the employee manual. Thus, the work on the employee manual was never completed. (Tr. 39, 40-41, 69).
The Respondent did prepare a service agreement and waiver for Throgmorton's on-site customers. The draft of the service agreement was sent to Mayer. (Adm. Ex. 3) Throgmorton reviewed the proposed agreement, and it was then used in his business. Thus, the work on the service agreement was completed. (Tr. 41-42). The Respondent also prepared documents for Throgmorton and Mayer to sign as to M.O.C.C.I. Box. However, Mayer did not sign the documents. (Tr. 43-44, 59).
On May 28, 2004, the Respondent sent a letter to Throgmorton. (Adm. Ex. 8). This "termination letter" stated that the "limited services which you retained us to perform are now completed and we will close our files accordingly." Throgmorton received the letter shortly after
May 28, 2004. He said that some of the work the Respondent was hired to do was not completed. The uncompleted work consisted of the employee contract, the employee manual, and the confidentiality and non-compete agreements. (Tr. 43-45, 66-67).
On June 4, 2004, Mayer spent a day with the Respondent. When Mayer returned to Computer Warehouse, he announced he was quitting. Throgmorton had not received any prior notice of Mayer's intent to quit his job at Computer Warehouse. (Tr. 46-47, 60, 65). On June 7, 2004, the Respondent spoke with Throgmorton and inquired if Computer Warehouse could continue to service the computers at her law firm in the absence of Mayer. (Tr. 65-67).
Shortly after Mayer quit, other employees of Computer Warehouse quit and went to work at the computer company Mayer formed, Network Consulting Solutions (NCS). The former employees took clients with them and, thus, Computer Warehouse lost many profitable clients. (Adm. Ex. 13). About a year after Mayer quit, Throgmorton closed Computer Warehouse due to lack of business. (Tr. 32-33, 47-48, 52, 60-61).
After he closed Computer Warehouse, Throgmorton worked at Triage, L.I.C., a company owned by one of his clients. Throgmorton became a partner in that company. He later returned to school. (Tr. 48, 61-62).
After the business relationship between the Rhode & Jackson law firm and Throgmorton ended, he received a letter from the law firm requesting him to pay outstanding bills relating to Computer Warehouse. Throgmorton then claimed that the law firm owed him for work performed by Computer Warehouse. The claims were settled, and a mutual release of claims was executed on August 25, 2005. (Tr. 49- 54; Resp. Ex. 12).
Finally, Throgmorton testified that the Respondent and Mayer were in collusion against him, and kept it a secret from him. Throgmorton said the "most heinous thing was having an attorney that had access to every bit of information about my business and then using it basically
against me with one my employees [Mayer]," as to the creation of a competing business. (Tr. 50, 52-53).
Franciene Sabens, formerly Franciene Moore, testified that she is married and currently employed as a school counselor. She has a Bachelor's degree in Paralegal Studies and a Master's degree in Educational Psychology. (Tr. 76-77).
From sometime in 2003 until the fall of 2004, Franciene worked as a paralegal for the law firm of Rhode & Jackson. In 2004, she worked "mostly" with the Respondent. In early 2004, James Throgmorton became a client of the law firm. She knew Throgmorton previously because his brother and her husband are "best friends." (Tr. 77-79).
Franciene was present at a meeting with the Respondent, Shari Rhode, and Throgmorton, during which they discussed the things the law firm was going to do for Throgmorton. Franciene worked with the Respondent on various things for Throgmorton and the companies he owned. On April 8, 2004, Franciene sent a memorandum to the Respondent listing the pending projects on which they were working. (Resp. Ex. 19). The projects included the preparation of an employee manual for Computer Warehouse, with a non-compete clause; a contract for James Mayer as "partner" or "operations manager;" and documents pertaining to Scientistsuperstar and M.O.C.C.I. Box. (Tr. 84-86, 100-104).
On April 9, 2004, Franciene sent to Throgmorton and Mayer a "first draft of the Employee Manual" for Computer Warehouse. She identified Administrator's Exhibit 4 as the draft manual, and said it is her handwriting on that document. She also said she worked with the Respondent on this project and that they both did a substantial amount of work on it. A bill from Rhode & Jackson to Computer Warehouse (Adm. Ex. 6) sets out the hours they worked on the
draft manual. Franciene said she subsequently sent Mayer and Throgmorton a second draft of the employee manual. (Tr. 80-81, 97-99, 101).
Franciene said that James Mayer worked on the computer system of Rhode & Jackson, and was at the law firm "a lot." He frequently met with the Respondent. Franciene recalled Rhode being present at two meetings with Mayer and the Respondent. (Tr. 89-90, 105-106).
Franciene identified the first page of Administrator's Exhibit 25 as a page from the law firm's Outlook mechanical calendaring system. It shows that Shari Rhode was the organizer of a meeting with James Mayer, regarding "new business" scheduled for 3:00 p.m., April 26, 2004. The "required attendees" consisted of the Respondent, Franciene and all of the other employees of the law firm. Franciene said she did not remember the meeting, or the "new business" that was listed as the subject of the meeting. Page 2 of Administrator's Exhibit 25 is a copy of the April 26, 2004, Outlook calendar page for Rebecca Kill, the head secretary and bookkeeper at the law firm. That calendar page states that the Respondent was to be out of the office for a meeting with "Jill" at 2:30 p.m. (Tr. 91-92, 106-108, 110-11).
On April 19, 2004, Mayer sent an e-mail to the Respondent asking if he could "borrow that business plan creation software you have in Franciene's office." On the following day, the Respondent forwarded Mayer's e-mail to Franciene and said "respond to him. I don't care." (Adm. Ex. 15). Franciene said she had business plan software on a bookshelf in her office and gave it to Mayer after receiving the foregoing e-mail. She explained that the software looked like "one you could probably go to a store and buy," and that it was to "help you draft business plans" if someone was "trying to get a business off the ground." She also said she did not recall if she spoke with the Respondent about Mayer's request or if she simply gave the software to him based on the e-mails. She also said she had never used that software and was not aware of the Respondent having used it. Franciene did not recall the date on which she gave the software
to him, but thought it was shortly before a termination letter was sent to Throgmorton on May 28, 2002. (Tr. 93-96, 111-14).
On May 28, 2004, the Respondent sent a letter to Throgmorton stating "the limited legal services which you retained us to perform are now concluded and we will close our files accordingly." (Adm. Ex. 8). Franciene said she did not help in the preparation of the letter, and did not remember "doing a letter like this when we were done with things." (Tr. 87, 104-105). After the letter was sent out, Franciene took "several" telephone calls from Throgmorton, in which he asked to talk with the Respondent. However, she would not talk with him. Throgmorton come to the law office "to pick up his books and was very upset." He requested to talk with the Respondent, but she "hid from him that day and would not talk to him." (Tr. 87-88, 104-105).
Finally, Franciene said that "many" of the things the law firm had been doing for Throgmorton were not completed. The projects that were not completed included the employee manual and a contract for James Mayer. (Tr. 82, 86-87).
Mr. Mayer testified that he is 33 years of age and is a self-employed IT consultant. He has a Bachelor's degree and various Microsoft certifications. He said that he was previously the owner of a company named Network Consultant Solutions, L.L.C., (NCS) and that the "other owner technically was Platinum Consulting Solutions which was made up of Martine Jackson and Shari Rhode." (Tr. 126-27).
In January 2004, Mayer was working for Computer Warehouse. Computer Warehouse was owned by James Throgmorton, and Mayer was a salaried employee. Computer Warehouse had a computer store and provided on-site computer services to businesses. There were about five employees at Computer Warehouse at that time. As an employee of Computer Warehouse,
Mayer was assigned to provide computer services to the law firm of Rhode & Jackson, P.C., and met the Respondent for the first time. He said that Rhode & Jackson was a "high-maintenance client," which required "a lot" of his time. (Tr. 127-30).
According to Mayer, the idea of starting his own company and going into business with the Respondent was "formed from" the Respondent herself. He explained that, while he was at the Rhode & Jackson one day, he vented to the Respondent about some of his frustrations in the way Throgmorton was running Computer Warehouse. She then asked him why he didn't start his own company. He replied that he didn't know how to start a company and didn't have the funds to do so. Mayer could not recall the date on which the foregoing conversation occurred. On a subsequent occasion, the Respondent asked Mayer to come to her office. When he arrived, he saw that Shari Rhode was also present. They talked with him "about potentially starting an IT company with me." Thereafter, he had additional conversations with the Respondent and/or Rhode about starting up a new company, which was NCS. Mayer said there were from 20 to 30 meetings or conversations about forming NCS, and that they began in February 2004. The Respondent took part in all of the discussions, while Rhode was present for more than half of them. (Tr. 131-33, 154-55).
Mayer recalled a conversation in which the Respondent said we "need to figure out what to do with Jamie, James Throgmorton." (Tr. 133). Mayer also said the problem with Jamie was that Jamie's company was doing computer work for Rhode & Jackson and "Jamie was a client of Rhode & Jackson at the time." He further asserted that it was "pretty well common knowledge that Jamie shouldn't be told about this," and "we knew that there was, you know what I'm saying, a conflict back then."(Tr. 133, 156-58).
During his discussions with the Respondent, Mayer made it clear that he did not want to operate a computer store. Rather, he "wanted to do the business consulting because that's really
where the money was." He said "pretty much everything that we were talking about doing in the new company was stuff that Computer Warehouse had already been involved in." Mayer said that the Respondent was aware that the current employees of Computer Warehouse would go to NCS and that their clients would follow them. (Tr. 133-35). Mayer was aware that Computer Warehouse did not have non-compete agreements, and he informed Respondent and Rhode of that fact. (Tr. 160-61).
Mayer understood that NCS would be his company, but that the Respondent and Rhode "would be the financial backers of that company." (Tr. 156, 170). He also understood that the Respondent would be an "advisor" on how to run the company, a "consultant," and "handle the legal side of things." There was no discussion about how much money would be needed to finance NCS. Mayer was "asked to make a business plan to tell them how much money we would need to survive for the first year." (Tr. 136-37).
Mayer prepared a first draft of a business plan for NCS (Adm. Ex. 10) by using software "called Palo Alto Business Plan Pro or something like that." He obtained the software from Rhode & Jackson. On April 19, 2004, Mayer sent an e-mail to the Respondent, asking if he could borrow the business plan creation software in Franciene's office. The Respondent forwarded Mayer's e-mail to Franciene, and said "I don't care." (Adm. Ex. 15). Shortly thereafter, Mayer obtained the software from Franciene. Mayer said the software was still in a retail box with a manual and CD case. He took the software to his home and spent a week or two in preparing the draft business plan. He gave the draft business plan (Adm. Ex.10) to the Respondent for review. He said he was not certain if he e-mailed it or gave her a hard copy. However, he did see a hard copy of the draft on a credenza in the Respondent's office. He said the handwriting on Administrator's Exhibit 10 is not his. Mayer also said that he thought he prepared a second draft of the business plan. However, the business plan was never completed. (Tr. 137-44, 161-64).
On May 21, 2004, the Respondent forwarded to Mayer the notice for a conference entitled "Keeping a Close Eye on Your Employees, and she stated in her e-mail "something to think about for bus plan." (Adm. Ex. 18). Mayer said he did not know why the Respondent sent him the forgoing information. He explained that "I didn't quite understand why this would go into a business plan or why this would even be part of a business plan." (Tr. 149-50).
On May 10, 2004, Mayer sent an e-mail to the Respondent inquiring about banks doing business with NCS. He said she previously mentioned that she had friends at banks and would try to get the banks as clients of NCS. In his e-mail, Mayer said he had a "writeup of all the stuff we can do," and asked if she would "like me to email it to you or just print out a hard copy for you?" The Respondent replied to Mayer, saying "the non traceable way." (Adm. Ex. 16). Mayer said that "to me, that just means let's talk in person or hand me something . . . but don't, you know, e-mail me something from Computer Warehouse." (Tr. 144-46, 165).
The Respondent and Rhode suggested that Mayer obtain independent counsel in regard to the operating agreement for NCS. They provided him with the name of an attorney, whose first name was James. Mayer could not recall the attorney's last name. (Tr. 147, 166). On May 18, 2004, Mayer sent an e-mail to Rhode, asking for the phone number of the foregoing attorney, and Rhode provided it the following day. Mayer then sent Rhode an e-mail, saying "thank you." Rhode replied "welcome. Need investors?" (Adm. Ex. 17). Mayer later decided not to contact the attorney who the Respondent and Rhode recommended. Ultimately, the operating agreement was never signed. (Tr. 146-48, 166-67).
Mayer resigned from Computer Warehouse on "probably June 1st maybe or 2nd or 3rd." He said "I quit Computer Warehouse and the next day I was at NCS." (Tr. 169). He explained that he resigned because "I was offered a chance to start my own company and to go and be partners with [Respondent] and Shari [Rhode] to start up a bigger and better company." That
company was NCS. He had been making plans for NCS for "a few months" before he resigned. (Tr. 130).
Mayer identified Administrator's Exhibit 19 as the articles of organization for NCS, which was filed with the Illinois Secretary of State on June 9, 2004. Mayer's signature is on the second page of the document. He said he didn't know much about this document because Rhode & Jackson were to prepare the business corporation documents. The Respondent signed the document on behalf of Platinum Consulting Solutions, L.L.C. which was the other owner of NCS. Mayer explained that Platinum was owned by the Respondent, and he recalled the Respondent saying that she was going to make Rhode "an owner of Platinum in order for [Rhode] to own part of NCS." (Tr. 150-51, 186-87).
Mayer said he looked at office space for NCS while he was "on Computer Warehouse time." He also said his wife, the Respondent, and Rhode were with him when he looked at office space. About a week after they began looking, they found the office into which NCS ultimately moved. Mayer signed the lease on behalf of NCS on June 10, 2004. (Adm. Ex. 20). He said that NCS moved into that office about two to three weeks before the lease was signed. He and the Respondent had keys to that office. He did not know if Rhode also had a key. (Tr. 151-53, 167-68).
After Mayer left Computer Warehouse and went to NCS, other Computer Warehouse employees also quit and went to work at NCS. About 20 companies who were serviced by the foregoing employees also transferred their business from Computer Warehouse to NCS. Mayer said that Computer Warehouse still had four "very large clients." (Tr. 135, 160).
Within two years, NCS had 80 clients. Mayer said the success of NCS "caused [the Respondent] to literally want to suffocate the company and take control of it." Mayer was not happy with what the Respondent was doing, and he disassociated himself from NCS in June
2006. He has civil litigation pending against the Respondent and Rhode. He said he has spent between $250,000 and $300,000 on attorney fees and costs related to that litigation. He refused to answer any questions pertaining to the civil litigation. (Tr. 171-81, 193-96).
Mayer acknowledged there were no documents that set forth the ownership of NCS, his role in NCS, his salary, the Respondent's role in NCS, where the money for NCS was to come from, or if anyone had to pay any anything back. He was asked why he starting working at NCS without any such documents, and he answered that he thought he could trust the Respondent and Rhode. (Tr. 185-86).
Finally, Mayer said he thought the Respondent was his attorney before they began the business venture of NCS. She represented M.O.C.C.I. Box and he was a "50 percent owner" of that company. He and Throgmorton went to the Respondent "to talk about the structure of the company and to get counsel." Thus, "I thought she was my lawyer then. He further said that he considered the Respondent his attorney in regard to NCS on the day NCS "would be officially active." (Tr. 187-88).
Mr. Mack testified that he owns a computer network consulting firm that has two full-time employees. (Tr. 116-17).
Mack worked for Computer Warehouse from 1999 to June 2004. He met James Mayer while they both worked for Computer Warehouse. In January or February 2004, Mack learned of Mayer's "basic discussion" about starting his own company. By April or May 2004, "we were definitely in the thick of it and pretty much getting ready to go at that point." Mayer had mentioned to Mack that the Respondent and Rhode were going to provide the financial backing for Mayer's company. The employees of Mayer's new company, NCS, were going to be Mack, and two other employees of Computer Warehouse, Mike Cherry and Davis Clover. They planned
to notify all Computer Warehouse clients that they would be with NCS, and that "we would be happy to take care of them" at NCS. (Tr. 118-20).
When Mack resigned from Computer Warehouse, he "immediately," started working for NCS. He explained that he made the change in employment because his relationship with James Throgmorton "had gotten a little rocky" and he had the opportunity to do the same job for Mayer, with whom he had a good relationship. (Tr. 120, 124-25).
Mack said that a "very significant percentage" of the clients he served at Computer Warehouse followed him to NCS. Cherry and Clover also brought clients to NCS with them. (Tr. 121, 123). Mack identified Administrator's Exhibit 13 as a list of clients that NCS had in June 2006. Mack said "just about all of them are clients that we brought over from Computer Warehouse," and that the former clients of Computer Warehouse are shown with "dashes by the name." (Tr. 122-23).
Shari Rhode testified that she is 60 years of age and has been licensed to practice law in Illinois since 1976. She worked for the Southern Illinois University Office of General Counsel and became the chief trial attorney. She met the Respondent while the Respondent was in law school. She hired the Respondent as a graduate assistant in the General Counsel's office. Rhode worked full time for Southern Illinois University until 2001, and then left that employment entirely in 2003. In 2001, Rhode went into practice with the Respondent, and they became partners in the law firm of Rhode & Jackson. (Tr. 201-209).
Rhode said she has been the litigator in Rhode & Jackson, and its primary focus is employment and discrimination. The Respondent has been the managing partner responsible for the running of the office, which includes handling computer or IT problems. The Respondent does "corporate transactional" work, and represents doctors and medical practices. (Tr. 209-10,
216). Rhode said their law firm has a "conflict check system," and has been able to call a law professor and a former general counsel for the Illinois State Bar Association in regard to ethical issues. (Tr. 213-14). Rhode also described community service in which their law firm has been involved. (Tr. 211-13).
In the fall of 2003, Rhode & Jackson had a catastrophic problem with its computer system. Their system crashed and they discovered that there had been no back up to their system for several months. As a result, they had to reestablish the system and recreate information from hard copies in the files. The Respondent hired James Throgmorton and his company, Computer Warehouse, for the restoration project and to service their computer system. Throgmorton assigned his employee James Mayer to be the technician who would service the Rhode & Jackson computer system. (Tr. 216-17).
Rhode said she was made aware that the Respondent had agreed to provide legal services to Throgmorton and his companies and that Throgmorton was going to provide computer services to Rhode & Jackson. She was also aware that there was going to be a tradeoff so that the Rhode & Jackson bills would be offset against Computer Warehouse bills. (Tr. 218-19).
Rhode testified that she did not recall having ever talked with Throgmorton. She acknowledged that she may have been introduced to him, but never had a meeting with him. She asserted that she would not recognize Throgmorton. (Tr. 219-20, 237-38).
Rhode said that she did not have much interaction with Mayer, and she denied having any meetings or conversation with him in April or May 2004 about forming the computer company NCS. She said "I never had a discussion with him [Mayer] about the creation of a computer company. Never happened." (Tr. 217, 220-21). She also denied being the organizer of a meeting with Mayer and others for 3:00 p.m. on April 26, 2004, as indicated in Administrator's Exhibit 25. She said she did not know where that document (Adm. Ex. 25) came from. She
explained that at 3:00 p.m. on April 26, 2004, she was driving to Benton, Illinois for a 4:00 p.m. meeting. (Tr. 222-23).
Rhode denied having ever looked at office space for NCS with Mayer. She became aware of the location of the NCS office, but never had a key to it. In fact, she said she never went to that office until Mayer disassociated himself from NCS in 2006. (Tr. 224-25).
After NCS was incorporated, the Respondent asked Rhode if she "wanted to be a member of Platinum, which was to be or which was one of the members of NCS." (Tr. 221). Rhode understood that Mayer was asked to work for the law firm of Rhode & Jackson as the IT person. However, Mayer did not want to do so, but wanted his own company. The Respondent and Rhode agreed to help Mayer get his company started in order to have Mayer continue to provide computer service to the law firm. Rhode said "I never wanted to be in the computer business. I only wanted to make sure that our law firm was taken care of." (Tr. 221, 225-26).
Rhode said she did not see any ethical issues arising out of providing the funding for Mayer, after Mayer had left his employment with Throgmorton's company, Computer Warehouse, a former client of the law firm. Rhode explained that, after Mayer resigned from Computer Warehouse, the Respondent went to Throgmorton and asked him if Computer Warehouse could continue to service the law firm's computer system in the absence of Mayer. Throgmorton replied that he could not. Thus, it was only after Throgmorton was given the opportunity to continue to service their computers, that Rhode and the Respondent assisted Mayer "to simply make sure that our firm's system was taken care of." (Tr. 227-28).
In 2006, Rhode learned that Mayer "was using resources of the company as his piggy bank." For example, he used NCS money to pay his personal bills, to purchase cars, and to pay his boat docking fees." She and the Respondent met with Mayer. He said he didn't know that he couldn't use the company money as he did, and then would do it again. (Tr. 229-30). Finally,
and without any prior notice, Mayer left NCS. When Rhode went to the NCS office, she found it "trashed." Also, a program had been used to wipe everything off the office's computer hard drives. (Tr. 230-31).
Rhode further testified she saw or heard nothing to indicate the Respondent learned through her representation of Throgmorton that he did not have a non-compete agreement with his employees at Computer Warehouse. Likewise, she said she saw or heard nothing to indicate the Respondent learned through her representation of Throgmorton that Computer Warehouse clients could be become clients of NCS and used to make a profitable business. Rhode additionally said that she was not given a copy of the draft business plan prepared by Mayer in April 2004, and had not seen it prior to the current disciplinary proceeding. (Tr. 232-34).
Rhode acknowledged that she and the Respondent are still in the computer business at the present time. Their company is NCS, doing business as "Mr. Adm." She explained that they are in the computer business "regrettably," and that they "are trying to rebuild it enough to keep it to recoup what we've got in it." The computer company provides computer services to the law firm and is paid for those services. (Tr. 235-37, 240).
Finally, Rhode explained that Platinum Consulting Services is an entity, separate from the law firm, which the Respondent utilizes to set up doctors in medical practice. The Respondent gives non-legal advice about business-related matter. Rhode and the Respondent are the only members of Platinum. (Tr. 239-40).
Mr. Patrick testified that he is 62 years of age and is a computer forensic consultant. He works for Tactical Investigations, a private detective agency, which has been hired by the Rhode & Jackson law firm. He testified as to his educational and work history, and his resume was
received into evidence (Resp. Ex. 13). He said he has testified as an expert in both federal and state courts. (Tr. 249-52, 271).
Patrick forensically reviewed the history of the e-mails set out in Administrator's Exhibit 15. Those e-mails consist of one from James Mayer to the Respondent on April 19, 2004, and one from the Respondent to Franciene Moore on April 20, 2004. Patrick said he found the e-mails "only in the folders designated to me as being backups of [Respondent's] e-mails." Based upon the forgoing, he concluded that someone "made a backup copy of [Respondent's] e-mails." (Tr. 253-56). He said he also searched Franciene's e-mails, but "found nothing" related to the e-mail in Administrator's Exhibit 15. He concluded that it was "most likely" that the e-mail was sent, but it "never got" to Franciene. He explained that, if Franciene had received that e-mail and deleted it, he still would have expected to find it somewhere. (Tr. 256-58).
Patrick further testified that he extensively examined the draft business plan for Network Consulting Solutions in Administrator's Exhibit 10. He voiced the opinion that it is not a printout from the 2004 Palo Alto Business Plan software (as testified by James Mayer). (Tr. 259-60, 264-65). He also said it was not created from an earlier version of that software. (Tr. 279-80). Although Patrick was unable to determine when the draft business plan in Administrator's Exhibit 10 was created, he said he found nothing to indicate that it had been prepared before June 9, 2004. (Tr. 270-71, 273, 275-76, 279).
The Respondent testified that she is 45 years of age and has been licensed to practice law in Illinois since May 1998. She worked for the Legal Counsel at Southern Illinois University from 1998 to 2001. She met Shari Rhode during the foregoing employment. In 2001, the Respondent and Rhode became partners in the law firm of Rhode & Jackson. Their primary legal
work is in the area of employment law. The Respondent has handled the day-to-day operation of the office. (Tr. 295, 309, 311-14).
The Respondent has also provided consulting services and training to medical offices in regard to the requirements of HIPAA (the Health Insurance Portability and Accountability Act). For example, she has informed medical offices of the rules regarding the protection and privacy of health care information. She has provided training about "how to keep information private and how to make sure that they document the ways that they can and cannot release information." She established the entity called Platinum Consulting Solutions for the foregoing work in order to separate that work from the practice of law by Rhode & Jackson. (Tr. 317-20).
In late 2003, the computer network of Rhode & Jackson crashed. They learned that files had not been backed up for about a year. (Tr. 321-22). Following a meeting with James Throgmorton on February 9, 2004, the Respondent hired Throgmorton's company Computer Warehouse to reinstall the computer network of Rhode & Jackson and to provide continuing support for it. Throgmorton assigned his "lead employee," James Mayer, to handle the work at Rhode & Jackson. Mayer began the work shortly after the meeting. Throgmorton "showed up occasionally" at Rhode and Jackson, but he did not work on the computer system. (Tr. 325-27, 332-33).
The Respondent had another meeting with Throgmorton on February 19, 2004. The Respondent made notes of what was discussed at that meeting. (Resp. Ex. 18). Throgmorton told the Respondent about the M.O.C.C.I Box project, which pertained to a computer system for cars. He explained that he wanted to form a company to mass produce and sell the box. He also told her that he wanted another company of his, Scientistsuperstar or Tectonic, to own the M.O.C.C.I Box Company. Additionally, he wanted James Mayer to have an ownership interest in and an employment contract with M.O.C.C.I Box. (Tr. 327-29). Also at the their meeting on
February 19, 2004, Throgmorton informed the Respondent that his companies Scientistsuperstar and Tectonic had been fined for failing to file annual reports for a number of years. He asked the Respondent to assist him in having those companies reinstated with the Illinois Secretary of State. (Tr. 329-31).
The Respondent initially agreed to represent Throgmorton for the limited purposes of the formation of the M.O.C.C.I Box Company and the reinstatement of the other two companies. She said she thought the reinstatements were "connected to the formation of M.O.C.C.I Box obviously because one of those organizations was going to be the member of M.O.C.C.I Box." The Respondent said that, before agreeing to represent Throgmorton in the foregoing matters, she spoke with attorney Webb Smith who represented Throgmorton in the formation of Scientistsuperstar and Tectonic. (Tr. 330-32).
The Respondent testified that, after she told Throgmorton the hourly rate for her services and for those of her paralegal, he suggested they exchange or offset their bills for services to each other. The Respondent said she agreed to this exchange or off-set, but only as to work on the M.O.C.C.I Box project. She explained that "at the end of the project, once those two entities were formed and reinstated, we would bill each other . . . [and] whoever owed who money would write a check." (Tr. 331-32).
Beginning in March 2004, the Respondent also agreed to provide additional legal services to Throgmorton and his companies. Those services pertained to five specific matters. The first matter was to revise the consulting contract to be used by Computer Warehouse with its customers. (Tr. 335-36). The second matter was to revise a repair and service agreement to be used by Computer Warehouse with its customers. (Tr. 336). The third matter was to prepare corporate organizational documents and annual reports. This pertained to Scientistsuperstar and Tectonic, and was related to the Respondent's previous agreement to get them reinstated with the
Illinois Secretary of State. (Tr. 336-37). The fourth matter was the preparation of an employee handbook for Computer Warehouse. (Tr. 338). The final matter was the discussion of business planning and organizational issues pertaining to M.O.C.C.I Box. The Respondent emphasized that the business planning and organizational issues had nothing to do with Computer Warehouse or James Mayer's employment with Computer Warehouse. (Tr. 339-40, 342).
The Respondent said that all of the matters she had agreed to work on for Throgmorton were completed. She also said that each matter was completed without her needing or receiving any confidential information from Throgmorton about Computer Warehouse or his other companies. (Tr. 336, 337, 340-41, 361, 364, 372).
On April 8, 2004, Franciene Moore (now Sabens) prepared a memorandum entitled "Pending Projects and Suggestions." (Resp. Ex. 19). The first matter listed by Franciene was the status of Scientistsuperstar and the second matter was M.O.C.C.I. Box. The third matter was a "confidentiality/trade secret agreement." The Respondent said that this referred to both hardware and software related to M.O.C.C.I. Box. The fourth matter listed was a "contract for James Mayer." The Respondent said that this matter also pertained solely to M.O.C.C.I. Box, and did not relate to Computer Warehouse. The final matter listed pertained to the employee handbook for Computer Warehouse. (Tr. 343-46).
On April 9, 2004, Franciene sent a draft employee handbook (Adm. Ex. 4) to both Throgmorton and Mayer. (Adm. Ex. 6 at 1). It was sent to Mayer because Throgmorton had previously directed that the Respondent and Franciene work with Mayer as to the employee handbook. On April 13, 2004, the Respondent had a conversation with Mayer in regard to the draft employee handbook. Thereafter, she reviewed and revised the handbook. The revised employee handbook (Resp. Ex. 20) was then sent to Mayer on April 13, 2004. The Respondent did not receive any request for further revisions, and she believed the employee handbook was
completed. The Respondent again noted that she did not receive any confidential information about Computer Warehouse during the preparation of the employee handwork. (Tr. 246-50, 382, 450-52, 457-58; Adm. Ex. 6 at 1-2).
On April 14, 2004, the Respondent met with Throgmorton and asked him for a report on the completion of the computer network for Rhode & Jackson. She explained that their trade of services would end once the network was completed. He told her everything had been installed, and she said she would check on the status of the legal work she was doing for him. The Respondent said this was the "first discussion that I had with him of terminating the bartering agreement and terminating our legal representation because I had only agreed to do [certain projects] and he had regular counsel. I was not going to be his regular counsel." She met with Throgmorton again on April 27, 2004, because she wanted "to make sure that he understood that I was not going to be his regular counsel and that I was not going to represent his entity." (Tr. 351-55, 384-85).
On May 28, 2004, the Respondent sent a letter to Throgmorton informing him that "the limited legal services which you retained us to perform are now completed and we will close our files accordingly." (Adm. Ex. 8). The Respondent said that all the work for Throgmorton was, in fact, completed, and that the law firm regularly sent out letters of this type. (Tr. 356-57, 382). She denied, as claimed by Franciene Sabens (Moore), that she refused to accept Throgmorton's phone calls or otherwise speak with him after the termination letter was sent to him. (Tr. 357-58, 383). The Respondent pointed out that in September 2004 Franciene left her employment with Rhode and Jackson. The Respondent said "we let her resign in lieu of termination." (Tr. 357-58).
The Respondent was asked about billing statements of Rhode & Jackson that listed work performed for Scientistsuperstar, Computer Warehouse, and M.O.C.C.I. Box from May 28, 2004
to June 14, 2004. (Adm. Exs. 5, 6 at 2, and 7). She explained that no legal services were provided after May 28, 2004. (Tr. 454). Rather, the work performed after that date consisted of checking on and obtaining documents related to the reinstatement and formation of Throgmorton's companies. The documents were then forwarded to Throgmorton. (Tr. 356, 358-60, 454-56).
The Respondent denied that she talked with James Mayer about starting his own computer business at any time prior to June 4, 2004. (Tr. 334, 374-76, 388, 394). She said that on Friday, June 4, 2004, she met with Mayer at her office. He told her that he had resigned from Computer Warehouse and would not be available to service the computer network at Rhode & Jackson. He also told her that, because he had designed and implemented the network, no other employee at Computer Warehouse would know how to service that network. Mayer further stated that he wanted "to stay around" and "continue working on my network." The Respondent replied that she would have to talk with Throgmorton. (Tr. 399-402).
On the following Monday, June 7, 2004, the Respondent met with Throgmorton. He acknowledged that Mayer was no longer employed at Computer Warehouse. The Respondent asked him whether he could continue to service the computer network at Rhode and Jackson in the absence of Mayer. Throgmorton replied that he did not have any employee who could service it. She told him that, if Mayer were to stick around in this community and provide IT services, "I am inclined to go with Mr. Mayer and have my IT service run by Mr. Mayer." Throgmorton said he understood, and did not have a problem with that. The Respondent also told Throgmorton that "if [Mayer] needs assistance to stay in the community, I'm inclined to do that because I cannot afford to not have somebody here to provide IT services and I can't afford to start all over with finding someone to learn it." Throgmorton replied "that's fine, I understand." (Tr. 402-405, 416-17, 447).
On June 8, 2004, the Respondent's "e-mail server went down." She had her secretary contact Mayer. Mayer came to the Rhode & Jackson office and "fixed whatever was wrong." Mayer told her that there was a more serious problem with the network and that certain software was needed to fix it. She then asked him what he needed in order to provide service to her network. He indicated that equipment and software would be needed. She told him she would "make an investment in this equipment because it's something [she] would need and use." She explained that her plan initially was to invest in what was required for Mayer to service the Rhode & Jackson network. Later, Mayer repeatedly said he needed something else. At that point, from the Respondent's perspective, "we were investing in a service that we needed in order to continue operating Rhode and Jackson." (Tr. 405-11).
Mayer's Network Consulting Solutions, LLC (NCS) came into existence on June 9, 2004, when a document entitled Articles of Organization (Adm. Ex. 19) was filed with the Illinois Secretary of State. The Respondent said that another attorney had prepared the foregoing document for Mayer. The document identified Mayer as organizer, and identified the Respondent and Platinum Consulting Solutions as a member. The document was signed by both the Respondent and Mayer. (Tr. 410-12). The Respondent said that, after NCS came into existence, she first spoke with Rhode about becoming a member of Platinum and providing funding for NCS. The Respondent told Rhode that Mayer needed funding for NCS so that he could continue to provide computer services to their law firm. She asked Rhode if Rhode wanted to be a member of Platinum and invest in NCS. Rhode agreed to do so. In order to obtain start up funds, NCS received a loan of $10,000 from Old National Bank, on June 17, 2004. (Adm. Ex. 22). The Respondent signed the loan agreement on behalf of Platinum as a member of NCS. (Adm. Ex. 22 at 5). Also, the Respondent and Rhode were personal guarantors for the loan. (Tr. 377-78, 414-15; Adm. Ex. 22 at 6-9, 17-19).
Mayer signed a lease for office space on behalf of NCS on June 10, 2004. (Adm. Ex. 20). The Respondent said she had nothing to do with negotiating the lease. She also said she did not look at potential office space for NCS with Mayer. (Tr. 412-13).
The Respondent said she did not know, at the time, that employees of Computer Warehouse left and went to work for NCS. Likewise, she said she was not aware, at the time, that customers of Computer Warehouse left to become customers of NCS. (Tr. 415-16, 423-25, 446).
The Respondent said that NCS started making a profit in 2005, but that Mayer then began paying his personal bills with NCS money. She said there were also other problems with the management of NCS, such as "bounced check fees" being charged and overpayment of wages being paid to Mayer. In 2006, the Respondent and Rhode became involved in monitoring the books and records of NCS. Finally, on June 19, 2006, and without prior notice, Mayer and other NCS employees quit. The Respondent said that "everything" in the office had been "destroyed," and that software had been placed on computers to delete everything on the hard drives. (Tr. 429-34; Resp. Ex. 29). The Respondent described the subsequent legal proceedings between her and Mayer. (Tr. 434-43).
The Respondent acknowledged that NCS is still in business and has one employee. She explained that she is "expecting hopefully to pay off the debt that was incurred to repair the damage that was done." That debt is about "a quarter of a million dollars." (Tr. 448-49, 459).
Administrator's Exhibit 15 purports to be an e-mail from Mayer to the Respondent on April 19, 2004, asking to borrow the "business plan creation software," and an e-mail from the Respondent to Franciene Moore on April 20, 2004, stating "[please] respond to him. I don't care." The Respondent said that she did not write the forgoing e-mail and that neither she nor her law firm had any business planning software. (Tr. 389-90).
The Respondent said she did not receive a notice from Rhode regarding a meeting with Mayer scheduled for 3 p.m. on April 26, 2004 (Adm. Ex. 25 at 1) and did not attend such a meeting. She explained that Rhode would have had no reason to schedule such a meeting, and that Respondent had a meeting with a client at beauty salon, 25 miles away form her office, at the time of the purported scheduled meeting. (Tr. 390-93; Resp. Ex. 24; Adm. Ex 25 at 2).
Administrator's Exhibit 16 purports to be an exchange of e-mails between Mayer and the Respondent on May 10, 2004. In his e-mail, Mayer referred to "banks" Respondent was "talking about" as possible customers for Mayer, and he asked if he should provide some information to her by e-mail or hard copy. Her responding e-mail said "the non traceable way." The Respondent testified that she never saw the foregoing e-mails prior to this disciplinary proceeding. (Tr. 395-96).
There was a joint stipulation of fact (Resp. Ex. 30) that Mr. Clover was an employee of Computer Warehouse and then became an employee of NCS in the summer of 2004. At the request of James Mayer, Clover downloaded some pirated business plan software from the Internet. Clover did not recall whether he did this while working at Computer Warehouse or after he started working at NCS.
It was further stipulated that Clover did not communicate in any manner with the Respondent or Rhode about working for NCS. Also, he did not hear or see any evidence that the Respondent or Rhode were aware that Mayer intended to solicit clients of Computer Warehouse to become clients of NCS.
Peter C. Alexander
Mr. Alexander testified by evidence deposition, taken on January 11, 2012, as a character witness on behalf of the Respondent. (Resp. Ex. 31).
William Rance Butler
Mr. Butler testified by evidence deposition, taken on January 11, 2012, as a character witness on behalf of the Respondent. (Resp. Ex. 32).
Mr. Cox testified by evidence deposition, taken on January 11, 2012, as a character witness on behalf of the Respondent. (Resp. Ex. 33).
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 Thomas, 2012 IL 113035, par. 56; In re Winthrop, 219 Ill. 2d 526, 542, 848 N.E.2d 961 (2006). This standard requires a high level of certainty, greater than a preponderance of the evidence, but less than proof beyond a reasonable doubt. Bazydlo v. Volant, 164 Ill. 2d 207, 213, 647 N.E.2d 273 (1995); In re Barry, 09 SH 5, M.R. 24439 (Mar. 21, 2011) (Review Bd. at 6-7). In determining whether the burden of proof has been satisfied, the Hearing Panel is to assess the credibility and believability of the witnesses, weigh conflicting testimony, draw reasonable inferences from the evidence, and make factual findings based upon all of the evidence. In re Howard, 188 Ill. 2d 423, 435, 721 N.E.2d 1126 (1999); In re Ring, 141 Ill. 2d 128, 138-39, 565 N.E.2d 983 (1991).
It is troubling that the Respondent placed herself in a situation in which there would likely be an appearance of impropriety, particularly as viewed by a former client. A great deal of time and effort has been spent in this disciplinary proceeding because of the Respondent's failure to exercise good judgment. Nevertheless, we do not believe there is clear and convincing evidence that the Respondent engaged in ethical misconduct as charged in the Complaint.
The evidence showed that in February 2004 the Respondent hired Computer Warehouse, a company owned by James Throgmorton, to reinstall and provide service to the computer
network at the Rhode & Jackson law firm. At that time, James Mayer worked at Computer Warehouse. Throgmorton described Mayer as his "key employee." Throgmorton assigned Mayer to handle the work at Rhode & Jackson, with the Respondent being Mayer's primary contact person.
Later in February 2004, the Respondent agreed to provide legal service to Throgmorton in regard to a M.O.C.C.I. Box project and his companies Scientistsuperstar and Tectonic. Both Throgmorton and Mayer were involved in M.O.C.C.I. Box, which was intended to be a company that would manufacture and market a car-based personal computer called Mobile On-board Central Command Interface. Throgmorton wanted Mayer to have an ownership interest in M.O.C.C.I. Box, and he hired the Respondent to prepare the documents for the formation of the M.O.C.C.I. Box Company. Throgmorton also wanted either Scientistsuperstar or Tectonic to have an ownership interest in the M.O.C.C.I. Box Company. He hired the Respondent to provide the legal work needed to get Scientistsuperstar and Tectonic reinstated with the Illinois Secretary of State.
In March 2004, the Respondent agreed to do additional legal work for Throgmorton in regard to Computer Warehouse. The Respondent agreed to revise a consulting contract for customers; revise a repair and service agreement for customers; prepare a non-compete and a confidentiality agreement for employees; and prepare an employee handbook or manual. As phrased by Throgmorton, he wanted a "good, binding agreement" with Computer Warehouse employees with respect to "confidentiality" and a "non-compete" provision. (Tr. 29-31, 44-45).
On May 28, 2004, the Respondent sent Throgmorton a letter terminating her representation of him and his companies. In the letter, the Respondent said that the "limited legal services which you retained us to perform are now completed and we will close our files accordingly. (Adm. Ex. 8).
The charges of misconduct are based upon allegations pertaining to the Respondent's relationship with James Mayer during her representation of James Throgmorton, Mayer's employer. Her fiduciary duty to Throgmorton required undivided fidelity, loyalty, good faith, due care, skill, and diligence. See In re Winship. 219 Ill. 2d 526, 543-44, 848 N.E.2d 961 (2006); In re Meersman, 09 SH 17, M.R. 23643 (Mar. 16, 2010) (Hearing Bd. at 13). It was first alleged that, during her attorney-client relationship with Throgmorton, she discussed with Mayer a plan for Mayer to start a computer business, Network Consulting Solutions (NCS), which would compete directly with Throgmorton's Computer Warehouse. It was also alleged that the Respondent used confidential information received from Throgmorton in furtherance of the plan to start NCS. Additionally, it was alleged that, while she represented Throgmorton, she planned to have an ownership interest in NCS, knew Mayer intended to hire Computer Warehouse employees at NCS, and knew Mayer would take Computer Warehouse customers to NCS. (Complaint, pars. 18-22, 37-38).
We found no clear and convincing evidence that the Respondent discussed with Mayer, or even knew about, Mayer's plan to start his own computer business at the time she had an attorney-client relationship with Throgmorton, that is from February 2004 to May 28, 2004. The only direct evidence that such discussions occurred came from James Mayer. However, we did not find Mayer to be a credible witness and we did not find his testimony believable. We also find that certain exhibits offered by the Administrator were highly unreliable and did not provide support for Mayer's testimony.
Administrator's Exhibit 25 contains what purports to be a page from Rhode & Jackson's Outlook mechanical calendaring system. The document states that Rhode organized a meeting with the Respondent, all employees of Rhode & Jackson, and James Mayer. The meeting was in regard to "new business," and was scheduled for 3 p.m. on April 26, 2004. However, the Outlook
calendar page of the head secretary at the law firm (Adm. Ex. 25 at 2) showed that the Respondent was scheduled for a meeting with "Jill" outside of the office at 2:30 p.m. on that date. The Respondent testified that she had the meeting at Jill's business, which is in a city 25 miles away from the Respondent's office. We found no reasonable explanation for Rhode to have called for such a meeting or for requiring all the employees in her office to attend. It is also clear that no such meeting occurred. We also note that there was no evidence of Mayer having received a notice, by e-mail or otherwise, of the meeting. Thus, we find that the exhibit purporting to show a meeting with Mayer regarding "new business" on April 26, 2004, is neither reliable nor credible evidence.
Administrator's Exhibit 15 purports to show that Mayer sent an e-mail to the Respondent on April 19, 2004, in which Mayer asked if he could borrow the "business plan creation software you have in [Franciene's] office." The exhibit also purports to show that the Respondent then sent an e-mail to Franciene, saying "respond to him" and. "I don't care." Mayer and Franciene testified that Mayer subsequently went to Franciene's office and obtained the business plan creation software. The Respondent testified that she did not write the above e-mail to Franciene and that her law firm never had any business plan software. We found the testimony of expert witness Shawn Patrick to be believable. Patrick testified that he was unable to find the above e-mail from the Respondent to Franciene on Franciene's computer. He concluded that, if Franciene had received that e-mail and even had deleted it, he still would have expected to find it somewhere on her computer. Mayer testified that the software he received from Franciene's office was Palo Alto Business Plan software and that he used it to create a business plan for NCS in April 2004. (Adm. Ex. 10). Patrick, however, testified that the business plan prepared by Mayer (Adm. Ex. 10) was not created from the Palo Alto Business Plan software. Additionally, Patrick said he found nothing to indicate that the business plan for NCS (Adm. Ex. 10) had been
prepared prior to June 9, 2004. As mentioned above, we did not find Mayer to be a credible witness. We also note that Franciene Sabens (formerly Moore) left her employment with Rhode & Jackson in September 2004 when she was allowed to "resign in lieu of termination." Additionally, Franciene's husband and Throgmorton's brother are "best friends." Consequently, we conclude that Administrator's Exhibit 15 is neither reliable nor credible evidence.
Paragraph 10 of the Disciplinary Complaint alleges that, from March through June 2004, Throgmorton discussed with the Respondent his intent to give James Mayer an ownership interest in Computer Warehouse and asked the Respondent to prepare a contract for that purpose. We found no evidence, not even in Throgmorton's testimony, that Throgmorton wanted Mayer to have an ownership interest in Computer Warehouse. Rather, the only business in which Throgmorton wanted Mayer to have an ownership interest was M.O.C.C.I. Box. Thus, the allegations in paragraph 10 were not proved.
We are unable to find by clear and convincing evidence that the Respondent obtained confidential information from Throgmorton regarding Computer Warehouse and then used such information to assist Mayer in starting a competing business, NCS. Throgmorton's testimony was vague about what confidential information he may have disclosed to the Respondent. He simply asserted that the Respondent was in "collusion" with Mayer, and "had every bit of information about my business and then [used] that basically against me with one of my employees." (Tr. 50, 53). Based upon the nature of the work the Respondent did for Computer Warehouse, as described by the Respondent, Throgmorton, and Franciene Sabens (Moore), we are not convinced that she received or had any reason to receive confidential information from Throgmorton. The Respondent did become aware that Computer Warehouse did not have a non-compete agreement or a confidentiality agreement with its employees. However, that information was common knowledge of the employees and former employees of Computer Warehouse, and
there was insufficient proof that it was confidential or secret information. Also, because Mayer already was aware of the foregoing information prior to the time the Respondent become aware of it, we fail to perceive how the Respondent used that information to assist Mayer in starting NCS.
The Complaint, at paragraph 23, alleges that the Respondent had not completed the legal work she was to do for Throgmorton when she terminated him as a client on May 28, 2004. We are unable to find clear and convincing evidence that the Respondent had not completed the work she agreed to do for Throgmorton by May 28, 2004. There is no dispute that the Respondent had completed a consulting agreement and a service agreement for Computer Warehouse; the necessary paperwork for the formation of the M.O.C.C.I Box Company, which Mayer declined to sign; and performed the legal work needed to have Scientistsuperstar and Tectonic reinstated with the Illinois Secretary of State. Throgmorton contended that the Respondent did not complete the employee handbook, a non-compete agreement, and a confidentiality agreement for Computer Warehouse. The evidence showed that a draft employee handbook was sent to Throgmorton and Mayer on April 9, 2004. The reason it was sent to Mayer was because Throgmorton had instructed the Respondent and Franciene Moore to work with Mayer on that handbook. On April 13, 2004, the Respondent spoke with Mayer about the employee handbook and than she made revisions in it. On the same day, the revised handbook was sent to Mayer. There was no evidence that either Mayer or the Respondent contacted the Respondent thereafter with comments, questions, or possible additional revisions to the employee handbook. Based upon the circumstances shown by the evidence, we conclude that the Respondent reasonably believed her work on the employee handbook had been completed. Additionally, the employee handbook prepared by the Respondent included provisions on "non-disclosure," "confidentiality," a "non-compete rule," and a prohibition against former employees
pursuing "Computer Warehouse clients" (Adm. Ex. 4 at 18-11: Resp. Ex. 20 at 10-11). Thus, the Respondent did prepare a non-compete provision and a confidentiality provision, and she could have reasonably believed that an employee handbook containing those provisions constituted a sufficient agreement or contract with Computer Warehouse employees in that regard.
The Complaint charges, at paragraph 24, that the Respondent did not return Throgmorton's telephone calls for "several weeks" after she sent him the termination letter of May 28, 2004. The only testimony in support of the foregoing allegation came from Franciene Sabens. On the other hand, Throgmorton testified that the termination letter "came right before she [Respondent] called and wanted to get paid for services." (Tr. 44). Also, Throgmorton acknowledged that he had another conversation with the Respondent on June 7, 2004, during which she asked him if Computer Warehouse could continue to service her computers without James Mayer. (Tr. 66-67). The Respondent also denied that she refused to take or respond to calls from Throgmorton. Based upon the testimony of Throgmorton and the Respondent, the allegations in paragraph 24 were not proved by clear and convincing evidence.
After considering all of the testimony and exhibits, we find the Respondent's version of what occurred in June 2004 to be reasonable and believable. According to the Respondent, the first time she became aware that Mayer intended to resign from his employment at Computer Warehouse was on June 4, 2004, when he told her he had resigned. He also told her on June 4, 2004, that no other employee of Computer Warehouse had sufficient knowledge to service the computer network at Rhode & Jackson, and he offered to "stay around" to "continue working on [Respondent's] network." The Respondent told him she would talk with Throgmorton. On Monday, June 7, 2004, the Respondent did talk with Throgmorton. Both the Respondent and Throgmorton testified that she asked him if Computer Warehouse could continue to service the computer network at Rhode & Jackson in the absence of Mayer, and Throgmorton replied that he
did not have any employee who could service it. The Respondent then told Throgmorton that she was inclined to have Mayer provide IT services to Rhode & Jackson if he intended to stay in the community. Throgmorton said that he understood. On June 8, 2004, the Respondent asked Mayer how she could get him to continue to service her computers. Ultimately, she decided to provide money for Mayer to start NCS because "we were investing in a service that we needed in order to continue operating Rhode and Jackson." We found no clear and convincing evidence that the Respondent knew in June 2004 that Mayer was going to hire employees away from Computer Warehouse or persuade customers of Computer Warehouse to become customers of NCS.
On June 9, 2004, Articles of Organization for NCS were filed with the Illinois Secretary of State. The document identified Mayer as organizer, and identified the Respondent and Platinum Consulting Solutions as a member. The document was signed by both the Respondent and Mayer. Although the Articles of Organization document was prepared and filed quickly after the Respondent spoke with Mayer about NCS, the Respondent explained that another attorney for Mayer had prepared the document.
Based upon our findings that there was no clear and convincing evidence showing that the Respondent, during her attorney-client relationship with Throgmorton, discussed with Mayer, or even knew about, Mayer's plan to start the computer business of NCS, we conclude that charges the Respondent breached her fiduciary duty to James Throgmorton and engaged in a conflict of interest (Complaint, par 39 (a) and (b)) were not proved. Based upon our finding that there was no clear and convincing evidence showing that the Respondent received and used confidential information from Throgmorton to assist Mayer with his plan to start NCS, we conclude the charge that the Respondent used information related to her representation of Throgmorton to his disadvantage (Complaint, par. 39(d)) was not proved.
We also find the charges that the Respondent, as a partner in a law firm, failed to make reasonable efforts to ensure that the firm had in effect measures giving reasonable assurance that the conduct of all lawyers in the firm conformed to the Rules of Professional Conduct, and that she knew of conduct at a time when its consequences could be avoided or mitigated, but failed to take reasonable remedial action (Complaint, par 39 (e) and (f)) were not proved by clear and convincing evidence. Because there was no proof of any misconduct by the Respondent, there was no basis upon which to find that the Respondent failed to take measures to prevent or mitigate misconduct. Additionally, Shari Rhode and the Respondent testified, without contradiction, that when they have had ethical issues arise, they have contacted a law school professor, who teaches ethics, and/or a former general counsel for the Illinois State Bar Association in regard to such issues. (Tr. 213-14, 319).
Finally, we find that the Respondent did not violate Supreme Court Rule 770, as charged in paragraph 39 (g) of the Complaint. In In re Thomas, 2012 IL 113035, an opinion issued on January 20, 2012, the Supreme Court held that an attorney cannot "violate" Supreme Court Rule 770. In Thomas, at par. 92, the Court stated:
Supreme Court Rule 770 is not itself a Rule of Professional Conduct. Rather, it is contained in article VII, part B, of our rules, which governs "Registration and Discipline of Attorneys." Rule 770 is titled "Types of Discipline" and provides that "[c]onduct of attorneys which violates the Rules of Professional Conduct contained in Article VIII of these rules or which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute shall be grounds for discipline by the court." Ill. S. Ct. Rule 770 (eff. Apr. 1, 2004). The rule then lists eight levels of discipline ranging from disbarment to reprimand. Thus, one does not "violate" Rule 770. Rather, one becomes subject to discipline pursuant to Rule 770 upon proof of certain misconduct. We conclude that based on his violations of Rules 5.5(a), 8.4(a)(4), and 8.4(a)(5), respondent is subject to discipline by this court pursuant to Rule 770.
In light of the fact that no misconduct was proved, the Respondent is not subject to discipline pursuant to Supreme Court Rule 770.
Accordingly, we recommend that the disciplinary charges against the Respondent, Martine Polynice-Jackson be dismissed.
I, Kenneth G. Jablonski, Clerk of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois and keeper of the records, hereby certifies that the foregoing is a true copy of the Report and Recommendation of the Hearing Board, approved by each Panel member, entered in the above entitled cause of record filed in my office on August 24, 2012.
Kenneth G. Jablonski, Clerk of the