Excessive reinstatement fees are wrong and unfair. No system should favor the rich lawyer over the poor lawyer.

I noticed recently that to file for reinstatement in the attorney disciplinary system, there are now filing fees. Sometimes this creates a burden for lawyers seeking reinstatement. Why are these changes being made?

Samuel C. Stretton.

The recent imposition of sometimes fairly substantial filing fees in the attorney disciplinary system caught many lawyers by surprise, including this writer. Obviously, there is concern over this because lawyers who are applying for reinstatement oftentimes are financially in desperate shape. To have to pay filing fees of $500 or $1,000 or more is very burdensome and can effectively prevent a lawyer from returning to the practice of law. The whole rationale behind these filing fees is the system needs more money apparently. As noted in earlier articles, the attorney disciplinary system is funded through lawyers. Every lawyer pays an annual registration fee of $220, which covers the cost of the disciplinary system and the cost of the Client Security Fund System. Apparently, the annual fee is not enough and more money is needed. Therefore, filing fees presumably are the way to do that.

It seems like a very short-sighted and unfair decision since it places the burden on individuals who are at least able to pay, those seeking reinstatement after being suspended or disbarred. Even those on inactive status have to pay although the fee is far less, somewhere in the range of $250 to $500. The rationale presumably is that these lawyers have created problems and, therefore, should help pay for the additional cost of the system. In theory that might be a logical rationale, but in practice it is somewhat hard-hearted and makes it difficult for lawyers who are not in a great position to pay because of the loss of their law license.

It would seem that the better practice might be that all lawyers share the burden of funding the system and additional costs shouldn't be placed solely on those who have had problems. If the system is really suffering from lack of funds then the $220 fee might be increased to $250 or maybe $300 a year. It's doubtful any lawyers would complain about paying $300 a year for the privilege of practicing law to ensure the independence of the bar.

These rule changes are surprising because no one ever consults those who practice in the area with any regularity. This writer has either represented lawyers or prosecuted lawyers for almost 47 years and never once has any rules committee or Supreme Court sought his advice as to the wisdom or lack of wisdom of any rule changes. Presumably, this is done through Disciplinary Board rules committees. But most members of the Disciplinary Board, until they are on the board or served on hearing committees, have very little knowledge and experience in the attorney disciplinary system. This would be like having a Civil Rules Committee being staffed by lawyers who do not practice regularly on the civil side.

In a previous article, it was pointed out that the Client Security Fund rules ought to be changed, particularly the 10% annual interest fee charged to lawyers who owe funds to the Client Security Fund. Again, in principle, the theory is those who have caused loss to the Client Security Fund should pay their fair share. But 10% is awfully punitive and can prevent many lawyers from being able to return to the practice of law. If a lawyer waits five or 10 years and owed $5,000 or $10,000 that 10% figure is going to double the amount. Lawyers who made mistakes but have reformed and want to return should not be unduly penalized by this excessive interest rate. Those who practice in the area of disciplinary law know that a lawyer cannot even file a reinstatement petition unless and until the Client Security Fund is paid in full. One should also note that the Client Security Fund allows no right to an appeal. Many times, they don't even give hearings. Therefore, amounts awarded are done without any appellate review and then as years tick away, the 10% keeps adding on.

On this same subject, a lawyer cannot apply for reinstatement if they owe monies to the Disciplinary Board. The Disciplinary Board assesses the cost of litigating matters and preparing for litigation against the respondent lawyer. If the respondent lawyer is successful, no costs are assessed. But if the respondent lawyer is not successful or there is a finding of violation or if there is even just one finding of violation, the entire cost is assessed against the lawyer. This cost includes expenses, but also includes costs of the transcripts that are copied numerous times and given to the various board members. There is a very substantial per page bill that can result in bills for costs of $5,000 to $10,000. Lawyers petitioning for reinstatement, if successful, have to pay the cost of the reinstatement hearing.

What is even more unfair is that the various Disciplinary Counsel offices assess the costs differently. In District I, it appears that they charge double or maybe triple (it's hard to determine without all the figures) the transcript costs that maybe District II or some of the other districts charge. As a result, a Philadelphia lawyer is going to have to pay a lot more to have the right to seek reinstatement than, for instance, someone else. But this whole idea of charging for multiple costs and copying of transcripts makes no sense, particularly in this age of electronics. Why can't the transcript be electronically filed and given to the board members or the court? And why should a lawyer have to pay the costs multiple times when they are seeking reinstatement years later? Even more importantly is why is there a disparity between the districts in the cost? At least there should be some uniformity in cost.

If a person has been suspended or disbarred and makes the appropriate changes in their lives and is in a position to demonstrate those changes and reforms, then the lawyer should be allowed to return and the return should not be barred by whether they are rich or whether they are poor. The Equal Protection Clause of the U.S. Constitution and related provisions of the Pennsylvania Constitution would appear to prohibit such an arbitrary and capricious way of preventing someone from regaining their legal law license. It should not be a monetary game that favors the rich and defeats the poor.

Recently, a lawyer in the First Judicial District who was on a stayed suspension had a hearing. He was ultimately successful in not having the stayed suspension lifted. But he was assessed approximately $4,000 by the District I Office and the Disciplinary Board, primarily a large portion of that was for the transcript cost. That lawyer was then notified he had to pay that cost and he was not in a position to do it.  So, therefore, he is being placed on inactive status (i.e., administrative suspension). That, of course, creates a terrible dilemma for that lawyer. They have to immediately close their practice. The lawyer can be charged with the unauthorized practice of law, which would immediately be a violation of the stayed suspension and result in the imposition of the original suspension.

All that is happening to the lawyer because he is poor. One of the hallmarks of the Pennsylvania attorney disciplinary system is that it's different from other states. Discipline in Pennsylvania is based on individual review. There is no per se discipline. In other words, unlike New Jersey, misuse of funds doesn't necessarily result in disbarment. Lesser discipline is imposed depending on the circumstances of each lawyer in Pennsylvania. The purpose is not punitive, but to protect the public and ensure lawyers are fit. Also, under that concept, if a lawyer has changed and reformed, they should be given the right to come back. Of course, that assumes they will present the proper evidence that they have made the change and reform through character testimony, other exhibits and their own testimony. Many lawyers are just not financially in a position either to pay the cost of reinstatement, pay the 10% interest on Client Security Fund matters, or pay the extremely excessive costs charged lawyers by the various disciplinary offices, including District I, which apparently charges far more than the other districts in at least the transcript costs if not other costs.

Obviously, someone should challenge that, but it's hard to convince lawyers to do the challenge when they want to be reinstated. Many believe this would alienate the court or those who are going to decide whether they have proven that they are fit to return. Those who in a situation where they can't pay the costs can little afford to litigate these issues.

There's been a lot of changes in the attorney disciplinary system the last couple of years. Perhaps it's not as warm and fuzzy as it used to be. Continuances are rarely granted. Hearing Committee members seem very prosecutorial-minded. The Disciplinary Board imposes much harsher discipline. There are now lawyers hired by the court who are liaisons to the Disciplinary Board and lawyers hired to be liaisons to the Hearing Committee. There is no longer Elaine Bixler and before her, Nan Cohen, who were very human and who one could talk to and try to resolve issues. In other words, the Disciplinary Board is becoming a first-class bureaucracy. Whether that's good or bad remains to be seen.

But the imposition of excessive fees that must be paid before reinstatement is wrong and unfair. No system should favor the rich lawyer over the poor lawyer.

In conclusion, there should be a reconsideration of some of these punitive-type measures such as substantial filing fees, 10% interest and the high cost assessed against respondent attorneys in the disciplinary system. It should be noted the same high cost is assessed against someone who is reinstated; they still have to pay the cost at the end of the reinstatement process. Further, the lack of uniformity of how these costs are imposed is worrisome. A self-regulatory system can only work if it has the confidence of the bar. These measures ought to start raising issues of confidence, particularly when the rich are favored over the poor.

A conflicted-out attorney can receive a referral fee due to rule changes.

I just referred a case to another lawyer since I was conflicted out. May I receive a referral fee?

If this was 40 years ago, the answer would be no. Originally, a lawyer who referred a case could only receive a quantum meruit fee. This meant the lawyer had to continue to be involved. If the lawyer was conflicted out, that couldn't happen.

Under the new referral rules (when I say new, the rules changed after 1979 and then further amended in 1987), there is no quantum meruit requirement for referral fees. Now, referral fees can't be excessive and the client has to approve the referring lawyer is receiving some portion of the fee. The client doesn't have to be told the actual amount (See Rule of Professional Conduct 1.5).

Since there is no quantum meruit requirement and since, in reality, the only thing a referral lawyer has to do is make a phone call and refer the case, it doesn't appear that it makes a difference whether the lawyer is conflicted out or not for the purpose of receiving a referral fee. Of course, when the lawyer makes a phone call, it would be a wise idea to have a letter or written agreement summarizing the referral fee so there is no dispute.

There is no definite decision on this issue in Pennsylvania, although at least this writer believes the conflicted lawyer under most circumstances can receive the referral fee. There have been some legal ethics opinions, but they vary and there is no agreement as to what is the correct answer.

In the Pennsylvania Ethics Handbook, 5^th Edition, by the Legal Ethics & Professional Responsibility Committee of the Pennsylvania Bar Association, edited by attorneys Michael Temin and Thomas Wilkinson Jr., there is reference to an opinion by the District of Columbia Bar Association's ethics committee. It is titled "Opinion 326″ and is dated in 2004. That opinion allows a referral fee to be paid even if the referring lawyer has a conflict of interest. According to the summary in the Pennsylvania Ethics Handbook, which is found on Page 162 of the 5^th Edition, is that it still helps or is beneficial to the client to be referred out to a lawyer who doesn't have the conflict. In essence, it's important to have good counsel not burdened by conflict and who is competent. According to the handbook, it would not be a bad idea to give the name of other lawyers to the client also. Whether that's a realistic suggestion remains to be seen.

In conclusion, there is no firm opinion saying it's OK for a lawyer conflicted out to still refer the case—in Pennsylvania—but it appears because of the changing rationale of referral fees that it would be OK.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.