Disciplinary Counsel Have Duty to Speak Up On Waiver of Attorney-Client Privilege, But Remain Silent
What if Disciplinary Counsel finds, in the course of prosecuting one lawyer, that one or more of their attorney witnesses are, themselves, guilty of violating the Rules of Professional Conduct in the very same case for which they are to be witnesses. What do they do? Their duty is clear under Rule 16-803.A. The Rule says a lawyer having knowledge of a violation of the Rules of Professional Conduct shall inform the appropriate professional authority.
But what if Disciplinary Counsel remains silent about the breach of the Rules of Professional Conduct by their witnesses? Are they in violation of the Rules of Professional Conduct by failing to report the transgression to the Disciplinary Board? Further, do they violate their obligation as prosecutors for the New Mexico Supreme Court by failing to disclose the wrongful acts of their witnesses to the charged lawyer in order to be fair and just?
Unfortunately, that is exactly what Chief Deputy Disciplinary Counsel Sally Scott-Mullins and Deputy Disciplinary Counsel Sarah Karni failed to do in a discipline case they filed against Attorney Stuart L. Stein. They decided to keep silent to protect their witnesses. The complaint originated from the disgruntled daughter of one of Stein’s clients, Peter Bogarosh.
Facts of Bogarosh Estate Planning
Mr. and Mrs. Bogarosh specifically told Stein the reason they did not name their attorney daughter Barbara as first subsequent trustee was that Barbara was mentally unstable, although seemingly able to function in life. Although they equally divided their estate between Christopher and Barbara, they were very specific in not wanting Barbara to ever have full control of their estate during their lives or for distribution after they were gone. The estate plan was executed and the Living Trust was fully funded.
Bogarosh A/B Split and 706 Return
Novella Bogarosh died in June of 2001. The Stein Law Firm was retained to accomplish the A/B split required in the Trust to get the best Federal Estate Tax advantage. Additionally, the firm was retained to file a 706 Estate Tax Return and to defend it at audit without further charge, should an audit come to pass.
The fee for these services was one percent (1%) of the value of the estate or approximately $17,000.00. If the services were correctly performed, the children of Mr. and Mrs. Bogarosh would save in excess of $300,000.00 in Federal Estate and State Inheritance Taxes upon the death of Peter, the surviving spouse.
This quoted fee is on the lower end of fees charged for these services by lawyers around the country, except in New Mexico where very few lawyers prepare 706’s. The one or two lawyers in New Mexico who do prepare estate tax returns, except for Stein, charge an hourly rate. Stein charges a flat fee based on a percentage of the estate.
The services of The Stein Law Firm in preparing the A/B split and 706, including details about the fee, were discussed at a meeting with Peter, Christopher and Barbara at Stein’s office. After the meeting, a confirmation letter containing the discussed fee was mailed to Peter with copies to Christopher and Barbara. There was no objection to the fee made after the meeting and receipt of the letter. The fee would be due upon completion and signing of the A/B split paperwork and the 706 Tax Return.
Work Accomplished; New Changes Requested
Stein told them it would be quicker for his office to prepare a new trust rather than an amendment to effectuate the changes requested. The death of Novella Bogarosh further complicated the matter and would require customization to an amendment that a new trust would not need. He also told them he was leaving the next day for Las Cruces to meet with clients for the balance of the week.
New Trust for Peter Created
The new trust could be accomplished within the required two-day time restriction. Barbara and Peter agreed to and paid Stein’s regular fee for the new trust, without any additional premium for the expedited time requirement. The Trust was prepared and signed within the time constraint placed by Barbara, but not immediately funded because Peter’s assets were still being funded into the A and B Trusts of his 1995 Trust. The new Trust could only be funded after the A/B split was completed.
Anyone who has ever attended one of Stein’s seminars or worked with his office to create a trust knows that a main focus of Stein and his office is to be sure that his clients understand funding and the importance of it. Peter never contacted Stein’s office to fund his new 2002 Trust.
Peter’s Guardianship and Conservatorship
Around June of 2002, after the signing of the papers in January of 2002, Peter seemed to be further falling into depression and dementia. He would refuse to go to his doctor appointments and, in one case, disappeared for a day to avoid one appointment. In June of 2002, after realizing that her father never funded the new 2002 Trust, Barbara went to Attorney Randolph Hamblin to bring a guardianship and conservatorship case to make herself the sole guardian and conservator of her father.
Hamblin competes with Stein for estate planning clients in Albuquerque. Prior to the Bogarosh matter, Hamblin signed a letter along with seven other competitor lawyers complaining to the now defunct Legal Advertising Committee about Stein’s advertising of seminars for estate planning legal services. Hamblin told Barbara that Stein had charged her father too much for his services. Soon thereafter Barbara made a complaint to the Disciplinary Board.
Barbara Boga-Rosh Makes Bar Complaint Against Stein
The Disciplinary Board complaint was assigned to Disciplinary Counsel Sally Scott-Mullins and Sarah Karni. After doing an inadequate investigation, e.g. they never spoke to Christopher Bogarosh until almost the eve of the hearing on the merits in the discipline case, they filed a formal Specification of Charges against Stein. In that charging document, four attorneys were listed as expert and/or fact witnesses: Randy Hamblin, Lawrence W. Kay, Susan Tomita and Kenneth Leach.
Hamblin, Leach and Tomita were retained Gregory W. MacKenzie, Esq. to quash deposition subpoenas issued by Stein. (See, Posting of June 3, 2007, which discussed the pending ethical complaint against MacKenzie concerning his representation of these three attorneys claiming an attorney-client privilege for documents that didn’t exist.)
The essence of the accusations against Stein were (1) that he charged too much money for the A/B Split and 706 Estate Tax Return; (2) that he didn’t make free copies of his file - which contained no original materials belonging to his clients - and (3) that the new trust didn’t work because it was not funded.
Lawrence W. Kay Claims Attorney-Client Privilege
Stein served Lawrence W. Kay, Esq. with a subpoena duces tecum for deposition and asked him to bring with him any information and files concerning Peter Bogarosh. Kay’s initial reaction to the subpoena was by letter of October 14, 2003: that he couldn’t comply because it would require him “. . . to violate his attorney client privileges with many clients, including, Peter Bogarosh.” Kay sent a copy of this letter to Disciplinary Counsel Sally Scott-Mullins.
What Stein didn’t know on the date of the October 14, 2003 letter from Kay was that the material he was seeking from Kay about Peter Bogarosh was already in the hands of Sally Scott-Mullins and Sarah Karni six months before.
New Mexico Evidence Rule 11-511 states that a voluntary disclosure of attorney-client privilege materials is waived when any significant part of the matter or communication is disclosed or consent is given for its disclosure. Case law holds that even when the material is disclosed inadvertently to a party opponent, the privilege is waived. Hartman v. El Paso National Gas Co., 107 N.M. 697, 763 P.2d 1144 (N.M. 1988). And its waived for other materials relating to the issue as well since ” . . . the cat’s already out of the bag.” Id. 688, 1153.
Kay on Notice that Attorney-Client Privilege Was Waived
On April 9, 2003, Barbara Boga-Rosh faxed a letter to Disciplinary Counsel Sarah Karni enclosing a copy of an amendment that Kay prepared for Peter Bogarosh in October of 2002. Transmission of this attorney-client material to a non-privileged person, Disciplinary Counsel, waived the attorney-client privilege. Kay got a copy of this letter. He was on notice that the attorney-client privilege was waived by Peter’s duly appointed Full Guardian and Conservator, Barbara Boga-Rosh.
Ultimately, Kay’s deposition was taken on January 20, 2004. The only item requested by Stein’s subpoena that Kay brought to the depo. was a short bio for himself. His deposition revealed that he got a letter dated April 8, 2003 from Disciplinary Counsel Sarah Karni asking him if he got the attorney-client waiver from Barbara Boga-Rosh concerning her ward and father, Peter Bogarosh. When Stein’s lawyer asked Kay if he got the waiver from Barbara he replied, “Yes. Yes.” (See, Deposition of Lawrence W. Kay, Esq., 1-20-04, pg. 9, lines 12-13.)
He was pressed on the point: “So you talked to disciplinary counsel about your representation of Mr. Bogarosh, and you got a waiver of confidentiality from his guardian and conservator, Ms. BogaRosh?” He answered: “Yes. His daughter, yes.” Question: “. . . is that completely accurate?” Answer: “Yes.” (See, Deposition of Lawrence W. Kay, Esq., 1-20-04, pg. 10, lines 7-14.)
Disciplinary Counsel Stays Silent With Duty to Speak
When Sally Scott-Mullins and Sarah Karni got the copy of the October 16, 2003 letter from Kay to Stein claiming the attorney-client privilege, neither of them (1) notified Kay that the attorney-client privilege as to Peter Bogarosh was waived by Barbara Boga-Rosh when she supplied copies of Kay’s work on Peter’s behalf to Disciplinary Counsel’s Office that Kay considered privileged; (2) made an ethical complaint or opened an investigation against Kay for misleading Stein as to his right of access to Kay’s file, or (3) notified Stein that they had the material he was requesting from Kay and the attorney-client privilege was waived.
But this wasn’t the only incident in the Bogarosh case where Scott-Mullins and her office ignored the waiver of the attorney-client privilege. When Hamblin voluntarily gave Disciplinary Counsel copies of materials from his file, it was a waiver. Yet, Scott-Mullins did not supply these materials to Stein’s counsel when ordered by the Hearing Committee.
One of the items supplied to Scott-Mullins and Karni by Barbara Boga-Rosh was a chronology of events surrounding her father and brother that Disciplinary Counsel used to draft the Specification of Charges. Barbara claimed it was done for her lawyer, Hamblin, so he could understand the case and claimed it was attorney-client privileged for that reason. Yet, once it was given to Disciplinary Counsel, the privilege was waived. Scott-Mullins and Karni didn’t or refused to understand that concept. And, for that matter, neither did Hearing Committee Chairman Robert P. Tinnin, Jr., Esq. He attempted to split the baby by allowing Stein and his lawyers just a lunch hour to go over the lengthy chronology and then they had to give it back and it was placed under seal.
The Disciplinary Board website has the Complaint Against a Lawyer form online for anyone wishing to make a complaint against a lawyer. The form is not necessary and a letter could be written instead. But the form advises the complainant that signing the form gives consent to allow an investigator to “see and copy any of my papers and obtain any information necessary to a complete investigation from any lawyers who now or ever did represent me.”
Barbara Boga-Rosh chose to write her complaint in a letter. Why does Disciplinary Counsel require those who choose the complaint form as their option to sign a waiver of their attorney-client privilege and someone who writes a letter does not? It is unbelievable that Disciplinary Counsel does not understand the requirements of their own Office placed on complainants or that they enforce those requirements selectively. And how can Disciplinary Counsel investigate a complaint without a waiver? How can an accused attorney respond to the allegations without violating the attorney-client privilege unless there is a waiver?
It is difficult to respect a system when you have lawyers, like Kay, who are so afraid of Disciplinary Counsel, that as a volunteer witness against another lawyer they knowingly violate the Rules of Professional Conduct. Kay was so afraid of Disciplinary Counsel, as was Ken Leach, that they agreed to put the time into being expert witnesses without being paid. Lawyers are required to cooperate under Rule 16-803.D but there is no requirement that they be forced into involuntarily servitude as expert or fact witnesses without being paid the fees required for their testimony and expert opinion. Neither Kay nor Leach demanded even a witness fee - then just $75.00 - for their time, and they had to pay their lawyer, MacKenzie, out of their own pockets.
It is perhaps even more difficult to respect a system when Disciplinary Counsel, working under the umbrella of the Supreme Court and its Disciplinary Board with the portfolio of policing the ethics of other lawyers, knowingly violate the Rules of Professional Conduct they are supposed to enforce. For Disciplinary Counsel not to know, cold, the application of attorney-client privilege and waiver issues in this area is disgraceful. What hypocrites!
Result of Discipline Hearing
Suffering under the lack of discovery that distorts the attorney discipline system (Stein’s attorneys were denied any pre-trial interrogatories or requests for admission), the Hearing Committee found that Stein’s fee for his A/B Split, 706 Estate Tax Return was not too much, but he did wrongfully not return papers to Barbara from his file and, because the new Trust wasn’t funded and did not work, he failed in his obligation to achieve the result for which he was retained.
There was no proof at the trial that identified what papers belonged to the client and were not returned. There was no proof at the trial as to what Peter’s intentions were as to anything. But a lack of proofs never stops the Hearing Committee or the Office of Disciplinary Counsel from prosecuting or finding violations.
Scott-Mullins thought these “proved” violations required a 1 year suspension. The Hearing Committee gave a 15 day suspension. The clueless Review Panel, representing the full Disciplinary Board, found that Stein did charge too much for the 706 Estate Tax Return and the A/B Split and ordered a partial refund of those fees, upped the suspension to 90 days and affirmed, in all other respects, the findings and recommendations of the Hearing Committee.
Supreme Court Reverses Disciplinary Board
and Hearing Committee Recommendations
The Supreme Court, where cooler heads prevail, after oral argument which extended long beyond the time originally alloted, reversed the finding of excessive fees for the tax work and the suspension sanction but kept the Hearing Committee’s findings on the return of materials and the unfunded trust and ordered a public reprimand.
Conclusion
Why did Kay say he had an attorney-client privilege when it was already waived and he knew it? Why didn’t Scott-Mullins or Karni speak up when they knew that Kay was intentionally misleading Stein by objecting to the subpoena without basis? Scott-Mullins and Karni missed numerous opportunities to set the record straight.
The only conclusion is that Scott-Mullins and Karni suffer from the same disease that plagues the Office of Disciplinary Counsel - the inability to admit when are wrong, ever. In order to cover up their own stupidity, they remain silent instead of taking the high road and doing the right thing.