Florida Supreme Court disciplines lawyer who allowed non-lawyer to have signatory authority on escrow account.  [Added 6/10/10]

    Lawyer agreed to handle real estate closings for Lending Group.  She opened an escrow account for these closings.  Lawyer allowed the nonlawyer principal of Lending Group ["Principal"] to have signatory authority on the escrow account.  "However, because she recognized the inherent danger of allowing a nonlawyer access to an escrow account maintained in her name as an escrow agent and Florida lawyer, she placed caps on the amounts of money that [Principal] could access or control in the escrow account."

    For one closing that occurred in Orlando on short (same-day) notice, Lawyer express mailed 10 blank, signed account checks to a nonlawyer title processor for Lending Group.  Lawyer "did not attend the closing and did not see, review, or approve the closing documents before the closing."  Checks from the escrow account were issued.  Principal ordered a stop payment on a check issued to the sellers in the transaction and misappropriated all of the funds involved, about $128,000.  When Lawyer learned of the misappropriation, she notified law enforcement authorities and worked to ensure that the sellers were made whole.

    The Florida Bar charged Lawyer with violating various Rules of Professional Conduct, including 4-1.1 (lawyer must provide competent representation), 4-1.15 (lawyer must comply with trust accounting rules), 4-5.3(a) (paralegals must work under lawyer's direction or supervision), 4-5.3(b) (lawyer must make reasonable efforts to ensure that nonlawyers retained by or associated with lawyer act in manner compatible with lawyer's ethical obligations), 4-5.3(c) (lawyer must review and be responsible for work product of paralegals), 4-8.4(a) (lawyer shall not violate ethics rules or do so through others), and 4-8.4(d) (lawyer shall not engage in conduct prejudicial to administration of justice).  The referee who tried the disciplinary case recommended that Lawyer be found not guilty of all charges.  The Bar sought Supreme Court review of the referee's conclusions regarding Rules 4-1.1, 4-5.3(b), 4-5.3(c), 4-8.4(a), and 4-8.4(d).

    The Supreme Court concluded that "although [Lawyer's] conduct in this case reflected poor judgment in several respects," she did not violate Rules 4-1.1, 4-5.3(c), 4-8.4(a), or 4-8.4(d).  The Court, however, did find that Lawyer did violate Rule 4-5.3(b) (lawyer must make reasonable efforts to ensure that nonlawyers retained by or associated with lawyer act in manner compatible with lawyer's ethical obligations).  The Court concluded:  "[Lawyer's] professional obligations as a lawyer included holding and delivering possession of the escrowed funds in strict accordance with the principals’ agreement and supervising the closing in a reasonably prudent manner.  By allowing [Principal], a nonlawyer whom she neither employed, supervised, nor controlled, essentially unfettered access to the funds held in the escrow account, [Lawyer] failed in her responsibility to ensure that she had 'in effect measures giving reasonable assurance' that [Principal]’s conduct would be compatible with those professional obligations.  In fact, when it comes to the area of funds held in trust by a lawyer, we conclude that a reading of rule 4-5.3 in its entirety leads to only one reasonable conclusion.  A lawyer may permit a nonlawyer to have authority or control over such funds only if that nonlawyer is employed by or under the direct supervision and control of the lawyer."  (Emphasis by Court.)

    The Court distinguished Florida Ethics Opinions 64-40 and 64-40 (Reconsideration), which concerned trusted nonlawyer employees of a lawyer having signatory authority on the lawyer's trust account.  "We do not read these opinions as authorizing a lawyer to permit a nonlawyer, nonemployee to have essentially unfettered access to funds held in trust by the attorney, whether in an IOTA trust account or an escrow account in the attorney’s name.  There is a critical distinction between an attorney’s office manager and a person who is neither employed by, responsible to, nor otherwise under the supervision and control of the lawyer as here."

    The Court remanded for a hearing on the appropriate sanction, "including consideration of a rehabilitative suspension."  Florida Bar v. Hines, __ So.3d ___, 35 Fla.L.Weekly S337 (Fla., No. SC08-2297, 6/10/2010), 2010 WL 2301711.

Civil theft judgment against lawyer who left law firm and took clients with him is reversed.  [Added 2/10/10]

    A case that the appeals court described as having facts "enough to make any legal ethics professor cringe" involved the situation of a lawyer departing a law firm and taking clients with him.  Winters, an associate at Mulholland's law firm, left the firm.  Twelve of the firm's "lucrative" clients went with Winters.  Winters had copied or kept some client files. Before Winters left, his "paramour" (a paralegal at the firm) hacked into the firm's computer system and "altered client contact data for some of the clients assigned to Winters to make it more difficult for Mulholland to contact these clients."  (Footnote omitted.)

    Mulholland sued Winters for civil RICO, federal RICO, civil theft, conversion, intentional interference with advantageous business relationships, accounting, and extinguishment of retaining liens.  Ultimately only the civil theft claim was submitted to the jury.  A judgment against Winters was entered for more than $1.4 million.

    Winters appealed.  The Second DCA reversed, ruling that Mulholland "failed to prove that any of Winters' actions were the proximate cause of any damages suffered by Mulholland."

    Although the court had "no real question" that Winters' activities in connection with leaving the firm "constitute the unauthorized use of Mulholland's client files, misappropriation, fraud, and deception," in order to recover on his civil theft claim Mulholland had to also prove by clear and convincing evidence that he was injured "by reason of any violation" of the theft statutes.  F.S. sec. 772.11 (2001).  In the view of the appellate court, Mulholland failed to satisfy his burden of proof.  "For example, Mulholland presented no evidence that any client chose to leave Mulholland and go with Winters because Winters had a copy of their file."  Additionally, "while the alterations to the client information in the computer system may have affected Mulholland's ability to contact his clients, no client testified that he or she left Mulholland and went with Winters because Mulholland never contacted them."  Furthermore, "Mulholland did not present any evidence to establish that any of the clients left because Winters told them that Mulholland was retiring."  In summary, the lack of evidence of proximate cause was "fatal to Mulholland's civil theft claim."  Winters v. Mulholland, 33 So.3d 54 (Fla. 2d DCA 2010).

Venue of legal malpractice case based on disclosure of confidential information is proper not where disclosure took place but where resulting damage occurred.  [Added 10/21/09]  --  Rocco v. Glenn, Rasmussen, Fogarty & Hooker, P.A., 32 So.3d 111 (Fla. 2d DCA 2009).

Law firm not responsible for losses caused by one of its lawyers who acted outside scope of employment and defrauded "investors."  [Added 10/9/09]  --  Saralegui v. Sacher, Zelman, Van Sant, Paul, Beily, Hartman & Waldman, P.A., 19 So.3d 1048 (Fla. 3d DCA 2009).

Florida Bar Board of Governors approves guidelines regarding "offshoring" of legal services  [Added 4/7/09]

    At its meeting in Miami on April 3, 2009, the Florida Bar Board of Governors approved "Guidelines Regarding Offshoring Legal Services."  The Guidelines were developed by the Bar's Professional Ethics Committee.  The Board had asked the Committee to further study the issue of outsourcing legal services, particularly to foreign countries.  In response, the Committee prepared the Guidelines to accompany Florida Ethics Opinion 07-2.  The Guidelines are reproduced below.

Florida Commission on Ethics renders opinion on possible voting conflict of non-lawyer law firm member who acts as a lobbyist.  [Added 6/25/08]  --  Florida Commission on Ethics Opinion 08-13.

Lawyer-paralegal bonus agreement that violates ethical fee-splitting rule is not void as against public policy and is enforceable by paralegal.  [5/9/08]  --  Patterson v. A Law Office of Lauri J. Goldstein, P.A., 980 So.2d 1234 (Fla. 4th DCA 2008).

Florida Supreme Court discusses whether lawyers who share space are  a "firm" for conflicts imputation purposes.  [Added 11/19/07]  --  Connor v. State, 979 So.2d 852 (Fla. 2007) (revised opinion).