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, __ So.3d ___ (Fla. 2d DCA, No. 2D08-5270, 1/29/2010), 2010 WL 323035.

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]

    The personal representative ("P.R.") of an estate hired Law Firm to represent her in her individual and representative capacities.  Probate proceedings were opened in Manatee County, where the decedent had resided.  Law Firm was based in Hillsborough County.  Disputes arose between P.R. and her stepsons, who were represented by their own counsel.  The parties reached a settlement.  The Internal Revenue Service subsequently determined that the estate owed additional taxes.  Lawyer, an attorney with Law Firm, contacted the stepsons' counsel regarding their paying a portion of the tax liability pursuant to the settlement agreement.  Lawyer provided the stepsons' counsel with a copy of the IRS worksheets, but before sending them the Lawyer "failed to redact confidential information from the sheets, thereby providing to the sons privileged information relating to the financial circumstances of [P.R.] and the estate."  After receiving this information the stepsons hired new counsel and brought an action against P.R. demanding additional funds from the estate.  P.R. paid them, then sued Law Firm and Lawyer for alleged breach of fiduciary and professional negligence.

    P.R. filed suit in Manatee County, but Law Firm was successful in having the trial conclude that Manatee County "was not the proper venue because the cause of action accrued in Hillsborough County.  P.R. appealed the order transferring the case to Hillsborough County.

    The Second DCA reversed.  Venue was proper where the last action that would render the defendant liable occurred.  In order to determine the answer to that question, the court stated that it "must resolve whether the delivery of the documents was the proximate cause of the damage to [P.R.] or whether some additional event or act must have occurred before [Law Firm and Lawyer] could be held liable for the tortious conduct."  The court decided that the mere delivery of the documents was not the proximate cause of P.R.'s damage.  "[W]e conclude that [P.R.] did not suffer redressable harm, thereby causing her legal malpractice claim to accrue, until the sons used the improperly disclosed information as the basis for their pleadings in the Manatee County probate proceeding.  Until those pleadings were filed, [P.R.] professional negligence claim was hypothetical and any damages were speculative.  As such, the final act or event that was necessary to render [Law Firm and Lawyer] liable for professional negligence occurred in Manatee County, and venue is proper there."  Rocco v. Glenn, Rasmussen, Fogarty & Hooker, P.A., __ So.3d ___, 34 Fla.L.Weekly D2136 (Fla. 2d DCA, No. 2D08-6215, 10/16/2009), 2009 WL 3320202.

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]

    Two defrauded "Investors" sued several defendants including Law Firm.  Investors had "invested" money with Lawyer, who was an employee of Law Firm.  (The "investments" arguably were disguised usurious loans.)  Law Firm moved for summary judgment, which was granted.  Investors appealed.

    Investors argued, inter alia, that there was a genuine issue of fact regarding Lawyer's "apparent agency" for Law Firm.  The Third DCA disagreed.  The "investment" agreement recited in part that Investors were "contracting with '[Law Firm]–[Lawyer]–Trustee, acting solely in his capacity as a Trustee for a client ('Client”).'  The agreement further stated that the 'Trustee acts on behalf of an international qualified borrower ('Client'), who is currently participating in an investment project.  [Lawyer] signed as 'Trustee.'"  Although Investors wired funds to Law Firm's trust account, Law Firm did not know of the fraudulent transaction and apparently did not keep the funds.  The appeals court pointed out that Investors did not specifically plead "apparent agency" in their complaint, although they did allege that Lawyer acted in the course and scope of his employment with Law Firm.  This, however, "was contradicted, not established, by the parties' submissions before the summary judgment hearing."  The court stated:  "[Law Firm]’s representations, if they rise to that, involved [Lawyer]’s authority to render legal advice to firm clients, not his authority to commit the firm as a party to loan agreements.  Further, any representations regarding the specific loan transactions were made by [Lawyer]e, not by the firm.  Finally, the appellants concede that [Lawyer] did not communicate directly with the appellants regarding the transactions until after the advances were made; [Lawyer]’s instructions and alleged promises were made through Tavares [who was not part of Law Firm] and others as intermediaries, with no authorization or ratification by [Law Firm]."  (Footnote omitted.)

    The court concluded:  "[Lawyer]’s fraud was also a fraud upon [Law Firm], and it resulted in his permanent disbarment from The Florida Bar.  Unfortunately, citizens of other countries may be familiar with transactions in their own countries in which lawyers and law firms wear multiple hats as principals, brokers or intermediaries, and legal advisors in business transactions, but our system draws clear distinctions among these roles and clear boundaries between the legal representation of a lender and a borrower.  Had the appellants retained a Florida lawyer to give them independent advice before making these loans, the facially-obvious usury and questionable 'trusteeship' proposed by [Lawyer] on behalf of the borrowing entity surely would have caused legal eyebrows to rise and the investors to flee."  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).