Court: Supreme Court of Rhode Island; May 10, 1994; Rhode Island; State Supreme Court
The Supreme Court is reviewing the case of attorney Thomas W. Pearlman following findings by the Disciplinary Board concerning two unrelated complaints. According to Rule 6(d) of Article III in the Disciplinary Procedure for Attorneys, the Board's recommendations for suspension are under consideration, and Pearlman was given an opportunity to contest these sanctions but did not provide sufficient cause.
In the first complaint, Pearlman represented Teresa Tai-Ling Lin in a divorce case initiated by her husband in May 1990. He was contacted by Lin’s brother-in-law, Edward Ornelas, who facilitated communication due to Lin's limited English proficiency. Pearlman quoted a $2,500 fee, which he later reduced to $1,250 upon Lin's request due to her financial hardship, on the condition that the case remained uncontested.
The case became contested in September 1990, and Pearlman’s son, also an attorney, appeared on his behalf during the March 19, 1991 hearing due to Pearlman’s prior commitment. All issues were settled except for the $1,500 fee owed to Pearlman. Discrepancies arose between Pearlman and Lin regarding fee payment; Pearlman claimed he could not reach Lin and relied on Ornelas’ instructions to settle the matter, leading him to request the court to include the fee in the final judgment.
After the hearing, Pearlman sent a draft decree to Lin, which included the counsel fee provision. However, Lin expressed dissatisfaction with the fee, and opposing counsel later communicated that Ornelas claimed no agreement had been reached regarding the fee. Despite this, Pearlman submitted the draft decree to the court, which was subsequently approved.
Prior to final judgment, the client offered the respondent an additional $500 to settle a disputed $1,500 fee, which he refused. On June 6, 1991, the respondent filed a small-claims action against the client for the fee and later prepared a final decree that included the fee provision, which was entered on June 20, 1991. The respondent received a default judgment on August 29, 1991, but later claimed to have waived this judgment. The Disciplinary Board found that the respondent violated Article V, Rule 1.7(b) of the Rules of Professional Conduct, which prohibits representation if a lawyer’s responsibilities to another client or personal interests may materially limit the representation. The Board determined that the respondent was aware of the fee dispute during the ongoing small-claims suit while still representing the client and entered the final decree against her objections. As a consequence, the Board recommended a three-month suspension from practice.
In a separate complaint, Leo and Maureen Tondreau retained the respondent on June 27, 1990, to assist with selling their home, which had multiple liens, including those from the IRS and DES. They sought the respondent's help in negotiating reductions in these liens, agreeing to pay him one-third of the savings. Most work was performed by attorney David Yavner, associated with the respondent. The IRS lien was confirmed at just under $72,000, with the DES lien reduced to $2,500. Disagreement arose over the negotiation of the IRS lien, with the respondent claiming joint negotiation efforts with Yavner, but failing to produce evidence of a hardship waiver he claimed to have instructed the clients to sign. The clients testified they had to act independently to negotiate the IRS lien payoff figure after experiencing delays and stated that they had not received guidance from the respondent. Additionally, the clients sought assurance documents for two creditors without liens, which the respondent suggested handling through mortgages.
On July 27, 1990, Yavner, under the direction of the respondent, prepared a $15,000 mortgage to secure legal fees, which clients later disputed, stating they only requested a document for creditors, not a mortgage. The respondent failed to advise clients to seek independent legal counsel before signing the mortgage or to explain its implications. All three mortgages were recorded, and $15,000 was deducted from the property sale proceeds to satisfy the respondent’s mortgage. The day after the sale, Yavner informed the clients of an additional charge of $3,783.72 due to a billing mistake. The clients requested an itemized bill, which included charges for various liens and costs.
While the board acknowledged that the respondent had provided services to reduce the IRS lien, it deemed the fees unreasonable, particularly for a charge related to a non-existent Santoro lien. The respondent violated Rule 1.8(a) of the Rules of Professional Conduct by not meeting the standards for acquiring a security interest in clients' property, failing to advise them to seek independent advice, and not fully disclosing the transaction terms. The board found violations of Rule 1.5(a) regarding unreasonable fees and Rule 1.8(a) concerning acquiring interests adverse to clients without proper disclosure and consent.
Consequently, the board recommended a three-month suspension from practice, which the court upheld, resulting in a total six-month suspension starting June 1, 1994. Upon completing the suspension, the respondent may apply for reinstatement with proof of compliance. To safeguard current clients' interests, the respondent must file a list of active clients or a statement from an attorney taking over their responsibilities. The respondent had not met a Colorado client in person, communicated mainly via phone or mail, and explained fees related to a contested divorce, adjusting the payment terms. He also withdrew from a personal injury case due to billing disputes with the clients.
