The Florida Bar v. Scot Strems

Citation: Not availableDocket: SC20-806

Court: Supreme Court of Florida; December 21, 2022; Florida; State Supreme Court

Original Court Document: View Document

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In the consolidated cases of The Florida Bar vs. Scot Strems, the Supreme Court of Florida reviewed referee reports recommending a two-year suspension for Strems due to gross mismanagement of his law firm, Strems Law Firm, P.A. (Case No. SC20-806), and a public reprimand for failing to communicate with a client (Case No. SC20-842). The Court approved the referee's findings of fact, except for one aspect, and partially approved and disapproved the recommendations regarding guilt and mitigation but disapproved the proposed discipline. Instead, Strems was disbarred for cumulative misconduct.

Strems, as the sole partner of the firm, faced significant caseload growth without adequate staffing or procedures, leading to client neglect and frequent court sanctions. Despite hiring a managing attorney to implement improvements, the firm continued to mishandle cases, resulting in weekly sanctions of $5,000 to $15,000 and multiple case dismissals under the precedent set in Kozel v. Ostendorf. Specific incidents included attorneys failing to communicate with clients and missing court appearances, which prompted concerns from judges about the firm's compliance with procedural rules. Strems acknowledged the issues but failed to take effective action, continuing to accept a high volume of new cases while disregarding the firm’s existing clients' needs. Additionally, the firm faced sanctions for filing frivolous lawsuits, illustrating a pattern of professional misconduct.

Mojica v. United Property, Casualty Insurance Co. reveals that the court sanctioned Mojica for providing false testimony regarding property repairs. Although SLF was found negligent for not verifying Mojica's statements, its conduct did not warrant sanctions. The case also implicated attorney Strems, who faced criticism for mismanagement and submitting false affidavits in settlement negotiations. Notably, he included a misleading email chain in an affidavit that omitted seven conflicting emails from opposing counsel. The referee recommended finding Strems guilty of multiple violations of the Rules Regulating The Florida Bar, including lack of communication with clients, advancing unmeritorious claims, and dishonesty toward the tribunal. Four aggravating factors were identified: a pattern of misconduct, multiple offenses, submission of false evidence, and substantial experience. Conversely, six mitigating factors were noted: absence of prior disciplinary issues, lack of dishonest intent, good faith restitution efforts, positive character, interim rehabilitation, and remorse. The recommended sanction for Strems is a two-year suspension, followed by one year of probation, completion of ethics training, and payment of Bar costs. Strems seeks review of the findings and recommendations, while the Bar requests a harsher penalty, advocating for permanent disbarment.

In Case No. SC20-842, Margaret Nowak, an 84-year-old client, engaged SLF to pursue a claim against her insurer for hurricane-related damages, under a contingency fee agreement stipulating that attorney fees would be 30% of the awarded amount or the amount obtained through settlement negotiations. Initially, Nowak indicated a willingness to settle for $30,000 before litigation, allowing for $22,500 to her and $7,500 to SLF. However, after filing suit due to the insurer's refusal to settle, SLF's attorney Carlos Camejo sought a higher offer, eventually leading to attorney Strems taking over negotiations. 

Strems settled the case for $45,000 without informing Nowak, who later learned of the settlement through SLF's documentation two months later. Nowak objected to SLF's receipt of half the settlement amount as attorney fees, arguing that the fee agreement only entitled SLF to 30%. Despite her concerns, the referee found no illegality or unreasonableness in SLF's fee structure, based on expert testimony, and acknowledged the fee-shifting statute under Florida law.

Strems is recommended to be found not guilty of violating Bar Rules 4-1.2 (Objectives and Scope of Representation), 4-1.5 (Fees and Costs for Legal Services), and 4-1.7 (Conflict of Interest; Current Clients). However, he is found guilty of violating rule 4-1.4 (Communication) for failing to communicate a settlement offer to Nowak. The referee identified three aggravating factors: prior disciplinary offenses, the victim's vulnerability, and Strems' substantial experience in law. Mitigating factors included the absence of dishonest motives, a timely effort to rectify misconduct, and good character. The recommended sanction is a public reprimand and payment of the Bar's costs. The Bar seeks a review, contesting the not guilty findings for rules 4-1.2, 4-1.5, and 4-1.7, as well as the aggravating and mitigating findings, and requests permanent disbarment due to cumulative misconduct.

In addressing Strems' challenge to being found guilty under Bar Rule 4-5.1(c) (Responsibilities of Partners, Managers, and Supervisory Lawyers), the Court reiterates that a lawyer can be held responsible for another's violations if they ordered the conduct or ratified it with knowledge. Strems is deemed to have failed in managing his firm adequately, contributing to unaddressed violations and multiple dismissals due to lack of diligence from his associates. His ineffective management responses and continued acceptance of new cases, despite ongoing issues, reflect a tacit approval of his associates' actions. The argument against vicarious responsibility is rejected, affirming that as the sole partner, Strems holds responsibility for the firm's misconduct.

The referee's findings, supported by competent and substantial evidence, affirm Strems’ guilt for violating Bar Rule 4-5.1(c). Under Bar Rule 4-3.2, attorneys must expedite litigation in their clients' interests, and Bar Rule 4-8.4(d) prohibits conduct that obstructs justice. Strems failed to implement necessary measures to prevent eight Kozel dismissals and weekly sanctions, despite being aware of inadequate staffing at SLF for over two years. The evidence reveals a consistent pattern of SLF's negligence regarding deadlines and court orders, prompting defendants to file motions to compel due to SLF's inadequate discovery responses. Affidavits from two judges highlight SLF’s pervasive obstruction of justice and dilatory tactics. Consequently, the referee's findings justify the determination of guilt under Bar Rules 4-3.2 and 4-8.4(d). 

Regarding Bar Rule 4-3.1, which requires a non-frivolous basis for legal action, the referee identified SLF's frivolous case in Mora, evidenced by a sanction order indicating the plaintiffs should have recognized the claim's lack of merit. Strems' argument against the inclusion of Mora, due to it not being referenced in the Bar's petition, was dismissed as the conduct fell within the Bar's accusations and Strems was aware of the charges. Additionally, the appeal status of Mora did not preclude its consideration, as referees can assess any relevant evidence. Strems' claim of non-involvement in Mora was countered by evidence showing his responsibility for settlement negotiations and his role as SLF's sole partner, making him aware of all ongoing cases.

Strems was found guilty of violating multiple Bar Rules based on competent, substantial evidence. After SLF received a section 57.105 motion for sanctions related to the Mora case, they did not dismiss the case during the safe harbor period, leading to findings of guilt against Strems for violating Bar Rule 4-3.1. Regarding Bar Rule 4-3.4(a), the referee determined that Strems unlawfully obstructed opposing counsel's access to evidence by not disclosing information about plaintiffs' misrepresentations, despite his claims that he had no knowledge of the cases. 

Additionally, under Bar Rule 4-3.3(a), Strems was found guilty of making false or misleading statements to the tribunal, supported by findings that he submitted doctored affidavits. The referee correctly relied on relevant evidence, including judicial statements, to substantiate these claims. Under Bar Rule 4-8.4(c), Strems was also found guilty of misconduct due to dishonesty and misrepresentation.

Lastly, under Bar Rule 4-3.3(b), it was determined that Strems failed to take reasonable remedial measures despite knowing SLF's client intended to engage in fraudulent conduct, as evidenced by the trial judge's findings regarding preexisting property damage. The referee's conclusions were well-supported and justified the recommendations for guilt across all cited Bar Rules.

Bar Rule 4-1.4(a) requires lawyers to reasonably consult with clients about achieving their objectives. The referee found Strems guilty based on the conduct of attorney Romero in the McEkron case, who failed to discuss a settlement counteroffer with the client. However, it was determined that Strems should not be found guilty of this rule since he was not present at the mediation and there was no evidence of his knowledge or involvement in Romero's actions. Consequently, the recommendation of guilt was disapproved.

The Bar also contested the referee's finding that Strems did not violate Bar Rule 4-1.2, which mandates that lawyers must adhere to client objectives and consult on their pursuit. It was established that Strems did not effectively follow up with the client, Nowak, regarding her increased recovery demands due to additional expenses incurred during the delay. Strems' attempt to offer Nowak her prelitigation bottom line, which excluded new expenses, indicated a failure to align with her objectives. Thus, the recommendation of not guilty was disapproved, and Strems was found guilty of violating Bar Rule 4-1.2.

Additionally, the Bar challenged the referee's conclusion that Strems did not violate Bar Rules 4-1.5(a) regarding illegal or excessive fees and 4-1.7 concerning conflicts of interest. The referee's reliance on expert testimony asserting that the fees were reasonable and the client's signed fee agreement was insufficient, given the evidence suggesting otherwise. As such, the recommendations of not guilty for these violations were also disapproved.

Feldman, the insurer's attorney, contested Strems' assertion of a bifurcated settlement at the final hearing, emphasizing that all settlements with SLF were globally resolved and he would not negotiate indemnity and attorney’s fees separately without a fee hearing. An email from Feldman indicated he had been authorized to settle for up to $30,000 and aimed for a global resolution. Camejo informed Nowak of efforts to secure a higher settlement, but there was no indication that only attorney’s fees were being negotiated. Following negotiations, Feldman confirmed a global settlement agreement with Strems and requested a breakdown of the settlement check, undermining the claim of a bifurcated settlement. The referee’s classification of the settlement as bifurcated contradicts the evidence, and under the contingency fee agreement, SLF was entitled to a 30% fee or a court-awarded sum. The argument that amounts negotiated with Feldman equate to court-ordered fees was dismissed, echoing the precedent set in *Fla. Bar v. Kavanaugh*. Strems attempted to claim attorney’s fees exceeding his contingency agreement, leading to findings of violations of Bar Rule 4-1.5 and Bar Rule 4-1.7 due to a conflict of interest, as he sought to increase his fees at Nowak’s expense. Regarding discipline, the Court noted that referees must assess aggravating and mitigating factors according to established standards. The Court retains broader discretion in reviewing recommended sanctions, allowing for cumulative consideration of misconduct from multiple complaints.

The misconduct of Strems is deemed severe enough to warrant disbarment, as the referee's recommended sanctions are inadequate. Key factors contributing to this decision include Strems’ submission of false affidavits, failure to manage his law firm (SLF), and the creation of a conflict of interest with client Nowak. Relevant standards indicate disbarment is appropriate when a lawyer causes significant harm to a client, knowingly misleads the court, or interferes with legal proceedings. The standards collectively support disbarment rather than suspension or reprimand, as Strems’ actions were not merely negligent but involved conscious disregard for known issues within his firm, leading to court sanctions and client neglect.

Strems’ argument that only a public reprimand applies lacks merit; his actions went beyond negligence. The definitions of 'negligence' and 'knowledge' clarify that his conduct was more serious. The referee’s analysis in Case No. SC20-842 incorrectly limited the violations considered, failing to recognize the true nature of Strems' conflict of interest and the implications of his fee arrangements with Nowak. Additionally, the findings regarding mitigating and aggravating factors are addressed, with the court disapproving the referee’s assessment of Strems’ motives, categorizing them instead as dishonest and selfish, contrary to the referee's unsupported claims of his intent to provide quality legal counsel.

Strems consistently accepted a high volume of cases, ranging from twenty to fifty weekly, prioritizing new case acquisition over adequately managing existing ones, indicating a selfish motive. In Case No. SC20-842, the referee's mitigation finding regarding Strems’ good faith restitution efforts was rejected, as he took nearly sixteen months to accept a 30% attorney fee under the fee agreement. The referee's conclusion of no dishonest or selfish motive was also disapproved, given that Strems, as the sole owner of SLF, personally benefited from all fees. His negotiation of a 50% attorney's fee without offering a higher amount to client Nowak was deemed clearly selfish. Additionally, the referee's failure to recognize Strems' multiple offenses was disapproved; he engaged in distinct misconduct, including failing to communicate settlement offers, attempting to collect excessive fees, neglecting client objectives, and creating conflicts of interest. Relevant case law highlighted similar misconduct, such as in Florida Bar v. Shoureas and Florida Bar v. Adorno, which resulted in suspensions for lawyers who failed to perform significant client services and negotiated detrimental settlements. In Florida Bar v. Kane, attorneys were disbarred for similar conflicts of interest and withholding information from clients. The Court noted multiple aggravating factors in both Kane and Case No. SC20-842, including dishonest motives, pattern of misconduct, and a refusal to acknowledge wrongful conduct.

Strems’ failure to disclose a settlement to Nowak stemmed from a conflict of interest, as he negotiated a larger settlement while limiting her recovery and interpreting his fee agreement to take nearly half for his fees. Previous case law indicates that excessive fee violations have led to suspensions of up to ninety-one days, while conflict-of-interest cases have resulted in suspensions of up to eighteen months. Strems’ misconduct, particularly in Case No. SC20-842, supports at least a one-year rehabilitative suspension. His cumulative misconduct, including lack of communication regarding Nowak's settlement, dismissal of multiple clients' cases, submission of false affidavits, and failure to manage his firm's caseload effectively, points toward disbarment. The totality of his actions undermines the necessary standards of practice, indicating a need for discipline to protect the public, punish misconduct, and deter similar actions by others. Although the Florida Bar sought permanent disbarment, the evidence does not suggest that Strems is beyond rehabilitation.

Permanent disbarment is justified when an attorney demonstrates a consistent pattern of unrepentant and severe misconduct, indicating they are irredeemable. In the case of Scot Strems, he is disbarred from practicing law in Florida, effective immediately due to his current suspension. Strems must comply with specific regulatory rules, including Rule Regulating The Florida Bar 3-5.1(h) and, if applicable, Rule Regulating The Florida Bar 3-6.1. Additionally, a judgment has been entered against Strems for $45,563.34 in costs owed to The Florida Bar, with execution allowed on this amount. The decision was concurred by several justices, while one did not participate. The filing of a motion for rehearing will not affect the disbarment's effective date.