On September 18, 2012, the New Hampshire Supreme Court issued two important decisions addressing professional responsibility issues. This Advisory will cover O'Meara's Case, which addresses conflicts and deceit in a fee dispute. We will issue a subsequent Advisory dealing with Clauson's Case, which deals with a conflict between two current clients in a domestic assault case.

A. O'Meara's Case, No. LD-2011-002 (September 18, 2012)

In May 2005, Anita Conant suffered very serious injuries when she was rear-ended by a paving truck in Pennsylvania. She is now ventilator-dependent and quadriplegic.

Soon thereafter, her husband retained Attorney Timothy O'Meara to represent the family and Mrs. Conant. He signed an agreement entitling O'Meara to thirty-three percent of the gross recovery.

On June 3, 2005, approximately 10 days after he was retained, Mr. O'Meara learned that the paving company had $11 million in insurance coverage. He filed suit in Pennsylvania in November 2005 and was informed soon thereafter that the insurer would not contest liability. After receiving this information, O'Meara sent defense counsel a letter indicating that if the insurer did not pay the policy limits, the family would proceed to trial. At the time of this letter, O'Meara had no settlement authority from the Conants.

On January 13, 2006, O'Meara advised opposing counsel that the Conants would release the paving company in return for $11 million. However, on the same day, O'Meara spoke with Mr. Conant who made clear that O'Meara was not authorized to settle the case for that amount. Between January 11th and January 24th, O'Meara did not notify the insurer that he lacked authority. On January 24th, defense counsel responded and agreed to the $11 million settlement. At that point, O'Meara told him that the Conants would not accept that amount. Counsel for the paving company indicated that he believed they had a binding settlement. In response, O'Meara sent a letter, backdated to January 20th, indicating that the Conants "withdrew" their settlement offer. Defendant filed a motion to enforce the settlement.

When the Conants learned of O'Meara's actions and the unauthorized settlement, they asked that he modify his fee agreement. By this time, they had received estimates of the life care needs of Mrs. Conant that ranged between $15 and $23 million dollars. O'Meara agreed to reduce his fee by $166,000.

With the motion pending, the federal court scheduled mediation. Prior to the mediation, O'Meara spoke with the family again about his fees. Conant indicated that the family now believed that it could meet Mrs. Conant's projected needs with an annuity of $12.5 million. He again asked O'Meara to adjust his fee in the event they were limited to $11 million. O'Meara offered to reduce his $3.67 million potential fee by $500,000. The family was very unhappy with this. Conant's brother stated that he had heard a $2 million dollar fee in this type of case might be reasonable; Mr. Conant did not comment on his brother's statement.

The conversation continued to deteriorate and Conant asked why he should not just fire O'Meara. O'Meara responded that he would sue him, that such litigation could get "ugly," and that O'Meara would win. Ultimately, Conant and O'Meara agreed to modify the fee arrangement so that the fee was to "be negotiated." Despite this, O'Meara the next day sent a "Memorandum of Understanding Regarding Fees" indicating that if the recovery were $11 million, the fee would be $2 million. Conant refused to sign since this did not reflect the understanding they had reached the day before.

The mediation was scheduled the day after this exchange. O'Meara met with Conant on the morning of the mediation and indicated that he would not represent Conant in the mediation unless he had a fee agreement for $2 million. Conant, feeling he had no choice, signed.

At the mediation, it became apparent that if the company had to pay any more than $500,000 over the policy, it would declare bankruptcy. The mediation concluded with an offer from the paving company and its insurer for $11.5 million. The Conants fired O'Meara on March 5, 2006 and then accepted the offer. They agreed to pay O'Meara $750,000, place $1.25 million in an escrow account, and arbitrate the issue of the disputed fee.

At the arbitration hearing, O'Meara argued that the family agreed to pay him $2 million. Every other witness testified to the contrary, and the panel awarded only a portion of O'Meara's request. The matter then went to the Attorney Discipline Office, where the Professional Conduct Committee found that O'Meara's testimony before the arbitration panel had been false.¹

B. Decision of the Professional Conduct Committee

The Attorney Discipline Office charged O'Meara with violating the following rules:

1. Rule 1.2(a), requiring an attorney to abide by the client's decisions concerning the objective of the representation;
2. Rule 1.7(a)(2), barring an attorney from representing a client, without consent, when there is a significant risk that a client's representation will be materially limited by a personal interest of the lawyer's;
3. Rule 8.4(a), which makes it professional misconduct to violate another professional rule; and
4. Rule 8.4(c), barring a lawyer from engaging in conduct involving deceit.

The Hearing Panel found violations of all the above rules and recommended disbarment. The PCC agreed with the Panel on the violations, but disagreed on the sanction. After a rehearing, the Committee found that disbarment, which is the baseline sanction for these violations, was not the correct sanction since "the most serious charge [the deceit] [arose] from conduct that occurred after the representation of the client was terminated in the context of a fee dispute." The PCC recommended a three year suspension. Because the PCC does not have the authority to impose this sanction on its own, the case proceeded to the Supreme Court.

C. The Supreme Court's Decision

The Court, through Justice Conboy, agreed that the charged rules had been violated. It rejected O'Meara's argument that he had not made an offer, but had just tried to set up a "Dumas" demand.² The Court found sufficient evidence of a settlement offer made without authority.

It also found a clear violation of Rule 1.7 because O'Meara allowed his own personal interest in the fee to limit his representation of the Conants. The Court noted his threats to sue the Conants for the fee if they terminated him and his threatened withdrawal on the day of the mediation if the Conants did not agree to the $2 million fee. Finally, the Court found evidence supporting the PCC's finding that O'Meara falsely testified at the arbitration hearing.

The case is perhaps most interesting for the sanctions discussion. As the Supreme Court always does in disciplinary cases, it looked to the ABA's Standards for Imposing Lawyer Sanctions (2005) (Standards) for guidance. The Standards require the PCC and Court to look to: 1) the duty violated; 2) the lawyer's mental state; 3) the potential or actual client injury; and 4) aggravating and mitigating factors. The first three factors are used to determine a baseline sanction and the fourth to make adjustments, if warranted, to the baseline sanction. The Court also noted that when there are multiple violations, the Court will ordinarily issue a sanction at least as great as the baseline for the most serious misconduct and likely greater.

The Court disagreed with the PCC on what was the most serious violation. While the PCC found this to be the deceit, the Court found the conflict of interest to be equally troublesome. This conclusion became important because the conflict occurred during the representation and caused significant injury.

The Court agreed with the PCC that O'Meara acted knowingly in this case. It went on to find that in addition to the injury to the Conants of having to incur costs in the lengthy arbitration, the actions here, especially the deceit, caused "substantial" injury to the "integrity of the legal profession".

Based on the above, the Court found the baseline sanction to be disbarment. It based this on both the deceit and the conflict. It found the conflict particularly troubling because the actions were motivated by O'Meara's own self-interest.

The Court also seemed to establish a baseline for deceit cases. Though the opinion recognized that one must be free to vigorously advocate a position, it made clear that such advocacy may never include lying. It is interesting that the Court in this case seems to be moving away somewhat from a more factually-based analysis of the lies that it set out in Mr. O'Meara's prior case, a case which imposed a public censure in the context of lies in his own divorce case. See O'Meara's Case, 150 N.H. 157 (2003). The analysis in this case seems to reflect a more categorical approach to deceit than some prior cases may have been read to suggest. The Court set out the significance of any lawyer lying, especially in his or her self-interest, when disagreeing with the PCC's conclusion that since the deceit in this case was after the representation, it was less serious:

• "That O'Meara lied in the context of a fee dispute illustrates that the purpose of his lie was to further his own interest, at the expense of his clients' interests. If anything, this is an aggravating, not a mitigating, factor."

Finally, the Court found no mitigating factors and several aggravating ones, including the prior discipline, his selfish motive, his failure to acknowledge his wrongdoing and his experience in the practice of law. It found that no sanction less than disbarment would protect the public and preserve the integrity of the profession. O'Meara was barred from reapplying for three years and until he had passed the bar exam and the Multistate Professional Responsibility exam.

¹ In the interest of full disclosure, Peter Beeson, one of the members of this practice group, was a member of the arbitration panel.

² Dumas concerns an insurance company's liability to the insured for failing to settle within policy limits. See Dumas v. State Farm Mut. Auto. Ins. Co., 111 N.H. 43 (1971)

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