Kenneth Martin, a solo practitioner in McLean, Va., is fighting a recommendation by the Office of Bar Counsel for the D.C. Bar that he be disbarred for his handling of fees back in 2003.
At issue is $364,368 in fees Martin collected for representing a small internet software security company in litigation with a former business partner. Bar Counsel in 2007 charged Martin, a member of the D.C. Bar, with collecting fees that were too high. He was also accused of failing to properly handle the money after the client disputed his fees, and of being dishonest about advice he received about how to handle the issue from the D.C. Bar Ethics Hotline Counsel.
In arguments this morning before the District of Columbia Court of Appeals, Martin’s lawyer, Daniel Schumack of Schumack Ryals in Fairfax, Va., argued that his client acted appropriately and that the charges should be dropped.
In a June 2011 report (PDF), the Board on Professional Responsibility found Bar Counsel had proved that Martin’s fees were unreasonable and that he was dishonest about his call to the ethics hotline. The board rejected Bar Counsel’s argument, however, that Martin violated D.C. Bar rules in his handling of the client’s money.
Martin’s client received a $656,646 settlement in early 2003, and the money was transferred to Martin on February 21 of that year. On February 25, according to the board’s report, Martin disbursed shares of the settlement to his client and himself, as well as other attorneys who were owed. The client notified Martin that same day that it was disputing the fees and ordered him to not make any disbursements. Martin claimed he didn’t learn of the dispute until after he had disbursed the money, and then received advice from the D.C. Bar Ethics Hotline that he should not return the funds.
Schumack pointed to the board’s findings that Martin hadn’t violated rules in how he dealt with the fees in dispute. On the amount of the fees, Schumack noted that in a hearing committee’s September 2010 report (PDF) to the board on the case, the committee members found Martin’s fees were reasonable based on the circumstances of the case. The board, Schumack argued, made legal findings about why the fees were unreasonable, but didn’t offer a reason to overturn the hearing committee’s findings based on the facts of the case.
Schumack also disputed Bar Counsel’s allegation that Martin misrepresented the advice he got from the ethics hotline. Schumack said the attorney who took Martin’s call couldn’t remember the conversation, instead testifying that he would not have given the advice that Martin said he did.
Senior Assistant Bar Counsel Julia Porter said Martin used his client as a “vehicle to line his own pockets.” Porter said disbarment was appropriate because of the extent of Martin’s misconduct and his refusal to accept responsibility.
Porter said that Martin essentially double-billed his client, collecting an hourly rate and a contingency fee without getting the client’s approval. She also argued that there was evidence showing Martin didn’t disburse the settlement funds until days after he learned there was a dispute over fees, and then failed to put the funds back in a trust as he should have.
The D.C. Bar Attorney Client Arbitration Board ordered Martin in 2004 to pay his client about $175,000 of the fees in question plus interest, a decision Martin appealed. The client filed a complaint with Bar Counsel that same year. Martin later settled with his client to pay back approximately $87,000 instead.
Porter told the court that not requiring Martin to pay back more of the disputed fees or accepting the board’s lower sanctions recommendation of a six-month suspension would be “rewarding him for his misconduct.” The board did recommend that Martin pay the rest of the arbitration award plus interest.
Martin could not immediately be reached this afternoon.
Associates Judges John Fisher and Anna Blackburne-Rigsby, and Senior Judge Warren King, heard the case.