Cincinnati Bar Ass'n v. Schwartz

Per Curiam. In his objections to the board’s report, respondent claims that he did not commit the cited misconduct because he notified his client that he was accepting a legal fee from her insurance company, the interests of Thomas and her insurance carrier were not in conflict, he did not use the fee for his own benefit, and he repaid the fee after his client complained to relator. For the reasons that follow, we overrule respondent’s objections and agree with the board’s findings that he violated DR 5-105(A) and (B), and 5-107(A)(l). [491] Under DR 5-105(C), an attorney may accept or continue employment by two or more clients having potentially competing interests only if (1) it is “obvious” that all the clients’ interests can be represented adequately by a single attorney, (2) all the clients have been fully informed as to possible conflicts, and (3) all the clients have knowingly consented to the multiple representation. Moreover, mere notice to clients is not sufficient to avoid such charges of misconduct. Rather, “it [is] incumbent upon [an attorney] to advise those clients possessing competing interests of any potentially adverse effects which might cause [the attorney] to support for one client what his professional duty for the other required him to oppose.” Bar Assn. of Greater Cleveland v. Shillman (1980), 61 Ohio St.2d 364, 367, 15 O.O.3d 443, 445, 402 N.E.2d 514, 517. Respondent’s representation of Thomas and her insurance carrier satisfied none of these prerequisites. Thomas’s interests were obviously in conflict with those of the insurance company — both were competing for shares of the settlement proceeds. In the end, respondent entered the competition himself, taking fees that at once reduced Thomas’s portion and compensated him in excess of their contingency-fee agreement. See Cincinnati Bar Assn. v. Schultz (1994), 71 Ohio St.3d 383, 385, 643 N.E.2d 1139, 1141. Respondent also failed to fully explain to Thomas the possible conflict between all these competing interests; he apparently did not appreciate the potential for conflict himself. Finally, while respondent may have notified Thomas that he had negotiated with her insurance company for his receipt of legal fees, he acknowledges that he did not secure her specific consent, which is mandatory in matters of multiple representation. Accord Shillman, supra, 61 Ohio St.2d at 367, 15 O.O.3d at 445, 402 N.E.2d at 517. In Cincinnati Bar Assn. v. Fehler-Schultz (1992), 64 Ohio St.3d 452, 597 N.E.2d 79, the attorney retained over $8,000 from the client’s settlement as a “subrogation fee,” ie., a fee for pursuing the claim of the client’s insurer for reimbursement of medical expenses paid on the client’s behalf. While it is true that this court found no violation of DR 5-105(A) or (B), our disapproval of the attorney’s failure to provide full disclosure to the client and to secure his client’s consent is implicit in our holding in that case. We disapprove of this practice. Accordingly, we hold that in pursuing a client’s personal injury action, an attorney cannot ethically accept legal fees from the client’s insurance carrier in exchange for the attorney’s efforts to collect reimbursement for the carrier of its payment of the client’s medical expenses, unless the client specifically consents to the dual employment after full disclosure. We also reject respondent’s contention that he did not “accept” the sum of $164.61 in legal fees for the purpose of DR 5-107(A)(l). Respondent deposited this amount in his client trust account because he believed it was the subject of a [492] fee dispute, and that therefore this deposit was required by DR 9-102(A)(2). He then repaid this amount when he realized his mistake in having taken it. Neither act alters the facts that he initially retained these fees as payment from a source other than his client, or that he did so without complying with the full disclosure and specific client consent requirements that DR 5-107(A)(l) also imposes. Accordingly, we find clear and convincing evidence that respondent committed the misconduct cited by the board, and we accept its recommended sanction. Respondent is therefore publicly reprimanded for having violated DR 5-105(A) and (B), and 5 — 107(A)(1). Costs taxed to respondent. Judgment accordingly. Moyer, C.J., Douglas, Wright, Resnick, F.E. Sweeney, Pfeifer and Cook, JJ., concur.