In the context of attorney-client relationships, people often forget that a client is a consumer of legal services. Given the scope of this definition of consumer, it is inevitable that a client may attempt to bring a cause of action under consumer protection laws in addition to common law malpractice. Beyers v. Richmond, 594 Pa. 654 (2007) is an interesting case which considers the applicability of consumer protection statutes to legal representation which may be more deficient than allowable.
In the case, Donald Richmond admitted to misappropriating settlement funds of the client. The client, Beyers, was injured in an automobile accident, and was represented byRichmond. As part of the representation, a contingency form was signed which would give appellee 42.5% of the eventual settlement. When the case was settled, the firm received the check, andRichmond, converted certain portions to pay a personal bill, some was put in escrow, and the other charges were itemized.
Based upon the distribution schedule, the court ordered Beyers be paid. Beyers then contested the deductions taken byRichmond. Finally, Beyers filed a complaint for negligence, conflict of interest, breach of fiduciary duty, violation of consumer protection laws, and fraudulent misrepresentation. A bench trial was held on damages only at which time, the Judge held the consumer protection claim under advisement. Several months later, the court ruled in favor of Beyers on the consumer protection claim, awarding her treble damages. Eventually, trebled damages in the amount of $467,637.20 were ordered againstRichmond, and his law firm.
The superior court reviewed this decision, and upheld the verdict againstRichmond. They believed that because the damages arose not based on the practice of law, but rather as a result of personal actions, the profession did not provide a shield against these charges. The court believed that the various violations committed byRichmondplaced the actions within the scope of consumer protection.
The Pennsylvania Supreme Court believed otherwise. Doctors were analogized to lawyers, in that doctors are not covered by the consumer protection statutes. Previously, the Court stated that consumer protection laws are intended to apply to trade and commerce, not medical care. These laws protect consumers from misrepresentation in buying goods or services, but not in receiving medical advice.
Additionally, the Court was persuaded by a case which dealt with the consumer protection statutes applicability to a debt collecting law firm. In that case, the Court held that attorneys who regularly engage in debt collection conduct apart from their legal representation are covered under federal consumer protection statutes. Debt collection was considered a trade or commerce. Similarly, a doctor, another professional has only been found to be vulnerable to attack under consumer protection when engaging in debt collection.
Most importantly perhaps was the Court's consideration of itself as the authority in policing attorney behavior throughout the state. InPennsylvania, the Supreme Court has been granted authority to police attorney behavior by virtue of the State Constitution. Thus, all laws which would otherwise control attorney behavior are essentially preempted by the Court's rulemaking authority. Similarly, it is the judicial branch's role to govern attorneys, and separation of powers demands the legislature not encroach in this area. If the consumer protection laws apply to attorneys, then the legislature would be given authority to police attorneys.
Pursuant to the Court's authority, they have passed rules of professional conduct, as well as rules of disciplinary enforcement. This rule-making power given to courts was used byPennsylvaniato strike down a statute which criminalized conduct of an attorney for compensating a non-attorney for client referrals. Thus, the conduct in this case is a violation of Pennsylvania Rule of Professional Conduct 1.5(c), in which an attorney must immediately notify a client or third party when they receive funds or property that person has an interest in. The lawyer should then promptly deliver such funds or property. Rules 8.4(b) and 8.4(c) provide that attorneys may not engage in criminal conduct which adversely affects their trustworthiness, and it is misconduct to engage in deceit or misrepresentation.
In addition to these rules, the Court used Rule 1.15 to govern client trust accounts to safeguard property. All rules mentioned would then be susceptible to enforcement under Disciplinary Rule 514 which addresses reimbursable losses caused by attorney dishonesty. Thus, although the Court was deeply disturbed by the behavior ofRichmondin this case, they were forced to vacate the verdict.
This is an interesting situation in that often times, legal advertisements are similar to those for any other good or service. It is interesting the Court acknowledged the trust broken in this case, but was virtually powerless to change the law. Whether this is good or bad, is a personal opinion. However, it is interesting that the attorney in this case saved hundred of thousands of dollars by being ordered to only reimburse losses, instead of paying treble damages as punishment.