Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 80 CR 713--John F. Grady Judge.
Eschbach and Posner, Circuit Judges, and Grant,*fn* Senior District Judge. Judge Grant dissenting.
This appeal from a judgment of civil contempt against attorney Robert De Meo brings up to us a question of first impression: whether a federal district judge has the power to compel, on his own initiative, a criminal defendant's attorney to return part of the legal fee that the attorney collected from the defendant, on the ground that the fee was exorbitant.
A federal grand jury indicted Steven Vague and Gerald McDermott for possession of, and conspiracy to possess, goods stolen from O'Hare Airport in Chicago. Vague was 23 years old and lived with his parents. The family hired De Meo, a member of the Illinois bar, to represent Steven. The indictment had been returned on December 23, 1980; after some procedural skirmishing both defendants decided to plea bargain; and on March 16, 1981, Vague pleaded guilty to two counts of the indictment. Sentencing was set for April 23.
In reading the presentence report the district judge noticed among Vague's liabilities a $12,000 item described as Mr. De Meo's fee in the case. According to the report all but $1,000 had been paid. At the beginning of the sentencing hearing the district judge asked De Meo to explain the fee. De Meo replied that he had set it on the assumption that the case would go to trial, and under prodding from the judge conceded that therefore the fee should be reduced. The judge adjourned the sentencing hearing to May 12 to give De Meo time to think about a suitable reduction.
At the reconvened hearing De Meo said he had decided to reduce his fee to $8,000, but the judge was not satisfied and proceeded to question De Meo, Steven Vague, Vague's father, and the assistant U.S. attorney who had handled the case against Steven -- all of whom were present for the sentencing -- concerning De Meo's work on the case. The judge reserved decision on the fee and then sentenced Vague (to 90 days on work release followed by five years on probation).
The fee order was entered later. 521 F. Supp. 147 (N.D.Ill. 1981). The judge found that De Meo had put in at most 40 hours of work beneficial to his client, of which about two-thirds had been spent in listening to tape recordings of an electronic surveillance, and that De Meo's work had been competent but not outstanding. According to the presentence report McDermott's lawyer had charged his client only $1,250. The judge concluded that the maximum reasonable fee for De Meo's representation of Vague was $2,500, and ordered De Meo to return the difference between that amount and what he had already been paid. De Meo refused. The judge adjudged him in civil contempt and De Meo has appealed from the judgment. The Department of Justice has filed a brief on behalf of the district judge.
In refusing to reduce his fee below $8,000, De Meo took the position that his fee arrangements with his client were none of the district judge's business unless and until his client complained -- and neither Steven Vague nor his father (who apparently is footing the bill) has complained. That position is untenable. Canon 3(B) (3) of the Code of Judicial Conduct for United States Judges provides that a federal judge "should take or initiate appropriate disciplinary measures against a judge or lawyer for unprofessional conduct of which the judge may become aware," and section 2-106(a) of the Illinois Code of Professional Responsibility provides that "a lawyer shall not enter into an agreement for, charge, or collect an illegal or excessive fee." This prohibition, which obviously establishes a category of "unprofessional conduct," is not limited to contingent-fee agreements or to fees payable by children or others who cannot make enforceable contracts. Applied to a freely bargained fixed fee such as De Meo's for representing Steven Vague, the prohibition may seem paternalistic or worse, but its application even to a fixed-fee contract with a competent adult cannot be questioned after In re Kutner, 78 Ill. 2d 157, 163-64, 399 N.E.2d 963, 964-65, 35 Ill. Dec. 674 (1979). Although the federal courts are not bound to apply state rules of professional ethics to lawyers practicing before them, Theard v. United States, 354 U.S. 278, 1 L. Ed. 2d 1342, 77 S. Ct. 1274 (1957), we may assume without deciding that they would apply the Illinois rule as interpreted in Kutner, and therefore that when the district judge discovered that De Meo had charged a fee that apparently violated section 2-106 he was duty-bound to take some action.
But the question is whether he took the right action. The Commentary to Canon 3(B) (3) suggests that he should have reported the matter to the ethics committee of the Illinois bar or the Executive Committee of the United States District Court for the Northern District of Illinois, in which are vested as we shall see the district court's disciplinary powers. The district judge did neither. He postponed sentencing till after a hearing on the alleged ethical violation and then ordered the lawyer to disgorge the fruits of the violation.
If he had not discovered the alleged violation until after he sentenced Vague and thereby terminated the criminal case, the judge could not have ordered De Meo to return a portion of the fee. He would have lost jurisdiction over the criminal case and would have had no authority to start a new proceeding against De Meo. See Matter of Innkeepers of New Castle, Inc., 671 F.2d 221, 230 (7th Cir. 1982). Even if the judge had discovered the alleged violation before imposing sentence on Vague, if he had done nothing at all about it till after the case was closed probably it would then have been too late for him to do anything. Cf. Brown v. Watkins Motor Lines, Inc. 596 F.2d 129 (5th Cir. 1979). Only the judge's action in postponing sentencing till after he had investigated the fee question gives his order of restitution the appearance of being ancillary to the criminal proceeding, for it was the postponement that enabled him to act in the fee matter before imposing sentence. But the power to order restitution of an excessive legal fee should not depend on whether the restitution proceeding begins before or after the sentence is imposed. It would be inconsistent with the spirit of the Sixth Amendment and the Speedy Trial Act to encourage a district judge as in this case to postpone sentencing in order to deal with collateral matters.
By shearing the case of the accidental feature that the judge discovered and investigated the alleged unethical conduct before imposing sentence we bring into focus the principal objection to his action -- it cast him in the role of a prosecutor. No one complained to him about De Meo's fee. The judge decided there might be a violation of the code of ethics, conducted the examination of De Meo and other witnesses, determined that a violation had in fact occurred, and prescribed the remedy. He assumed the role that the Vagues' lawyer would have played had they sued for restitution of the excessive fee paid De Meo.
There would have been no mixing of judicial and prosecutorial functions if the judge had simply referred the matter to an ethics committee. If the committee had found a violation, De Meo could have sought judicial review, and in the review proceeding the lawyer for the committee would have played the same role that a government lawyer plays in the appeal of a criminal case. As the matter was handled the district judge took the place of the committee. In representing the district court in this court, the Department of Justice is representing the only adversary to Mr. De Meo.
Prosecutorial and adjudicative functions are often combined in the administrative process -- the Federal Trade Commission, for example, issues complaints and then adjudicates them, see 15 U.S.C. § 45(b). But such a combination is alien to the traditional concept of the federal judiciary, and not only because a federal judge may not sit in a case in which he is a party. 28 U.S.C. § 455(b) (5) (i); Code of Judicial Conduct for United States Judges, Canon 3(C) (1) (d) (i). A federal judge may not insist that a criminal or civil proceeding be begun or continued. United States v. Cox, 342 F.2d 167, 171 (5th Cir. 1965); Webster Eisenlohr, Inc. v. Kalodner, 145 F.2d 316 (3d Cir. 1944). "The judicial power is limited to deciding controversies. That has been its function historically; that is its function under the Constitution of the United States. No doubt a great deal goes on in the world which ought not to go on. If courts had general investigatory powers, they might discover some of these things and possibly right them. Whether they would do as well in this respect as officers or bodies expressly ...