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In Re Teichner

OPINION FILED SEPTEMBER 20, 1984.

IN RE MARSHALL I. TEICHNER, ATTORNEY, RESPONDENT.


Disciplinary proceeding.

JUSTICE UNDERWOOD DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 30, 1984.

This is a disciplinary proceeding brought against the respondent attorney, Marshall I. Teichner, who was admitted to practice in 1959. The Administrator of the Attorney Registration and Disciplinary System (87 Ill.2d Rules 751 through 771) filed a two-count complaint charging the respondent with (1) overreaching, charging an excessive and unconscionable fee, and dishonest and deceitful conduct, and (2) commingling and conversion of client funds. Following three days of testimony, including numerous witnesses presented by each party, the hearing panel determined that the charges in both counts had been proved and recommended that the respondent, whom this court in 1980 had suspended for two years for solicitation (In re Teichner (1979), 75 Ill.2d 88), be disbarred. A unanimous Review Board agreed.

Both of the charges here involved stem from the respondent's representation of Helen Escobedo, the complainant, in matters arising from the death of Juan Escobedo. While Juan Escobedo and Helen Escobedo were never formally married, the record is clear that they had been living together for over 20 years, had two children born of their relationship, and were generally recognized throughout the community as husband and wife. Prior to this relationship, Juan Escobedo had been married to Heriberta Hernandez Escobedo, and although they had been long separated, they apparently were never divorced.

Juan Escobedo was hospitalized as a result of an industrial accident on November 4, 1977, at his place of employment, General American Transportation Company, and died on November 8. On November 15, Helen Escobedo completed the necessary claim form to obtain payment under Juan's employer's group life insurance policy with the Metropolitan Life Insurance Company (Metropolitan). She had been substituted for Heriberta Escobedo as beneficiary under this policy in 1971. On the claim form, Helen Escobedo identified herself as the wife of Juan Escobedo. The employer's representative who assisted her in completing the claim form advised her that the claim would be paid in approximately 30 days.

Following submission of the claim form, also on November 15, complainant consulted the respondent for the first time. The appointment was made for her by her adult son, whose union secretary, from whom the son sought advice, recommended respondent. He and complainant discussed the group life claim and other potential claims relating to a separate accidental death policy, savings and pension plans, a workers' compensation claim and a products liability claim against Hyster Manufacturing Company, the manufacturer of the vehicle involved in the injury to Juan Escobedo. At this first meeting, complainant advised the respondent that she had already filed a claim under the Metropolitan group life policy, but that she was concerned about her entitlement to the proceeds because she was not legally married. Respondent's testimony, which was not, in this respect, disputed, indicates that she told him "she had heard from the real wife, Heriberta, and that it looked like there was going to be another claim made." Respondent agreed to represent her with reference to the Metropolitan claim, and a contingent-fee agreement was executed providing that respondent was to be paid one-fourth of the amount recovered by settlement or judgment.

On November 21, complainant returned to the respondent's office. During this second visit, she executed contingent-fee agreements agreeing to pay respondent one-third of the amount recovered in exchange for representation on the products liability claim against Hyster Manufacturing Company and one-fifth of the amount recovered against the employer on the workers' compensation claim. None of the agreements included any provision for advancing costs or expenses incurred during the course of the respondent's representation.

Metropolitan issued a check in the amount of $27,598.71 payable to complainant on December 9. Following its receipt complainant met with respondent on three occasions before it was cashed on December 19. During her first visit, respondent advised her that the check appeared to be in order and informed her that he was entitled to one-fourth of the amount of the payment from Metropolitan pursuant to the contingent-fee agreement of November 15. He also requested an additional $7,000 in order to prosecute the products liability claim. Complainant hesitated at paying the additional $7,000, and the end result of this meeting was that the respondent retained the check and advised her to consider his entitlement to the amount requested.

On her second visit during this period, complainant again discussed with respondent his request for the additional $7,000 and also questioned the amount of work performed by him and the amount of his fee with reference to the Metropolitan claim. Following a heated discussion, respondent offered to return the check and withdraw as her attorney, but she ultimately agreed, at her son's urging, to pay him as requested. Because it was late in the day, the respondent kept the check and complainant agreed to return on a future date to cash it.

On December 19 complainant returned to respondent's office. Respondent accompanied her and two of her children to his bank in order to negotiate the check. Because she was the sole payee, it was necessary for respondent to arrange with bank personnel to cash the check. He contacted the assistant vice-president of the bank, who offered to approve the negotiation of the check if respondent would endorse it. The vice-president's testimony that respondent said "he didn't feel like he wanted to put his signature on the back of the check" is undenied, although respondent now says he refused to endorse the check because he was not the payee. The bank officer then indicated that he would approve the check if respondent would provide a letter guaranteeing the endorsement and payment of the check. This was done.

At respondent's direction, the bank gave Helen Escobedo three cashier's checks, one for $4,500 payable to her and one for $4,750 payable to each of her two children for a total sum of $14,000, and an envelope containing the remaining $13,598.71 in cash. Upon returning to the respondent's office she retained the three checks and gave respondent the envelope with the $13,598.71 in cash. Her testimony that respondent told her that payment of the money to the children was better "for purposes of taxes," and that respondent gave her no receipt for the cash is uncontradicted.

In the proceedings before the hearing panel, respondent testified that he was unsure what he had done with that portion of this payment attributable to the products liability claim. He had, however, previously advised the Administrator by letter that the funds had been deposited into his firm's client-fund account. Respondent attempted to explain the inconsistency as carelessness in dictating the letter. The bank records produced by the Administrator clearly established that no deposit of the funds had been made, and respondent ultimately conceded that he might simply have spent the money. Notwithstanding the uncertain disposition of these funds, respondent testified that filing fees and undescribed investigation expenses were attributed to this products liability file and that $1,000 was subsequently disbursed from this amount to Helen Escobedo as a loan. The sum of $5,109 was ultimately returned to her following her filing of the disciplinary complaint.

Complainant subsequently retained counsel to proceed against the respondent with reference to the contingent fee taken by him from the proceeds of the Metropolitan group life insurance policy. In order to settle that claim, respondent paid complainant's new counsel $9,200, constituting the amount claimed plus interest, and also gave her attorney a promissory note for his fee for recovering these funds. As to this count, the hearing panel found the $7,000 fee unconscionable, and that "Respondent engaged in fraudulent and deceptive behavior toward Helen Escobedo to enforce collection of the fee in stating that he performed significant professional services, and that his services were a material factor in effecting the payment by Metropolitan." The panel also referred to complainant's eighth-grade education and lack of business experience, as well as her heart ailment and diabetic condition, in criticizing respondent's lack of sensitivity to the inability of a potential client to evaluate the need for legal counsel, which had also been noted in the earlier disciplinary proceeding. In re Teichner (1979), 75 Ill.2d 88, 115-16.

The respondent's major contention before this court is that the Administrator failed to prove by clear and convincing evidence that respondent charged excessive fees and converted and commingled client funds as alleged in the complaint. Initially, we note that since the hearing panel, which hears the testimony and observes the demeanor of the witnesses, is in the best position to weigh conflicting testimony and to make determinations regarding the credibility of witnesses, its factual determinations are to be given substantially the same weight as those of other fact-finding bodies. (See, e.g., In re Harris (1982), 93 Ill.2d 285, 295; In re Kink (1982), 92 Ill.2d 293, 301.) In this case, the extensive "Report and Recommendation" of the hearing panel, which was adopted by the Review Board, carefully details the evidence presented by both parties. While the record does contain a number of conflicts and contradictions in the testimony of witnesses for both the Administrator and the respondent, the hearing panel acknowledged that there were "instances of confusion or mistake in [complainant's] testimony," but stated such instances did not "suggest any intentional dishonesty on her part," and that the panel's factual references were based upon other testimony and exhibits in the record. We believe the findings of the panel are clearly supported by the record.

We believe, however, that the panel was, perhaps, unduly critical of respondent's action in securing a contingent-fee contract on the Metropolitan claim at the November 15 meeting. Initially, the hearing panel determined that this claim was not an adversarial matter which justified respondent's actions in securing a contingent-fee agreement. As earlier noted, that agreement was executed by complainant at respondent's office, where she had gone after completing the claim form with the assistance of personnel from Juan Escobedo's employer. While she was advised by the company personnel that she could expect payment in approximately 30 days, there is no evidence in this record that she related this fact to respondent. Further, notwithstanding this statement, complainant testified that she was concerned with her right to the proceeds of this policy and unsure that she would receive the ...


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