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12/21/89 In Re William J. Gerard

December 21, 1989



548 N.E.2d 1051, 132 Ill. 2d 507, 139 Ill. Dec. 495 1989.IL.2004

Disciplinary proceeding.


JUSTICE STAMOS delivered the opinion of the court.


The Administrator of the Attorney Registration and Disciplinary Commission (the Administrator) filed a one-count complaint charging respondent, William J. Gerard, with charging and collecting an excessive fee, in violation of Rule 2--106(a) of the Code of Professional Responsibility (the Code) (107 Ill. 2d R. 2--106(a)). The Administrator also charged respondent with the following misconduct arising out of the same factual allegations: conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Rule 1--102(a)(4) of the Code (107 Ill. 2d R. 1--102(a)(4)); overreaching; prejudicing and damaging a client during the course of the professional relationship in violation of Rule 7--101(a)(3) of the Code (107 Ill. 2d R. 7--101(a)(3)); and conduct involving moral turpitude.

Of these charges, the Hearing Board found respondent had collected an excessive fee in violation of Rule 2--106(a) and had engaged in conduct involving dishonesty, fraud, and deceit in violation of Rule 1--102(a)(4). The Hearing Board recommended respondent be suspended from the practice of law for a period of six months. While the Review Board adopted the Hearing Board's findings of fact and Conclusions of law, it found respondent's conduct constituted "extreme overreaching," and the Review Board thus recommended a one-year suspension.

Respondent filed exceptions to the Review Board's report and recommendation, asserting that the Review Board had erred in making certain findings of fact, in failing to dismiss the charge of a Rule 1--102(a)(4) violation either because the complaint failed to state a cause of action or because the Administrator failed to bear his burden of presenting clear and convincing evidence of a Rule 1--120(a)(4) violation, in finding that respondent's conduct constituted extreme overreaching, and in recommending the sanction of suspension for one year. The Administrator also filed exceptions to the Review Board's report and recommendation, contending that the Board should have recommended that respondent be disbarred. We granted both petitions (107 Ill. 2d R. 753(e)(6)).


This disciplinary proceeding arises out of the attorney-client relationship between respondent and Ruth Randolph, which began in August 1985. Because Ruth Randolph died before the Administrator filed the complaint, the sole evidence of what occurred between respondent and Randolph is respondent's testimony and certain documents. Even so, respondent and the Administrator disagree on some facts, and respondent denies the correctness of some findings of fact made by the Hearing Board and the Review Board.

As we discuss later, we do not find that any of the factual errors mentioned by respondent are critical, and we base our Conclusions on undisputed facts. It is these facts, construed in respondent's favor where necessary, which we recite here.

As of August 1985, respondent had practiced law for 24 years, concentrating his practice in the area of Federal taxation. The relationship between Randolph and respondent began in early August 1985, when Margaret O'Boyle contacted respondent and asked him to telephone Randolph, who wanted a will. At this time, Randolph was 84 years old and was hospitalized for an injury suffered in a fall. Her closest relative was a niece. When respondent telephoned Randolph, she told him that, besides wanting him to prepare a will, she wanted respondent to help her find, or as respondent phrases it, "recover," certain paper assets she owned that were missing; she told respondent that she believed they had been taken by someone at the hospital.

Over the phone, respondent discussed with Randolph his fee for his services in "recovering" the assets; he told her that either he could charge her a rate of $175 per hour, or they could agree to a contingent fee. Randolph said she preferred the contingent fee arrangement.

On August 20, 1985, respondent visited Randolph in the hospital to discuss these matters. Before this meeting, respondent prepared the following document as the contingent fee agreement:

"This is to confirm my understanding that William J. Gerard Ltd. will receive as a retainer an amount equal to one-third of all assets recovered for the undersigned."

This was the first contingent fee contract respondent had drafted in his career, yet while drafting it he did not consult any form books or other sources. Respondent, however, had served on the Chicago Bar Association's Professional Fees Committee for four years.

At the time respondent prepared this agreement, he did not know the nature of the paper assets that were missing, their value, or the complete circumstances surrounding their disappearance. At the August 20, 1985, meeting, some of these details were clarified. Randolph told respondent that the assets she was concerned about were certificates of deposit she held in seven financial institutions which she named. Randolph also told respondent that she was not receiving interest on these certificates. Although respondent now had some information, he still did not know how many certificates of deposit Randolph thought were missing, or their total value.

Respondent explains that at the time he and Randolph entered into the contingent fee agreement he suspected that litigation might be necessary to "recover" the certificates of deposit; he speculated that someone might make an adverse claim to them, or possibly the certificates of deposit had been wrongfully redeemed by someone who had stolen them, requiring a lawsuit against the banks that allowed their redemption.

At the August 20, 1985, meeting, respondent and Randolph also agreed that respondent would prepare a trust agreement and a will with a pour-over provision. Randolph accepted respondent's advice to place stock she owned, as well as the certificates of deposit if they were "recovered," in this trust, with herself and respondent named as co-trustees. When he left Randolph that day, respondent left the contingent fee agreement with her.

Two days later, respondent met with Randolph again. Randolph executed the will and trust agreement respondent had prepared; for this work, respondent charged Randolph a fixed fee of $250. Randolph also gave respondent the contingent fee agreement, which she had signed. Thus, respondent entered into the first contingent fee agreement of his career.

During the next month, respondent contacted all of the institutions mentioned by Randolph as having issued the certificates of deposit. Respondent discovered that all of the funds represented by the certificates were still safe in accounts under Randolph's name. Respondent also discovered that the total value of these certificates was approximately $450,000. The actual value of the certificates turned out to be $453,443.37.

On September 26, 1985, Randolph gave respondent a list of the banks she had named on August 20 and the number of certificates of deposit which each bank held for her, for a total of 23. This matched with the information respondent had discovered already.

Now that he had identified the missing certificates of deposit, respondent's next step was to reregister each of them in the name of the trust he had established. Respondent accomplished all of this work by telephoning, visiting, and writing letters to the banks and by visiting Randolph. At no time were any adverse claims made by third persons, and at no time did litigation become necessary. At the hearing, respondent conceded that his actions in identifying and reregistering these certificates were basically administrative in nature, required no legal skills, and could have been done by Randolph herself if she had been able-bodied. Respondent claims to have spent 160 hours "recovering" these certificates. Apparently, respondent completed the "recovery" of all the missing certificates of deposit sometime in October 1985, within two months of when he had been hired by Randolph; but respondent has never stated the date on which he reregistered the last certificate of deposit.

Respondent began collecting his contingent fee on October 10, 1985, when he redeemed two certificates of deposit, now registered in the trust's name, and deposited the money in his corporate account as a portion of his contingent fee. (These redemptions on October 10, 1985, support the Conclusion that respondent succeeded in "recovering" and reregistering all of the certificates of deposit by early October, because contingent fees are only to be collected when it is clear how much money the client has received, and therefore how much money the attorney deserves as his percentage.) On various dates over the next three months, respondent redeemed eight more certificates of deposit. On January 10, 1986, respondent redeemed the tenth certificate of deposit, which because it was unmatured was reduced by a penalty of $225, and deposited the resultant sum of $40,275 in his corporate account. Through this method of redeeming 10 of the 23 certificates of deposit registered in the trust's name respondent succeeded in collecting a total fee of $159,648.60; this exceeds one-third of the $453,443.37 value of the certificates of deposit "recovered" by respondent.

The day before, on January 9, 1986, Randolph signed a document revoking the trust agreement. In this revocation Randolph instructed respondent as co-trustee to deliver to her all trust assets and trust documents, and to render an accounting for all transactions made during the trust's existence. Randolph mailed this revocation to respondent, who states that he did not receive it until January 14, 1986.

Respondent followed these instructions and delivered the documents to Randolph on or about January 31, 1986. At the same time, Randolph signed a release which respondent had prepared, and which stated that Randolph acknowledged the return of the trust assets and released respondent from "all claims in connection with the trust." On that date also, Randolph showed respondent the original certificates of deposit, which had been found.

Seven months later, in August 1986, Randolph died. At no time did Randolph request a renegotiation of respondent's fee. At no time did respondent ever suggest to Randolph that they should renegotiate his fee.

Margaret O'Boyle, however, was not satisfied. In June 1986 she filed a complaint regarding respondent's $159,648.60 fee with the Attorney Registration and Disciplinary Commission (the Commission). O'Boyle also filed an action in the circuit court of Cook County, individually and as executrix of Randolph's estate, seeking the return of the fee. O'Boyle and respondent settled the civil action in November 1987, four months after the Administrator filed his complaint. They renegotiated respondent's fee down to $28,000, which represents 160 hours of work at respondent's hourly rate of $175, and respondent repaid the estate the difference of $131,648.60, plus interest. As part of this settlement, O'Boyle ...

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