N.Y. Attorney Suspended for Funding More Than 200 Loans to Clients
Although not directly an insurance case the decision of the New York Appellate Division concerning attorney James J. Moran shows the depths to which a lawyer -- faced with the volume of money earned from legitimate and illegitimate personal injury claims -- will fall. Money, especially large sums of money, easily obtained caused a lawyer to violate the rules of professional conduct and loan money secretively to his clients to keep them as his clients. Because of his failure of judgment the lawyer is now suspended from the practice of law for 18 months because of 200-plus loans the attorney made to his own clients via intermediaries.
A unanimous New York Appellate Division, 4th Department, panel found that James J. Moran made more than 200 loans totaling more than $700,000. The panel said that the loans through third parties for non-litigation-related expenses did not "directly" violate the Code of Professional Responsibility, but that Moran's actions nonetheless "circumvented" the code, which in itself is a violation.
Moran conceded, according to the ruling [http://www.nycourts.gov/ad4/court/Decisions/2007/06-08-07/PDF/P-06-008.pdf], that he knew his conduct violated disciplinary rules, but "he stated that he provided the financial assistance so that his clients would not be required to borrow funds from lending companies at exorbitant rates of interest."
The panel found six other violations:
1. DR 1-102 (a) (2) (22 NYCRR 1200.3 [a] [2]) - circumventing a disciplinary rule through actions of another;
2. DR 1-102 (a) (4) (22 NYCRR 1200.3 [a] [4]) - engaging in conduct involving dishonesty, fraud, deceit or misrepresentation;
3. DR 1-102 (a) (5) (22 NYCRR 1200.3 [a] [5]) - engaging in conduct that is prejudicial to the administration of justice;
4. DR 1-102 (a) (7) (22 NYCRR 1200.3 [a] [7]) - engaging in conduct that adversely reflects on his fitness as a lawyer;
5. DR 1-104 (b) (22 NYCRR 1200.5 [b]) - failing to make reasonable efforts to ensure that a lawyer over whom he has direct supervisory authority conforms to the disciplinary rules;
6. DR 2-105 (c) (1) (22 NYCRR 1200.10 [c] [1]) - stating that he has been recognized or certified as a specialist in a particular area of law or law practice by a private organization without identifying the certifying private organization and including the required disclaimer; and
7. DR 5-101 (a) (22 NYCRR 1200.20 [a]) - accepting or continuing employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by his own financial interests.
The lawyer was found to have, "with full knowledge of the prohibition, funded loans to clients for more than eight years and engaged in deceptive and deceitful conduct to conceal his role as lender. Respondent has expressed a shocking lack of remorse for his misconduct. He conceded that he loaned money through intermediaries in order to circumvent the disciplinary rules, and he continued to represent clients who had obtained loans funded by him until as late as the commencement of the hearing conducted by the Referee in this matter. Accordingly, after consideration of all of the factors in this matter, we conclude that respondent should be suspended ..."
Moran, 58, was admitted to the New York bar in 1973. His firm, Moran & Kufta, specialized in personal injury and medical malpractice. (Wednesday, the firm's Web site was out of commission, and a receptionist said the firm had recently changed its name to Valerio & Kufta.)
The panel also found that Moran violated disciplinary rules by failing to disclose the existence of one such loan during a client's bankruptcy proceeding and by failing to include a required disclaimer when referring to himself as a trial specialist on his Web site.
The panel however rejected the referee's findings that loaning money via intermediaries directly violated the disciplinary rules, that Moran loaned money directly to clients, that it was improper for Moran to compare the quality of his firm to others' on his Web site or that he engaged in "misleading" conduct by posting information about the rival firm.
Justices Robert G. Hurlbutt, Salvatore R. Martoche, Nancy E. Smith, John V. Centra, and Erin M. Peradotto sat on the panel.
Barry Zalma
http://www.zalma.com
