IN RE: DISCIPLINE OF HARDEEP SULL , 140 Nev. Adv. Op. No. 54 ( 2024 )

140 Nev., Advance Opinion 5 1-i
IN THE SUPREME COURT OF THE STATE OF NEVADA
IN THE MATTER OF DISCIPLINE OF No. 86781
HARDEEP SULL, BAR NO. 12108.
FILE
AUG 2 2 2024
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CLER OF Pi
BY
IEF DEPUTY CLERK
Appeal from a disciplinary board hearing panel's order
dismissing a complaint against an attorney.
Reversed; attorney reprimanded.
Daniel M. Hooge, Bar Counsel, and R. Kait Flocchini, Assistant Bar
Counsel, Reno,
for State Bar of Nevada.
Richard Harris Law Firm and David A. Clark, Las Vegas,
for Respondent Hardeep Sull.
BEFORE THE SUPREME COURT, HERNDON, LEE, and BELL, JJ.
OPINION
By the Court, BELL, J.:
In this matter, we consider whether attorney Hardeep Sull
violated the Nevada Rules of Professional Conduct (RPC) concerning the
safekeeping of client funds and the duties owed to a client when terminating
representation. Specifically, the rules require attorneys to deposit "[a]ll
funds received or held for the benefit of clients . . . including advances for
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costs and expenses" into a designated client trust account, "to be withdrawn
by the lawyer only as fees are earned or expenses incurred." RPC 1.15(a),
(c). We conclude that Su11 violated RPC 1.15 when she charged a flat fee for
a limited scope representation but failed to deposit that fee into a client
trust account. We further conclude that Su11 violated RPC 1.16(d), which
requires an attorney to "refundll any advance payment of fe[s] or
expense[s] that has not been earned or incurred" when the client terminates
that representation. Because the hearing panel erred when it concluded
that Su11 did not violate either of these rules, we reverse the hearing panel's
order dismissing the disciplinary charges against Sull. Based on the clear
evidence supporting violations of RPC 1.15 and RPC 1.16, and considering
the circumstances, we conclude that a reprimand serves the purpose of
attorney discipline.
BACKGROUND
Hardeep Sull has been licensed to practice law in Nevada since
2010 and has no prior discipline. Sull's practice primarily consists of
immigration matters. In June 2021, a preexisting client retained Sull to
prepare and file an E-2 Visa Application. For this representation, the client
agreed to pay Sull a flat fee of $15,000, plus a $750 client file fee. The fee
agreement provided that, in the event of early termination, Sull's "time
completed on the matter will be billed at an hourly rate" of 8395 per hour
and that Sull would "refund any unused portion of the costs and/or
expenses." The client wired the full $15,000 to Sull's firm's operating
account. Within a month, Sull had withdrawn all of those funds without
attributing the withdrawals to the E-2 Visa matter. At no time did Sull
place the client's funds into the firm's client trust account.
In December 2021, the client informed Sull that he did not want
to move forward with the E-2 Visa Application. As a result, Sull never filed
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the application. The next month, the client requested that Su11 provide an
accounting of work performed on the matter and a refund of any unearned
fees. Su11 promised to provide the requested accounting within a month but
failed to do so. The client continued to request an accounting for several
months and eventually filed a grievance with the State Bar. After the
parties participated in a fee dispute mediation, Su11 provided the client with
an accounting. In early 2023, Su11 refunded the client $3,500.
The State Bar filed a disciplinary complaint against Su11,
alleging that Su11 violated RPC 1.15 (safekeeping property) by failing to
deposit the client's funds into a client trust account and RPC 1.16 (declining
or terminating representation) by failing to provide the client with an
accounting or a refund of unearned fees when the client terminated the
representation. The hearing panel unanimously concluded that Su11 (1) did
not violate RPC 1.15 because the $15,000 was a flat fee that did not have to
be deposited into a client trust account and (2) did not violate RPC 1.16
because the client did not terminate the representation. The panel
dismissed the complaint. The State Bar appeals, arguing that the panel
erred in concluding that Su11 did not violate RPC 1.15 and RPC 1.16.
DISCUSSION
"Our review of the panel's findings of fact is deferential. . . so
long as they are not clearly erroneous and are supported by substantial
evidence." In re Discipline of Colin, 135 Nev. 325, 330, 448 P.3d 556, 560
(2019) (internal citation omitted). We review the panel's conclusions of law,
including "whether the factual findings establish an RPC violation," de
novo. Id. (discussing SCR 105(3)(b)).
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Because a flat fee is not earned upon receipt, Sull violated RPC 1.15 by
failing to deposit the client's funds in her trust account
The Nevada Rules of Professional Conduct require that "[a]ll
funds received or held for the benefit of clients by a lawyer.... shall be
deposited in [the lawyer's] trust account." RPC 1.15(a); see also SCR
78(1)(a) (requiring attorneys to "deposit all funds held in trust in this
jurisdiction" into a trust account). "All funds held in trust" includes fees
paid in advance of the lawyer providing the agreed-upon services. "Legal
fees and expenses that have been paid in advance" may "be withdrawn [from
the trust account] by the lawyer only as fees are earned or expenses
incurred." RPC 1.15(c). The rules are clear that fees paid in advance may
only be withdrawn as the fees are earned. Accordingly, fees paid in advance
must be placed into the lawyer's trust account until the lawyer earns the
fees by performing the agreed-upon work. Although the rules allow a
lawyer to charge a fixed or "flat" rate for legal services, the lawyer must still
account for the work performed to demonstrate that the fee has been
earned. See RPC 1.5(a)(8) (permitting a lawyer to charge a fixed fee for
services). An attorney cannot avoid accounting for work performed by
labeling the fee as a "flat fee." Indeed, "[t]he client must be in a position to
understand what the lawyer will do for the agreed upon fees, and, of equal
importance, what the lawyer will not do. Simply put, the client must know
what [the client] bargained for." In re Seare, 493 B.R. 158, 206 (Bankr. D.
Nev. 2013) (emphasis omitted), as corrected (Apr. 10, 2013), aff'd, 515 B.R.
599 (B.A.P. 9th Cir. 2014).
The American Bar Association recently issued an opinion
addressing the proper treatment of flat or fixed fees paid in advance. "If a
flat or fixed fee is paid by the client in advance of the lawyer performing the
legal work, the fees are an advance. Use of the term 'flat fee' or 'fixed fee'
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does not transform [an] arrangement into a fee that is 'earned when paid."
ABA Comm. on Ethics & Pro. Resp., Formal Op. 505, at *4 (2023). We agree.
Fees paid in advance of legal services being performed are not earned upon
receipt. When a lawyer receives an advance of fees, "that fee must be placed
in a Rule 1.15-compliant trust account, to be disbursed to the lawyer only
after the fee has been earned." Id. A prudent way to comply with the rule
would be to set milestones by which specified portions of an advanced fee
may be earned. Id. at *5 (citing In re Mance, 980 A.2d 1196, 1202, 1204-05
(D.C. 2009)). Doing so "allows the lawyer to be paid in part before the end
of the representation and provides some assistance in determining the
refund amount in case of early termination." Id. For example, once the
lawyer reaches a certain stage of representation or completes a designated
task, they could provide the client with an accounting demonstrating that
the task has been completed, and then the lawyer could transfer the agreed-
upon portion of funds for that task out of the trust account. "Of course,
'extreme "front-loading" of payment milestones in the context of the
anticipated length and complexity of the representation' may not be
reasonable." Id. (quoting Mance, 980 A.2d at 1204-05).
The fee agreement at issue provided that the $15,000 fee was
for "legal services to be rendered" and indicated that Sull would send billing
statements to the client explaining how any deposited fees would "be
applied towards the balance of the legal services rendered." By the terms
of the agreement, the client's fees in this matter were paid in advance.
Consistent with RPC 1.15(c), those fees should have been deposited in a
client trust account and withdrawn by Sull only as fees were earned or
expenses incurred. Sull instead treated the funds as "earned upon receipt,"
placing the client's funds directly into her operating account without first
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performing the work to earn those funds. By doing so, Su11 violated RPC
1.15. We cannot agree with the hearing panel's contrary conclusion.
The client terminated Sull's representation before she completed the task for
which she was retained
The Nevada Rules of Professional Conduct provide that, "[u]pon
termination of representation, a lawyer shall. . . surrender[ ] papers and
property to which the client is entitled and refund[ ] any advance payment
of fee or expense that has not been earned or incurred." RPC 1.16(d). The
question here is whether the client terminated the representation.
Sull's client had previously retained Sull for two other matters,
one of which is still pending. Each matter was distinct and had its own fee
agreement. See RPC 1.2(c) ("A lawyer may limit the scope of the
representation if the limitation is reasonable under the circumstances and
the client gives informed consent."). The third matter was the E-2 Visa
Application, which formed the basis of the State Bar's complaint. The
record establishes that the client terminated the representation for the E-2
Visa after Sull had completed some work but before Sull filed the
application. Because the E-2 Visa was a separate representation from the
other matters, we conclude that the client terminated the representation,
triggering RPC 1.16. The fact that Sull remained counsel of record for the
client on an unrelated matter has no bearing on whether the client
terminated Sull's representation for the E-2 Visa. The record fails to
support the hearing panel's finding that the client had not terminated the
representation.
Sull delayed providing the client with an accounting of work
performed and a refund of unearned fees for several months after the
representation for the E-2 Visa terminated. The record demonstrates by
clear and convincing evidence that Sull violated the duty to "surrender[]
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papers and property to which the client is entitled and refund[] any
advance payment of fee or expense that has not been earned or incurred."
RPC 1.16(d); see also In re Discipline of Drakulich, 111 Nev. 1556, 1566, 908
P.2d 709, 715 (1995) (recognizing the burden of proof in a disciplinary
matter).
A reprimand is appropriate di.scipline for Sull's uiolations
In determining the appropriate discipline, we weigh four
factors: "the duty violated, the lawyer's mental state, the potential or actual
injury caused by the lawyer's misconduct, and the existence of aggravating
or mitigating factors." In re Discipline of Lerner, 124 Nev. 1232, 1246, 197
P.3d 1067, 1077 (2008). Although the hearing panel's recommendation is
persuasive, we determine the appropriate discipline de novo. See In re
Discipline of Schaefer, 117 Nev. 496, 515, 25 P.3d 191, 204 (2001); SCR
105(3)(b).
Based on the record provided, we conclude that the State Bar
proved by clear and convincing evidence that Sull's actions caused actual or
potential injury to the client by depriving the client of access to and use of
the client's own funds for over one year. See In re Watt, 717 N.E.2d 246,
248-49 (Mass. 1999) ("Deprivation arises when an attorney's intentional use
of a client's funds results in the unavailability of the client's funds after they
have become due, and may expose the client to a risk of harm, even if no
harm actually occurs."). The record also supports that Sull negligently
violated RPC 1.15 and knowingly violated RPC 1.16. Because the most
serious misconduct was the knowing violation of duties owed when the
client terminated the representation, the baseline sanction, before
considering aggravating or mitigating circumstances, is suspension. See
Standards for Imposing Lawyer Sanctions, Compendium of Professional
Responsibility Rules and Standards, at Standard 7.2 (Am. Bar Ass'n 2023)
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("Suspension is generally appropriate when a lawyer knowingly engages in
conduct that is a violation of a duty owed as a professional and causes injury
or potential injury to a client, the public, or the legal system .").
The record further demonstrates substantial evidence of one
aggravating circumstance (substantial experience in the practice of law)
and five mitigating circumstances (absence of a prior disciplinary record,
absence of a dishonest or selfish motive, personal or emotional problems,
cooperative attitude toward proceedings, and character and reputation).
See SCR 102.5 (listing "[a]ggravating and mitigating circumstances [which]
may be considered in deciding what sanction to impose"). Given that this is
Sull's first discipline and that the mitigating circumstances significantly
outweigh the one aggravating circumstance, we conclude that a downward
deviation from the baseline sanction is appropriate. Considering all of the
factors, we conclude that a reprimand serves the purpose of attorney
discipline. See In re Discipline of Arabia, 137 Nev. 568, 571, 495 P.3d 1103,
1109 (2021) (recognizing that the purpose of attorney discipline is to protect
the public, the courts, and the legal profession).
CONCLUSION
Sull violated the Nevada Rules of Professional Conduct by
mishandling client funds and by failing to account for and refund client
funds after the client terminated her representation. Given the clear
evidence of violation, we reverse the hearing panel's order dismissing the
disciplinary charges against Sull. Considering the aggravating and
mitigating circumstances, particularly that Sull has had no prior attorney
discipline, we conclude that a reprimand is sufficient to serve the purpose
of attorney discipline.
Accordingly, we reprimand attorney Hardeep Sull for violating
RPC 1.15 (safekeeping property) and RPC 1.16 (declining or terminating
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representation). Su11 shall pay the costs of the disciplinary proceedings,
including $1,500 under SCR 120, within 30 days after the State Bar
provides an invoice for those costs. The State Bar shall comply with SCR
121.1.
J.
Bell
We concur:
rJ
(74
Herndon
Lee
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