Roberts v. Virginia State Bar , 296 Va. 105 ( 2018 )

PRESENT: All the Justices
THOMAS HUNT ROBERTS
OPINION BY
v. Record No. 180122 JUSTICE D. ARTHUR KELSEY
SEPTEMBER 6, 2018
VIRGINIA STATE BAR
FROM THE VIRGINIA STATE BAR DISCIPLINARY BOARD
Thomas Hunt Roberts appeals a decision of the Virginia State Bar Disciplinary Board
(the “Board”) sanctioning him with a public reprimand with terms after finding that he violated
Rules 1.15(a)(3)(ii) and 1.15(b)(5) of the Virginia Rules of Professional Conduct (“Disciplinary
Rules”). Finding no error in the Board’s decision, we affirm.
I.
On appeal, “we view the evidence and all reasonable inferences that may be drawn
therefrom in the light most favorable to the Bar, the prevailing party below.” Green v. Virginia
State Bar, ex rel. Seventh Dist. Comm., 274 Va. 775, 783 (2007).
A. THE REPRESENTATION AGREEMENT
In December 2014, Lauren Hayes engaged Thomas H. Roberts & Associates, P.C., to
represent her regarding a personal injury claim arising out of a vehicle collision. On behalf of
the firm, Roberts entered into a Representation Agreement, see 2 J.A. at 332-37, which, among
other things, provided that the firm would receive a contingency fee of “33 1/3 percent of the
gross . . . of any and all judgment and/or recovery, computed before any deductions, including
but not limited to expenses or costs,” id. at 332.
The agreement stated that the contingency fee would increase to 40% “[i]f the recovery is
within 45 days of the first trial date or thereafter.” Id. It also provided that “any settlement or
award” that included attorney fees “shall be paid to the law firm in addition to the contingency
fees provided for above.” Id. In addition to the stipulated fees, the agreement required Hayes to
pay “all costs and expenses” of the firm, including charges for word processing, computerized
research, travel, copying, court reporters, and other similar expenditures. Id. at 333.
Another provision of the agreement required Hayes “to maintain a balance of $150.00 in
trust with the law firm” and stipulated that “[t]his money held in trust belongs to the client.” Id.
(emphasis omitted). The firm reserved the right, however, to “draw against the money held in
trust for costs and expenses and also for payment of fees for services performed” and similarly
advised that “[a]t such time as the law firm ceases to represent the client, any amount remaining
in trust will be returned to the client, after deduction for costs & expenses and fees for service.”
Id.
In the event that Hayes terminated the representation, the agreement instructed her that
“any such termination shall not in any way affect the client’s obligation to pay” for all bills that
the firm had incurred as well as “interest, costs and attorney’s fees on the terms and conditions
set forth in this Agreement.” Id. at 334-35. In bold print, the agreement added:
Additionally, client understands and agrees that if the client
terminates the representation where all or part of the firm[’]s fee
for services was to be computed based on some contingency, the
law firm will be entitled to a fee quantum merit [sic] for services
rendered. Client agrees that the reasonable value of the services
rendered to it by the law firm shall not be less than the fees set
forth in this Agreement.
Id. at 335 (emphasis omitted). Finally, the agreement permitted an additional minimum charge
of “25% of the amount owing” if the firm had to engage in collection efforts against Hayes. Id.
B. THE TERMINATION
Hayes eventually became dissatisfied with the firm’s handling of her claim. In August
2015, she notified the firm that she was terminating the representation. See id. at 375. She
2
understood “that any cost[s] incurred or expenses paid” by the firm would be “deducted” from
the balance in the trust account. Id. She added: “It is also my understanding that if there is a
remaining balance from the money held in trust after all expenses are paid that the remaining
balance will be returned to me.” Id.
An associate with the firm replied via letter titled Notice of Attorneys’ Lien to advise
Hayes that she could “collect [her] file and the balance of [her] trust account” anytime during the
following week and that she had “a trust balance of $150.00 with th[e] firm.” Id. at 377. The
associate’s letter also informed Hayes that, pursuant to the Representation Agreement, the firm
was “entitled to a fee quantum meruit for services rendered, and that the reasonable value of the
services rendered by th[e] firm shall not be less than the fees set forth in th[e] Agreement.” Id.
The letter added: “The firm has expended $5,532.00 of its time representing you.” Id.
Hayes wrote back requesting “a breakdown of the $5,532.00 lien” and stating that she
intended “to dispute the amount of the lien.” Id. at 378. Writing an email in reply, Roberts
quoted to her the quantum meruit provision of the agreement and restated the firm’s assertion of
a lien. See id. at 379-80. The email also warned Hayes that “should the firm be required to
undertake efforts to collect its fees in this matter that it will be entitled to recover an additional
25%.” Id. at 380. The email included a ledger showing a balance of $150 in the trust account.
In October 2015, Hayes advised Roberts’s firm by letter that she had retained another
attorney, Mark Esposito, and directed that her file be forwarded to him. She also asked that the
firm send her a check for the balance in the trust account. See id. at 382. 1 Roberts did not
directly respond to this letter. Instead, the firm transferred $6.70 from the trust account into its
1
Roberts concedes in his brief on appeal that Hayes “asked for the balance of the funds”
and “that she understood the money was to be repaid to her.” Appellant’s Br. at 23.
3
operating account to cover the cost of mailing the file to Esposito, leaving a balance of $143.30.
See id. at 373. The associate attorney also made a new time entry in the ledger noting that he had
received Hayes’s demand for a return of her trust funds and was sending a check to her. 2 See id.
at 371. Hayes never received any refund, however. Roberts then wrote Esposito and advised
him that the firm asserted a lien of $5,744.50 3 in the case and that “[t]he last offer we received
from the insurance company was $7,800.” Id. at 383 (emphasis omitted).
When it became clear that there would be no resolution of the lien issue, Esposito filed a
suit against Roberts’s firm on Hayes’s behalf in general district court. The warrant in debt
inexplicably claimed that Roberts’s firm “owe[d] [Hayes] a debt in the sum of” $5,744.50. Id. at
386. A bill of particulars, however, later stated that the warrant in debt was meant to seek a
declaratory judgment declaring the asserted lien to be unreasonable and setting forth the
reasonable value of Roberts’s services. Roberts’s firm responded with a motion to dismiss, a
motion to strike, grounds of defense, and a motion for sanctions. On June 2, 2016, the general
district court dismissed the warrant in debt for lack of jurisdiction and denied the motion for
sanctions. See id. at 403. 4
2
At the disciplinary hearing, the associate testified that this time entry was only a “to-do
notation” for the task of sending the check to Hayes. 1 J.A. at 115-16.
3
The original lien demand in August 2015 claimed $5,532 and declared that “THE
REPRESENTATION HAS ENDED.” 2 id. at 377 (emphasis omitted). This subsequent lien
demand in November 2015 for $5,744.50 appears to be based on a claim for legal fees incurred
after the firm had declared that its representation had ended. See 1 id. at 117; 2 id. at 371. The
difference of $212.50 appears to stem from time billed for communicating with Hayes and
Esposito after the termination. See 2 id. at 371.
4
Esposito had withdrawn his representation and nonsuited the personal injury suit a few
weeks before this order dismissing the case against the firm. See id. at 412. Hayes refiled the
personal injury suit pro se in general district court. It remained pending throughout the
proceedings below. See 1 id. at 70-72.
4
In April 2016, Roberts transferred $143.30, the remaining balance in the trust account, to
his firm’s operating account, claiming that it was a partial payment for his firm’s fees. The firm
did not notify Hayes of this transfer. At that time, Hayes had received no settlement, judgment,
or recovery of any kind on her personal injury claim. A notation on the ledger stated: “Paid to
Thomas H. Roberts & Associates, P.C. Applied to Quantum Meruit - Fees Earned $143.30.” Id.
at 373. The ledger showed a trust balance of $0 and a balance due to the firm of $5,783.70,
which appears to represent an amount including additional charges for travel to the post office
and communication with Esposito but with a credit for the $143.30 that Roberts had transferred.
See id. at 371-74.
C. THE BAR’S INVESTIGATION
In June 2016, Hayes executed a “Lawyer Inquiry Form” complaining that Roberts’s firm
had asserted a “ridiculous” lien, failed to return her trust funds, and failed to handle her claim
expeditiously. See id. at 404-07. The Bar received the complaint and began an investigation.
During the investigation, the Bar provided Hayes with the ledger that showed the transfer of the
$143.30 from the firm’s trust account to its operating account. See 1 id. at 69-70; 2 id. at 373.
Hayes had only seen an earlier version of this ledger, displayed in a different format, that did not
include any notation of the transfer.
Also during the investigation, Hayes provided the Bar with an annotated copy of the
earlier ledger (provided by the firm to Hayes in September 2015) on which she had noted her
disputes over certain charges and made a notation of “OK” next to four of the charges. See 2 id.
at 323-30. At the disciplinary hearing, Hayes conceded that the charges marked “OK” totaled
approximately $500, but she clarified that while she was “[a]greeing that there was work that had
been done,” there was “plenty” on the ledger with which she was disagreeing. 1 id. at 96-97.
5
She testified that at no point did she resolve her dispute with Roberts over his fees or give him
permission to take any money out of the trust account for his fees. See id. at 72-73.
The Bar charged Roberts with violating Disciplinary Rules 1.5(a) (Fees), 1.15(a)(3)(ii)
(Safekeeping Property), 1.15(b)(4) & (5) (Safekeeping Property), 1.16(d) (Declining or
Terminating Representation), and 8.4(a) (Misconduct). After a hearing, the Third District
Committee found that Roberts had only violated Disciplinary Rules 1.15(a)(3)(ii) and 1.15(b)(5).
See 2 J.A. at 482-83. The Committee imposed a public reprimand with terms, requiring Roberts
to place the $143.30 back in trust until a tribunal determined the disposition of the funds or until
Hayes and Roberts reached an agreement regarding such disposition, and also required Roberts
to take 8 hours of Continuing Legal Education classes in ethics. See id. at 483.
The Committee “declined” to make a “finding” under a clear and convincing evidence
standard that Roberts had violated Disciplinary Rule 1.5 and other Disciplinary Rules by
transferring the $143.30 before Hayes had received any recovery. 2 J.A. at 482, 489. Instead,
the Committee found that Roberts had violated Disciplinary Rule 1.15(a)(3)(ii) when he
transferred the funds knowing that there was an ongoing dispute regarding his fees and that
Hayes had demanded a refund of the money in trust. See 2 J.A. at 489-90. The Committee also
found that Roberts had violated Disciplinary Rule 1.15(b)(5) when he transferred the funds
without Hayes’s consent or the direction of a tribunal. See 2 J.A. at 490.
On appeal to the Disciplinary Board, Roberts argued that these two violations should be
overturned because: (1) Hayes had consented to the transfer in the Representation Agreement,
which provided for the transfer of money from the trust account to the firm for its fees upon a
termination of the contingency agreement; (2) there was no genuine dispute over the firm’s right
to at least $143.30; and (3) Roberts had provided the accounting and severance of interests that
6
Rule 1.15(a)(3)(ii) requires. He also claimed that the District Committee’s interpretation of
Disciplinary Rule 1.15(b)(5) was unexpected, thereby violating his due process rights, and that
Disciplinary Rule 1.15(a)(3)(ii) is unconstitutionally vague.
The Bar’s brief to the Disciplinary Board made several references to the fact that Roberts
had transferred the funds before Hayes received any recovery on her personal injury claim. The
brief argued that if the Representation Agreement allowed Roberts to recover in quantum meruit
before Hayes had received any recovery, the agreement “was improper from the beginning.” 2
J.A. at 552. In response, Roberts filed a motion to strike portions of the Bar’s brief, arguing that
the Disciplinary Board had no jurisdiction to hear these arguments because the District
Committee had specifically declined to find any violation based on the fact that Roberts had
transferred the funds before Hayes obtained any recovery. He also claimed that the Bar’s
arguments violated his due process rights.
The Disciplinary Board denied the motion, finding it “pointless” to strike portions of the
brief since “we’ve all read it.” Id. at 613. The Disciplinary Board stated, however, that “all
we’re considering here . . . [are] the violations of the two rules which survived.” Id. On those
two violations, the Disciplinary Board affirmed the findings of the District Committee and the
sanction that the Committee had imposed.
II.
In reviewing an appeal from Bar disciplinary proceedings, we “make an independent
examination of the whole record, giving the factual findings [of the Disciplinary Board]
substantial weight and viewing them as prima facie correct.” Green, 274 Va. at 783 (alteration
and citation omitted). These findings are “not given the weight of a jury verdict” but “will be
sustained unless it appears they are not justified by a reasonable view of the evidence or are
7
contrary to law.” Id. The interpretation of the Disciplinary Rules, however, is a question of law
that we review de novo. Zaug v. Virginia State Bar, ex rel. Fifth Dist. - Section III Comm., 285
Va. 457, 462 (2013).
A. THE DISPUTE OVER THE TRUST FUNDS
Roberts claims that he did not violate the Disciplinary Rules by withdrawing $143.30
from the trust account. 5 As he sees it, the Representation Agreement allowed him, in the event
that Hayes terminated the representation, to convert his contingency fee into a quantum meruit
fee measured by billable hours. Under this view, the quantum meruit fee was liberated from any
contingencies and accrued immediately upon termination, making it due and owing even if
Hayes never recovered anything either by means of a settlement or a judgment. Relying on this
premise, Roberts asserted below, “There is no doubt that this law firm’s quantum meruit fees
exceeded $143.30 — the balance of the trust after expenses which was applied to fees earned on
April 14, 2016.” 2 J.A. at 446 (emphasis added).
From Roberts’s perspective, the Bar errs in that “it does not care about the objective
merits of the dispute.” Appellant’s Br. at 24. Roberts argues that he transferred the funds
“consistent with the representation agreement” and points out that the Bar itself “stipulated” to
the “substantial work” that the firm had performed for Hayes and “declined to argue” that his
services “were not worth $143.30.” Id. at 24-25. He notes that Hayes also “acknowledged . . .
that the firm did substantial work” and that she was “OK” with fees that totaled more than $500.
Id. at 25. According to Roberts, the merits of the dispute do matter, and he was entitled to make
his own determination of those merits according to his interpretation of the facts and the
5
Roberts asserts nine assignments of error. Our discussion in Part II.A. corresponds
roughly to Assignments of Error 2, 3, 4, and 7.
8
Representation Agreement, 6 which in his view provided for the transfer of the trust funds to
satisfy his quantum meruit fees without any previous recovery and without allowing Hayes to
withdraw her consent.
Roberts adds that there was no dispute as to the $143.30 in trust because Hayes’s bill of
particulars in the general district court only challenged the reasonableness of the lien and because
the ledger which Hayes marked up included several notations stating that she was “OK” with
certain charges that added up to more than $143.30. See id. at 30-32. Nor was there any reason,
Roberts argues, for someone other than himself to conduct “an accounting and severance of their
interests,” Va. Sup. Ct. R., Part 6, § II, ¶ 1.15(a)(3)(ii). Instead, Roberts claims that he could
simply determine whether or not Hayes disputed his entitlement to the $143.30 in trust. 7
6
See Appellant’s Br. at 22 (“It reasonably appeared Ms. Hayes’s claims no longer
impugned the money in trust . . . . In evaluating the situation in April 2016, after responding to
th[e] bill of particulars, Mr. Roberts transferred the money out of trust.”); id. at 28 (“[T]he only
issue that needed to be resolved for Mr. Roberts to transfer the money . . . was this: Were two
parties presently claiming an interest in the money in trust? In April 2016 the answer was (or
reasonably appeared to be) ‘No.’” (emphases in original); id. at 32 (“[The bill of particulars]
provided Mr. Roberts a basis for reasonably believing [Hayes] no longer claimed an interest in
the money in trust . . . thereby resolving that dispute. Moreover, . . . Ms. Hayes did not, in fact,
honestly dispute the firm’s right to $143.30. . . . [S]he recognized the work performed by the
firm. She freely and voluntarily circled the monetary amounts listed for four entries of the ledger
and annotated them as ‘OK’ . . . .” (emphasis in original) (footnote omitted)).
7
See id. at 17-18 (stating that Disciplinary Rule 1.15(a)(3)(ii) leaves attorneys to
“speculate” as to who determines the existence of a dispute or whether a dispute has been
resolved as well as who performs the required accounting and severance, but concluding that
“[n]othing in this Rule, however, prohibits Mr. Roberts from deciding the dispute was
resolved . . . .”); see also Reply Br. at 1-2 (“The Bar concedes the attorney managing the trust
fund must perform the Rule 1.15(a)(3)(ii) accounting and severance. . . . This Rule operates on
the premise that an attorney can and must determine the ‘question of fact’ as to whether there are
or there are not competing claims to funds. . . . The Rule requires attorneys to determine if there
are competing claims.” (emphases omitted) (citing Appellee’s Br. at 13)); Oral Argument Audio
at 25:41 to 27:01 (arguing that Roberts had a “duty to determine” whether there was a dispute);
supra note 6.
9
We disagree with the first premise of Roberts’s argument — that an attorney claiming an
interest in trust funds can unilaterally determine whether a dispute over the funds exists or has
been resolved. Disciplinary Rule 1.15(a)(3)(ii) forbids a lawyer from taking funds out of a client
trust account whenever “two or more persons (one of whom may be the lawyer) claim an
interest” in the trust account. If such a dispute arises, the funds “shall be held in the trust account
until the dispute is resolved and there is an accounting and severance of their interests. Any
portion finally determined to belong to the lawyer or law firm shall be promptly withdrawn from
the trust account.” Va. Sup. Ct. R., Part 6, § II, ¶ 1.15(a)(3)(ii). Nothing in the text or context of
this Disciplinary Rule suggests that an attorney, while claiming an interest in the trust funds, gets
the last word on whether a dispute exists and, if so, whether it has been resolved in his favor.
That said, we agree that Disciplinary Rule 1.15(a)(3)(ii) presupposes that there must be a
good faith basis for the claimant’s dispute. However, we find that such a good faith basis exists
for Hayes’s dispute in this case. Hayes hired Roberts’s firm to assert a personal injury claim.
The Representation Agreement authorized a percentage fee contingent upon Hayes recovering
compensation by settlement or judgment. The “quantum mer[u]it” clause authorized a fee if
Hayes terminated the representation and stipulated that the fee would be based upon the
“reasonable value” of the firm’s services, which “reasonable value” would “not be less than the
fees set forth in th[e] Agreement.” 2 J.A. at 335. It would be reasonable for an injured claimant
to assume that, whatever amount a “quantum mer[u]it” fee might be, it nevertheless would be,
like “the fees set forth in th[e] Agreement,” id., contingent upon her recovering on her claim. 8
8
Roberts devotes three assignments of error (7, 8, and 9) to his assertion that the
Disciplinary Board improperly permitted the Bar to re-allege that Roberts had violated the
Disciplinary Rules by withdrawing the money from the trust account before Hayes obtained any
recovery on her claim because the District Committee declined to find a violation based on that
10
Hayes twice demanded a full return of any funds remaining in the trust account after the
deduction of costs and expenses. See id. at 375, 382. Roberts concedes as much on brief,
acknowledging that Hayes “asked for the balance of the funds” and “that she understood the
money was to be repaid to her.” Appellant’s Br. at 23. Hayes testified that at no time did she
agree that Roberts “was entitled to fees,” nor did she ever consent to him deducting any fees
from the trust account except for costs and expenses. 1 J.A. at 69; see 2 id. at 375. She did not
remember specifically discussing the “quantum mer[u]it” provision, 2 id. at 335, in the
Representation Agreement with Roberts. See 1 id. at 57. Nor did anything in the agreement
make clear to Hayes that a quantum meruit fee was not conditioned upon whether and when she
received any recovery.
Quantum meruit is Latin for “as much as he has deserved.” Black’s Law Dictionary 1437
(10th ed. 2014). Absent a termination of the attorney-client relationship, the Representation
Agreement stipulated that Roberts contractually deserved a fee only if Hayes ultimately
recovered. It would be reasonable for Hayes to assume that the same contingency (an ultimate
recovery) would apply to the quantum meruit fee in the event that she terminated the
relationship. After all, in dicta, we have observed that the calculation of a quantum meruit fee
theory. See Appellant’s Br. at 2. However, we do not address the question whether a quantum
meruit fee would be contingent upon Hayes’s recovery in order to resurrect a theory of discipline
that the District Committee did not adopt and that the Disciplinary Board did not address on
appeal. Rather, we address this issue solely for the purpose of determining whether, under these
unusual facts, Hayes could have asserted a dispute over the trust funds in good faith.
Moreover, by declining to find a violation on this theory by clear and convincing
evidence, the District Committee did not affirmatively rule that Roberts had a right to withdraw
the funds before a recovery. Thus, while we will not resurrect this theory of discipline to find a
separate violation against Roberts, we do address the point insofar as it relates to the violations
actually found, in particular to the finding that Roberts withdrew the funds from the trust account
in the face of a good faith dispute as to his entitlement to them.
11
should take into account not only “[t]he amount and character of the services rendered” but also
“whether or not the fee is absolute or contingent.” Hughes v. Cole, 251 Va. 3, 25 (1996)
(quoting County of Campbell v. Howard, 133 Va. 19, 51 (1922)).
According to Roberts, a footnote in Heinzman v. Fine, Fine, Legum & Fine, Attorneys at
Law, 217 Va. 958 (1977), “suggests” that a quantum meruit fee can never be “contingent on the
client’s recovery.” Appellant’s Br. at 8 n.4. The Heinzman footnote reads in pertinent part, “As
applied in this context, a quantum meruit determination looks to ‘the reasonable value of the
services rendered, not in benefit to the client, but, in themselves.’” 217 Va. at 964 n.4 (quoting
Howard, 133 Va. at 51). However, that footnote, and the text of Howard upon which it relies,
must be understood in context. While Heinzman and Howard distinguish between a measure of
compensation based upon a benefit to the client and a measure of compensation based upon the
reasonable value of the services rendered, Howard specifically includes the concept of a benefit
to the client within its discussion of the factors that courts should consider in determining the
reasonable value of an attorney’s services.
In Howard, we stated that when determining the reasonable value of an attorney’s
services, courts should consider, among other factors, “whether or not the fee is absolute or
contingent, it being a recognized rule that an attorney may properly charge a much larger fee
where it is to be contingent than where it is not so.” 133 Va. at 51. The reason why is because
the contingency-fee lawyer takes a risk that he will receive no compensation for his services.
See, e.g., Commonwealth v. Huynh, 262 Va. 165, 172-73 (2001). That the factors for
determining the reasonable value of an attorney’s services include whether the fee is contingent
(in which case a higher fee may be reasonable depending on the risk-reward ratio) demonstrates
that Howard, and therefore Heinzman, include the concept of a benefit to the client within the
12
calculation of a quantum meruit fee even while recognizing the distinction between a quantum
meruit fee and one based on the benefit to the client.
In Heinzman, a claimant seeking property and personal injury damages arising out of a
vehicle collision hired an attorney and signed a written agreement to pay him a one-third
contingency fee on any recovery. The attorney settled the property damage claim and received
his contractual fee of one-third of that amount. The client thereafter fired the attorney “entirely
without just cause,” Heinzman, 217 Va. at 962 n.3, and hired another attorney to pursue the
personal injury claim. The second attorney settled the personal injury claim one day before trial
and the first attorney requested, pursuant to the client’s previous agreement with him, a one-third
contingency fee on that settlement amount. The trial court approved the settlement and awarded
the first attorney his contractual fee of one-third of the settlement that the second attorney had
obtained.
On appeal, we reversed the order approving the first attorney’s fee. Our holding,
however, was quite specific:
Having in mind the special nature of a contract for legal services,
we hold that when, as here, an attorney employed under a
contingent fee contract is discharged without just cause and the
client employs another attorney who effects a recovery, the
discharged attorney is entitled to a fee based upon quantum meruit
for services rendered prior to discharge and, as security for such
fee, to the lien granted by Code § 54-70 [current Code § 54.1-
3932].
Heinzman, 217 Va. at 964 (emphases added) (footnote omitted). 9
9
In this context, an attorney cannot recover a quantum meruit fee unless he “is
discharged without just cause.” Heinzman, 217 Va. at 964. In our review of this case, we
assume arguendo, but do not decide, that Hayes fired Roberts without just cause.
13
“[T]he special nature of a contract for legal services” led us to reject the view “that a
contract for legal services is the same as any other contract and is governed by the same rules
concerning breach and the measure of damages.” Id. at 962. A different paradigm governs the
relationship between a Virginia attorney and a layman client:
Contracts for legal services are not the same as other contracts.
“It is a misconception to attempt to force an agreement between an
attorney and his client into the conventional modes of commercial
contracts. While such a contract may have similar attributes, the
agreement is, essentially, in a classification peculiar to itself. Such
an agreement is permeated with the paramount relationship of
attorney and client which necessarily affects the rights and duties
of each.”
Seldom does a client stand on an equal footing with an attorney in
the bargaining process. Necessarily, the layman must rely upon
the knowledge, experience, skill, and good faith of the
professional. Only the attorney can make an informed judgment as
to the merit of the client’s legal rights and obligations, the
prospects of success or failure, and the value of the time and talent
which he must invest in the undertaking. Once fairly negotiated,
the contract creates a relationship unique in the law.
Id. at 962-63 (alteration and citation omitted).
Against this backdrop, Heinzman addressed the scenario in which the discharged attorney
was “employed under a contingent fee contract” and sought an award of fees after the second
attorney had “effect[ed] a recovery” on behalf of the client. Id. at 964. Under these facts, we
held that the first attorney could recover “a fee based upon quantum meruit for services rendered
prior to discharge.” Id. (footnote omitted).
We did not hold in Heinzman that, nor have we ever addressed whether, a discharged
contingency-fee attorney can recover in quantum meruit from a personal injury claimant who
never receives any compensation whatsoever. Even if quantum meruit principles theoretically
permitted such a fee, the fee would still have to be adequately explained to the client, be
14
reasonable under all the circumstances, and not unreasonably hamper the client’s right to
discharge counsel. See Va. Sup. Ct. R., Part 6, § II, ¶¶ 1.4, 1.5(a)-(c), 1.16(a)(3); Va. Legal
Ethics Op. 1812, 2005 Va. Legal Ethics Ops. LEXIS 4, at *6-7 (Oct. 31, 2005). Whatever the
contours of such a provision, it must not function as a poison pill that financially punishes a
client for, and thus deters a client from, exercising her right to end the attorney-client
relationship.
Roberts also relies on Legal Ethics Opinion 1812 as support for the quantum meruit
provision in the Representation Agreement. In that opinion, the Virginia State Bar Standing
Committee on Legal Ethics (“Legal Ethics Committee”) addressed a contingency-fee agreement
that included an “alternative fee arrangement” provision that required the client, in the event that
he terminated the representation, to pay either an hourly fee for all pre-termination legal work or
to pay, at the attorney’s election, the agreed contingency fee applied to “any settlement offer
made to Client prior to termination.” Va. Legal Ethics Op. 1812, 2005 Va. Legal Ethics Ops.
LEXIS 4, at *1, *11. The Committee concluded that the hourly-fee provision was “unclear” as
to whether it was attempting to create an alternative hourly fee or to establish an agreed-upon
hourly rate in a quantum meruit analysis, and that, if the latter were true, it went “too far” by
appearing “to attempt to set an hourly rate for quantum meruit analysis, which is misleading and,
therefore, impermissible.” Id. at *9-11.
The Committee also found fault with the provision allowing the attorney to elect
compensation based upon the agreed contingency fee applied to any settlement offer made to the
client prior to termination. That provision, the Committee opined, was “likewise improper as it
is misleading and fails to fully and properly inform the client of the lawyer’s entitlement to
15
compensation in the event the client terminates the representation prior to a recovery from the
defendant.” Id. at *11-12.
Rather than support Roberts’s position, Legal Ethics Opinion 1812 undermines it. His
Representation Agreement did not explain to Hayes that she would be liable for quantum meruit
fees irrespective of when, and even if, she obtained compensation from the alleged tortfeasor. In
addition, much like the hourly-rate provision rejected by the Legal Ethics Committee, the
provision at issue here attempted to set the “fee quantum mer[u]it for services rendered” in
advance, but set that fee at an amount no less “than the fees set forth in th[e] Agreement.” 2 J.A.
at 335. Both the 33.3% and 40% fee calculations in the agreement presupposed a compensatory
recovery by Hayes. In the event that she terminated the representation and thus recovered
nothing, the provision would mean only that the quantum meruit fee would be no less than zero.
This case does not require us to interpret with finality the disputed fee provisions in the
Representation Agreement or to rule on their legal or ethical validity. The only question we ask
is whether Roberts violated Disciplinary Rule 1.15(a)(3)(ii) by unilaterally transferring $143.30
from the trust fund to his firm’s operating account in partial payment of his fees. We agree with
the Board that he did. At the time that Roberts transferred the trust funds, Hayes disputed his
entitlement to the balance of the funds and did so in good faith.
B. DISCIPLINARY RULE 1.15 & THE CONSTITUTION
Roberts also argues that the Disciplinary Board’s findings violated his due process rights
because Disciplinary Rules 1.15(a)(3)(ii) and 1.15(b)(5) are unconstitutionally vague and were
arbitrarily enforced. See Appellant’s Br. at 12-26, 33-40. 10 We disagree.
10
This discussion corresponds roughly to Assignments of Error 1 and 5. Aspects of
Assignment of Error 5 are also addressed in Part II.C.
16
1.
A Disciplinary Rule “is presumed to be constitutional, and we will resolve any doubt
regarding its constitutionality in favor of its validity.” Motley v. Virginia State Bar, 260 Va. 243,
247 (2000). Beginning our analysis with this presumption, we must first determine the proper
scope of Roberts’s void-for-vagueness argument. When a party makes a vagueness challenge, he
generally cannot argue vagaries in aspects of the challenged law that do not directly affect
him — a legal claim often called a “facial challenge.” See, e.g., Holder v. Humanitarian Law
Project, 561 U.S. 1, 18-20 (2010); Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc.,
455 U.S. 489, 494-95 & n.7 (1982); Parker v. Levy, 417 U.S. 733, 755-56 (1974); Shin v.
Commonwealth, 294 Va. 517, 526-27 (2017); Toghill v. Commonwealth, 289 Va. 220, 227-28
(2015); Commonwealth v. Hicks, 267 Va. 573, 580-81 (2004).
Instead, Roberts can challenge only those irresolvable ambiguities that caused his alleged
unconstitutional deprivation. See Motley, 260 Va. at 247 (applying an “as-applied” standard in
which the challenged statute or rule is “examined in light of the facts of the case at hand”
(citation omitted)). The only recognized exception to this general rule involves vagueness
challenges to laws that allegedly violate First Amendment rights. See Holder, 561 U.S. at 18-20;
Parker, 417 U.S. at 752; Volkswagen of Am., Inc. v. Smit, 279 Va. 327, 336 (2010); Motley, 260
Va. at 247. Because Roberts’s arguments do not implicate any First Amendment rights, we
address only those vagaries that he identifies in Disciplinary Rule 1.15 that are directly relevant
to his public censure by the Disciplinary Board.
The void-for-vagueness doctrine, implicit in constitutional due process principles, also
takes into account the gravity of the harm resulting from the alleged unconstitutional deprivation.
Thus, courts generally afford a “greater tolerance of enactments with civil rather than criminal
17
penalties because the consequences of imprecision are qualitatively less severe.” Sessions v.
Dimaya, 584 U.S. ___, ___, 138 S. Ct. 1204, 1212-13 (2018) (plurality opinion) (quoting Village
of Hoffman Estates, 455 U.S. at 498-99). 11 It is relevant, therefore, that Roberts did not receive a
criminal punishment. Nor did the Bar revoke or even temporarily suspend his license. He only
received a public censure. That rebuke, as impactful as it might be on his reputation, does not
change the fact that a “proceeding to discipline an attorney is a civil proceeding.” Moseley v.
Virginia State Bar, ex rel. Seventh Dist. Comm., 280 Va. 1, 3 (2010) (per curiam) (citing Norfolk
& Portsmouth Bar Ass’n v. Drewry, 161 Va. 833, 837 (1934)). “The primary purpose of such
disciplinary proceedings is to protect the public, not punish the attorney.” Id. (citing Seventh
Dist. Comm. of the Va. State Bar v. Gunter, 212 Va. 278, 284 (1971)).
2.
Working within these parameters, we address Roberts’s main void-for-vagueness
argument. Specifically, Roberts contends that Disciplinary Rule 1.15(a)(3)(ii) is
unconstitutionally vague because it lacks “an express scienter requirement,” uses the “passive
voice,” includes “undefined terms,” and “equivocat[es] in its terms.” Appellant’s Br. at 14. He
also maintains that this Rule is irreparably vague because it appears to enable a “damned-if-you-
do, damned-if-you-don’t approach.” Id. at 16. Under this view, “the Bar can discipline an
attorney retrospectively at any point either for leaving money in trust or for taking the money out
11
While recognizing the general rule that courts allow greater latitude in the civil context,
the plurality of the Court in Sessions found the heightened standard of the criminal context
applicable to immigration removal laws because “deportation is ‘a particularly severe penalty,’
which may be of greater concern to a convicted alien than ‘any potential jail sentence.’” 584
U.S. at ___, 138 S. Ct. at 1213 (citation omitted). Because “federal immigration law
increasingly hinge[s] deportation orders on prior convictions, removal proceedings [have
become] ever more ‘intimately related to the criminal process.’” Id. (citation omitted).
18
of trust, merely by contradicting (months after the fact) the attorney’s evaluation as to which
provision of the Rule should apply.” Id. We disagree.
Disciplinary Rule 1.15(a)(3)(ii) cannot reasonably be read to allow the Bar to punish an
attorney for taking money out of a trust account and, alternatively, to punish him for leaving the
same money in the trust account. The Rule prohibits removing funds subject to a “dispute” and
requires the prompt transfer of all or part of those funds to the attorney’s account after the funds
have been “finally determined” to belong to the attorney. Va. Sup. Ct. R., Part 6, § II,
¶ 1.15(a)(3)(ii); see also id. cmt. [3] (“The undisputed portion of the funds shall be promptly
distributed.”). Neither the text nor the ethical context of this Disciplinary Rule places an
attorney in the lose-lose scenario that Roberts hypothesizes.
Roberts next argues that “[t]he terminology of this Rule is also vague because the Rule
uses material terms and phrases that are undefined . . . — most notably the key terms
‘accounting’ and ‘severance of their interests.’” Appellant’s Br. at 18. The absence of an
explicit definition of these terms, he concludes, “allows the Bar to use, after the fact, whatever
standards it wants.” Id. Another ambiguity that Roberts sees in these terms is the Disciplinary
Rule’s use of the passive voice when employing them, which suggests to him that he alone can
perform the required “accounting” and “severance” and, based upon them, can unilaterally
determine whether he may withdraw funds from the trust account. See id. at 17-18; supra note 7.
We cannot accept that view as a plausible interpretation of these terms in the context of our
Disciplinary Rules.
Courts have often said that “[i]n legal codes, as in ordinary conversation, ‘a word is
known by the company it keeps.’” Tvardek v. Powhatan Vill. Homeowners Ass’n, 291 Va. 269,
278 (2016) (citation omitted). A void-for-vagueness challenge cannot prevail by isolating a
19
specific term and arguing that it is abstractly ambiguous. See, e.g., United States v. Williams,
553 U.S. 285, 306 (2008) (acknowledging the invalidity of criminal statutes creating “wholly
subjective judgments without statutory definitions, narrowing context, or settled legal meanings”
but finding “no such indeterminacy” in the statute at issue (emphasis added)); Gray v.
Commonwealth, 260 Va. 675, 680-81 (2000) (relying on “the context of this case” to find the
terms of a statute not void for vagueness); Bell v. Dorey Elec. Co., 248 Va. 378, 382 (1994)
(upholding a statute because its “directives or standards” had “clear and self-evident” meanings).
In this case, the context of Disciplinary Rule 1.15(a)(3)(ii) and the absence of a definition of
“accounting” or “severance” indicate that the attorney must perform these requirements, see
Appellee’s Br. at 13 (conceding the point), but that context and the lack of definitions do not
further suggest that the attorney has unilateral authority to determine the existence or resolution
of a dispute.
Roberts sees even “more subtle ambiguities in this Rule,” particularly the “equivocation”
in the phrases “‘funds in which two or more persons claim an interest,’ ‘the dispute is resolved,’
and ‘any portion finally determined to belong to the law firm.’” Appellant’s Br. at 19
(alterations omitted). He claims that these phrases “imply an artificial degree of orderliness and
certainty in disputes regarding funds.” Id. He wonders whether a “dispute” is the same as two or
more persons claiming an interest in the funds such that if all but one person withdraws his claim
to the funds “the dispute is resolved.” Id. He also questions whether these phrases require “a
formal mechanism” to resolve the dispute or “an adjudication” to make the “final determination”
that the Disciplinary Rule requires. Id. (alterations omitted). These hypotheticals are irrelevant
to Roberts’s ethical violation, and we need neither ask nor answer these questions.
20
The common thread throughout all of these arguments is a single, erroneous assertion:
The dispute is resolved, and the final determination made, when Roberts says so. See supra note
7. As we have already stated, however, see supra at 9-10, 19-20, we find his interpretation of
Disciplinary Rule 1.15(a)(3)(ii) to be unreasonable. It is unnecessary, therefore, to address the
precise nature of the dispute-resolution process that would justify an attorney in transferring
funds from a trust account to his operating account. There was no dispute-resolution process of
any kind in this case. Roberts simply made a determination on his own and in his favor. 12
Finally, as noted previously, see supra at 8, Roberts contends that the Bar arbitrarily
enforced Disciplinary Rule 1.15(a)(3)(ii) in this case by concluding that “the merits of the
dispute do not matter.” Appellant’s Br. at 25; see also id. at 24 (“[T]he Bar also indicates it does
not care about the objective merits of the dispute.”). He believes that the true meaning of
Disciplinary Rule 1.15(a)(3)(ii), stripped of its vagaries, authorizes him to resolve the dispute on
the merits by finding Hayes’s claim of interest to be either withdrawn or meritless. As we stated
earlier, however, see supra at 9-10, 19-20, Disciplinary Rule 1.15(a)(3)(ii) cannot reasonably be
read to permit one of two disputants to unilaterally determine that the dispute no longer exists
whenever he asserts that it no longer exists or that the other is simply wrong. Because we reject
Roberts’s interpretation of Disciplinary Rule 1.15(a)(3)(ii), we do not see it as a legitimate basis
for declaring the Disciplinary Rule void for vagueness. 13
12
Roberts also argues that Disciplinary Rule 1.15(a)(3)(ii) is void for vagueness because
it lacks a “scienter requirement.” See Appellant’s Br. at 14, 17, 20; Reply Br. at 6-7. We do not
address this argument because Roberts, by his own admission, intentionally withdrew the trust
funds based on his asserted claim of right.
13
Roberts’s principal void-for-vagueness argument targets Disciplinary Rule
1.15(a)(3)(ii). In a few sentences on brief, however, Roberts also asserts that Disciplinary Rule
1.15(b)(5) is also void for vagueness. See Appellant’s Br. at 36 (claiming that the parameters of
“consent” in the Bar’s reasoning render the Rule void for vagueness); Reply Br. at 12-13 (same).
21
C. DISCIPLINARY RULE 1.15(B)(5): CONSENT & REVOCATION OF CONSENT
Roberts devotes two assignments of error (5 and 6) to the related arguments that various
“legal or contractual authorities, or bodies of authorities” demonstrate that (i) Hayes
contractually consented, in the Representation Agreement, to Roberts paying his fees from the
trust account; (ii) that Hayes had no right to later withdraw that contractual consent; and (iii) that
the Disciplinary Board’s findings to the contrary were unconstitutional. See Appellant’s Br. at 1-
2, 33-40, Reply Br. at 12-13. 14 He frames these arguments as an attack on the Disciplinary
Board’s holding, alleging that the Board “implicitly or explicitly” held that “Hayes could
withdraw contractual consent unilaterally and without consideration.” Appellant’s Br. at 34
(emphases omitted). Our earlier discussion is dispositive here.
While it is true that the Representation Agreement authorized Roberts to use trust funds
to pay legal fees, this authorization was necessarily limited to fees actually due and owing at the
time of the withdrawal of funds. Neither Hayes nor any other client signing that agreement
could be understood to have consented to the payment of legal fees that were not due and owing
and to have thereby authorized fees that the client claimed were never due at all. Roberts’s
argument to the contrary merely assumes his conclusion that he had an unequivocal right to
quantum meruit fees prior to, and even despite the potential absence of, any ultimate recovery by
Hayes. Again, as we stated before, see supra at 16, we need not affirm or disaffirm this thesis.
It is enough that Hayes both disputed Roberts’s claim to fees and asserted an interest in the trust
funds in good faith.
We find no merit in this assertion.
14
Given our conclusion that Hayes’s consent was limited to fees actually due and owing,
we need not address Roberts’s further contention that the Board’s finding was unprecedented and
thus unconstitutional, see Appellant’s Br. at 33-40; Reply Br. at 12-13.
22
III.
The Board did not err when it affirmed the Committee’s findings that Roberts had
violated Disciplinary Rules 1.15(a)(3)(ii) and 1.15(b)(5) and when it affirmed the sanction of a
public reprimand with terms. We thus affirm.
Affirmed.
23