Board of Professional Responsibility v. Connie Reguli

IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
October 1, 2015 Session
BOARD OF PROFESSIONAL RESPONSIBILITY v. CONNIE REGULI
Appeal as of Right from the Circuit Court for Williamson County
Nos. 20149 and 201430 Robert L. Jones, Judge
No. M2015-00406-SC-R3-BP – Filed December 28, 2015
A Board of Professional Responsibility hearing panel determined that an attorney
violated multiple rules of professional conduct and imposed a suspension to be served on
probation subject to certain conditions. The trial court affirmed the hearing panel‟s
findings but modified the sanction by requiring the attorney to pay restitution, shortening
the term of the suspension and probation, and eliminating and modifying other conditions
of probation. Upon careful consideration, we affirm the trial court‟s order of restitution,
but otherwise reinstate the decision of the hearing panel.
Appeal Pursuant to Tenn. Sup. Ct. R. 9, § 1.3; Judgment of the Circuit Court
Affirmed in Part, Reversed in Part
SHARON G. LEE, C.J., delivered the opinion of the Court, in which CORNELIA A. CLARK
and HOLLY KIRBY, JJ., and FRANK G. CLEMENT, JR., SP.J., joined. JEFFREY S. BIVINS, J.,
not participating.
Connie Reguli, Brentwood, Tennessee, Pro Se.
Krisann Hodges, Brentwood, Tennessee, for the appellee, Board of Professional
Responsibility of the Supreme Court of Tennessee.
OPINION
I.
This is an attorney discipline case involving Connie Reguli, who maintains a law
office in Brentwood, Tennessee. On July 16, 2012, the Board of Professional
Responsibility (“the Board”) filed a petition for discipline against Ms. Reguli based on
three complaints of misconduct.1 The complaints arose out of Ms. Reguli‟s
1
The Board‟s petition was filed pursuant to Tennessee Supreme Court Rule 9, section 8.2.
representation of Robert Castleman, representations on Ms. Reguli‟s website regarding
her professional certification, and Ms. Reguli‟s representation of Sayuri Pope. The Board
alleged that Ms. Reguli‟s conduct violated Tennessee Supreme Court Rule 8, Rules of
Professional Conduct (RPC) 1.4(a) and (b), Communication; 1.5(a) and (f), Fees; 1.16(d),
Declining or Terminating Representation; 7.4(b), Communication of Fields of Practice
and Specialization; 8.1(b), Bar Admission and Disciplinary Matters; and 8.4(a), (c), and
(d), Misconduct.
Ms. Reguli answered the petition and denied any misconduct. In her answer and
in pretrial motions, she asserted, among other things, that the United States and
Tennessee Constitutions require that the Board‟s allegations be proven by clear and
convincing evidence, that the Board be required to produce documentation confirming
that the Board‟s Chair selected panel committee members on a rotating basis, that the
hearing panel members be recused, and that Disciplinary Counsel Krisann Hodges be
disqualified. Ms. Reguli filed numerous other motions and objections, including, but not
limited to, an objection to holding the hearing in a private facility, a counterclaim against
the Board alleging the Petition for Discipline was unsupported by fact and law and had
been brought to harass Ms. Reguli, a motion to strike exhibits, a motion to bifurcate the
Petition for Discipline‟s allegations and assign them to separate panels, an Americans
with Disabilities Act accommodation request, a motion for a declaratory ruling as to
whether Panel members are judges, a motion to stay the disciplinary proceeding pending
disposition of a declaratory judgment action filed by Ms. Reguli against the Board in
Davidson County Chancery Court, and a motion to dismiss the alleged RPC 1.5(f)
violation.
A hearing panel (“the Panel”) was appointed pursuant to Tennessee Supreme
Court Rule 9.2 On July 16, 2013, the Panel ruled on a number of Ms. Reguli‟s
pre-hearing motions and objections. The Panel denied Ms. Reguli‟s request that the
Panel employ a clear and convincing evidence standard and also denied her motion to
disqualify Ms. Hodges. The Panel also dismissed Ms. Reguli‟s counterclaim and took
under advisement her requests for disclosures regarding the manner in which Panel
members are appointed. Ms. Reguli continued to file a number of other motions and
objections until the hearing.
Effective January 1, 2014, this Court adopted substantial changes to Tennessee Supreme Court Rule 9.
Because this case was initiated before January 1, 2014, it is governed by the pre-2014 version of
Tennessee Supreme Court Rule 9. All references in this opinion to Tennessee Supreme Court Rule 9
refer to the pre-2014 version.
2
The Panel‟s membership was altered twice in the proceeding following the motions for recusal
by Ms. Reguli. The Panel in its final form was assembled on February 27, 2013.
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II.
The Panel conducted a hearing on November 13 and 14, 2013. Ms. Reguli, Robert
Castleman, Kathryn Wright, and David Johnson testified before the Panel.
On July 21, 2011, Ms. Reguli and Mr. Castleman entered into a written fee
agreement for Ms. Reguli to represent Mr. Castleman in his divorce proceeding. Mr.
Castleman paid Ms. Reguli $10,000 and signed the fee agreement. The agreement
provided that the “$10,000 will be held in escrow and the hourly fees will be charged
against this retainer”; that “[o]nce the full amount of the retainer has been used for legal
services, an additional retainer may be required, depending on the status of the case”; and
that “[i]f services are completed or ended prior to the expiration of the funds held in
escrow, the return of the funds will be at the discretion of the firm in accordance with
Formal Ethics Opinion 92-F-128.”3
Ms. Reguli testified that she understood that Formal Ethics Opinion 92-F-128
provided that nonrefundable retainers are acceptable if they are in writing. Ms. Reguli
believed the language “at the discretion of the firm” in the fee agreement made the
retainer nonrefundable. She testified that she reviewed the fee agreement with Mr.
Castleman, but did not provide him with a copy of the ethics opinion. Mr. Castleman
testified that he did not know the contents of Formal Ethics Opinion 92-F-128 when he
signed the agreement. Mr. Castleman stated that he only read two paragraphs of the
agreement and that he did not feel the need to ask questions about the contract because he
trusted Ms. Reguli as an attorney. Ms. Reguli testified that she assumed she placed the
$10,000 in her escrow account and that she most likely withdrew amounts from the
retainer as she worked on Mr. Castleman‟s case.
About three or four weeks after signing the agreement, Mr. Castleman discharged
Ms. Reguli as his lawyer. Mr. Castleman testified he tried to contact Ms. Reguli to get an
accounting of the time Ms. Reguli spent on his case and to recoup the unearned portion of
the fee. He stated that he called Ms. Reguli‟s office several times and left messages that
were not returned and also called Ms. Reguli‟s cell phone without a return call. On
September 20, 2011, Mr. Castleman sent Ms. Reguli a letter requesting an itemized
billing and a refund of the balance of the retainer. According to Mr. Castleman, he did
not receive an accounting or a refund from Ms. Reguli. Mr. Castleman stated that his
address at the time he sent the September 2011 letter was a different address than when
he signed the fee agreement.
3
Formal Ethics Opinion 92-F-128 states, in pertinent part, “All pre-paid, advanced or retainer
fees are ethically deemed to be refundable in the absence of a clear understanding by the client to the
contrary, preferably in writing.” Tenn. Bd. of Prof‟l Responsibility, Formal Ethics Op. 92-F-128 (1992).
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Ms. Reguli testified that in September 2011, she provided Mr. Castleman with an
accounting of the time she spent on his case. Ms. Reguli stated that she mailed Mr.
Castleman the requested information, but by that time, Mr. Castleman had changed his
address. At the hearing, Ms. Reguli produced an accounting that listed billed hours and
corresponding fees of $2,082.50 and expenses of $116.75, for a total of $2,199.25
charged against the $10,000 retainer. Ms. Reguli did not refund the balance of the
retainer to Mr. Castleman.
Kathryn Wright, an administrative assistant at Ms. Reguli‟s law firm, testified that
she answers phones in Ms. Reguli‟s office. Ms. Wright stated that she transfers calls to
attorneys if they are available, and if not, she takes a message. Ms. Wright records
messages in a computerized system. She testified that someone is always available to
answer the office phone during working hours, even if she is temporarily unavailable.
Ms. Wright does not answer Ms. Reguli‟s cell phone calls. Ms. Wright acknowledged
receiving Mr. Castleman‟s September 20, 2011 letter. Ms. Wright stated that she scans
letters and places them in attorneys‟ inboxes upon receipt, but she did not recall what she
did with Mr. Castleman‟s letter. Ms. Reguli testified that she reviewed her office‟s
computerized message system and did not see any notations of messages left for her by
Mr. Castleman from August through October 2011.
The Board received a complaint from Mr. Castleman regarding Ms. Reguli on
October 18, 2011. The Board forwarded the complaint to Ms. Reguli in a letter dated
October 27, 2011, and requested that she submit a response to the Board. Ms. Reguli
responded to the Board on November 3, 2011, stating that the fee agreement provided
that any refund would be at her discretion. In letters dated January 13, 2012, and
February 9, 2012, the Board specifically requested billing records or a detailed summary
of Ms. Reguli‟s work in Mr. Castleman‟s case. Ms. Reguli responded on February 12,
2012, referring to her initial response to Mr. Castleman‟s complaint and declining to
provide the requested documents. Ms. Reguli did not produce the billing records to the
Board until the November 2013 hearing.
On or about November 1, 2011, attorney David Johnson filed a complaint with the
Board about Ms. Reguli‟s website. Mr. Johnson alleged that Ms. Reguli‟s website
misrepresented Ms. Reguli as a certified specialist in family law and divorce. Ms.
Reguli‟s website listed the following information on her attorney profile page:
“Certification/Specialties: . . . Family Law[,] Divorce.” Ms. Reguli admitted that she was
not certified as a specialist in family law and divorce.
Ms. Reguli testified that since 2006, she had a website hosted by a company called
FirmSite and in 2007, she approved information for public posting by FirmSite. Ms.
Reguli testified that she did not put the certification information on her website and was
not aware that the website described her as being certified or being a specialist in family
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law and divorce until receiving Mr. Johnson‟s complaint in 2011. Ms. Reguli stated that
she checked her website periodically before 2011, but never noticed the incorrect
information. Ms. Reguli noted at the hearing that the website also falsely stated that she
was licensed in the United States District Court for the Middle District of Pennsylvania
and that she graduated from Purdue University in “Lafayette, Tennessee.” 4 Ms. Reguli
testified that when she received the Johnson complaint, she was very ill with cancer. She
contacted the FirmSite company to correct the website in early spring of 2012.
The third complaint was filed by Janson Pope. Ms. Reguli represented Sayuri
Pope in a divorce proceeding against Janson Pope. Mr. Pope alleged that Ms. Reguli
drafted and filed an order with a court that did not accurately reflect a judgment against
her client, Ms. Pope. Ms. Reguli testified that the trial court awarded Mr. Pope periodic
alimony payments but did not prescribe when the payments would commence. Mr.
Pope‟s attorney filed a petition for contempt alleging that Ms. Pope was in contempt for
failure to make the alimony payments. The court held a hearing on the motion and issued
a ruling from the bench. Mr. Pope‟s attorney and Ms. Reguli submitted different orders
to the trial court. The trial court judge signed an order prepared by Ms. Reguli. Mr. Pope
later filed a Tennessee Rule of Civil Procedure 59 motion, which alleged that the order
Ms. Reguli drafted did not accurately reflect the court‟s decision. The court modified its
earlier ruling and awarded Mr. Pope $1,000 for attorney fees related to his Rule 59
motion.
The Panel entered its findings on November 18, 2013, and its amended findings on
December 27, 2013. With respect to the Castleman complaint, the Panel found that
(1) Mr. Castleman sought to discharge Ms. Reguli and requested an accounting of fees
earned; (2) Ms. Reguli‟s failure to provide the Board with an accounting showed that no
accounting existed; and (3) the “some seven thousand dollars” of the fee that Ms. Reguli
did not refund was unreasonable for the work she provided. The Panel found that this
constituted violations of RPCs 1.4(a)(4)5 and (b),6 1.5(f),7 1.16(d)(4) and (6),8 8.1(b),9
and 8.4(a) and (d).10
4
Purdue University is located in West Lafayette, Indiana.
5
RPC 1.4(a)(4) states, “A lawyer shall . . . (4) promptly comply with reasonable requests for
information[.]”
6
RPC 1.4(b) states, “A lawyer shall explain a matter to the extent reasonably necessary to permit
the client to make informed decisions regarding the representation.”
7
RPC 1.5(f) states, “A fee that is nonrefundable in whole or in part shall be agreed to in a
writing, signed by the client, that explains the intent of the parties as to the nature and amount of the
nonrefundable fee.”
8
RPC 1.16(d) states, in pertinent part:
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The Panel found that Ms. Reguli‟s website falsely stated that she had
“Certification/Specialties:” in “Family Law and Divorce” and therefore Ms. Reguli had
violated RPC 7.4(b).11 The Panel dismissed the Board‟s claim regarding alleged
misconduct in the Pope divorce matter, finding insufficient proof.
The Panel concluded the aggravating circumstances applicable were (1) prior
professional discipline of Ms. Reguli;12 (2) Ms. Reguli‟s bad faith failure to respond to
requests for information by the Board; (3) dishonest or selfish motives of Ms. Reguli;
(4) Ms. Reguli‟s refusal to recognize the wrongful nature of her conduct; and (5) Ms.
Reguli‟s substantial experience in the practice of law.13 The Panel found Ms. Reguli‟s
cancer and chemotherapy treatments during the period of her misconduct to be a
mitigating circumstance.
(d) A lawyer who is discharged by a client, or withdraws from representation of a
client, shall, to the extent reasonably practicable, take steps to protect the client‟s
interests. Depending on the circumstances, protecting the client‟s interests may
include: . . . (4) promptly surrendering papers and property to which the client is entitled
and any work product prepared by the lawyer for the client and for which the lawyer has
been compensated . . . and (6) promptly refunding any advance payment of fees that have
not been earned or expenses that have not been incurred.
9
RPC 8.1 states, in pertinent part:
An applicant for admission to the bar, or a lawyer in connection with a bar
admission application or in connection with a disciplinary matter, shall not:
....
(b) fail to disclose a fact necessary to correct a misapprehension known by the
person to have arisen in the matter, or knowingly fail to respond to a lawful demand for
information from an admissions or disciplinary authority, except that this Rule does not
require disclosure of information otherwise protected by RPC 1.6.
10
RPC 8.4 states, in pertinent parts:
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the Rules of Professional Conduct, knowingly
assist or induce another to do so, or do so through the acts of another;
....
(d) engage in conduct that is prejudicial to the administration of justice[.]
11
RPC 7.4(b) states, in pertinent part, “[A] lawyer shall not state that the lawyer is a specialist,
specializes, or is certified or recognized as a specialist in a particular field of law.”
12
In 2011, Ms. Reguli received a public censure for professional misconduct.
13
Ms. Reguli has been licensed to practice law in Tennessee since 1994.
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The Panel imposed an eleven month, twenty-nine day suspension, to be served on
probation subject to certain conditions. The probation conditions required Ms. Reguli to
practice subject to extensive supervision of a probation monitor pursuant to Tennessee
Supreme Court Rule 9, section 8.5, participate in an evaluation by the Tennessee Lawyer
Assistance Program (“TLAP”), and comply with any monitoring requirement TLAP
deemed necessary. The Panel did not order Ms. Reguli to pay restitution to Mr.
Castleman. Both parties appealed the Panel‟s decision.
Following a review of the record and a hearing where no new evidence was
introduced, the trial court affirmed the Panel‟s findings but modified its sanctions by
(1) reducing Ms. Reguli‟s eleven month, twenty-nine day suspension to sixty days, all of
which the court suspended with no active time served; (2) placing Ms. Reguli on
probation for one year subject to supervision of a probation monitor; (3) requiring Ms.
Reguli to serve a six-month active suspension should she violate the terms of her
probation; (4) reducing the scope of the probation monitor‟s supervision of Ms. Reguli‟s
law practice; (5) eliminating the Panel‟s requirement that Ms. Reguli undergo a TLAP
evaluation; and (6) ordering Ms. Reguli to pay restitution to Mr. Castleman in the amount
of $7,800, with the condition that if she pays the restitution within six months, some of
her monitoring requirements will be eliminated. Both Ms. Reguli and the Board appealed
to this Court.
III.
“The Supreme Court of Tennessee is the source of authority of the Board of
Professional Responsibility and all its functions.” Mabry v. Bd. of Prof’l Responsibility,
458 S.W.3d 900, 903 (Tenn. 2014) (citing Brown v. Bd. of Prof’l Responsibility, 29
S.W.3d 445, 449 (Tenn. 2000)). We have the duty to regulate the practice of law and to
enforce the rules of the legal profession. Id. (citing Doe v. Bd. of Prof’l Responsibility,
104 S.W.3d 465, 470 (Tenn. 2003)). “In furtherance of this duty, we have established a
system where attorneys charged with disciplinary violations have a right to an evidentiary
hearing before a hearing panel, which must determine the disciplinary penalty.” Bd. of
Prof’l Responsibility v. Cowan, 388 S.W.3d 264, 267 (Tenn. 2012) (citing Tenn. Sup. Ct.
R. 9, § 8.2). “We review [hearing panel] judgments under our „inherent power and
essential and fundamental right to administer the rules pertaining to the licensing of
attorneys.‟” Mabry, 458 S.W.3d at 903 (quoting Skouteris v. Bd. of Prof’l Responsibility,
430 S.W.3d 359, 362 (Tenn. 2014)).
When reviewing the decision of a disciplinary hearing panel, we employ the same
standard of review as the trial court. Moncier v. Bd. of Prof’l Responsibility, 406 S.W.3d
139, 150 (Tenn. 2013) (citing Cowan, 388 S.W.3d at 267). Accordingly, we will reverse
or modify the decision of a hearing panel only if
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the rights of the petitioner have been prejudiced because the panel‟s
findings, inferences, conclusions or decisions are: (1) in violation of
constitutional or statutory provisions; (2) in excess of the panel‟s
jurisdiction; (3) made upon unlawful procedure; (4) arbitrary or capricious
or characterized by abuse of discretion or clearly unwarranted exercise of
discretion; or (5) unsupported by evidence which is both substantial and
material in the light of the entire record.
Tenn. Sup. Ct. R. 9, § 1.3. We do not substitute our judgment for that of the hearing
panel as to the weight of the evidence or questions of fact. Bd. of Prof’l Responsibility v.
Allison, 284 S.W.3d 316, 323 (Tenn. 2009) (citing Bd. of Prof’l Responsibility v. Love,
256 S.W.3d 644, 653 (Tenn. 2008)). We review questions of law de novo with no
presumption of correctness. Cowan, 388 S.W.3d at 267 (citing Sneed v. Bd. of Prof’l
Responsibility, 301 S.W.3d 603, 612 (Tenn. 2010)).
The issues Ms. Reguli raises for our review are (1) whether the Panel‟s findings
are void because the Panel Chair exceeded his authority; (2) whether the Panel erred in
denying Ms. Reguli‟s disclosure requests regarding the Board‟s
panel-member-appointment process and whether the Board‟s appointment procedure is
unlawful; (3) whether the Panel erred in declining to disqualify Ms. Hodges; (4) whether
the Panel‟s findings of fact and conclusions of law were arbitrary and capricious,
characterized by an abuse of discretion, or unsupported by substantial and material
evidence; (5) whether the imposition of probation and restitution was arbitrary and
capricious or inconsistent with American Bar Association (“ABA”) standards; and
(6) whether Tennessee‟s attorney disciplinary system is unconstitutional. The Board
raises a single issue—whether the trial court erred by modifying the Panel‟s probationary
period and requirements.
Ms. Reguli contends that the Panel‟s findings are void because the Panel Chair
acted unilaterally and outside his scope of authority. In support of this contention, Ms.
Reguli presents arguments that the Chair (1) made unilateral evidentiary rulings;
(2) abused his discretion in evidentiary rulings; (3) made rude and derogatory prejudicial
remarks; and (4) signed the judgment form for the other Panel members.
Ms. Reguli‟s claim as to the actions of the Panel Chair is without merit.
Tennessee Supreme Court Rule 9, section 5.5(b) allows the Board to adopt written
guidelines, subject to approval by this Court, to ensure efficient and timely disciplinary
proceedings. Under the guidelines applicable to Ms. Reguli‟s proceeding, the Panel
Chair had the authority to rule on evidentiary issues with the advice and consent of the
other Panel members. Policies and Rules of the Board of Professional Responsibility of
the Supreme Court of Tennessee, § 2.5, adopted December 14, 2012, available at
https://www.yumpu.com/en/document/view/27067404/policies-and-rules-of-the-board-of
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-professional-responsibility/3 (“The Chair of the hearing panel will preside at the hearing
and with the advice and consent of the other members of the hearing panel will rule on all
issues of law, evidence and procedure arising during the hearing.”). The record
demonstrates that the other Panel members were actively engaged in the proceeding,
including evidentiary rulings. The Panel members had the opportunity to fully
participate. We conclude that the Panel Chair acted appropriately within the bounds of
his authority.
Ms. Reguli further contends that a number of the Panel Chair‟s evidentiary rulings
constitute abuses of discretion. A Panel abuses its discretion by “appl[ying] an incorrect
legal standard, or reach[ing] a decision which is against logic or reasoning that causes an
injustice to the party complaining.” Sallee v. Bd. of Prof’l Responsibility, 469 S.W.3d 18,
42 (Tenn. 2015) (quoting Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)) (internal
quotation marks omitted). This is a deferential standard of review, Sanford v. Waugh &
Co., 328 S.W.3d 836, 847 (Tenn. 2010) (citing Biscan v. Brown, 160 S.W.3d 462, 468
(Tenn. 2005)), and we will uphold the Panel‟s rulings “so long as reasonable minds can
disagree as to propriety of the decision[s] made[,]” Sallee, 469 S.W.3d at 42 (quoting
State v. Scott, 33 S.W.3d 746, 752 (Tenn. 2000); State v. Gilliland, 22 S.W.3d 266, 273
(Tenn. 2000)) (internal quotation mark omitted). As the party challenging the rulings,
Ms. Reguli has the burden to show the Panel abused its discretion. Ballard v. Herzke,
924 S.W.2d 652, 659 (Tenn. 1996) (citing Rachels v. Steele, 633 S.W.2d 473, 475 (Tenn.
Ct. App. 1981)). Upon review of the record, we conclude that Ms. Reguli has failed to
show that the Panel or its Chair abused its discretion regarding evidentiary rulings.
As for Ms. Reguli‟s claim that the Panel Chair made rude and derogatory
prejudicial remarks, our review of the record finds no indication that the Panel Chair
acted inappropriately. The Panel Chair was engaged and questioned Ms. Reguli as a
witness and an advocate. The Tennessee Rules of Evidence apply to attorney disciplinary
proceedings, Tenn. Sup. Ct. R. 9, § 23.3, and Tennessee Rule of Evidence 614 allows the
Panel to interrogate witnesses. By choosing to represent herself in this proceeding, Ms.
Reguli submitted herself to questioning from the Panel, both as a witness and as an
advocate. The Panel Chair had the authority to limit testimony or arguments that were
repetitive. The Panel Chair was balanced in his rulings and sometimes ruled in Ms.
Reguli‟s favor on evidentiary objections. We conclude that the Panel Chair‟s rulings and
conduct were reasonable and not an abuse of discretion.
Next, Ms. Reguli argues that the Panel Chair exceeded his authority by signing the
order for the other Panel members. Ms. Reguli offered no evidence that the Panel Chair
signed on behalf of the other Panel members without their permission or their knowledge.
This argument has no merit.
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In her second issue, Ms. Reguli asserts that the Panel erred in failing to allow
discovery on the appointment of Panel members on a “rotating basis,” as required by
Tennessee Supreme Court Rule 9, section 8.2. Ms. Reguli filed a “Demand for
Compliance on Hearing Panel Appointment,” requesting certain documents be provided
to her. At a hearing on June 4, 2013, the Panel took the demand under advisement. The
matter proceeded to trial in November 2013 without a ruling on the demand. Ms. Reguli
did not pursue it further. There is no decision from which to appeal, and Ms. Reguli,
therefore, waived appellate review. See Nashville, Chattanooga & St. Louis Ry. v. Hayes,
99 S.W. 362, 366 (Tenn. 1907) (“It is the duty of the litigant . . . to invoke the action of
the lower court upon [his or her respective] motions, and, failing to do so, . . . will not
[b]e heard to complain in this court . . . .”); see also State ex rel. Jones v. Looper, 86
S.W.3d 189, 202 (Tenn. Ct. App. 2000); Kendricks v. State, 13 S.W.3d 401, 403 (Tenn.
Crim. App. 1999).
Ms. Reguli argues that the Panel‟s decision is unlawful and should be vacated
because Panel members were selected based on a “random” selection process as opposed
to a “rotating” selection process. Tennessee Supreme Court Rule 9, section 6.4 provides
that panel members are to be selected from district committee members in accordance
with Tennessee Supreme Court Rule 9, section 8.2. In response, the Board contends that
no functional difference exists between a random or a rotating panel member selection
process due to the many reasons members may turn down appointments. The Board
argues that district committee members serve voluntarily and can turn down an
appointment for any reason. Additionally, the Board cites Tennessee Supreme Court
Rule 9, section 6.5, which precludes district committee members from serving on a panel
if “a judge, similarly situated, would have to recuse himself or herself.” Ms. Reguli‟s
challenge to the selection process is without merit. The trial court may hear additional
proof to resolve allegations of procedural irregularity before a hearing panel. Tenn. Sup.
Ct. R. 9, § 1.3. Ms. Reguli did not present proof of an irregular procedure to the trial
court, nor are the documents she references in her brief part of the evidentiary record
before this Court. Even if there was evidence in the record showing that the Board
appointed the Panel members on a “random” basis, this would not warrant vacating the
Panel‟s decision. No substantial right is implicated by the use of a “random” selection
process as opposed to a “rotating” process, and we agree with the Board that no
meaningful difference exists between the two. We find no error in the manner in which
Panel members were selected nor any unlawful procedure.
The day before oral argument before this Court, Ms. Reguli filed a document
alleging unlawful procedure in the trial court. Specifically, Ms. Reguli relies on a
transcript of a telephone message that the trial judge, while connected to Ms. Reguli via
telephone, left on Ms. Hodges‟ voice mail. The message concerned a post-judgment
motion the Board filed in the trial court seeking modification of the trial court‟s sanction.
The trial judge orally denied the Board‟s motion and noted that he had discussed the
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Board‟s motion with the Panel Chair. Ms. Reguli objects to the trial judge‟s
communication with the Panel Chair. The trial judge disclosed the communication as he
denied the Board‟s motion. We find no error, and even if there was error, there is no
showing that this communication more probably than not affected the final judgment of
the trial court or that Ms. Reguli was prejudiced. See Tenn. R. App. P. 36(b).
Ms. Reguli next contends that the Panel erred in failing to disqualify Ms. Hodges
because Ms. Hodges sent an e-mail to members of the Disciplinary Counsel‟s office
informing them that Ms. Reguli had cancer. In response to the e-mail, Nancy Jones,
Chief Disciplinary Counsel, sent Ms. Reguli a letter expressing Ms. Jones‟ condolences
and suggesting that Ms. Reguli consider whether disability inactive status of her law
license would be appropriate. Ms. Reguli argues that Disciplinary Counsel are held to the
same ethical standards that apply to prosecutors in criminal proceedings. In criminal
proceedings, a conflict of interest can disqualify a prosecutor where circumstances exist
which render the prosecutor incapable of “exercis[ing] his or her independent
professional judgment free of „compromising interests and loyalties.‟” State v.
Culbreath, 30 S.W.3d 309, 312 (Tenn. 2000) (citation omitted). An appearance of a
conflict of interest may also require disqualification. Id. at 313. The determination of
whether to disqualify an attorney is within the discretion of the trial court, and review is
under an abuse of discretion standard. Id. We need not decide if Disciplinary Counsel is
held to the same ethical standards that apply to prosecutors in criminal proceedings.
Even if so, the circumstances here fail to show an actual or the appearance of a
disqualifying interest of Ms. Hodges. Ms. Hodges‟ e-mail does not indicate any
malicious intent or improper purpose. The letter from Ms. Jones fails to demonstrate any
disqualifying interest of Ms. Hodges. Instead, the letter represents only an expression of
concern regarding Ms. Reguli‟s health. Ms. Reguli‟s illness was a relevant consideration
because an illness can justify delaying a disciplinary proceeding and can make disability
inactive status appropriate for that attorney. Tenn. Sup. Ct. R. 9, § 21.3. Illness can
likewise be a mitigating factor in determining an appropriate disciplinary sanction under
the ABA Standards for Imposing Lawyer Sanctions (“ABA Standards”). ABA Standard
9.32. The Panel did not abuse its discretion in declining to disqualify Ms. Hodges.
Ms. Reguli next contends that the Panel‟s findings of fact and conclusions of law
were arbitrary and capricious, an abuse of discretion, or unsupported by substantial and
material evidence. A decision that lacks substantial and material evidentiary support is
arbitrary and capricious. Allison, 284 S.W.3d at 322. Evidence is sufficient to support a
factual finding “if it furnishes a reasonably sound factual basis for the decision being
reviewed.” Id. (quoting City of Memphis v. Civil Serv. Comm’n of Memphis, 216 S.W.3d
311, 316-17 (Tenn. 2007)) (internal quotation marks omitted). This “has . . . been
described as requiring „something less than a preponderance of the evidence . . . but more
than a scintilla or glimmer.‟” Id. at 322-23 (quoting Jones v. Bureau of TennCare, 94
S.W.3d 495, 501 (Tenn. Ct. App. 2002)). Like the trial court, this Court must not
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substitute its judgment for that of the Panel. Id. at 323. Nor will we re-weigh the
evidence before the Panel, as the Panel “is uniquely suited to make credibility
determinations of witnesses.” Long v. Bd. of Prof’l Responsibility, 435 S.W.3d 174, 181
(Tenn. 2014) (quoting Culp v. Bd. of Prof’l Responsibility, 407 S.W.3d 201, 208 (Tenn.
2013)) (internal quotation marks omitted). Thus, we defer to the Panel‟s witness
credibility determinations. Id.
With respect to the complaint regarding the Castleman fee, there was material and
substantial evidence to support the Panel‟s findings that Ms. Reguli violated RPC
1.4(a)(4), which requires an attorney to promptly comply with reasonable requests for
information. There was proof that Ms. Reguli failed to respond to Mr. Castleman‟s
requests for information about an accounting and refund of the fee he paid. Ms. Reguli
testified she sent Mr. Castleman an accounting; he said he did not receive one. We defer
to the Panel‟s finding that it was “highly unlikely” that Ms. Reguli ever sent Mr.
Castleman an accounting. RPC 1.4(b) requires an attorney to explain a matter to a client
to the extent reasonably necessary for the client to make an informed decision about the
representation. The proof indicated Ms. Reguli failed to fully and adequately explain to
Mr. Castleman her understanding of the fee agreement.
There was also substantial and material evidence that Ms. Reguli failed to return
unearned fees pursuant to RPC 1.16(d)(6). The fee agreement signed by Mr. Castleman
did not provide for a nonrefundable fee. Ms. Reguli retained the unearned fee and failed
to refund the balance to Mr. Castleman. The term “retainer” is often used to describe
three variations of fee arrangements. See Douglas R. Richmond, Understanding
Retainers and Flat Fees, 34 J. Legal Prof. 113, 114-18 (2009). One type of retainer is the
general retainer, sometimes called a “true” or “classic” retainer. Id. at 114. This fee
merely ensures a lawyer‟s availability to a client. Id. at 114-15. The client must pay the
lawyer additional fees for actual legal services performed by the lawyer should the client
wish to employ the lawyer for a particular matter. Id. at 115. The Tennessee Rules of
Professional Conduct recognize that general retainer fees are earned upon receipt,
assuming the lawyer remains available to serve the client. Tenn. Sup. Ct. R. 8, RPC 1.5
cmt. 4a. Because this fee is earned upon receipt, the fee should not be placed in a client
trust account, as the fee becomes the lawyer‟s property. See Tenn. Sup. Ct. R. 8, RPC
1.15 cmt. 10. Another type of retainer is the “advance fee retainer,” which “is a present
payment to a lawyer as compensation for the provision of specified legal services in the
future.” Richmond, supra, at 118. This fee is intended to compensate the lawyer for all
work to be done on a matter, and is more commonly known as a “fixed” or “flat” fee. Id.
(emphasis added). This fee is also earned upon receipt, assuming the lawyer is available
to perform the services. Tenn. Sup. Ct. R. 8, RPC 1.5 cmt. 4a. Accordingly, an earned
fixed fee should not be placed in a client trust account. Tenn. Sup. Ct. R. 8, RPC 1.15
cmt. 10. A remaining retainer fee is the “security retainer,” which “is intended to secure
the client‟s payment of fees for future services that the lawyer is expected to perform.”
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Richmond, supra, at 116. A “lawyer who collects a security retainer draws it down
pursuant to an agreed hourly rate as the lawyer earns the fees by performing legal
services for the client.” Id. at 117. Retainer funds paid pursuant to a security retainer
agreement “remain the client‟s property until the lawyer applies them to charges for
services that are actually performed.” Id. Thus, a lawyer must initially place such fees
into a client trust account and only withdraw the fees as the lawyer earns them. Tenn.
Sup. Ct. R. 8, RPC 1.15 cmt. 10. Any portion of such a fee not earned by the lawyer
upon termination of the lawyer‟s representation must be returned to the client pursuant to
RPC 1.16(d)(6). See also Tenn. Sup. Ct. R. 8, RPC 1.5 cmt. 4; Tenn. Sup. Ct. R. 8, RPC
1.15 cmt. 10.
As shown by the fee agreement, the fee Mr. Castleman paid to Ms. Reguli was not
earned upon receipt by Ms. Reguli. The fee agreement provided that the fee would be
held in escrow and Ms. Reguli‟s hourly fees would be charged against the retainer. The
payment therefore was considered as security to ensure payment for legal services to be
provided in the future and not merely to assure Ms. Reguli‟s availability. Accordingly,
the $10,000 was not a general retainer earned by Ms. Reguli upon receipt. See
Richmond, supra, at 114; Tenn. Sup. Ct. R. 8, RPC 1.5 cmt. 4a. The fee agreement
additionally provided that once the full amount of the retainer had been used for legal
services, an additional retainer would be required, depending on the status of the case.
This language clearly precludes the possibility that the $10,000 was a “fixed fee” earned
by Ms. Reguli upon receipt. See Richmond, supra, at 118; Tenn. Sup. Ct. R. 8, RPC 1.5
cmt. 4a.
Ms. Reguli admitted that she did not refund any part of the $10,000, which was in
excess of the fees for which she billed Mr. Castleman. Ms. Reguli had an ethical duty to
return the unearned portion of the fee when Mr. Castleman terminated her services.
Tenn. Sup. Ct. R. 8, RPC 1.16(d)(6). There was substantial and material evidence to
support the Panel‟s finding that Ms. Reguli violated RPC 1.16(d)(6).
Ms. Reguli maintains that the fee she collected from Mr. Castleman was a
nonrefundable fee. However, RPC 1.5(f) requires “[a] fee that is nonrefundable in whole
or in part [to] be agreed to in a writing, signed by the client, that explains the intent of the
parties as to the nature and amount of the nonrefundable fee.” The fee agreement was in
writing and signed by Mr. Castleman, but failed to adequately explain that it was
nonrefundable. The reference in the fee agreement that the funds would be returned “at
the discretion of the firm” is inadequate to make it clear that the fee was nonrefundable.
Cf. In re Disciplinary Proceeding Against Van Camp, 257 P.3d 599, 612 (Wash. 2011)
(holding that attorney could not justify contention that he charged a “flat fee” where his
“fee agreement contain[ed] both [an] „earned retainer‟ phrase and listed hourly rates,
which suggest[ed] that hourly rates may be charged against the „earned retainer‟
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amount”). Accordingly, there was substantial and material evidence to support the
Panel‟s finding that Ms. Reguli violated RPC 1.5(f).
Ms. Reguli admitted that she never provided the Board, as requested, with an
accounting of her time on the Castleman matter. This supports the Panel‟s finding that
she violated RPC 8.1(b), which prohibits an attorney from knowingly failing to respond
to a lawful demand for information from a disciplinary authority. The various violations
described above also support the Panel‟s finding that Ms. Reguli violated RPC 8.4(a) and
(d), which prohibit an attorney from violating any rule of professional conduct and
engaging in conduct prejudicial to the administration of justice.
With respect to the complaint about her website, it is undisputed that Ms. Reguli‟s
website represented her as having “Certification/Specialties” in “Family Law[,] Divorce.”
Ms. Reguli admitted she was not certified as a specialist in any field of law. This is
substantial and material evidence to support the Panel‟s finding that she violated RPC
7.4(b). Even though Ms. Reguli may not have provided the false information to her
website company, she is responsible for the contents of her website. Attorney advertising
includes all potential ways in which attorneys can communicate information about their
services to the public, including communication through websites. See Tenn. Sup. Ct. R.
8, RPC 7.2 cmt. 1 (“The Rule [on advertising] encompasses all possible media through
which such communications may be directed to the public.”). Whether websites are
maintained by the attorney or a third party, the attorney has the ultimate responsibility for
monitoring and reviewing the advertisement to ensure compliance with ethical rules. See
In re Hyderally, 32 A.3d 1117, 1122 (N.J. 2011) (dictum) (“Whether a website is created
by an outside consultant or developed and maintained by an attorney or his or her staff,
all language and design that appears on it should be reviewed frequently for compliance
with . . . all Rules of Professional Conduct.”); cf. In re Anonymous, 689 N.E.2d 434, 435
(Ind. 1997) (disciplining attorney for misleading advertising even though communication
of misleading information was “unintentional”); Columbus Bar Ass’n v. Dugan, 865
N.E.2d 895, 897-98 (Ohio. 2007) (disciplining attorney in part for improper statements
on the attorney‟s website entered by the attorney‟s secretary without the attorney‟s
consultation). Ms. Reguli bears the responsibility for the misrepresentation on her
website. Accordingly, the Panel‟s finding that she violated RPC 7.4(b) was supported by
substantial and material evidence.
Ms. Reguli next contends that the imposition of suspension and probation in this
case was arbitrary and capricious or inconsistent with the ABA Standards. Specifically,
Ms. Reguli challenges the trial court‟s modification of the sanctions because the trial
court did not reference the ABA Standards as required by Tennessee Supreme Court Rule
9, section 8.4. The Board contends in its sole issue that the trial court correctly modified
the Panel‟s sanction by requiring Ms. Reguli to pay restitution, but otherwise erred in
modifying the Panel‟s suspension and probation conditions. The Board argues that
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(1) the trial court‟s modified sanction of a sixty-day suspension (all of which is to be
suspended with no active time served), coupled with a one-year probationary period,
effectively and inappropriately imposes two suspensions at the same time; (2) the trial
court erred by preemptively determining the length of active suspension should Ms.
Reguli fail to meet her probation conditions; (3) the trial court‟s decision to eliminate the
Panel‟s TLAP evaluation condition is arbitrary and capricious; and (4) the trial court had
an insufficient basis to modify the responsibilities of the probation monitor.
When determining the level of discipline to impose upon an attorney for
misconduct, a hearing panel must consider relevant provisions of the ABA Standards.
Tenn. Sup. Ct. R. 9, § 8.4. The ABA Standards represent “guideposts,” as opposed to
bright-line rules when determining sanctions for professional misconduct. Bailey v. Bd.
Prof’l Responsibility, 441 S.W.3d 223, 232 (Tenn. 2014). The ABA Standards provide
that when imposing a sanction, a court should consider “[(1)] the duty violated; [(2)] the
lawyer‟s mental state; [(3)] the potential or actual injury caused by the lawyer‟s
misconduct; and [(4)] the existence of aggravating or mitigating factors.” ABA Standard
3.0. Aggravating factors include prior discipline, a dishonest or selfish motive, a pattern
of misconduct, multiple offenses, bad faith obstruction of disciplinary proceedings,
refusal to acknowledge the wrongful nature of conduct, and substantial experience in the
practice of law. ABA Standard 9.22. Mitigating factors include personal or emotional
problems. ABA Standard 9.32. When reviewing disciplinary sanctions, this Court
reviews comparable cases to ensure consistency in discipline. Bailey, 441 S.W.3d at 236.
The Panel properly considered the factors in ABA Standard 3.0 when determining
Ms. Reguli‟s sanction. The Panel appropriately made findings of five aggravating factors
and a single mitigating factor, all of which are supported by the record. Taking these
considerations into account, the Panel properly imposed an eleven month, twenty-nine
day suspension, to be served on probation subject to various conditions.
The trial court correctly determined that the Panel‟s failure to order Ms. Reguli to
pay restitution was arbitrary. The Panel made a specific factual finding that Ms. Reguli
charged Mr. Castleman an unreasonable fee based on the work Ms. Reguli performed and
that Ms. Reguli failed to refund the unearned portion of the fee. Tennessee Supreme
Court Rule 9, section 4.7 provides for restitution when a lawyer‟s misconduct financially
injures a person or entity. ABA Standard 2.8 also provides for restitution. As the trial
court noted, unless Ms. Reguli makes restitution to Mr. Castleman, she will gain a
windfall at the expense of Mr. Castleman. Accordingly, the trial court‟s modification of
the Panel‟s sanction requiring Ms. Reguli to make restitution to Mr. Castleman in the
amount of $7,800 was proper.
However, the trial court erred in modifying the rest of the Panel‟s sanction. First,
the trial court erred in eliminating the Panel‟s probation condition that Ms. Reguli
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undergo a TLAP evaluation by determining that the requirement was not necessary. The
trial court did not see or hear Ms. Reguli testify at the hearing. The Panel‟s judgment
reflected that it “saw evidence” during the hearing that a TLAP evaluation was
warranted. In eliminating the TLAP evaluation, the trial court impermissibly substituted
its judgment for that of the Panel. See Mabry, 458 S.W.3d at 903 (noting that a trial court
must refrain from substituting its judgment for that of a hearing panel as to the weight of
evidence). In the same manner, the trial court impermissibly substituted its judgment for
the Panel in reducing the scope of the probation monitor‟s supervision of Ms. Reguli14
and by restructuring the Panel‟s eleven month, twenty-nine day suspension. The Panel
properly considered the ABA Standards, including making findings of aggravating and
mitigating factors. Accordingly, the Panel acted appropriately in imposing its sanction,
aside from its failure to provide for restitution.
A review of comparable cases demonstrates that the Panel‟s eleven month,
twenty-nine day suspension to be served on probation, coupled with the trial court‟s order
of restitution, is consistent with sanctions ordered in other cases. See Sallee, 469 S.W.3d
at 40-41 (upholding a one-year suspension where attorney charged an unreasonable fee,
failed to inform clients of inaccurate fee estimate, and refused to recognize wrongful
nature of conduct); Threadgill v. Bd. of Prof’l Responsibility, 299 S.W.3d 792, 799-800,
810 (Tenn. 2009) (affirming a one-year suspension where attorney failed to deliver
accounting to client, among other ethical violations), overruled on other grounds by
Lockett v. Bd. of Prof’l Responsibility, 380 S.W.3d 19, 27-28 (Tenn. 2012); see also
People v. Weisbard, 35 P.3d 498, 509 (Colo. 2000) (ordering an eighteen-month
suspension where attorney refused to account and refund unearned funds, failed to return
client calls for extended period of time, and committed other violations); In re Schmidt,
130 So. 3d 908, 910, 913 (La. 2013) (one-year and a day suspension imposed, along with
requirement that attorney resolve fee disputes with clients, where attorney failed to
provide an accounting, refund unearned funds, and cooperate with disciplinary authority).
The Panel‟s original sanction is reinstated, along with the additional requirement that Ms.
Reguli pay Mr. Castleman restitution in the amount of $7,800.
Finally, Ms. Reguli contends that Tennessee‟s attorney discipline system is
unconstitutional for several reasons. Ms. Reguli first contends that the preponderance-of-
the-evidence standard in attorney disciplinary proceedings is unconstitutional. She
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The Panel‟s decision provided that Ms. Reguli must employ and meet with a probation monitor
on a monthly basis to review her billing practices, including review of her fee arrangements and of any
refunds due to clients in the case of termination or conclusion of services. Additionally, the Panel‟s
decision required Ms. Reguli to inform her practice monitor of any complaint by attorneys or judges
regarding pleadings drafted by Ms. Reguli. The probation monitor was required to provide monthly
reports of Ms. Reguli‟s compliance to the Board. In contrast, the trial court‟s probation monitor
requirement provided that the practice monitor review all engagement letters and fee agreements or
contracts to ensure compliance with the Rules of Professional Conduct.
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argues that due process demands a standard of proof at least as stringent as the clear and
convincing evidence standard. Ms. Reguli also argues that the combined investigative,
enforcement, and adjudicative functions of the Board violate due process. Ms. Reguli‟s
various remaining arguments allege that the Board is an unconstitutional body because of
the financial interests of its members in the outcome of disciplinary proceedings and that
the system otherwise lacks adequate due process safeguards.
We foreclosed each of these arguments in our recent holding in Walwyn v. Board
of Professional Responsibility, No. M2015-00565-SC-R3-BP, 2015 WL 7770161 (Tenn.
Dec. 3, 2015). There, we held the preponderance-of-evidence standard of proof in
attorney disciplinary proceedings is constitutional. Id. at *15. We addressed Ms.
Reguli‟s further arguments by reaffirming our previous holdings in Long, 435 S.W.3d at
186-88, and Moncier, 406 S.W.3d at 156. Walwyn, 2015 WL 7770161, at *16. In Long,
we held that because the Board‟s multiple responsibilities “are functionally separate
within the Board, Rule 9 does not violate due process principles.” 435 S.W.3d at 187.
We also noted in Long that Panel members “receive no compensation, other than
reimbursement for travel expenses, for sitting as the adjudicatory body in a disciplinary
matter.” Id. at 188. Further, in Moncier, we highlighted the extensive procedural
protections Tennessee‟s attorney discipline system affords attorneys. 406 S.W.3d at 156.
Ms. Reguli‟s constitutional objections lack merit.
Ms. Reguli has submitted as supplemental authority North Carolina Board of
Dental Examiners v. F.T.C., ___ U.S. ___, 135 S. Ct. 1101 (2015), in support of her
claim that Tennessee‟s attorney discipline system is unconstitutional and violative of
antitrust laws. The North Carolina Board of Dental Examiners decision does not support
her constitutional claims. Ms. Reguli did not raise issues of antitrust violations before the
trial court or the Panel. Any such claim is now waived.
IV.
The Panel‟s findings of fact and conclusions of law are affirmed. The Panel‟s
sanction is reinstated, with the additional requirement that Ms. Reguli make restitution to
Mr. Castleman in the amount of $7,800. Accordingly, Ms. Reguli is suspended from the
practice of law in Tennessee for eleven months and twenty-nine days, all of which Ms.
Reguli may serve on probation subject to the conditions that Ms. Reguli (1) pay
restitution to Mr. Castleman in the amount of $7,800; (2) submit to a probation monitor
in accordance with the Panel‟s judgment; and (3) submit to an evaluation by
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TLAP and comply with any monitoring requirement TLAP deems necessary. Costs of
this appeal are taxed to Connie Reguli and her surety, for which execution may issue if
necessary.
_________________________________
SHARON G. LEE, CHIEF JUSTICE
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