Last week, the DC Circuit Court of Appeals found that a conflict of interest required an attorney to pay back attorney fees. In So v. Suchanek, the client alleged legal malpractice, breach of contract, and breach of fiduciary duty. The appellate court held that the breach of fiduciary duty required repayment of attorney fees, even more than the $456,000 that the trial court awarded the client.
The client, Mr. So got burned in a Ponzi scheme to the tune of $30 million by Land Base LLC. The attorney, Mr. Suchanek, had provided an opinion to Land Base that its operations were lawful and any claim to the contrary was frivolous. Yet, Suchanek felt he could oversee worldwide litigation to try to help Mr. So. Attorney Suchanek did not appear in court. Instead, he hired the lawyers, and paid himself $1 million. By the way, Suchanek also represented Mr. So's business agent, the woman who invested So's money into the Ponzi scheme.
See any conflict of interest here?
The trial court saw some. It found that the attorney breached his fiduciary duty to the client because the attorney violated the rules of professional conduct that prohibit conflicts of interests. The trial court found breaches during two particular periods of time, and it ordered pay back of $400,000 plus interest.
The Court of Appeals found that attorney violated the conflict of interest rules from the beginning. It ordered the trial court to reconsider the facts and require the attorney to return more money, perhaps the entire $1 million Suchanek paid himself.
Jeff Merrick, Oregon Trial Attorney
503-665-4234
