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Full Opinion
2014 WI 114
SUPREME COURT OF WISCONSIN
CASE NO.: 2013AP1439-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against
Carl H. Creedy, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Carl H. Creedy,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST CREEDY
OPINION FILED: October 14, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2014 WI 114
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2013AP1439-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Carl H. Creedy, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant,
OCT 14, 2014
v.
Diane M. Fremgen
Clerk of Supreme Court
Carl H. Creedy,
Respondent.
ATTORNEY disciplinary proceeding. Attorney publicly
reprimanded.
¶1 PER CURIAM. Pending before the court is the report
of referee James W. Mohr, Jr., rendered following a hearing and
receipt of a stipulation filed after the respondent, Attorney
Carl H. Creedy, opted to plead no contest pursuant to Supreme
Court Rule (SCR) 22.14.1 The referee recommends that this court
1
SCR 22.14(2) states:
The respondent may by answer plead no contest to
allegations of misconduct in the complaint. The
(continued)
No. 2013AP1439-D
publicly reprimand Attorney Creedy for professional misconduct.
No appeal has been filed so we review this matter pursuant to
SCR 22.17(2).2 We also consider Attorney Creedy's objection to
the request by the Office of Lawyer Regulation (OLR) for
imposition of full costs, which total $17,801.64 as of May 21,
2014. See SCR 22.24.
¶2 We approve and adopt the referee's findings and
conclusions and we agree that a public reprimand is sufficient
discipline for Attorney Creedy's misconduct. We further order
that Attorney Creedy pay one-half the costs of this disciplinary
proceeding. Restitution is not an issue in this matter.
¶3 Attorney Creedy was admitted to the practice of law in
Wisconsin in 1980. He practiced law in Orfordville, Wisconsin
at the time of the filing of the complaint, and now practices in
Janesville, Wisconsin. He has no previous disciplinary history.
referee shall make a determination of misconduct in
respect to each allegation to which no contest is
pleaded and for which the referee finds an adequate
factual basis in the record. In a subsequent
disciplinary or reinstatement proceeding, it shall be
conclusively presumed that the respondent engaged in
the misconduct determined on the basis of a no contest
plea.
2
SCR 22.17(2) states:
If no appeal is filed timely, the supreme court
shall review the referee's report; adopt, reject or
modify the referee's findings and conclusions or
remand the matter to the referee for additional
findings; and determine and impose appropriate
discipline. The court, on its own motion, may order
the parties to file briefs in the matter.
2
No. 2013AP1439-D
¶4 Most of the allegations in the OLR's complaint involve
Attorney Creedy's business relationship with a client named
Joseph Murphy. Murphy, who is not an attorney, created a
company called American Disability Entitlements LLC, intended to
represent claimants in Social Security disability matters.
Social Security laws and procedures permit nonlawyers to
represent such claimants. Murphy learned that if an attorney
provides similar services, the attorney can have fees paid
directly to the attorney by the Social Security Administration
out of any award. Murphy approached Attorney Creedy to see if
they could work together representing disability claimants in
order to ensure receipt of any fees.
¶5 Murphy and Attorney Creedy both represented claimants
before the Social Security Administration. They would discuss
and mutually agree upon a fair division of fees. They did not
have a written agreement.
¶6 Murphy was routinely accepting unlawful fee advances,
a practice prohibited by applicable Social Security rules and
procedures. The parties disputed whether Attorney Creedy knew
that Murphy was routinely accepting unlawful fee advances.
¶7 Attorney Creedy maintained that he first learned this
was occurring in March of 2010, when an attorney representing a
claimant advised Attorney Creedy that the claimant had been
improperly assessed two fees: one paid by the claimant directly
to Murphy, and another later paid to Attorney Creedy by the
Social Security Administration. Upon receiving and confirming
this information, Attorney Creedy promptly refunded one set of
3
No. 2013AP1439-D
fees to the claimant. He then began dissolving the business
arrangement with Murphy.
¶8 Meanwhile, law enforcement was investigating Murphy in
connection with a variety of matters. Attorney Creedy
voluntarily met and provided law enforcement with some
information about Murphy.
¶9 On June 27, 2013, the OLR filed an eight-count
complaint against Attorney Creedy seeking a four-month
suspension of his license to practice law. Attorney Creedy
filed an answer and the court appointed the referee, who
conducted an evidentiary hearing in February 2014.
¶10 After the hearing, the parties executed a stipulation
whereby the OLR voluntarily dismissed Counts Four, Five, and
Seven of the Complaint. The OLR also dismissed its allegation
that Attorney Creedy violated two subsections of the supreme
court rule alleged in Count Three. Attorney Creedy withdrew his
answer and pled no contest to the remaining allegations of
misconduct: Counts One, Two, Six, and Eight, and the remaining
two supreme court rule subsections in Count Three.
¶11 Our rules provide that where, as here, a respondent
pleads no contest to allegations of misconduct pursuant to
SCR 22.14, the referee shall make a determination of misconduct
in respect to each allegation to which no contest is pled and
for which the referee finds an adequate factual basis in the
record. The referee rendered a thorough and thoughtful report
in which he summarized the evidence from the hearing and made
detailed factual findings and conclusions.
4
No. 2013AP1439-D
¶12 As relevant to this matter, the referee explicitly
stated that he found Attorney Creedy to be both credible and
professional. He believed that Attorney Creedy was unaware that
Murphy was improperly accepting advance fees until confronted by
a claimant's lawyer in March 2010. He deemed Murphy to be a
less than credible witness, noting that Murphy is currently
serving time for felony convictions related to a variety of
fraud-related transactions. Moreover, the referee observed that
"it was clear that [Murphy] had personal animosity toward
[Attorney] Creedy and went out of his way to express that
animosity."
¶13 We summarize the referee's findings and conclusions.
Count One of the OLR's complaint involves Attorney Creedy's
resolution of a fee issue where a conflict of interest existed
between Attorney Creedy, Murphy, and a Social Security claimant.
The facts pertaining to this charge are undisputed. Murphy took
unauthorized advance fees from a Social Security disability
claimant, a practice prohibited by the Social Security
Administration. Attorney Creedy was counsel of record for the
claimant at the time. Additional fees were then paid to
Attorney Creedy as part of the ensuing Social Security
disability award. When Attorney Creedy learned, from the
claimant's attorney, that Murphy had already received an advance
fee, Attorney Creedy promptly agreed, on behalf of Murphy, to
refund the advance fees that Murphy had taken improperly.
¶14 The problem with this decision is that, as the referee
found, Attorney Creedy had a concurrent conflict of interest,
5
No. 2013AP1439-D
because Murphy was both a business partner and a client of
Attorney Creedy. As such, Attorney Creedy's representation of
one client (the Social Security claimant) was directly adverse
to the other client (Murphy). Attorney Creedy admits he did not
get informed consent, confirmed in writing, signed by either of
his clients as required by court rule. The OLR alleged,
Attorney Creedy stipulated, and the referee agreed that the
record evidence supported a conclusion that Attorney Creedy
violated SCR 20:1.7(a).3 The referee noted, however, that
despite having failed to obtain a written, informed consent,
Attorney Creedy nevertheless acted entirely properly in
refunding the excess fees to the Social Security claimant almost
immediately.
¶15 Count Two of the complaint relates to Attorney
Creedy's failure to comply with supreme court rules,
3
SCR 20:1.7(a), as relevant here, states:
[A] lawyer shall not represent a client if the
representation involves a concurrent conflict of
interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be
directly adverse to another client; or
(2) there is a significant risk that the
representation of one or more clients will be
materially limited by the lawyer's responsibilities to
another client, a former client or a third person or
by a personal interest of the lawyer.
6
No. 2013AP1439-D
specifically in violation of SCR 20:1.8(a),4 in the manner in
which he entered the business arrangement with Murphy to
represent Social Security claimants. It is undisputed that
Attorney Creedy never disclosed, in writing, the terms upon
which the business relationship was based, never advised Murphy
in writing of the desirability of seeking the advice of
independent legal counsel on the transaction, and never obtained
written, informed consent from Murphy to the essential terms of
the transaction and to Attorney Creedy's role in the
transaction.
¶16 The referee noted that it was apparent that Murphy was
a sophisticated business person, but this does not excuse
4
SCR 20:1.8(a) states:
A lawyer shall not enter into a business
transaction with a client or knowingly acquire an
ownership, possessory, security or other pecuniary
interest adverse to a client unless:
(1) the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the
client and are fully disclosed and transmitted in
writing in a manner that can be reasonably understood
by the client;
(2) the client is advised in writing of the
desirability of seeking and is given a reasonable
opportunity to seek the advice of independent legal
counsel on the transaction; and
(3) the client gives informed consent, in a
writing signed by the client, to the essential terms
of the transaction and the lawyer's role in the
transaction, including whether the lawyer is
representing the client in the transaction.
7
No. 2013AP1439-D
failure to comport with the requirements of the rule.
Accordingly, the OLR alleged, Attorney Creedy stipulated, and
the referee agreed that the record evidence supported a
conclusion that Attorney Creedy violated SCR 20:1.8(a).
¶17 In Count Three, the OLR alleged that Attorney Creedy
violated SCR 20:5.4(a), (b), (c), and (d), which generally
prohibit a lawyer from partnering and/or sharing legal fees with
a nonlawyer. The allegations regarding SCR 20:5.4(c) and (d)
were subsequently voluntarily dismissed by the OLR. As to the
two remaining subsections, the referee concluded that the OLR
had failed to establish that Attorney Creedy violated
SCR 20:5.4(a)5 because federal law permits nonlawyers to
5
SCR 20:5.4(a) states:
A lawyer or law firm shall not share legal fees
with a nonlawyer, except that:
(1) an agreement by a lawyer with the lawyer's
firm, partner, or associate may provide for the
payment of money, over a reasonable period of time
after the lawyer's death, to the lawyer's estate or to
one or more specified persons;
(2) a lawyer who purchases the practice of a
deceased, disabled, or disappeared lawyer may,
pursuant to the provisions of SCR 20:1.17, pay to the
estate or other representative of that lawyer the
agreed-upon purchase price;
(3) a lawyer or law firm may include nonlawyer
employees in a compensation or retirement plan, even
though the plan is based in whole or in part on a
profit-sharing arrangement; and
(4) a lawyer may share court-awarded legal fees
with a nonprofit organization that employed, retained
or recommended employment of the lawyer in the matter.
8
No. 2013AP1439-D
represent individuals in Social Security disability claims and
to receive fees as payment for their services. The Social
Security Administration designates these payments as "fees," not
necessarily "legal fees." The referee further noted that
federal law permits such representation by nonlawyers, and
concluded that the OLR failed to establish that Attorney Creedy
violated SCR 20:5.4(b).6 The OLR has not appealed this
recommendation and we accept it.
¶18 The OLR voluntarily dismissed Counts Four and Five of
its complaint.
¶19 Count Six of the OLR's complaint alleged that Attorney
Creedy failed to adequately supervise Murphy, a nonlawyer,
thereby violating SCR 20:5.3(a) and (b).7 The OLR's complaint
6
SCR 20:5.4(b) states that "[a] lawyer shall not form a
partnership with a nonlawyer if any of the activities of the
partnership consist of the practice of law."
7
SCR 20:5.3(a) and (b) state:
With respect to a nonlawyer employed or retained
by or associated with a lawyer:
(a) a partner, and a lawyer who individually or
together with other lawyers possesses comparable
managerial authority in a law firm shall make
reasonable efforts to ensure that the firm has in
effect measures giving reasonable assurance that the
person's conduct is compatible with the professional
obligations of the lawyer;
(b) a lawyer having direct supervisory authority
over the nonlawyer shall make reasonable efforts to
ensure that the person's conduct is compatible with
the professional obligations of the lawyer; . . . .
9
No. 2013AP1439-D
focused on a specific incident in which, as outlined in the
referee's report, it was unclear who would represent the
claimant before a Social Security tribunal: Attorney Creedy or
Murphy. Attorney Creedy could not reach Murphy to resolve that
question, and therefore prepared to go to the hearing to
represent the claimant. As it turned out, Murphy appeared at
the hearing and the claimant opted to proceed with Murphy as her
representative. The referee found that there "is no evidence in
the record that Murphy did anything unprofessional or
incompetent in the hearing" and, as such, the referee found no
evidence that Attorney Creedy failed to supervise Murphy in
violation of SCR 20:5.3(a) and (b).
¶20 Indeed, the referee observed that several witnesses
testified that, generally, Murphy had a good reputation and
worked diligently on behalf of Social Security claimants. The
one notable exception was Murphy's taking of unauthorized
advance fee payments from clients, but the referee found
credible Attorney Creedy's assertion that he did not know Murphy
was doing this until March of 2010. Thus, the referee concluded
that the OLR had failed to demonstrate that Attorney Creedy
failed to supervise Murphy as alleged in Count Six.
¶21 The OLR voluntarily dismissed Count Seven.
10
No. 2013AP1439-D
¶22 In Count Eight, the OLR alleged that Attorney Creedy
violated SCR 20:1.8(b)8 by providing information obtained in the
course of his representation of Murphy to the disadvantage of
Murphy, without Murphy's consent. It is undisputed that the
Green County District Attorney's Office and the Monroe Police
Department investigated Murphy. Attorney Creedy met with these
entities and provided certain information that was adverse to
Murphy, without obtaining Murphy's informed consent. The
investigation into Murphy's conduct ultimately led to felony
charges and convictions of Murphy. Accordingly, the OLR
alleged, Attorney Creedy stipulated, and the referee concluded
that by providing information obtained in the course of his
representation of Murphy to the Green County District Attorney's
Office and the Monroe Police Department to the disadvantage of
Murphy, without obtaining Murphy's informed consent, Attorney
Creedy violated SCR 20:1.8(b).
¶23 Initially the OLR sought a four-month suspension but,
following the evidentiary hearing, the parties submitted a joint
stipulation agreeing that a public reprimand was sufficient.
The referee observed that there was no evidence that any member
of the public, other than perhaps Murphy, was harmed by Attorney
Creedy's conduct, and characterized any harm to Murphy as de
minimus and the proven ethical violations as technical. Indeed,
8
SCR 20:1.8(b) states that "[a] lawyer shall not use
information relating to representation of a client to the
disadvantage of the client unless the client gives informed
consent, except as permitted or required by these rules."
11
No. 2013AP1439-D
the referee commented that a private reprimand might have been a
sufficient sanction. However, he accepted the parties'
stipulation and recommends that this court impose a public
reprimand.
¶24 The only remaining dispute involves whether the court
should impose the full costs of this proceeding on Attorney
Creedy. The OLR seeks imposition of all costs, which total
$17,801.64 as of May 21, 2014. Attorney Creedy filed a timely
objection, arguing that no costs should be imposed.9
¶25 As stated in SCR 22.24(1m),
The court's general policy is that upon a finding
of misconduct it is appropriate to impose all costs,
including the expenses of counsel for the office of
lawyer regulation, upon the respondent. In some cases
the court may, in the exercise of its discretion,
reduce the amount of costs imposed upon a respondent.
In exercising its discretion regarding the assessment
of costs, the court will consider the statement of
costs, any objection and reply, the recommendation of
the referee, and all of the following factors:
(a) The number of counts charged, contested, and
proven.
9
Attorney Creedy has also filed a motion asking the OLR to
produce, for this court's in camera review, a list of all
grievances filed by Murphy against any attorney or judge.
Attorney Creedy claims that such information could allow this
court to determine whether the OLR considered "numerous
unfounded grievances" filed by Murphy when the OLR pursued the
instant disciplinary proceeding against Attorney Creedy. The
OLR opposes Attorney Creedy's motion, citing SCR 22.40
(Confidentiality) and asserting that "whether Mr. Murphy has or
has not filed previous grievances with OLR is irrelevant." We
can resolve the allocation of costs without any need to consider
the information Attorney Creedy seeks. Accordingly, the motion
is denied.
12
No. 2013AP1439-D
(b) The nature of the misconduct.
(c) The level of discipline sought by the parties
and recommended by the referee.
(d) The respondent's cooperation with the
disciplinary process.
(e) Prior discipline, if any.
(f) Other relevant circumstances.
¶26 The referee carefully considered each of these
criteria and recommended, both before and after the filing of
Attorney Creedy's objection, that Attorney Creedy should pay
one-half of the costs of the proceedings. The referee was
mindful that only three of the eight counts were proven. His
statements regarding imposition of costs are telling:
I have considered the submissions of the parties
and the record in this proceeding. Although I am a
staunch supporter of OLR and of the attorney
disciplinary process in this state, I have to confess
that I find the requested imposition of almost $18,000
in costs to be extraordinarily large. As I wrote in
my original Decision, I felt Respondent was "both
professional and credible" in his appearance and
testimony before me. (Decision, p. 6). I thought he
acted properly in promptly returning one set of fees
to a client as soon as he learned of it and verified
it (Ibid., p. 9, 10). I found no evidence that his
other two violations harmed either a client or the
public.
¶27 The referee reminds the court that "[a]s noted in my
original Decision, it did not appear to me that [Attorney]
Creedy's conduct evidenced any disrespect for the legal system,
or for the rights of members of the public. The violations of
the Supreme Court Rules were by no means flagrant." He notes
further that Attorney Creedy cooperated fully with the
13
No. 2013AP1439-D
disciplinary process. We agree with the referee's assessment
and we direct Attorney Creedy to pay one-half of the costs of
this proceeding.
¶28 IT IS ORDERED that Attorney Carl H. Creedy is publicly
reprimanded for professional misconduct.
¶29 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Carl H. Creedy shall pay to the Office of Lawyer
Regulation one-half the costs of this proceeding.
14
No. 2013AP1439-D
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