Forcing Adverse Party to Sign Waiver of Ethics Grievance Draws Reprimand

A lawyer's attempt to shield himself from discipline via a release in a divorce agreement was not only void ' it was itself an ethics violation, the New Jersey Supreme Court ruled on Nov. 18.

The court adopted the Disciplinary Review Board's (DRB) finding that Alan Welch knew the release to be unenforceable but included it as a tactical block against the client's wife, who had already reported him to ethics authorities.

“The point was that he wanted [the wife] to believe it was enforceable,” the DRB said. “In respondent's own words, he sought to 'freeze' her from filing a grievance against him, so that he could continue to represent [the husband].”

Although finding the aggregate conduct would call for a censure, the DRB recommended a reprimand, pointing to Welch's admission of wrongdoing, expression of remorse and lack of disciplinary history. The court agreed

The ethics case, Matter of Welch, DRB 11-117, arose from his representation of James Parascandola in a contentious divorce from Catharine Sutton. According to the opinion, Welch, of Welch & DeTommaso in Somerville, NJ, deposited in his trust account a $1,258 homestead rebate check payable jointly to Parascandola and Sutton.

By letter of Nov. 3, 2008, Welch informed Sutton's lawyer, Janna Chernetz of Pomper & Associates in Highland Park, NJ, that he had disbursed the funds to Parascandola because of several expenses to which Sutton had not contributed. Upon learning of the disbursement, Sutton persuaded Welch's bank to debit the $1,258 from his trust account, though it was unclear to the DRB how this occurred.

In early 2009, Sutton filed a grievance against Welch with the District XIII Ethics Committee (DEC). It was procedurally dismissed pending the outcome of the matrimonial case. Nevertheless, the grievance became a sticking point when the parties negotiated the property settlement agreement. That August, Welch wrote Chernetz, “because your client has filed an Ethics Complaint against me, this Agreement will not be signed until I have a full release from her,” saying Chernetz was “not allowed to delete this paragraph.”

Sutton signed the agreement, saying later that she did so because Chernetz told her the release was unenforceable. Sutton then refiled her grievance. Welch, in his reply to the DEC, pointed out the release clause in the agreement and noted that Sutton waived any grievance against him. Welch later testified he knew the provision was unenforceable but said Parascandola insisted on it because he wanted Welch to continue to represent him.

The DEC found that Welch violated Rules of Professional Conduct 1.15(a), failure to safeguard property belonging to a client or third party, when he disbursed the money to Parascandola, and 8.4(d), conduct prejudicial to the administration of justice, when he inserted the release provision in the agreement.

Welch had a fiduciary duty to both Parascandola and Sutton, and “a party cannot be forced to give up an ethical claim against an attorney,” the DEC said, calling the provision “contrary to public policy.” The committee added that the provision was included to protect Welch's own interests, not that of his client, citing his letter demanding that the release be included in the agreement.

The DEC recommended an admonition. After a de novo review, the DRB adopted the committee's findings, but urged harsher discipline. The DRB brushed off Welch's arguments that he disbursed the rebate money to Parascandola alone because Sutton did not make mortgage payments or share a stimulus payment as the court required; that she was earning more than Parascandola; that Parascandola needed the money as he was caring for the couple's children; and that any disparities would be rectified when the case ultimately was resolved.

“That was an issue for the court to decide, not respondent,” DRB Chairman Louis Pashman wrote in an Oct. 6 opinion. “Instead, he engaged in 'self-help' on his client's behalf, a decision that was not his to make.” Welch's knowledge that the waiver provision was unenforceable “is without moment,” Pashman said.

Unlike attorneys in other ethics matters who were merely admonished because they mistakenly believed that there was no impediment releasing certain funds, Welch intentionally made the disbursement without Sutton's or Chernetz's knowledge, the board said.

Welch admitted to authorities that the did not contact Chernetz to have Sutton cosign the check because Sutton would have refused to do so unless she was promised half the money, and said he declined to seek a court order to keep legal fees low for his client. DEC investigator John E. Lanza scoffs at Welch's downplaying of the release as unenforceable. “He cited it in his defense,” says Lanza. “How could [he] say [he] really didn't believe it was enforceable?”

A lawyer's attempt to shield himself from discipline via a release in a divorce agreement was not only void ' it was itself an ethics violation, the New Jersey Supreme Court ruled on Nov. 18.

The court adopted the Disciplinary Review Board's (DRB) finding that Alan Welch knew the release to be unenforceable but included it as a tactical block against the client's wife, who had already reported him to ethics authorities.

“The point was that he wanted [the wife] to believe it was enforceable,” the DRB said. “In respondent's own words, he sought to 'freeze' her from filing a grievance against him, so that he could continue to represent [the husband].”

Although finding the aggregate conduct would call for a censure, the DRB recommended a reprimand, pointing to Welch's admission of wrongdoing, expression of remorse and lack of disciplinary history. The court agreed

The ethics case, Matter of Welch, DRB 11-117, arose from his representation of James Parascandola in a contentious divorce from Catharine Sutton. According to the opinion, Welch, of Welch & DeTommaso in Somerville, NJ, deposited in his trust account a $1,258 homestead rebate check payable jointly to Parascandola and Sutton.

By letter of Nov. 3, 2008, Welch informed Sutton's lawyer, Janna Chernetz of Pomper & Associates in Highland Park, NJ, that he had disbursed the funds to Parascandola because of several expenses to which Sutton had not contributed. Upon learning of the disbursement, Sutton persuaded Welch's bank to debit the $1,258 from his trust account, though it was unclear to the DRB how this occurred.

In early 2009, Sutton filed a grievance against Welch with the District XIII Ethics Committee (DEC). It was procedurally dismissed pending the outcome of the matrimonial case. Nevertheless, the grievance became a sticking point when the parties negotiated the property settlement agreement. That August, Welch wrote Chernetz, “because your client has filed an Ethics Complaint against me, this Agreement will not be signed until I have a full release from her,” saying Chernetz was “not allowed to delete this paragraph.”

Sutton signed the agreement, saying later that she did so because Chernetz told her the release was unenforceable. Sutton then refiled her grievance. Welch, in his reply to the DEC, pointed out the release clause in the agreement and noted that Sutton waived any grievance against him. Welch later testified he knew the provision was unenforceable but said Parascandola insisted on it because he wanted Welch to continue to represent him.

The DEC found that Welch violated Rules of Professional Conduct 1.15(a), failure to safeguard property belonging to a client or third party, when he disbursed the money to Parascandola, and 8.4(d), conduct prejudicial to the administration of justice, when he inserted the release provision in the agreement.

Welch had a fiduciary duty to both Parascandola and Sutton, and “a party cannot be forced to give up an ethical claim against an attorney,” the DEC said, calling the provision “contrary to public policy.” The committee added that the provision was included to protect Welch's own interests, not that of his client, citing his letter demanding that the release be included in the agreement.

The DEC recommended an admonition. After a de novo review, the DRB adopted the committee's findings, but urged harsher discipline. The DRB brushed off Welch's arguments that he disbursed the rebate money to Parascandola alone because Sutton did not make mortgage payments or share a stimulus payment as the court required; that she was earning more than Parascandola; that Parascandola needed the money as he was caring for the couple's children; and that any disparities would be rectified when the case ultimately was resolved.

“That was an issue for the court to decide, not respondent,” DRB Chairman Louis Pashman wrote in an Oct. 6 opinion. “Instead, he engaged in 'self-help' on his client's behalf, a decision that was not his to make.” Welch's knowledge that the waiver provision was unenforceable “is without moment,” Pashman said.

Unlike attorneys in other ethics matters who were merely admonished because they mistakenly believed that there was no impediment releasing certain funds, Welch intentionally made the disbursement without Sutton's or Chernetz's knowledge, the board said.

Welch admitted to authorities that the did not contact Chernetz to have Sutton cosign the check because Sutton would have refused to do so unless she was promised half the money, and said he declined to seek a court order to keep legal fees low for his client. DEC investigator John E. Lanza scoffs at Welch's downplaying of the release as unenforceable. “He cited it in his defense,” says Lanza. “How could [he] say [he] really didn't believe it was enforceable?”