Beyers v. Richmond, 937 A.2d 1082 (Pa. 2007)

Brief Summary
The Pennsylvania Supreme Court held that a consumer protection statute did not apply to claims of lawyer misconduct in the collection and disbursement of settlement funds.

Complete Summary
Janice Iannece Beyers and James Piccirilli, (collectively, “Client”) retained the services of Donald Richmond, an associate of Forceno & Arangio, P.C. (the “Firm”) to represent them in a personal injury claim arising from an automobile accident. Client agreed to settle the case for $468,401.67. According to the fee agreement, Client was to receive 42.5 percent of the settlement, or $205,495.72.

When the Firm received the settlement funds, Richmond converted a portion of the proceeds. Client subsequently sued the Firm, alleging, among other things, a violation of the Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 201-1 et seq., which provides in pertinent part that:

Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as result of the use or employment by any person of a method, act or practice declared unlawful by section 3 of this act, may bring a private cause of action to recover actual damages or one hundred dollars ($ 100), whichever is greater. * * *

Id. at § 201-9(a).

The Firm did not deny that Richmond converted funds or that the Firm was vicariously liable. A bench trial was held solely on the issue of damages, and the court found in favor of Client as to all claims except the UTPCPL claim, which the court initially took under advisement.

Subsequently, the court found in Client’s favor on the UTPCPL claim and awarded treble damages. The Superior Court affirmed the judgment of the trial court, holding that because the Firm’s actions “did not arise from the practice of law . . . [the Firm] could not use their profession as a shield from application of the UTPCPL.” Beyers, 937 A.2d at 1085. The Firm appealed.

Reversing the Superior Court, the Pennsylvania Supreme Court declined to hold that the UTPCPL applied to an attorney’s conduct in collecting and distributing settlement proceeds. The court held instead that the legislature has no authority under the Pennsylvania Constitution to regulate the conduct of lawyers in the practice of law and thus “any application of the UTPCPL to the facts of this case would purport to regulate the conduct of attorneys and would be an impermissible encroachment upon the power of the Court.” Id. at 1091. As the court noted, the Pennsylvania Constitution vests the court with exclusive authority to monitor Pennsylvania attorney conduct.

The court noted, however, that in some circumstances, consumer protection statutes might apply to attorney conduct. See, e.g. Daniels v. Baritz, WL 21027238, 2003 U.S. Dist. Lexis 7707 (E.D. Pa. 2003) (applying the Fair Debt Collection Practices Act to “[a]ttorneys who regularly engage in debt collection practices, apart [from] their legal representation . . .”) (emphasis in original).

Significance of Opinion
The pro-attorney holding in this opinion was fact-specific but is generally consistent with similar holdings in a number of states. It is worth noting, however, that the firm was still liable under common law principles of respondeat superior.

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Two Remaining Seminars:

May 15, 2008: Third Party Claims for Lawyers: Is There Life After Stoneridge

July 16, 2008: Impaired and Poorly Behaving Partners: Managing the Risks

Third Party Claims for Lawyers: Is There Life After Stoneridge

May 15, 2008, Noon-1:30 pm EST

Speakers
Rebecca Lambreth, Partner, Duane Morris LLP
Anthony Davis, Partner, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP

Program Overview
One of the most important (and disturbing) developments in law firm risk management in recent years has been the increased willingness of plaintiff’s lawyers, government agencies, and courts to hold lawyers and law firms culpable for the actions or omissions of their clients. We have seen these so-called “third party claims” in a wide variety of contexts, from securities fraud cases to abusive tax shelter claims to cases involving circumstances of deepening insolvency. In January, the Supreme Court handed down its decision in Stoneridge Investment Partners v. Scientific-Atlanta, a case that affirms the limited ability of plaintiffs in securities fraud cases to reach lawyers and other providers of services to defendant companies.

This virtual seminar will bring together two highly knowledgeable and experienced practitioners to discuss these and related issues.

Topics to Include

• The circumstances under which lawyers can still be held liable for the actions or omissions of their clients;
• Potential liability for lawyers as third-party defendants in securities fraud cases after Stoneridge, and whether the “aiding and abetting” claim still has relevance;
• The seriousness of the threat of lawyers being held liable for the actions of their clients in deepening insolvency circumstances;
• What lawyers and law firms can do to protect themselves against such claims going forward;
• Red flags” in this area that firm managements should pay attention to.

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Impaired and Poorly Behaving Partners: Managing the Risks

July 16, 2008, Noon-1:30 pm EST

Speakers
Thomas L. Browne, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP
Tom H. Luetkemeyer, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP
Dr. Larry R. Richard, Vice President and Head of the Leadership & Organization Development Practice Group, Hildebrandt International

Program Overview
Dealing with “problem” partners has always been a challenge for law firm leaders. In recent years, however, it has also become a serious area of risk exposure as state bars, regulatory agencies, clients, and plaintiff’s lawyers have been increasingly willing to charge firms with accountability for the “lack of supervision” often evidenced in such behaviors. In this virtual seminar, you will hear three experts ― two professional responsibility lawyers and one lawyer/psychologist ― describe the nature of these risks and offer some practical advice on dealing with these problems.

Topics to Include

• Ways of identifying “problem” partners before the problems cause serious damage;
• Methods for dealing with impaired or poorly behaving partners that protect the interests of the partners and the firm;
• Circumstances in which “problem” partners must be reported to the local bar;
• Understanding the psychological issues that can give rise to problems and how to short-circuit them;
• Discussing “problem” partner issues with clients; and
• Managing the damage to the firm when and if problems become public.

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