ORIGINAL PROCEEDING IN DISCIPLINE
Original proceeding in discipline.
This is an original proceeding in discipline filed by the office of the Disciplinary Administrator against the respondent, Steven C. Alberg, of Olathe, an attorney admitted to the practice of law in Kansas in 1980.
The office of the Disciplinary Administrator filed a formal complaint against the respondent on June 14, 2011, alleging multiple violations of the Kansas Rules of Professional Conduct (KRPC). The respondent answered the complaint on July 7, 2011. The Disciplinary Administrator filed an amended formal complaint on November 16, 2011, and a panel of the Kansas Board for Discipline of Attorneys conducted a hearing on that complaint on June 12, 2012. The respondent personally appeared at the hearing and was represented by counsel. The hearing panel determined the respondent violated KRPC 1.5(f)(1) (2012 Kan. Ct. R. Annot. 492) (fees); 1.7(a)(2) (2012 Kan. Ct. R. Annot. 506) (conflict of interest); 1.8(k) (2012 Kan. Ct. R. Annot. 516) (sexual relationship with client); 1.15(a), (b), and (d)(2)(iii) (2012 Kan. Ct. R. Annot. 541) (safekeeping of property); 3.3(a)(1) (2012 Kan. Ct. R. Annot. 582) (candor toward the tribunal); and 8.4(b) (2012 Kan. Ct. R. Annot. 643) (commission of a criminal act reflecting adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer).
At the conclusion of the hearing, the panel made the following findings of fact and conclusions of law, together with its recommendation to this court:
"6. In April, 2007, T.G. called the Respondent regarding representation for a divorce. T.G. had previously retained the Respondent to represent her in an action for divorce years before.
"7. The Respondent and T.G. agreed to meet for lunch. During the lunch meeting, T.G. and the Respondent discussed her domestic situation. The Respondent provided T.G. advice on how to prepare for her divorce. Specifically, the Respondent told T.G. what documents she needed to gather in order to file for divorce. The Respondent and T.G. re-formed their attorney client relationship during the lunch meeting.
"8. The Respondent and T.G. did not enter into a fee agreement.
"9. Shortly after the lunch meeting, T.G. and the Respondent began a sexual relationship. T.G. and the Respondent continued their personal and sexual relationship in excess of a year. In late 2007, T.G. moved into the Respondent's residence.
"10. On October 4, 2007, the Respondent filed a petition for divorce on behalf of T.G. Eventually, the Respondent and counsel for T.G.'s estranged husband settled the property issues. As a result, the Respondent received a check in the amount of $47,516.00, for T.G.'s share of the equity in the marital home.
"11. T.G. instructed the Respondent to deposit the check into the Respondent's client trust account.
"12. From time to time, T.G. instructed the Respondent to provide her with a portion of the money. Additionally, from time to time, the Respondent asked and received permission from T.G. to borrow some of the money he held on her behalf. On one occasion, the Respondent borrowed money from T.G.'s funds held in trust to make his payroll.
"13. In March, 2008, contrary to T.G.'s understanding of the Respondent's intention, the Respondent asked T.G. to pay attorneys fees for her representation in the divorce proceedings. The Respondent told T.G. that she owed him $10,000 in attorneys fees. T.G. allowed the Respondent to withdraw the attorney fees from the funds he held for her in his client trust account. [Footnote: There was some evidence in this matter that after asking for $10,000 in attorney fees, the Respondent later reduced that amount to $7,500. Whether the Respondent requested $10,000 or $7,500 is only relevant to determine how much money the Respondent owed T.G. The evidence clearly established that the Respondent requested $10,000 as that is the amount of T.G.'s check written at the time.]
"14. The personal relationship between T.G. and the Respondent deteriorated and eventually, T.G. moved out of the Respondent's residence.
"15. T.G. repeatedly requested that the Respondent provide her with an accounting of the $47,516 which he held in trust for her. The Respondent failed to provide T.G. with a complete accounting of the funds. The accounting that the Respondent provided to T.G. listed only the amounts which the Respondent provided to T.G. The Respondent failed to include the amounts which he borrowed from time to time.
"16. Later, T.G. filed suit against the Respondent. The litigation proceeded to jury trial. At trial, the jury found in favor of T.G. On November 8, 2011, the Court issued a journal entry of judgment on the jury verdict, which provides:
'The jury found that Steven Alberg breached a fiduciary duty to the plaintiff [T.G.] and awarded zero damages to plaintiff on the breach of fiduciary claim. The jury then stated "yes" to the question of whether "punitive damages should be assessed against the defendant for breach of his fiduciary duty."
'The jury found in favor of the plaintiff on her quantum meruit claim and awarded plaintiff $16,000. The jury answered "yes" to the question of "did the defendant Steven Alberg convert the money placed into his trust account or the personal property of the plaintiff [T.G.]?" and found that plaintiff's damages were $12,000. The jury answered "no" as to whether punitive damages should be assessed for conversion.
'The jury awarded $28,000 in total damages to the plaintiff [T.G.].'
"17. Additionally, the Court also stated that it would conduct a hearing on punitive damages on a later date. The Court did not order any punitive damage. Thereafter, T.G. appealed the Court's decision to not award punitive damages to the Kansas Court of Appeals, appellate number 107211. T.G.'s appeal remains pending.
"18. During the Respondent's representation of T.G., T.G. referred her sister, K.J., to the Respondent for representation. K.J. was seeking a divorce from her estranged husband, who resided in Africa. K.J. and her estranged husband owned property and a variety of businesses in Africa, including a precious gem mining operation.
"19. The case involving K.J. and her estranged husband was contentious and required a significant amount of the Respondent's time. K.J.'s estranged husband refused to acknowledge the Kansas court's jurisdiction and did not appear personally in court.
"20. On April 1, 2008, the Respondent successfully negotiated a stipulation and property settlement agreement.
"21. At the time the Respondent began the representation, the Respondent failed to reduce their fee agreement to writing. Later, however, on April 29, 2009, the Respondent memorialized his understanding of their agreement in a letter. The letter provided, in pertinent part, as follows:
'[K.J.], in light of my relationship with your family, we have continued on this case/quest for quite some time without formally rendering our longstanding oral agreement into writing as to my fees, costs and representation. In that regard we have agreed that you will be responsible for attorney's fees at the rate of $175.00 per hour or I will receive fees consisting of 1/3 of any and all proceeds of any kind or nature received or recovered from Respondent. As you know there are also "costs" involved for which you will be ultimately responsible. In regards to my attorney fees awarded me by the court you need to know that does not remove your ultimate responsibility for the fees which will remain as above without credit or offset of your responsibility hereunder. In the event no proceeds are collected you are still responsible for the hourly fees as a minimum.'
"22. On May 20, 2009, the Court issued a journal entry in K.J.'s divorce case. In the journal entry, the Court granted the Respondent's request for an award of temporary attorney's fees in the amount of $50,000 to be paid by K.J.'s estranged husband to K.J. K.J.'s estranged husband did not pay the award of temporary attorney's fees.
"23. At the time of the final hearing in the divorce, the Respondent provided the Court with an itemized billing statement. The Respondent sought $184,432 in attorney fees. The Respondent's billing statement contained false entries.
"24. Following the divorce trial, K.J. terminated the Respondent's representation.
"25. On October 23, 2009, the Court issued a journal entry of divorce. In the journal entry of divorce, the Court included the following:
'21. The Petitioner is requesting an award of attorney fees in the amount of $184,432.00. The Court has reviewed the itemized billing by the Petitioner and the response from counsel for the Respondent. The Court hereby awards unto the Petitioner total attorney fees in the amount of $45,000.00 and hereby enters a judgment in favor of the Petitioner and against the Respondent in the amount of $45,000.00 as and for her attorney fees.'
"26. On November 16, 2009, the Respondent wrote to K.J. regarding the outstanding attorney fees. The letter provided:
'Thank you for yours of November 13, 2009. Needless to say we disagree with your version of the events. In regards to the fee we were doing the divorce itself for an hourly fee. We also agreed that I would be entitled to 1/3 of any recovery we could make in collection of the award. I think we have always known he would not voluntarily pay you and collection efforts would more than likely be required. In any event, please note that I am putting a lien in the file for ...