DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY REPORT AND RECOMMENDATION OF THE BOARD ON PROFESSIONAL RESPONSIBILITY

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1 DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY In the Matter of: : : ALBERT S. WATKINS, : : Respondent. : Bar Docket No : A Member of the Bar of the : District of Columbia Court of Appeals : (Bar Registration No ) : REPORT AND RECOMMENDATION OF THE BOARD ON PROFESSIONAL RESPONSIBILITY This is a reciprocal discipline matter based on a public reprimand imposed upon Albert S. Watkins ( Respondent ) by the Supreme Court of Missouri (the Missouri Court ) on August 23, The Board recommends that the District of Columbia Court of Appeals (the Court ) impose the functionally identical reciprocal discipline of a public censure. Background Respondent was admitted to the Bar of the District of Columbia by motion on May 30, He is also a member of the Missouri Bar. On October 8, 2004, Bar Counsel filed a certified copy with the Court of an order of the Missouri Court dated August 23, 2004, reprimanding Respondent. On October 18, 2004, the Court issued an order directing the Board either to (i) recommend whether identical, greater or lesser discipline should be imposed as reciprocal discipline, or (ii) determine whether the Board should proceed de novo. Order, In re Watkins, No. 04-BG-1240 (D.C. Oct. 18, 2004).

2 Bar Counsel filed a statement on November 16, 2004, recommending that the Court impose functionally identical discipline of a public censure. Respondent filed a response on November 29, 2004, asserting that imposing reciprocal discipline would result in a grave injustice under D.C. Bar R. XI, 11(c)(3), and asking that he be issued an informal admonition instead. The Missouri Proceedings The Missouri Office of Chief Disciplinary Counsel charged Respondent with violating Missouri Rules of Professional Conduct ( MRPC ) (confidentiality of information) and (conflicts of interest). Prior to the scheduled hearing on the charges, Respondent and the Chief Disciplinary Counsel entered into a stipulation of facts and joint recommendation for discipline. The Missouri Disciplinary Hearing Panel accepted the stipulated facts, which were as follows: Respondent, a member in good standing with the Missouri Bar, represented First Financial Planners, Inc. ( FFP ), a closely held Missouri corporation and issuer of securities, and its two wholly-owned subsidiaries, FFP Securities, Inc. ( FFP Securities ), and FFP Advisory Services, Inc. ( FFP Advisory ). Respondent represented FFP from 1996 until April 2001 in connection with litigation, non-litigation, administrative, and regulatory matters. These matters included massive investigations and audits conducted by 36 states and thereafter examinations conducted by the National Association of Securities Dealers ( NASD ) and the Securities and Exchange Commission ( SEC ). 2

3 Complainant Robert Rodermund, Jr., is the son-in-law of Roy M. Henry, who founded FFP and at all relevant times was its majority shareholder, president and chairman of its board. Complainant, Complainant s wife, mother-in-law, and brother-inlaw all worked at FFP. It was not unusual for Respondent to represent the various Henry family members in matters unrelated to FFP. From 1986 through October 2000, Complainant was an officer and director of FFP and was affiliated with FFP Securities as a registered representative and FFP Advisory as an investment advisor. Both FFP Securities and FFP Advisory were subject to regulation by the SEC, the NASD, the Missouri Division of Securities, and other state regulators. Thus, Complainant was a regulated person subject to the state and federal securities regulations and to the rules and procedures promulgated by the NASD. In 1998, Complainant was arrested in San Antonio, Texas in connection with a matter that was potentially both professionally and personally embarrassing. Because of various securities regulations and the terms of Complainant s contracts with FFP s subsidiaries, as well as by virtue of his status as an officer and director of FFP, Complainant was required to report his arrest to the chief compliance authority at FFP, his father-in-law, Mr. Henry. Complainant requested Respondent s representation in connection with the Texas arrest, and Respondent identified and facilitated a San Antonio attorney s services to represent Complainant. Respondent and Complainant discussed Complainant s legal duty to report the arrest to Mr. Henry and whether he would report the arrest to his fatherin-law. The Texas matter was successfully concluded in Complainant s favor in December

4 In October 1999, Respondent disclosed the Texas matter to Mr. Henry, under the mistaken belief that Complainant had already disclosed the matter to Mr. Henry and FFP. Respondent then discussed the Texas matter with employees of the Missouri Division of Securities, including the fact Complainant had paid for legal services with a check drawn against a trust account for which Complainant was the trustee. Respondent disclosed this information without Complainant s prior knowledge or consent. Respondent believed that there was no conflict of interest in representing Complainant in the Texas matter while also representing FFP, since he expected Complainant to disclose the Texas matter to his father-in-law, Mr. Henry, and to FFP. As a consequence, Respondent did not ask either FFP or Complainant to execute a waiver of any potential conflict of interest. Based on the above stipulated facts, Respondent further stipulated with the Missouri disciplinary authorities that his conduct violated MRPC and MRPC provides, with certain exceptions, that [a] lawyer shall not reveal information relating to representation of a client unless the client consents after consultation. MRPC provides, in relevant part, that absent the client s informed consent, a lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer s responsibilities to another client or to a third person.... The Chief Disciplinary Counsel and Respondent stipulated that the appropriate sanction for these violations was a public reprimand. The Missouri Disciplinary Hearing Panel accepted these stipulations and recommended to the Missouri Court that it enter judgment accordingly. On August 23, 2004, the Missouri Court publicly reprimanded Respondent. 4

5 Analysis There is a presumption in favor of imposing identical reciprocal discipline that may be rebutted by clear and convincing evidence that one or more of the five exceptions set out in D.C. Bar R. XI, 11(c) exists. 1 D.C. Bar R. XI, 11(f); In re Zilberberg, 612 A.2d 832, 834 (D.C. 1992). Unless the record affirmatively shows that one or more of the exceptions applies, the Court will impose identical reciprocal discipline. See, e.g., In re Zdravkovich, 831 A.2d 964, (D.C. 2003); In re Sheridan, 798 A.2d 516, (D.C. 2002). The Board does not find any of the five enumerated exceptions in the record. Respondent received due process in Missouri, and there was no infirmity of proof. Respondent had an opportunity for a hearing, but instead chose to enter into stipulations acknowledging violations of MRPC and He further acknowledged that a reprimand by the Missouri Court was the appropriate sanction for his misconduct. The misconduct established in Missouri is misconduct here. Although MRPC and MRPC are not precisely identical to their District of Columbia counterparts (District of Columbia Rules of Professional Conduct 1.6 and 1.7), the differences are immaterial to the misconduct here. In particular, MRPC is worded more broadly than is our Rule 1.6. MRPC broadly prohibits disclosure of 1 The five exceptions under D.C. Bar R. XI, 11(c) are as follows: (1) The procedure elsewhere was so lacking in notice or opportunity to be heard as to constitute a deprivation of due process; or (2) There was such infirmity of proof establishing the misconduct as to give rise to the clear conviction that the Court could not, consistently with its duty, accept and final the conclusion on that subject; or (3) The imposition of the same discipline by the Court would result in grave injustice; or (4) The misconduct established warrants substantially different discipline in the District of Columbia; or (5) The misconduct elsewhere does not constitute misconduct in the District of Columbia. 5

6 information relating to representations of the client, while our Rule 1.6 prohibits disclosure of client confidences and secrets. But the term secret is defined in Rule 1.6(b) as including any information gained in the professional relationship... the disclosure of which would be embarrassing, or would be likely to be detrimental, to the client. Further, Comment 6 to our Rule 1.6 clarifies that the rule of lawyer-client confidentiality exists without regard to the nature or source of the information or the fact that others share the knowledge. Thus, Respondent s disclosure of the Texas matter falls within the prohibition of our rule. Under these circumstances, where Respondent stipulated to the misconduct and the misconduct established in Missouri is also misconduct here, reciprocal discipline is appropriate. See, e.g., In re Sumner, 762 A.2d 528, 529 (D.C. 2000). Respondent asserts that the imposition of reciprocal discipline in this case would result in a grave injustice under D.C. Bar R. XI, 11(c)(3), since under the Sarbanes- Oxley Act, Respondent, as counsel for FFP, was required by law to report wrongful conduct to the head of the organization. See Respondent s Response to Statement of Bar Counsel. This is essentially an attempt to relitigate the Missouri court s violation findings something Respondent is not entitled to do. See In re Shearin, 764 A.2d 774, 777 (D.C. 2000) (in reciprocal proceeding, attorney was not entitled to relitigate adverse findings made by the Supreme Court of Delaware). Except in limited circumstances not applicable here, a final determination by a disciplining court... that an attorney has been guilty of professional misconduct shall conclusively establish the misconduct for the purpose of a reciprocal disciplinary proceeding.... D.C. Bar R. XI, 11(c). Thus, the Missouri Court s determination that Respondent violated MRPC and

7 conclusively establishes that misconduct for our purposes. This result is compelled, first, by the fact that Respondent has already received a full and fair opportunity to litigate the issues in the Missouri proceeding. See, e.g., In re Zdravkovich, 831 A.2d 964, 969 (D.C. 2003); In re Velasquez, 507 A.2d 145, 147 (D.C. 1986) (per curiam). Second, as the Court recognized in Zdravkovich, there is merit in according deference, for its own sake, to the actions of other jurisdictions. Id.; see also Velasquez, 507 A.2d at 147. In other words, however meritorious his defenses may be an issue we do not decide this is not a proper forum for Respondent to argue the merits of the Missouri Court s findings of misconduct. Having waived his opportunity to do so in Missouri, he cannot do so here. Respondent suggests that the appropriate sanction is an informal admonition rather than a public censure. But we find no clear and convincing evidence that substantially different discipline is warranted. In determining whether the substantially different discipline exception applies under D.C. Bar R. XI, 11(c)(4), we employ a two-step analysis. First, we consider whether the misconduct in question would not have resulted in the same punishment here as it did in the disciplining jurisdiction. In re Demos, No. 99-BG-1274, slip op. at 10 (D.C. May 26, 2005); (quoting In re Garner, 576 A.2d 1356, 1357 (D.C. 1990) (per curiam); In re Sheridan, 798 A.2d 516, 522 (D.C. 2002) (same). Same punishment is defined as a sanction within the range of sanctions that would be imposed for the same misconduct. Demos, slip op. at 10. Second, where discipline in this jurisdiction would be different, we consider whether the difference is substantial. Demos, slip op. at 11; Sheridan, 798 A.2d at 522. The reprimand by the Supreme Court of Missouri is the functional equivalent of a public censure in the District of Columbia. See, e.g., In re Bailey, 759 A.2d 1076 (D.C. 7

8 2000) (per curiam). Sanctions for violations of Rules 1.6 or 1.7 in the District of Columbia have ranged from informal admonition to a suspension. In re Gonzales, 773 A.2d 1026 (D.C. 2001) (informal admonition for violating Rule 1.6); In re Shay, 756 A.2d 465 (D.C. 2000) (per curiam) (90-day suspension for engaging in conflict of interest and dishonesty). Therefore, a public censure is within the range of sanctions that would be imposed for the same misconduct in this jurisdiction. Accordingly, imposing a public censure is appropriate reciprocal discipline. Conclusion We recommend that the Court impose a public censure as functionally equivalent reciprocal discipline based on the Respondent s violation of Missouri Rules and 4-1.7, which is misconduct in this jurisdiction. BOARD ON PROFESSIONAL RESPONSBILITY By: Ernestine Coghill-Howard Dated: July 19, 2005 All members of the Board concur in the Report and Recommendation except Dr. Payne, who did not participate. 8