Office of Lawyer Regulation v. Michael M. Rajek , 377 Wis. 2d 473 ( 2017 )

2017 WI 85SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP754-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against
Michael M. Rajek, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Michael M. Rajek,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST RAJEK
OPINION FILED: September 15, 2017
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2017 WI 85NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP754-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Michael M. Rajek, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant, SEP 15, 2017
v. Diane M. Fremgen
Clerk of Supreme Court
Michael M. Rajek,
Respondent.
ATTORNEY disciplinary proceeding. Complaint dismissed.
¶1 PER CURIAM. We review Referee James R. Erickson's
report recommending, consistent with a stipulation executed by
the Office of Lawyer Regulation (OLR) and Attorney Michael M.
Rajek, that we dismiss a pending disciplinary complaint against
Attorney Rajek. We agree with the OLR's discretionary
determination that the alleged rule violations do not warrant
discipline in light of our decision in In re Disciplinary
Proceedings Against Rajek, 2015 WI 18, 361 Wis. 2d 60, 859
No. 2014AP754-D
N.W.2d 439. (Rajek I.) We therefore dismiss the complaint. No
costs will be imposed.
¶2 Attorney Rajek was admitted to the practice of law in
Wisconsin in 1974. In 1986, he received a consensual private
reprimand for engaging in conduct involving dishonesty, fraud,
deceit or misrepresentation. Private Reprimand No. 1986-5. In
2006, he received a consensual public reprimand for misconduct
consisting of committing a criminal act that reflected adversely
on his honesty, trustworthiness or fitness as a lawyer in other
respects, and engaging in conduct involving dishonesty, fraud,
deceit or misrepresentation. Public Reprimand of Michael J.
Rajek No. 2006-4 (electronic copy available at
https://compendium.wicourts.gov/app/raw/001848.html).
¶3 On April 7, 2014, the OLR filed the disciplinary
complaint presently before this court. It alleged four counts
of misconduct involving two clients and it sought a 60-day
license suspension and costs. Two of the counts of alleged
misconduct involved deficiencies in the fee agreement Attorney
Rajek used. The fee agreement required a client to pay a
specified amount of money up-front before Attorney Rajek would
commence work. Although characterized as a "non-refundable
retainer" the payment was actually an "advanced fee" as defined
in SCR 20:1.0(ag). The fee agreement stated that the fee would
not be held in trust, thus rendering it subject to
SCR 20:1.15(b)(4m) ("Alternative protection for advanced fees.")
This rule provides that an attorney electing not to hold an
advanced fee in trust must provide certain notices to the
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No. 2014AP754-D
client, in writing, upon accepting the advanced fee payment.1
Attorney Rajek's fee agreement did not include several of these
required notices, nor did any other document provide these
required notices to the client at the outset of the
1
Effective July 1, 2016, substantial changes were made to
Supreme Court Rule 20:1.15, the "trust account rule." See S.
Ct. Order 14-07, (issued Apr. 4, 2016, eff. July 1, 2016).
Because the conduct underlying this case arose prior to July 1,
2016, unless otherwise indicated, all references to the supreme
court rules will be to those in effect prior to July 1, 2016.
Former SCR 20:1.15(b)(4m) provided: A lawyer who
accepts advanced payments of fees may deposit the
funds in the lawyer's business account, provided that
review of the lawyer's fee by a court of competent
jurisdiction is available in the proceeding to which
the fee relates, or provided that the lawyer complies
with each of the following requirements:
a. Upon accepting any advanced payment of fees
pursuant to this subsection, the lawyer shall deliver
to the client a notice in writing containing all of
the following information:
. . .
4. that the lawyer has an obligation to refund
any unearned advanced fee, along with an accounting,
at the termination of the representation;
5. that the lawyer is required to submit any
unresolved dispute about the fee to binding
arbitration within 30 days of receiving written notice
of such dispute; and
6. the ability of the client to file a claim with
the Wisconsin lawyers' fund for client protection if
the lawyer fails to provide a refund of unearned
advanced fees.
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No. 2014AP754-D
representation. As such, by failing to include in his fee
agreement the notices required by SCR 20:1.15(b)(4m)a.4., 5.,
and 6., Attorney Rajek allegedly violated those subsections of
SCR 20:1.15(b)(4m) with respect to two clients, T.L. and M.J.
¶4 The other two counts of alleged misconduct pertained
to an unresolved fee dispute with one of these clients and to
Attorney Rajek's delay in cooperating with the ensuing OLR
investigation. In August 2011, M.J. hired Attorney Rajek to
represent her on a non-criminal traffic charge. The fee
agreement required M.J. to pay Attorney Rajek an initial $2,500.
M.J.'s case proceeded to a jury trial at which M.J. was found
guilty. Attorney Rajek filed a Notice of Appeal on M.J.'s
behalf but M.J. opted to terminate representation and proceed
pro se. On April 26, 2012, Attorney Rajek sent M.J. a final
bill reflecting a balance due of $8,250. M.J. formally disputed
the amount due and M.J. and Attorney Rajek were unable to
resolve their disagreement regarding the fee.
¶5 Former SCR 20:1.15(b)(4m)c provided that when a fee
dispute cannot be resolved upon termination of representation:
Upon timely receipt of written notice of a dispute
from the client, the lawyer shall attempt to resolve
that dispute with the client, and if the dispute is
not resolved, the lawyer shall submit the dispute to
binding arbitration with the State Bar Fee Arbitration
Program or a similar local bar association program
within 30 days of the lawyer's receipt of the written
notice of dispute from the client.
(Emphasis added.)
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No. 2014AP754-D
¶6 On May 11, 2012, Attorney Rajek wrote to M.J., stating
in part:
I am in receipt of your letter disputing the bill that
was sent to you regarding trial expenses followed by a
notice informing the court that I will no longer be
representing you. It is mandatory that your dispute
be subject to binding arbitration. I have scheduled
this matter with Judge Proctor for June 5, 2012, at
11:00 a.m. at Proctor ADR, LLC located at 116 West
Grand Ave, Eau Claire, W1 54703.
Although Judge Proctor is a former Eau Claire County circuit
court judge, who now provides alternative dispute resolution
services, he was not affiliated with the State Bar Fee
Arbitration Program or a similar local bar association program.
Attorney Rajek's selection of Judge Proctor was unilateral.
¶7 M.J. objected to this choice and contacted the State
Bar of Wisconsin Fee Arbitration Program, requesting binding
arbitration. The State Bar, in turn, contacted Attorney Rajek
to coordinate arbitration but, as of the date the disciplinary
complaint was filed, Attorney Rajek had not agreed to submit to
arbitration through the State Bar's arbitration program. The
OLR alleged this violated SCR 20:1.15(b)(4m)c.
¶8 Attorney Rajek also delayed approximately two months
before responding to the OLR's request for information regarding
these matters. The OLR alleged this violated SCR 22.03(2).
¶9 While the OLR and Attorney Rajek litigated this
disciplinary proceeding, we issued our decision in Rajek I.
That matter also involved several counts of misconduct related
to Attorney Rajek's fee agreement. We concluded that Attorney
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No. 2014AP754-D
Rajak had committed five of the six alleged violations of the
Rules of Professional Conduct but we opted to impose no
discipline and we reduced the costs he was required to pay. In
re Disciplinary Proceedings Against Rajek, 2015 WI 18, ¶3, 361
Wis. 2d 60, 859 N.W.2d 439. We stated:
[W]e conclude that Attorney Rajek committed the rule
violations on five counts as found by the referee. The
violations, however, involved relatively minor
failures of communication, including failures in some
instances to provide certain notices or pieces of
information to clients under Supreme Court Rule (SCR)
20:1.15(b)(4m), which sets forth the alternative
procedure for handling advanced fees. They did not
involve the sufficiency or quality of the legal
representation provided by Attorney Rajek to his
clients. Given the particular facts of this case and
the nature of the violations, we determine that it is
not necessary to impose any discipline on Attorney
Rajek and that there is no basis for a restitution
award. We do require Attorney Rajek to pay costs, but
we reduce the amount of costs he must pay to $8,500.
¶10 The Rajek I decision prompted the OLR to reconsider
its position in this matter. Eventually, on September 12, 2016,
the parties executed and filed a stipulation providing that the
referee could recommend dismissal of this disciplinary case if
and when Attorney Rajek agreed to submit to, and complete,
binding arbitration in the fee dispute with his former client.
¶11 On March 15, 2017, the parties executed a revised
stipulation. Attorney Rajek agreed to revise the form of his
fee agreement to comply with the current SCR 20:1.5(g),2 and he
2
SCR 20:1.5(g) provides:
(g) A lawyer who accepts advanced payments of
fees may deposit the funds in the lawyer's business
(continued)
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No. 2014AP754-D
executed an affidavit averring that he will, in the future, use
a fee agreement that contains the notices required by
SCR 20:1.5(g) and will, upon termination of representation of a
client, who has paid an advanced fee, abide by the written
accounting and notice requirements of SCR 20:1.15(g)(2).3
account, provided that review of the lawyer's fee by a
court of competent jurisdiction is available in the
proceeding to which the fee relates, or provided that
the lawyer complies with each of the following
requirements:
(1) Upon accepting any advanced payment of fees
pursuant to this subsection, the lawyer shall deliver
to the client a notice in writing containing all of
the following information:
a. The amount of the advanced payment.
b. The basis or rate of the lawyer's fee.
c. Any expenses for which the client will be
responsible.
d. The lawyer's obligation to refund any unearned
advanced fee, along with an accounting, at the
termination of the representation.
e. The lawyer's obligation to submit any
unresolved dispute about the fee to binding
arbitration within 30 days of receiving written notice
of the dispute.
f. The ability of the client to file a claim with
the Wisconsin Lawyers' Fund for Client Protection if
the lawyer fails to provide a refund of unearned
advanced fees.
3
SCR 20:1.15(g)(2) provides:
(2) Upon termination of the representation, the
lawyer shall deliver to the client in writing all of
the following:
(continued)
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No. 2014AP754-D
¶12 On April 10, 2017, Referee Erickson filed a brief
report recommending, consistent with the terms of the
stipulation, the court dismiss the complaint.
¶13 On April 21, 2017, the OLR filed a detailed statement
of costs but noted that costs should not be imposed if the
complaint was dismissed. In its statement of costs, the OLR
described the stipulation:
[ ], the parties stipulated that OLR's disciplinary
complaint can be dismissed without any findings of
miscount, [sic] if Attorney Rajek first met certain
conditions. It toke [sic] quite a while – years – but
Attorney Rajek finally submitted the attorney fee
dispute he had with his former client to binding
arbitration with the State Bar of Wisconsin Fee
Arbitration Program, and he has provided a new Flat
Fee Agreement, compliant with current rules, which he
will use in his law office for clients who pay an
advanced fee. It is under those circumstances that
OLR asked the referee to dismiss the complaint.
a. A final accounting, or an accounting from the
date of the lawyer's most recent statement to the end
of the representation, regarding the client's advanced
fee payment.
b. A refund of any unearned advanced fees and
costs.
c. Notice that, if the client disputes the amount
of the fee and wants that dispute to be submitted to
binding arbitration, the client must provide written
notice of the dispute to the lawyer within 30 days of
the mailing of the accounting.
d. Notice that, if the lawyer is unable to
resolve the dispute to the satisfaction of the client
within 30 days after receiving notice of the dispute
from the client, the lawyer shall submit the dispute
to binding arbitration.
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No. 2014AP754-D
No appeal was filed and the matter was submitted to this court
under SCR 22.17(2).
¶14 Upon review, the court observed that the stipulation
did not expressly set forth the rationale for the OLR's decision
to dismiss the complaint. Pursuant to long-standing policy, the
court does not allow plea bargaining in attorney disciplinary
cases. See, e.g., In re Disciplinary Proceedings Against
Inglimo, 2007 WI 126, ¶85, 305 Wis. 2d 71, 740 N.W.2d 125 ("[W]e
note that the OLR is not authorized to plea bargain disciplinary
matters…"). In addition, the stipulation did not contain
assurances that typically appear in a stipulation.4
¶15 We directed the OLR to file a supplemental brief
addressing: (1) whether the stipulation comports with the
prohibition against plea bargaining and, if so, if the
stipulation should be amended to say so, and (2) the legal basis
and rationale for dismissal of the pending charges in exchange
4
Typically, stipulations executed in disciplinary matters
state that the stipulation: did not result from plea bargaining;
the lawyer avers that he or she fully understands the misconduct
allegations; the lawyer understands the ramifications should
this court impose the stipulated level of discipline; the lawyer
understands his or her right to contest the matter; the lawyer
understands his or her right to consult with counsel; the lawyer
states that his or her entry into the stipulation is made
knowingly and voluntarily; the lawyer states that he or she has
read the OLR's complaint and the stipulation and that entry into
the stipulation represents a decision not to contest the
misconduct alleged in the complaint or the level and type of
discipline sought by the OLR director. None of these assurances
appear in this stipulation.
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No. 2014AP754-D
for the attorney's compliance with supreme court rules. The OLR
filed its response on July 3, 2017.
¶16 The OLR explains that in the wake of this court's
decision in Rajek I, in which this court indicated that the fee
agreement violations did not warrant discipline, the OLR
determined that it would be inappropriate to continue to seek a
60-day suspension in this case. It opted to focus on resolving
the existing concerns by inducing Attorney Rajek to comply with
the applicable rules and obtaining some assurance that he would
comply in the future. The OLR states that its change in
position "was a unilateral decision on the part of OLR, made
following an assessment of the court's decision in [Rajek I]
2015 WI 18 [and] was not the result of plea bargaining."
¶17 The OLR asserts that the stipulation does not require
amendment. The OLR states that it is "entirely satisfied" that
Attorney Rajek fully understood his rights and that to further
amend the stipulation would only result in additional delay.
The OLR adds that it believes the course it chose "aligns with
the spirit of the court's more recent adoption of what is
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No. 2014AP754-D
commonly called the 'discretion petition.'"5 Attorney Rajek did
not submit a response although he was permitted to do so.
¶18 Our decision in Rajek I is certainly relevant to the
two alleged counts of misconduct involving Attorney Rajek's fee
agreement. Reasonable minds could differ as to whether the
5
The OLR's mention of the "discretion" rule refers to the
court's decision to amend SCR 22.001(2) (the definition of
"cause to proceed"); SCR 22.02(6) (intake); SCR 22.03(1)
(investigation); and SCR 22.25(3)-(4) (closing an
investigation). These rule changes confirm that the OLR has
discretion at the pre-charging stage, with respect to
investigating grievances and disposing of grievances upon
completion of an investigation. See S. Ct. Order 14-06, 2016 WI
28 (issued Apr. 21, 2016, eff. July 1, 2016).
As amended, one of the criteria for finding "cause to
proceed" is that the alleged misconduct "warrants discipline."
The court also added a policy statement in SCR 21.02(1). The
language added by the court is underlined, so it now provides:
The Office of Lawyer Regulation consists of the
director, investigative and support staff, and staff
counsel and retained counsel. The office receives and
responds to inquiries and grievances relating to
attorneys licensed to practice law or practicing law
in Wisconsin and, when appropriate, investigates
allegations of attorney misconduct or medical
incapacity, and may divert a matter to an alternatives
to discipline program. The office is responsible for
the prosecution of disciplinary proceedings alleging
attorney misconduct and proceedings alleging attorney
medical incapacity and the investigation of license
reinstatement petitions. The office has discretion
whether to investigate and to prosecute de minimus
violations. Discretion permits the office to
prioritize resources on matters where there is harm
and to complete them more promptly.
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No. 2014AP754-D
other two counts involving refusal to submit to binding
arbitration for a lengthy period of time and delay in
cooperating with the OLR could warrant prosecution and
discipline. However, we acknowledge that the OLR may, in its
discretion, cease prosecution if, as here, the OLR determines
that the charges at issue are de minimus. We are satisfied with
the OLR's explanation for its decision to stipulate to dismissal
of the pending complaint and its exercise of discretion in this
matter. Accordingly, we adopt the referee's report, accept the
stipulation, and dismiss the complaint. The OLR did not seek
restitution and we do not order restitution in this case.
Finally, because there is no finding of misconduct, we do not
impose costs upon Attorney Rajek.
¶19 IT IS ORDERED that the complaint against Attorney
Michael M. Rajek is dismissed.
¶20 IT IS FURTHER ORDERED no costs will be imposed.
12