This is an appeal from a divorce case in which a lawyer (Robert Caruso) and his client (Rick Wixom) were held jointly and severally liable for a $55,000 sanction award. The lawyer and client were sanctioned because, in the underlying custody litigation, they made false charges about Rick’s ex-wife Linda.
Here is where the lawyer made an error. He appealed the sanctions against himself and filed an appeal for his client, Rick Wixom. The court explains how the lawyer threw the client under the bus:
“In the appeal brief, Robert Caruso argues that, if this court affirms the sanctions, Rick Wixom alone should bear the $55,000 in attorney fees and costs. Because Caruso sought, at least partially, to absolve himself from paying sanctions and, instead, requested to shift the entire cost of the sanctions to his client, this appellate court asked Caruso to address whether he should be removed as Wixom’s attorney because of a conflict in interest. In his response to this court’s request, Robert Caruso, without citation to authority, argued no conflict of interest exists. If one exists, Caruso asserted, his client made an informed decision to waive that conflict on May 16, 2014, after Caruso gave him time to review the briefs and seek separate counsel. Caruso did not submit any written waiver or an affidavit by Rick Wixom attesting to waiving any conflict.”
The court explains that the position taken by the lawyer created a conflict of interest, meriting disqualification.
“If attorney and client disagree about who is at fault and point their fingers at each other in response to a request for sanctions, the interests of the two are clearly adverse. Eastway Constr. Corp. v. City of N.Y., 637 F.Supp. 558, 570 (E.D.N.Y. 1986). The client, therefore, will need new counsel to represent him against his former counsel in the proceedings to determine fault. Eastway Constr. Corp., 637 F.Supp. at 570 (citing William W. Schwarzer, Sanctions Under the New Federal Rule 11, 104 F.R.D. 181, 199 (1985)). Rick Wixom may not be pointing the finger at Robert Caruso because, not being schooled in the law, Wixom does not know to point the finger. But Caruso is pointing the finger at Wixom….
We recognize that a potential for conflict is inherent in any sanctions motion that is directed against both a client and a lawyer. See, e.g., Healey v. Chelsea Resources, Ltd., 947 F.2d 611, 623 (2nd Cir. 1991); In re Ruben, 825 F.2d 977, 985 (6th Cir. 1987). We do not imply that an attorney must withdraw each time the opposing party targets a sanction motion against both him or her and the client, otherwise such sanction motions could be used as a tactic to harass the opposing party and lawyer. We hold that, if and when an attorney seeks to limit a sanction award against only his or her client, the attorney must withdraw from representing the client.”
The court then went further and disqualified Caruso from representing himself in connection with the appeal because of the risk that he would simply follow the same course of action and urge that the client be held liable for the sanctions. The Court also rejected the argument that the client “waived” the conflict.
Bottom Line: This case presents an ethical nightmare for a lawyer. The sanction award was quite large ($55,000) and both the client and the lawyer appealed. At this point the lawyer needs to consider whether or not his financial interests are in conflict with those of his client. Here, where the lawyer and client pointed fingers at each other, the lawyer has a conflict of interest which cannot be waived and must step aside. This is a thoughtful opinion that reaches the correct conclusion for the right reasons. One of its merits of the opinion is that it deals with the conflict of interest and does not prejudge the merits of the dispute. By disqualifying the lawyer, the court gave the client and his former lawyer an opportunity to challenge the sanctions award.
Edward X. Clinton, Jr.