The New Jersey Supreme Court heard arguments Monday on whether renowned litigator David Gross should be disbarred for keeping a $50,000 bonus from a satisfied client, rather than turning it over to his firm.
The Disciplinary Review Board in January said he should be: that his failure to share the bounty with his firm, Budd Larner of Short Hills, N.J., was willful misappropriation, punishable in New Jersey by automatic, permanent disbarment, just like for stealing client funds.
"In this case, respondent had a fundamental obligation not to 'pick his partners' pockets,' " the 5-2 majority said.
But the two dissenters recommended a milder punishment -- censure or a one-year suspension -- finding Gross had a reasonable belief he was entitled to the money. They saw evidence the client intended the $50,000 to be a gift, since it was over and above the $5 million paid to the firm in fees.
Gross, as managing partner of Budd Larner from 1970 to 2002, was one of the state's leading product liability rainmakers, particularly in the field of asbestos litigation.
Keene Creditors Trust, formed to compensate asbestos disease claimants of the bankrupt Keene Corp., hired Gross to handle a fraudulent conveyance suit and an insurance dispute.
In 1998, after the case was over, Keene decided to give Gross $100,000 "over and above" the fees it had paid Budd Larner. Gross told the trustees to give half to his New York co-counsel, and he kept $50,000.
Janice Richter, counsel to the Office of Attorney Ethics, said that action breached Budd Larner's policy that all outside income, including teaching fees and honoraria, be turned over to the firm unless permission was given to keep the money.
Gross initially denied receiving the money, and later refused to turn it over as required, she said.
"Respondent's position is not reasonable, nor is it credible," said Richter.
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