A referee has found that Bronx Surrogate Lee Holzman (See Profile) should have fired Michael Lippman, the former chief counsel to the Bronx public administrator, and reported him to the First Department Disciplinary Committee in 2006 when he discovered that Lippman had collected excessive legal fees from estates. But the referee has rejected the rest of the charges brought against Holzman last year by the Commission on Judicial Conduct.
The referee, former Manhattan Supreme Court Justice Felice Shea, said in a report made public yesterday that, while Holzman had approved legal fees based on insufficient information in hundreds of cases, that did not rise to the level of misconduct because it was common practice among New York City surrogates. She also rejected the commission’s claims that Lippman’s misconduct was caused by Holzman’s failure to supervise him, and that Holzman should have disqualified himself from Lippman’s cases because Lippman was helping Holzman with his re-election campaign.
A hearing before the 11-member commission is set for Sept. 20. The commission will consider how much of the report to adopt and what sanction to impose. Although charges are nominally brought by the commission, they are drafted by its administrator.
The administrator, Robert Tembeckjian, said he would urge the commission to adopt Shea’s fact findings, but also to sustain the charges related to Holzman’s approval of legal fees and alleged failure to supervise, and order that he be removed from the bench. Tembeckjian also said he would recommend removal on the basis of the one charge sustained by Shea.
David Godosky of Godosky & Gentile, who represented Holzman, said he was pleased that Shea had rejected the “overwhelming majority” of the allegations against his client.
“It’s basically what we’ve said all along,” Godosky said. “While they put in a tremendous number of allegations and claims, they pretty much went by the wayside when the evidence was presented.”
“We’re optimistic that the commission will dispose of that last remaining charge,” Godosky added.
Holzman, who turned 70 this year, will leave the bench because of mandatory retirement in December.
The proceeding before Shea, which began late last year, lasted 14 days, making it one of the longest-ever judicial conduct proceedings in New York, according to Tembeckjian. It also had one of the most voluminous evidentiary records of any such proceeding, he said.
The commission’s charges, filed in January 2011, hinge on attorney fees collected by Lippman. At the end of a case in Surrogate’s Court, the parties submit an accounting of the estate for approval. In a publicly administered estate, that accounting includes legal fees for the public administrator’s counsel, calculated according to guidelines promulgated in 2002 by an administrative board chaired by Holzman.
In 2006, Holzman learned that Lippman had sometimes paid himself fees in advance of doing legal work, and sometimes more than he was entitled to. Rather than fire him, Holzman made him associate counsel and allowed him to continue working on estates, using the fees he earned to pay what he owed to other estates.
Lippman was finally fired in 2009 by counsel to the public administrator, John Reddy. In 2010, Lippman was indicted for collecting $300,000 in excessive fees (NYLJ, July 9, 2010). His trial is set to begin on Aug. 14.
The commission alleges that Holzman should have fired Lippman and reported him to the Departmental Disciplinary Committee in 2006. It also alleges that he should have shared what he knew with law enforcement authorities. Holzman knew that the city’s Department of Investigation and the Federal Bureau of Investigation were looking into the public administrator’s office at the time.
Shea agreed with the commission, saying that Holzman had a duty to fire Lippman and report his “gross misconduct.” She rejected Holzman’s defense that he did not know all that Lippman had done at the time.
“In 2006, the full extent of Mr. Lippman’s depredations was not known to respondent,” she said. “However, he knew that Mr. Lippman had deceived him, lied to him, and cheated the PA’s office.”
She added, “First and foremost, by allowing a lawyer who overcharged estates, cheated the PA’s office, lied to him and breached his trust to continue to represent the PA in the administration of estates, respondent put at further risk the estates under his care.”
Furthermore, Shea said, the fee repayment system Holzman devised for Lippman eventually “collapsed of its own weight,” with Lippman unable to make up what he owed.
The referee said she believed Holzman’s treatment of Lippman was related to the “long and close relationship” between the two.
She sustained the charge related to Holzman’s failure to fire and report Lippman, and recommended that Holzman be disciplined for cause.
Godosky said he would urge the commission not to adopt that finding in light of the fact that law enforcement agencies did not have enough information to take action against Lippman at the time either.
The commission also alleged that Holzman committed misconduct when he approved Lippman’s fees at the close of estate cases on the basis of “boilerplate” affidavits, which said little more than how many hours were worked and asked for the maximum fee of 6 percent.
Shea agreed that the affidavits were inadequate, and that Holzman could not have considered all the factors required by law, such as the difficulty of the work done in a case, before signing off on Lippman’s fees.
“Respondent’s contention that he considered all the statutory factors in awarding counsel fees to Michael Lippman is refuted by the evidence,” she said. “The affidavits of legal services submitted to him by Mr. Lippman did not provide a detailed statement of the legal services rendered and thus lacked important information needed for individualized consideration.”
However, Shea ruled that Holzman had not personally committed misconduct because “statutory compliance and transparency are not the norm and the problem is systemic and longstanding.”
“The practice of awarding legal fees to counsel to PAs as a uniform percentage of estate assets is entrenched,” she said. “The surrogates in other counties of New York City accept affidavits of legal services in a format similar in essence to the ones in dispute here.”
In a third claim, the commission argued that misconduct by Lippman and by former public administrator Esther Rodriguez, who routinely approved Lippman’s advance fees, was caused by Holzman’s failure to supervise his court.
Shea did not sustain that claim.
“I conclude that respondent badly misjudged Esther Rodriguez and Michael Lippman,” she said. “He trusted them and he relied on them, and, as he recognizes, they betrayed him and their public trust. The proof does not establish that respondent’s failure to supervise his appointees resulted in chaos and corruption.” Rodriguez pleaded guilty and is awaiting sentencing.
Finally, the commission claimed that Holzman should have recused himself from Lippman’s cases from 2001 through 2003 because Lippman raised more than $125,000 for Holzman’s 2001 re-election campaign, pointing to opinions from the New York Advisory Committee on Judicial Ethics.
Shea said the commission had failed to prove that Lippman raised that much money, and that, moreover, the opinions it cited called for a judge’s recusal only if an attorney took an active role in a judge’s campaign. She said that the evidence did not show that Lippman took such a role.
Tembeckjian said he would concede Shea’s findings on that point and would not ask the full commission to sustain the charge related to campaign fundraising.
@|Brendan Pierson can be contacted at firstname.lastname@example.org.