Laura M. Watson (CANDACE WEST / COPYRIGHT 2013)
The presiding chair in Broward Circuit Judge Laura Watson’s ethics trial on Tuesday questioned her agreement to take a position adverse to her clients in a $14.5 million settlement.
In the second day of trial, Watson spent the morning on the witness stand.
The state Judicial Qualifications Commission charged her with ethics violations in a class action lawsuit against Progressive Insurance. Her personal injury protection law firm was one of several on the losing end of a judgment entered against them in 2008 for unjust enrichment and misinforming clients about the settlement.
Watson and other PIP lawyers represented medical providers who were denied or shorted on payments for treating auto accident victims.
Fifth District Court of Appeal Judge Kerry Evander asked Watson about a settlement clause stating the PIP attorneys would defend Progressive against their own clients if any should decide to pursue a bad faith claim.
Watson tried to deny that could occur. She said the indemnification protecting Progressive applied only to PIP claims. And those that might remain unresolved were so few the damages amounted to very little. Moreover, the bad faith claims were settled for $1.75 million, she said.
Evander noted the clause referred to all claims, saying, “This says you will indemnify them from bad faith claims.”
Watson argued the clause had no practical effect because the law at the time was against her clients. They would not have prevailed on another bad faith claim.
“You agree one of your duties and obligations is to advise your client of whether to accept or reject a settlement?” Evander asked. “Under this agreement, if you advise your client to reject an offer, you’d be exposing yourself to liability.”
She conceded, “Potentially, yes.”
The 2004 settlement under review paid PIP claims and left about $11 million for legal fees and costs. The three PIP firms tried to cut out a bad faith law firm they retained two years earlier. Stewart Tilghman Fox & Bianchi in Miami spearheaded settlement talks, but once his firm made progress and a deal appeared on the horizon, it was let go.
It was the Stewart Tilghman lawsuit and resulting trial in the Palm Beach Circuit Court over the legal fee split that led to a judgment against Watson’s firm and her PIP colleagues.
JQC prosecutor Miles McGrane of the McGrane Law Firm in Coral Gables parsed his way through the client contracts, letters, emails and settlement documents to demonstrate Watson misinformed clients and acted against their interests.
Watson said the Florida Bar rule at the time didn’t require her clients to give informed consent to a settlement in writing. She said she kept clients informed by telephone.
Panel member Michael Nachwalter of Kenny Nachwalter in Miami asked Watson if she believed she should tell clients how much she was getting.
“If they ask,” Watson said.
Nachwalter asked, “Do you feel any obligation on your part, if you settle, to tell the client how much you got from that case?”
She responded, “No, I do not. I don’t know of a rule that requires it, nor do they care.”
Panel member Mayanne Downs, former Bar president and a GrayRobinson attorney in Orlando, asked Watson if she called the Bar for advice about the indemnification clause.
She said she submitted the entire agreement to her attorney. Downs then asked if the attorney told her there was no ethical problem with that particular provision.
“I don’t know that we had that express conversation,” Watson said.
Downs asked, “Had you ever entered any agreement in which you had agreed to be adverse against your own client before?”
“No,” Watson said.
Miles rested the state’s case, and Watson’s attorney, Robert Sweetapple of Sweetapple Broeker & Varkas in Boca Raton began her defense.
The Bar brought a finding of probable cause against Watson a few weeks before she was elected to the bench in November 2012.
Watson’s election caused the Bar to lose jurisdiction, and the disciplinary case was transferred to the JQC.