Reinstatement for federal courts is separate from Pennsylvania courts.
I was reinstated to the practice of law in Pennsylvania by the state Supreme Court. Can I practice in federal court? What is the procedure for being reinstated in federal court?
Surprisingly, some attorneys do not realize that if they are suspended in the Pennsylvania courts and later reinstated, they also have to seek reinstatement in the federal courts. If a lawyer is suspended by the Pennsylvania Supreme Court, then the lawyer has an obligation to notify all other jurisdictions in which the lawyer is admitted, including courts such as the U.S. District Court for the Eastern District of Pennsylvania. Similarly, when the lawyer is reinstated in the Pennsylvania courts, the lawyer must also seek reinstatement in the federal courts. There is no automatic reinstatement in the federal court just because the Pennsylvania Supreme Court has reinstated an attorney. These admission processes are two separate jurisdictions and each has its own rules and procedures.
The disciplinary rules for the Eastern District are found in the Local Rules of Civil Procedure, beginning at Rule 83.6. The reinstatement procedure is specifically found at Rule 7 of this section.
The rules require an attorney who was suspended for more than three months in federal court to seek reinstatement. The process is fairly straightforward and involves filing a reinstatement request with the federal court. The chief judge will then assign a panel of three federal judges to hear the reinstatement case. The burden of proof is upon the attorney and it is by clear and convincing evidence that the lawyer has the moral qualifications, competency and learning in the law to be readmitted.
Although in federal court the judges have the right to appoint an attorney to prosecute or defend the case, there is often no attorney appointed and the reinstatement hearing is held before the three judges without an attorney opposing. In years past, these hearings were almost a routine procedure unless there were some unusual issues presented to the court. The Eastern District would often seem to rubberstamp what the Pennsylvania Supreme Court had done in terms of the reinstatement process.
But that process has changed, at least in the Eastern District.
The disciplinary panels are chaired by U.S. District Senior Judge John R. Padova of the Eastern District of Pennsylvania. Padova is extremely knowledgeable in this area, having served as vice chairman of the Disciplinary Board of the Pennsylvania Supreme Court before he was appointed to the federal bench. Usually, Judge Juan R. Sanchez sits on these disciplinary panels, as does Judge Paul S. Diamond. Sometimes Judge Legrome D. Davis will sit.
There is no such thing as an automatic reinstatement in federal court. Any lawyer who is seeking reinstatement or who has a disciplinary hearing in the Eastern District must be prepared. The judges will no longer give great deference to what the Pennsylvania Supreme Court has done, but will instead require a lawyer to vigorously demonstrate by clear and convincing evidence that the lawyer has met the appropriate burden of proof. The three-judge panel is very vigorous in examining attorneys.
Any lawyer who has represented a lawyer in federal reinstatements knows that the judges will, in advance of the hearing, go on the Internet to see what the lawyer has placed there while on suspended or disbarred status. If the lawyer’s website suggests that the lawyer is admitted to practice in federal court before the lawyer is reinstated, that can be fatal to the reinstatement process. The judges are particularly aggressive if a lawyer doesn’t recall key points of the underlying misconduct or gives contradictory answers. That can prove fatal to the reinstatement.
Lawyers who have practiced in the past before the federal disciplinary panels should be aware that times have changed. There is no guarantee that being reinstated by the Pennsylvania Supreme Court is going to result in being reinstated by the federal court, at least in the Eastern District.
Therefore, lawyers seeking reinstatement in federal court should be prepared to go through a full hearing. Several character witnesses should be presented and these character witnesses should be fully prepared and briefed as to the issues involved.
The lawyer should also be prepared. Often, the judges will want to know in detail the nature of the underlying misconduct. A lawyer who is not as familiar as he or she should be could well not gain reinstatement. The judges expect lawyers to be fully aware of their misconduct and to be able to state what they have learned from this in a convincing fashion.
A lawyer who comes to the hearing and glosses over the misconduct or is not able to be precise may not be reinstated because the judges could feel that the lawyer is not taking the matter seriously enough or has not accepted full responsibility. Holding oneself out as a lawyer will prove fatal. The judges, in advance of the hearing, will have checked websites and any other places to see if that has occurred.
At least in the Eastern District, the disciplinary panel is a "hot panel." These judges have read the state reinstatement record and often have read the record for the underlying misconduct. They have read the exhibits. They are very knowledgeable.
A lawyer who is coming back and has not reviewed the matters can well face some very hostile questioning if there are not precise answers. Also, any guesswork will be very poorly received. If questions on prior misconduct are asked and the lawyer is unable to be precise, for instance, as to the amount of funds that were converted, that could prove fatal to a federal reinstatement.
Therefore, all lawyers seeking reinstatement in federal court and all lawyers who practice and represent people in these federal disciplinary proceedings should be aware that, at least in the Eastern District, a fully prepared hearing is now required.
Having said that, this new aggressiveness raises some concerns as to the constitutionality of the federal disciplinary system. In essence, the federal judges are acting as investigator, prosecutor and adjudicator in these matters. A student of constitutional law knows there cannot be a commingling of these three functions because it would violate fundamental due process under the Fourteenth Amendment. There has been no serious challenge to these federal disciplinary rules because, in the past, the court would usually defer to the Pennsylvania courts.
Presumably, there will be such challenges in the future. On the other hand, the concerns could be removed if federal judges would act only in their adjudicative capacity and appoint an attorney to act as disciplinary counsel or ask someone from the Office of Disciplinary Counsel in the state system to come down and prosecute or defend these actions. Clearly, that would be the better practice.
It is very difficult for an attorney who has faced vigorous cross-examination by the judges to feel that he or she is getting a fair adjudicatory hearing. It is just impossible to be a very vigorous prosecutor and at the same time be the neutral adjudicator. This suggestion of unconstitutionality is not made by way of criticism. Obviously, the federal judges are doing the right thing to ensure that the high standards are met for any attorney who practices or is reinstated in the federal court. But as federal disciplinary proceedings now have teeth, the due process issue becomes much more fundamental.
Fee-sharing agreements with nonlawyers must be carefully scrutinized.
May I share legal fees with a referral agency that has referred a case to me?
Normally, a lawyer cannot share legal fees with a nonlawyer. The prohibition against sharing legal fees with nonlawyers is clearly set forth in Rule of Professional Conduct 5.4(a) and is a cornerstone of the professional independence of a lawyer. In fact, Comment 1 notes as follows:
"The provisions of this rule express traditional limitations when sharing fees. These limitations are to protect the lawyer’s professional independence of judgment."
But there are several exceptions and one exception involves nonprofit organizations. A lawyer is allowed to share court-awarded legal fees "with a nonprofit organization that fully retained or recommended employment of the lawyer in the matter," per Rule 5.4(a)(5). Comment 4 to this rule notes as follows:
"Paragraph (a)(5) adds a new dimension to the current rule by specifically permitting the sharing of fees with a nonprofit organization. It is a practice approved in American Bar Association Formal Opinion 93-374."
A lawyer who participates in the lawyer referral services with a bar association can pay a percentage fee. These referral organizations sometimes require a 5 percent or 10 percent fee or sometimes a sliding percentage as a referral fee when a lawyer recovers funds or is paid a fee. There is nothing wrong with that.
The question then becomes other types of organizations. The rule talks about nonprofits. The question is whether that means the organization must be a nonprofit under Pennsylvania law or also requires an IRS 501(c)(3) charitable determination.
Clearly, a for-profit organization cannot receive a shared fee. Also, a lawyer can never pay a business or an individual for referring cases to him or her. This is totally prohibited and can also potentially have criminal consequences. A wise lawyer will let the client know there is a fee-sharing arrangement, just as a lawyer will do in a normal referral arrangement between lawyers.
There is an exception under Rule 5.4 for nonprofit organizations to allow some level of fee sharing with a nonlawyer. Every lawyer should carefully scrutinize the arrangement and ensure that the nonprofit is really a nonprofit and fits under the requirements of Rule 5.4. •
Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.