In re Seth Adam Robbins
192 A.3d 558 (2018)
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Rule of Law:
An attorney-client relationship can be formed by the conduct of the parties, even without a formal agreement or payment of fees, if the client reasonably believes the relationship exists. Once formed, the attorney is bound by all ethical duties, including the duty of communication and the duty to avoid conflicts of interest.
Facts:
- Seth Adam Robbins, an attorney for Persaud Companies, Inc., also co-owned an escrow company, Chesapeake Escrow Services.
- Persaud's surety, Hudson Insurance Company, required Persaud to find a third-party indemnitor for its surety bonds and to use an escrow agent, suggesting Chesapeake.
- Robbins asked his friend and prior client, Gary Day, to serve as the indemnitor, assuring him that Persaud had sufficient assets to protect him.
- Robbins negotiated terms of the indemnification agreement on Day's behalf, leading Day to believe Robbins was acting as his lawyer.
- Day signed the agreement without reading it, trusting Robbins to protect his interests.
- Robbins later learned that Persaud was in financial distress, was under federal investigation, and had stopped making required escrow payments, but did not inform Day of these developments.
- When Hudson made a demand on Day for over $1.2 million due to Persaud's default, Robbins told Day not to be concerned and that he was handling it.
- Hudson ultimately sued Day, who had to hire a new attorney and paid $1.7 million to resolve the litigation.
Procedural Posture:
- The District of Columbia Disciplinary Counsel filed a petition and specification of charges against Seth Adam Robbins.
- The D.C. Hearing Committee held a hearing and concluded that Robbins had violated multiple rules of professional conduct, recommending a sixty-day suspension.
- While the D.C. matter was pending, Virginia Bar Counsel filed identical charges, but a Virginia court, reviewing the D.C. record without live testimony, dismissed the case.
- The D.C. Board on Professional Responsibility reviewed the Hearing Committee's report, declined to give the Virginia decision preclusive effect, and adopted the Committee's findings and recommended sanction.
- Robbins appealed the Board's recommendation to the District of Columbia Court of Appeals.
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Issue:
Does an attorney violate the rules of professional conduct regarding communication and conflicts of interest when he acts on behalf of a friend in a transaction involving another client and his own business, thereby creating a reasonable belief that an attorney-client relationship exists, and then fails to disclose critical information and acts against the friend's interests?
Opinions:
Majority - Per Curiam
Yes, an attorney violates professional conduct rules in such a situation. An attorney-client relationship can be formed when parties, by their conduct, manifest an intention to create one, regardless of a written agreement or payment. Substantial evidence supported the finding that Day reasonably believed Robbins was his attorney based on their prior relationship, Robbins's actions in negotiating the agreement, and his subsequent assurances. Because a relationship existed, Robbins had ethical duties to Day which he violated. He violated Rule 1.4(a) by failing to keep Day reasonably informed about Persaud's financial problems and the impending lawsuit. He violated Rule 1.7(b)(2) because his representation of Day was adversely affected by his representation of Persaud. Finally, he violated Rule 1.7(b)(4) because his professional judgment was reasonably affected by his own financial interest in his escrow company, Chesapeake, which benefitted from the transaction.
Analysis:
This decision reaffirms the principle that an attorney-client relationship is determined by the substance of the interaction, not by formalities like contracts or fees. It serves as a significant warning to attorneys about the dangers of blurred professional and personal relationships, and the ease with which ethical duties can attach. The case underscores that an attorney's subjective belief that no relationship exists is not dispositive; the client's reasonable perception, based on the attorney's conduct, is paramount. This precedent will likely make disciplinary boards more inclined to find an implied attorney-client relationship in informal settings, increasing scrutiny on lawyers who provide advice or assistance to friends or business associates.
