2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

at 1092 (citing Pa. Rules of Prof’l Conduct 1.5(c), 1.15(b), 8.4(b) and 8.4(c)). Therefore, thecourt found that the appellants’ conduct in “collecting and distributing settlement proceeds doesnot fall within the purview of the UTPCPL, but rather within this court’s exclusive regulatorypowers.” Id. at 1093.In Strayer v. Bare, 2008 WL 1924092 (M.D. Pa. 2008), Plaintiff, Pennsylvania LawyersFund for Client Security (“PLFCS”) made payments to a number of former clients of the Frankelfirm in exchange for subrogation agreements and assignment of rights. Those who assigned theirrights to the PLFCS had received awards from personal injury litigation which were placed in theFrankel firm’s trust account, but, the funds were never paid to the clients. Claims were filed withthe PLFCS by these people and they received a portion of the funds which the Frankel firmallegedly misappropriated. Plaintiff Strayer was involved in a personal injury litigation whichresulted in a settlement of $530,000, which was paid to the Frankel firm, but, never properly paidout to Strayer. Plaintiffs brought suit against the Frankel firm and other defendants, alleging,inter alia, a claim under the UTPCPL. Defendants filed a motion to dismiss the complaint andthe court, as to the UTPCPL claim, granted the motion to dismiss and held that themisappropriation of client funds “[d]oes not fall within in the purview of the UTPCPL, but ratherwithin the Court’s exclusive regulatory powers.”R. Disciplinary Actions – Offensive Collateral Estoppel AppliesIn Office of Disciplinary Counsel v. Kiesewetter, 889 A.2d 47 (Pa. 2005), thePennsylvania Supreme Court held that, under the circumstances of the case, the doctrine ofcollateral estoppel could be applied offensively in a disciplinary matter against an attorney. TheODC’s petition for discipline alleged that the respondent had engaged in fraud bymisappropriating family assets, and relied upon the civil verdict previously entered against therespondent. The civil litigation arose from a dispute between the lawyer and his sisters andinvolved the three siblings’ inheritance. A jury found Defendant-attorney liable for breach offiduciary duty, unjust enrichment and fraud. The trial court in the civil action ruled that thelawyer’s total liability was over $3.6 million, which included $500,000 in punitive damages.In the subsequent disciplinary action, the Hearing Committee ultimately ruled that thedoctrine of collateral estoppel precluded the respondent from relitigating the issue of whether hehad engaged in fraud, and recommended that he be disbarred. Respondent filed a brief onexceptions and requested oral argument. Following oral argument, the Disciplinary Board ruledthat the doctrine of collateral estoppel from a civil verdict did not apply in a disciplinaryproceeding. On the initial appeal, the Supreme Court vacated the Board’s Order and remandedthe matter to the Discipline Board and instructed the Board to apply the doctrine of collateralestoppel as set forth in ODC v. Duffield, 644 A.2d 1186 (Pa. 1994). On remand, the Boardruled that collateral estoppel applied to this case and that the misappropriation of $2.4 millionconstituted dishonest and egregious conduct warranting disbarment. Respondent filed a requestto present oral argument pursuant to Pa. Rule D. Ethics 208(e)(2), which the Supreme Courtgranted.In its December 2005 Opinion, the court noted that it had previously ruled, in Duffield,that the doctrine of collateral estoppel could be asserted defensively in a disciplinary action. Thecourt acknowledged it had not yet addressed whether the doctrine could be applied offensively to173