In the Matter of Anthony Novo Fonte (1994)

Overview

This case addresses multiple core fiduciary failures: improper accounting for advanced legal fees, acquisition of an adverse interest through trust drafting without informed consent, and concurrent representation of clients with directly conflicting interests. Although respondent had more than 25 years of practice without prior discipline and significant public service, the Review Department found actual suspension necessary due to overreaching conduct and lack of insight into ethical duties.

Facts

Anthony Novo Fonte represented Eleanor and Phillip Fairchild in complex real estate litigation (Newport Pacific Enterprises litigation). Over a three-year period, the Fairchilds paid respondent more than $14,000 in fees in addition to an initial $5,000 advance. Respondent failed to provide timely or adequate billing statements and later produced a retrospective, non-chronological summary that lacked dates and sufficient detail. The court found that respondent unilaterally determined fees and failed to maintain adequate records or provide a proper accounting.

While still representing the Fairchilds in litigation, respondent drafted a living trust for them that named himself as successor trustee and granted the trustee unrestricted authority to borrow trust assets without security or oversight, coupled with a no-contest clause. Respondent did not advise the Fairchilds in writing to seek independent counsel, failed to disclose the adverse nature of the interest, and did not obtain informed written consent. After Mr. Fairchild’s death, respondent became trustee and later conditioned his resignation on releases of liability and withdrawal of a State Bar complaint.

In a separate matter, respondent represented Jan and Dan Curtis regarding claims for in-home care they had provided to elderly clients Erwin and Marguerite Loeloff. While initially acting for the Curtises, respondent undertook representation of the Loeloffs on the same subject matter without obtaining written consent from all parties. He drafted agreements favoring neither side, placed himself on the Loeloffs’ bank accounts, transferred more than $26,000 into an account in his own name, and withdrew $2,500 in fees while operating under a disqualifying conflict.

Rules Violated

Defenses

Respondent argued that the $5,000 advance was a true retainer earned on receipt and therefore not subject to accounting requirements, and that drafting a trust naming himself as successor trustee did not constitute acquiring an adverse interest. He also contended that his representation of the Curtises and Loeloffs was consecutive rather than concurrent.

The Review Department rejected these arguments, holding that the clients were paying for legal services, not mere availability; that granting oneself the power to self-deal as trustee constitutes an adverse interest; and that written consent was required even for consecutive representation involving the same subject matter.

Aggravating and Mitigating Factors

• Aggravation: Multiple acts of misconduct; overreaching elderly clients; uncharged misconduct including hospital solicitation and misleading a court; lack of candor; failure to recognize ethical accountability.
• Mitigation: More than 25 years of practice with no prior discipline; extensive civic and public service; character testimony (discounted).

Outcome

The Review Department adopted the hearing judge’s recommendation. Respondent was suspended for one year, with execution stayed, placed on probation for two years, and required to serve 60 days of actual suspension.

Probation conditions included restitution of improperly withdrawn fees, delivery of a proper accounting, completion of Ethics School and trust accounting courses, passage of the California Professional Responsibility Examination, and payment of State Bar costs.

Sanctions Table