In the Matter of Margaret Alice Seltzer (Review Dept. 2013) 5 Cal. State Bar Ct. Rptr. 263

Court: State Bar Court, Review Department

Judges: Epstein, J.; Remke, P.J.; Purcell, J.

Filed: April 16, 2013

Overview

Attorney Margaret Alice Seltzer was suspended for six months after the State Bar Court’s Review Department found she failed to perform competently and failed to refund unearned fees to a construction company client. The court reduced the hearing judge’s one-year suspension recommendation, emphasizing proportional discipline and diminished aggravation. Seltzer’s procedural challenges—including claims that the State Bar’s new “streamlined” discovery rules violated due process—were rejected as unfounded.

Facts

In 2009, SEB Construction, Inc. hired Seltzer for a $6,000 advance fee to pursue payment from the Dublin Unified School District. Despite client urgency, Seltzer failed to provide a demand letter, evaluation, or advice. She did not respond to repeated calls and emails over two months. When the client terminated her and requested a refund, Seltzer returned only $1,500, keeping $4,500.

The State Bar charged her with two counts: (1) failure to perform legal services with competence (Rule 3-110(A)); and (2) failure to refund unearned fees (Rule 3-700(D)(2)). The hearing judge found her culpable on both counts and recommended one year of actual suspension. On review, Seltzer argued that her fee agreement was “limited scope” and that she was denied discovery rights. The Review Department disagreed, finding clear evidence of reckless nonperformance and client neglect.

Procedural Rulings

Seltzer moved to abate the disciplinary proceedings pending a related civil suit she filed against SEB. The Review Department upheld the hearing judge’s denial, citing public protection priorities under Rule 5.50. The civil dispute for fees was distinct from the disciplinary question of professional competence. The court held that the State Bar’s 2011 Rules of Procedure—modeled on California’s Administrative Procedure Act—provided adequate due process and discovery.

Findings of Misconduct

Count One — Failure to Perform Competently (Rule 3-110(A))

The court found Seltzer willfully violated Rule 3-110(A) by not drafting a demand letter, providing no evaluation, and offering no advice despite repeated client contact attempts. Her claim that she was “not required to deliver anything” was contradicted by her own invoices and communications. The court emphasized that “adequate communication with clients is an integral part of competent performance.”

Count Two — Failure to Refund Unearned Fees (Rule 3-700(D)(2))

Seltzer refunded only $1,500 of a $6,000 advance after termination, justifying retention of $4,500 for “partial work.” Because she produced no tangible product or advice, clients were entitled to a full refund. The court cited In the Matter of Kennon (1990) and In the Matter of Phillips (2001) for the principle that attorneys must refund unearned fees when the client receives “nothing of value.”

Aggravation and Mitigation

• Aggravation: Prior discipline (2012 suspension for UPL and client neglect), uncharged misconduct (improperly withdrawing disputed fees from CTA), and lack of insight.
• Diminished weight: Prior discipline occurred after this misconduct, limiting its aggravating force.
• No mitigation: Seltzer offered no credible evidence of remorse, candor, or rehabilitation.

Level of Discipline

The Review Department held that a one-year suspension was excessive. Comparing cases like Layton (1993) and Nees (1996), the court found a six-month actual suspension appropriate, with restitution of $4,500 plus 10% annual interest to SEB Construction. Seltzer was also ordered to comply with Rule 9.20 and serve two years of probation with reporting and restitution conditions.

Holding and Disposition

The Review Department recommended:

• Stayed suspension: One year, with two years’ probation.
• Actual suspension: Six months and until restitution is paid.
• Restitution: $4,500 plus 10% interest from January 14, 2010.
• Rule 9.20 compliance and costs under Business & Professions Code §6086.10.

Key Takeaways

• Failure to communicate or deliver promised work constitutes incompetence under Rule 3-110(A).
• Partial or incomplete work does not justify retaining advance fees.
• Prior discipline is diminished in aggravation if imposed after the current misconduct.
• State Bar’s revised discovery rules meet due process standards.

Call to Action: Attorneys facing competence or refund-related investigations should contact East Bay Law P.C. for immediate representation.