In the Matter of David M. Harney (1995)
Overview
In the Matter of Harney is a landmark decision addressing an attorney’s duty to disclose statutory fee limits in medical malpractice cases and the consequences of collecting fees in excess of the limits imposed by MICRA (Bus. & Prof. Code § 6146).
The Review Department held that an attorney’s grossly negligent failure to disclose the potential applicability of MICRA fee limits to both the client and the court—followed by retention of the excess fee—constituted serious misconduct warranting a six-month actual suspension.
Facts
Respondent was a nationally prominent medical malpractice attorney who represented Wendy Paulis, a severely disabled adult, through her conservator, in a medical negligence action. The case settled in 1988 for $3.45 million.
Respondent requested and obtained court approval for attorney fees of $846,250—exactly 25 percent of the settlement—based on county probate guidelines. However, respondent failed to disclose to the conservator or the settlement judge that MICRA imposed statutory caps on attorney fees that limited his maximum permissible fee to approximately $579,400.
As a result, respondent collected $266,850 in illegal fees. When successor counsel demanded return of the excess, respondent refused.
Charges
- Bus. & Prof. Code § 6146 – Collection of illegal contingent fee
- Rule 4-200 (former rule 2-107) – Illegal fees
- Bus. & Prof. Code § 6068(a), (b), (d) – Failure to uphold the law and duty of candor
- Bus. & Prof. Code § 6106 – Moral turpitude (gross negligence)
- Rule 4-100(B)(4) – Failure to return funds due
Key Legal Holdings
- MICRA’s fee limits apply regardless of settlement, judgment, or probate approval.
- Clients cannot waive MICRA’s statutory fee limits.
- Court approval of an illegal fee does not create res judicata where the attorney failed to disclose material law.
- Concealment of material legal limits is as misleading as an affirmative misrepresentation.
- Gross negligence in withholding material information may constitute moral turpitude.
Aggravation and Mitigation
- Prior discipline for similar misconduct
- Significant harm to a disabled client
- Overreaching and lack of candor to court and client
- Lack of remorse and refusal to refund illegal fees
- Long legal career and professional reputation (limited weight)
Discipline Imposed
| Sanction | Details |
|---|---|
| Stayed Suspension | Two years stayed |
| Probation | Two years |
| Actual Suspension | Six months |
| Restitution | $266,850 (illegal portion of fee) |
| Other Conditions | Ethics compliance, fee disclosure requirements, rule 955 compliance |
Key Takeaways
- Attorney expertise increases, not lessens, ethical duties.
- Probate or court approval does not shield illegal fees.
- Failure to disclose controlling law is a serious breach of fiduciary duty.
- Gross negligence can warrant substantial actual suspension.
Facing Illegal Fee or MICRA Allegations?
Allegations involving illegal fees and lack of candor often lead to actual suspension. If you are under State Bar investigation, contact East Bay Law P.C. for experienced California attorney discipline defense.