The Florida Bar v. Swann, — So.3d —-, 2013 WL 3064813 (Fla. June 20, 2013)

Dishonesty. It’s an ugly charge that’s implicit (and sometimes explicit) in practically every case involving fiduciary misconduct by a personal representative (PR) or trustee. For most defendants the “what’s-your-worst-day-in-court” calculus for this kind of case is usually a dollars and cents exercise: on your worst day in court, what’s the largest money judgment you’re looking at? For lawyers serving as PR’s or trustees the stakes are potentially much higher: your worst day in court could be a professional death sentence: disbarment.

Why We Lie

Last year I wrote here about a trusts and estates lawyer that not only lost her license, she was criminally prosecuted for being dishonest. I’ve covered similar stories before, click here, here. Now we have another case involving another trusts and estates lawyer losing his license for being dishonest. If the stakes are so high for lawyers, why do we lie? Probably for the same reasons everyone else does, at least that’s what Prof. Dan Ariely would tell us. He’s a professor of psychology and behavioral economics at Duke University, the author of the new book, The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves, and the subject of Why We Lie, a WSJ interview discussing his book and latest research findings. Here’s an excerpt:

Over the past decade or so, my colleagues and I have taken a close look at why people cheat, using a variety of experiments and looking at a panoply of unique data sets—from insurance claims to employment histories to the treatment records of doctors and dentists. What we have found, in a nutshell: Everybody has the capacity to be dishonest, and almost everybody cheats—just by a little. Except for a few outliers at the top and bottom, the behavior of almost everyone is driven by two opposing motivations. On the one hand, we want to benefit from cheating and get as much money and glory as possible; on the other hand, we want to view ourselves as honest, honorable people. . .

In short, very few people steal to a maximal degree, but many good people cheat just a little here and there. We fib to round up our billable hours, claim higher losses on our insurance claims, recommend unnecessary treatments and so on.

. . .

All of this means that, although it is obviously important to pay attention to flagrant misbehaviors, it is probably even more important to discourage the small and more ubiquitous forms of dishonesty—the misbehavior that affects all of us, as both perpetrators and victims. This is especially true given what we know about the contagious nature of cheating and the way that small transgressions can grease the psychological skids to larger ones.

Case Study:

In the linked-to case above the Florida Supreme Court disbarred an attorney for misconduct involving 26 separate Bar rule violations covering a span of years and tainting the lives of family members and clients alike, including the following matters having a particularly close link to his work as a trusts and estates attorney:

[Misconduct as PR] In count I, addressing Swann’s conduct as the personal representative of his father’s estate, the referee found Swann guilty of violating several Bar Rules, including rules 3–4.3 and 4–8.4(c). . . . [T]he referee found that Swann used estate funds for various real estate transactions and structured the transactions to obscure the true ownership of the money and property involved; that although he refunded his father’s estate $400,000 from the total $463,429 used, there is no evidence that he repaid the estate the remaining $63,429. . . . Most notably, the referee found that Swann’s testimony during his divorce proceedings and his testimony before the referee in this case, both given while under oath, were directly contradictory. During his divorce case, Swann testified in a deposition that he invested estate funds solely for his mother’s benefit. However, before the referee, he testified that the money was a personal loan. It is clear to this Court that Swann varied his sworn testimony to suit his own purposes in each case.

[Conspiring with girlfriend to defraud elderly client in sham marriage] Turning to count II, the referee found that Swann helped his girlfriend, Khadija Rhoualmi, to exploit an elderly client [named William Shelton]. This count may involve the most egregious instances of Swann’s misconduct. The referee found Swann guilty of violating several Bar Rules in count II, including that he engaged in dishonest conduct in violation of rule 3–4.3. . . . On November 18, 2005, Rhoualmi and Shelton were married. Several months later, Shelton was declared incompetent to make financial and legal decisions. He passed away in August 2006. Ultimately, the Fourth Judicial Circuit Court entered a final judgment in In re Estate of Shelton, Case No.2006–CP–1845 (the Shelton case), which annulled the marriage between Shelton and Rhoualmi . . . In relevant part, the circuit court found that Rhoualmi’s “real intention was to obtain Shelton’s money and property” and that “[s]he accomplished this, in part, with the active assistance of Henry T. Swann, III (‘Swann’), an attorney with whom she became romantically involved by mid–2004.” In re Estate of Shelton, Case No. 2006–CP–1845 (Fla. 4th Cir. order entered Nov. 16, 2007) (emphasis added).

[For more on this case see Sad, final days in ‘sham marriage’; and more generally, read here about Florida legislation designed specifically to battle sham marriages].

[Misconduct as PR and trustee] Finally, count V addresses Swann’s actions as the co-personal representative for the Taylor estate and as the trustee for the Taylor Trust. As with counts I through IV, the referee found Swann guilty of violating several Bar Rules, including rule 3–4.3. In support of this recommendation, the referee found that Swann used an asset of the Taylor estate, the Taylor home, to benefit his girlfriend, Khadija Rhoualmi. Swann allowed Rhoualmi, and later a client, to live in the Taylor home for a rent below the market value. He did not fully advise the estate beneficiaries of this arrangement, and the evidence indicates that he did not fully account for the rental income he earned.

What’s the common thread? Dishonesty

We usually think of “dishonesty” in normative terms, reflecting personal (and usually private) beliefs about how things should or ought to be, how to value them, which things are good or bad, and which actions are right or wrong. For lawyers, these normative considerations have added weight; under Bar rules 3-4.3 and 4-8.4(c) the ramifications are potentially career ending. Here’s how the Florida Supreme Court bridges the gap between dishonesty in a lawyer’s private, personal affairs (e.g., as a deponent in his own divorce or PR of his father’s estate) and the very public consequence of disbarment.

[E]very count described in the referee’s report involves some instance of Swann’s dishonest and deceitful conduct. Our prior decisions have made clear that basic fundamental dishonesty is a serious flaw, one which cannot be tolerated by a profession that relies on the truthfulness of its members. Fla. Bar v. Rotstein, 835 So.2d 241, 246 (Fla.2002); Fla. Bar v. Korones, 752 So.2d 586, 591 (Fla.2000). . . .

Finally, the fact that much of the misconduct in this case involves Swann’s personal affairs does not change our conclusion that disbarment is warranted. This Court has long held that ethical violations which occur while a member of The Florida Bar is not acting as an attorney can nonetheless subject the attorney to disciplinary proceedings.

As this Court has stated before, “an attorney is an attorney is an attorney.” Even in personal transactions and when not acting as an attorney, attorneys must avoid tarnishing the professional image or damaging the public…. The practice of law is a privilege which carries with it responsibilities as well as rights. That an attorney might, as it were, wear different hats at different times does not mean that professional ethics can be “checked at the door” or that unethical or unprofessional conduct by a member of the legal profession can be tolerated.

Fla. Bar v. Della–Donna, 583 So.2d 307, 310 (Fla.1989) (citations and internal quotation marks omitted). This Court has previously imposed lengthy suspensions or disbarment when attorneys engage in dishonest conduct in their personal matters.

Lesson learned?

Prof. Ariely’s research reminds us to pay attention to those small transgressions, the little “white” lies that probably won’t get noticed, but open the door for the next lie, this one a little bigger, and then the next, and the next . . . and before you know it you find yourself in a career-ending nightmare you wouldn’t have dreamed possible when you first started practicing law years earlier. The lawyer at the center of the disbarment case linked-to above had been practicing over 30 years (since 1975) with a completely clean record — until now. He didn’t find himself in this predicament overnight; it was years in the making.

What to do? Think small. Professionalism initiatives like the Got Civility? pledge making the news lately (see Got civility?) may seem like much ado about nothing (don’t send nasty e-mails), but they’re important. Why? Because they discourage the small and more ubiquitous forms of dishonesty that “grease the psychological skids” for the big lies that can morph into career-ending catastrophes.