Florida Bar v. Doherty

94 So. 3d 443, 37 Fla. L. Weekly Supp. 241, 2012 Fla. LEXIS 623, 2012 WL 1033478
CourtSupreme Court of Florida
DecidedMarch 29, 2012
DocketNo. SC10-332
StatusPublished
Cited by5 cases

This text of 94 So. 3d 443 (Florida Bar v. Doherty) is published on Counsel Stack Legal Research, covering Supreme Court of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Florida Bar v. Doherty, 94 So. 3d 443, 37 Fla. L. Weekly Supp. 241, 2012 Fla. LEXIS 623, 2012 WL 1033478 (Fla. 2012).

Opinion

PER CURIAM.

We have for review a referee’s report recommending that Respondent Brian Gerard Doherty be found guilty of professional misconduct and disbarred. Doherty has petitioned for review of the report, challenging the referee’s recommendations as to guilt, as well as the recommended sanction. We have jurisdiction. See art. V, § 15, Fla. Const.

The disciplinary case against Doherty arises from ethical violations that occurred during Doherty’s representation of an elderly client to whom he provided both legal and financial investment services. The referee in this matter recommended that Doherty be found guilty of violating the following Rules Regulating the Florida Bar: 4 — 1.7(a)(2) (Conflict of Interest; Current Clients — Representing Adverse Interests) and 4-1.8(a) (Conflict of Interest; Prohibited and Other Transactions — Business Transactions With or Acquiring Interest Adverse to Client), and disbarred. The Court previously entered an order in this case approving the referee’s findings of fact, recommendations as to guilt, and recommended sanction, and disbarring Do-herty from the practice of law in Florida. See Fla. Bar v. Doherty, No. SC10-3S2, 2012 WL 149337 (Fla. order entered Jan. 17, 2012). This opinion follows.

FACTS

The Florida Bar filed a disciplinary complaint against Respondent Doherty, alleging that he violated several of the Rules Regulating the Florida Bar. A referee was appointed. The referee held evidentiary hearings and has submitted his report for the Court’s review, in which he makes the following findings and recommendations.

Doherty was first admitted to practice law in Massachusetts and New Hampshire in 1978. He was admitted to The Florida Bar in 1987 and eventually moved his practice to this state. In addition to his law practice, Doherty has a background as a financial advisor, and he provides financial planning and investment services to clients.

In 1994, Doherty began a professional relationship with the client and her hus[445]*445band. Originally, Doherty was hired only to provide financial services; Doherty was licensed in Florida to sell certain investment products, particularly annuities. Beginning in 2004, however, he also performed legal work for the couple. In June 2006, the client’s husband died. Following her husband’s death, the client continued to engage Doherty’s legal and financial services. Earlier that year, the client was diagnosed with cancer. Accordingly, she asked Doherty to help her make a number of changes to her investments and estate planning documents.

At the time her husband died, the client owned six annuity products. In an effort to simplify her investments, she asked Do-herty to reduce the number of annuities she owned from six to three. On July 16, 2006, Doherty submitted applications to purchase three annuities from Conseco Insurance Company (Conseco). The referee found that Doherty would have earned a ten percent commission on the sale had it been completed. However, on July 28, Doherty withdrew the applications. On August 1, 2006, he submitted applications to purchase three annuities from Washington National Insurance Company (Washington National), a subsidiary of Conseco. The referee found that Doherty would have earned a seven percent commission on the Washington National annuities. The referee also found that the client would have received an eight percent premium bonus from the purchase of the Washington National annuities, a bonus that would have vested at the time of the sale.

Notably, at the time these transactions took place, Doherty owed Conseco $86,370.54. The referee found that Doherty’s debt had come about due to “charge-backs,” meaning that Conseco was attempting to recapture certain commissions it paid to Doherty because his clients (the purchasers of the annuities) had died within a specified period after the annuity was issued. To satisfy the debt, in March 2006 Doherty and Conseco negotiated a settlement agreement. Pursuant to the agreement, Doherty was required to pay Conse-co $10,000 toward the total debt, as well as fifty percent of any commissions he earned selling Conseco products. If Doherty made no commissionable sales within a six-month period, the entire debt would become due in full and payable on demand.

As noted, Doherty would have received a commission on the sale of Conseco or Washington National annuities to the client. In either case, Conseco would apply fifty percent of the commission to reduce Doherty’s debt pursuant to the settlement agreement. Moreover, while the Conseco annuities would have been subject to a charge-back, such that Conseco would have sought to recover the commission if the client died within one year of the sale, the Washington National annuities did not have a charge-back provision and Doherty’s commission would have fully vested upon consummation of the sale. By this time, it was evident that the client’s health was declining. Indeed, the referee found that Doherty took steps in an attempt to eliminate or reduce the negative consequences that would have resulted if the client died within a year of purchasing the annuities. Ultimately, the client died on August 19, 2006, before any annuity sale could be completed.

In addition to her investments, in the last several weeks of the client’s life Do-herty worked to revise her estate planning documents. On August 10, 2006, the client executed a new will. Pursuant to this will, the full value of her estate passed to an existing trust (the Restated Trust). This would have included the Washington National annuities, had the sale been accomplished. The client named Doherty as her personal representative. She also execut[446]*446ed amendments to the Restated Trust to name Doherty as successor trustee. He was given final and uncontestable authority to determine whether certain estate planning methods the client effectuated were successful.

Doherty also authored two new trusts for the client’s estate. The first, a real estate trust, was executed on August 10, 2006. The primary asset in the trust was to be the client’s condominium unit. The trust instructed that the unit be sold and the proceeds from the sale used to purchase annuities. Doherty was named the successor trustee for the real estate trust and was granted sole discretion to select the annuities that would be purchased. Significantly, the referee found that Do-herty’s authority to sell financial products was limited to Conseco or Washington National annuities. The second trust at issue, an educational trust, was also executed on August 10, 2006. It was established to pay future educational expenses for the client’s grandchildren. Doherty was named the successor trustee for the educational trust. However, following the client’s death, the beneficiaries of her estate filed a challenge to Doherty’s appointments as personal representative and successor trustee. He was eventually removed from those positions.

With respect to each of the transactions at issue, the referee found that Doherty assumed “multiple, concurrent yet discreet [sic], professional roles in behalf of [the client], i.e., estate planner, trustee and successor trustee of a number of trusts, financial products salesperson, personal representative, and attorney.” However, the referee also found that Doherty did not provide the client with any written document to advise her of his multiple and conflicting positions.

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Cite This Page — Counsel Stack

Bluebook (online)
94 So. 3d 443, 37 Fla. L. Weekly Supp. 241, 2012 Fla. LEXIS 623, 2012 WL 1033478, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florida-bar-v-doherty-fla-2012.