In Re Petti

175 A.2d 609, 36 N.J. 146

• Court: Supreme Court of New Jersey
• Decided: November 20, 1961
• Docket: M-176; D-18
• Status: Published

Opinions

The opinion of the court was delivered by

Schettino, J.

Clare R. Petti, a candidate for admission to the bar of this state, questions the Bergen County Character and Eitness Committee’s refusal to grant her a Certificate of Qualification to take a bar examination. Her former preceptor, David H. Rothberg, has been made subject to disciplinary proceedings for his part in the events upon which the Committee based its refusal.

Prior to April 1, 1968, Miss Petti became a member of the bar of New York. She was also a New Jersey Certified Public Accountant. On or about April 8, 1958 she began a clerkship under Mr. Rothberg at his Hackensack office. Appropriate papers for the commencement of the clerkship were prepared and filed.

Prior to Miss Petti’s clerkship, Mr. Rothberg’s only office had been in Plainfield and it remained his main office during her clerkship. Mr. Rothberg opened the Hackensack office when Miss Petti’s clerkship began and closed it when she left to clerk elsewhere about a year later. His Hackensack office was a room he sublet from Miss Petti’s accounting firm, Eberhart & Petti, at 214 Main Street, Hackensack.

Miss Petti applied for permission to take the bar examinations of February 5 and 6, 1959. The Committee, after examining the qualifications of the candidate, ruled on January 26, 1959 that the clerkship was not in accordance with the provisions of the rules of this court and refused to approve it. The Committee’s objections were based upon the inadequate supervision which, it felt, she had received from her preceptor. It stated that Mr. Rothberg was present in the Hackensack office only two days a week and so Miss Petti had no direct supervision for 60% of the time she worked in the office. The Committee refused to certify her but it did not feel that it was necessary for her to serve a full nine months of clerkship. Rather, it recommended that she clerk under proper supervision from that date until the June 1959 bar examinations. The candidate obtained an order of this court to take the examination. She was given permission on terms, took the examination and was unsuccessful.

She thereafter applied for leave to take the bar examinations to be held on June 10 and 11, 1959. The Committee again undertook to examine the candidate concerning the facts and circumstances of her clerkship but she subsequently withdrew her application.

Meanwhile, the committee examined her under oath on May 28, 1959. Mr. Rothberg was examined under oath on July 16, 1959 and the candidate was re-examined on September 29, 1959. The Committee on October 15, 1959, reported to this court, gave a conditional certification and also stated:

“The testimony taken in this case indicates that there was fee splitting between Miss Petti and her preceptor; that such fee splitting was probably grounded in the fact that Miss Petti was a New York attorney; that she and her preceptor denied the payments to her were fee splitting, but were compensation to her for services rendered as a clerk, although no Social Security or withholding deductions were ever made therefrom; that our Committee is uncertain whether the concealment and denial of what the Committee finds to be the true basis of the financial relationship between Miss Petti and her preceptor would justify it in refusing certification on the ground of character.”

Upon being advised that Miss Petti had applied to take the bar examinations on Eebruary 25 and 26, 1960, the Committee applied to the court for instructions, based on the report and transcript it had previously filed. The court instructed the Committee to make specific findings, based upon its investigation. The Committee unanimously found and reported on Eebruary 10, 1960 that “Miss Petti does not possess the requisite character to be admitted as an attorney in this State and we therefore find adversely to her application.” She was notified of this adverse finding.

She then applied to this court, which permitted her to take the examination upon condition that her mark not be disclosed until such time as the court passed upon the question of her fitness. The court also directed that Miss Petti and the Committee submit briefs, covering her questioned clerkship as well as her character and fitness.

As a result of said briefs, we remanded, by order dated May 16, 1960, the matter to the Bergen County Committee on Character and Eitness “with directions to take further testimony from David Rothberg, Esq., and the applicant Petti with respect to whether Miss Petti was practicing law.” We further provided that “The Committee is hereby constituted an ethics and grievance committee for the purpose of considering whether the said David Rothberg, Esq., permitted Miss Petti to practice law in his name or under the guise of a false (as distinguished from a merely inadequate) clerkship.”

Mr. Rothberg became subject to disciplinary proceedings because of the question of a dona, fide nature of Miss Petti’s clerkship. In addition, he allegedly aided Miss Petti to practice law though she was not a member of the New Jersey bar, concealed and lied about his business relationship with her, and mingled his own and his client’s funds and paid his own expenses from the total.

I.

Adequacy of Clerkship.

The Committee found her clerkship insufficient. Mr. Roth-berg has had an office in Plainfield since 1948 or 1949. He was introduced to Miss Petti in 1955 or 1956. In the course of talking with her, she told him that she wanted to become a New Jersey attorney and complained that because she was a woman, she could not seem to get a law clerkship in Hackensack or thereabouts. He said he always liked the area and felt that perhaps he could do well up there. He did not recall whether it was her or his suggestion to rent one of the three rooms she and her accounting firm occupied, start a law office in Hackensack, and have her clerk for him until she passed the bar.

An oral renting arrangement was established involving the middle room and monthly payments of $50 were made sporadically. The Hackensack office had no door opening into the hall. It was necessary to enter the suite through one of the other two rooms and then cross that room to enter Mr. Rothberg’s office. He hired part-time stenographic help and an answering service received the phone calls. Clearly, the facilities were inadequate. He asserted that it was understood that he was just trying to see if it would be worth his while to maintain the Hackensack office and therefore wanted to go on an individual basis without any connection with his Plainfield office. He wanted something which could grow and if it did grow he would be very happy; if it did not grow, he had nothing to lose.

The bulk of the preceptor’s practice was in Plainfield although he did testify that he averaged between two and two and one-hálf days a week in Hackensack. Miss Petti stated that primarily she had been in Hackensack, that she spent 60% to 70% of her time in the Hackensack office and the remainder in the Plainfield office. When Mr. Rothberg was too busy, it was requested that she go to his Plainfield office. The supervision, of necessity, was slight.

In summary, her activities were as follows: She testified that when he was not in Hackensack, he would give her specific instructions on what she was to do for him. If she had research to do, she would draft a memorandum or tell him about it orally.

If he had a matter in Bergen County Court such as a pretrial or actual trial or if he had a closing, they would go together. She helped prepare some papers with Mr. Rothberg. She sat in on several pretrials with him. She sat up at the counsel table when they were picking a jury and gave him any information he might require. She also answered the calendar call on her own. At times she would go down to Plainfield and work under his close supervision. When clients came into the Hackensack office and Mr. Roth-berg was not there, she would try to take the information and arrange an appointment.

She said that her court appearances consisted of attendance in the Superior Court, both Law and Chancery Divisions, County Court and County District Court—all in Hackensack. She also attended the federal courts in Newark and in Trenton.

Her library facilities in Hackensack for research were meager. She would have to borrow the needed books from other law offices or from the Plainfield office if they were available.

The purpose of a clerkship is to help the candidate to obtain experience in the practice of the law so that the public is assured that an attorney has received at least nine months of supervised preliminary experience before he begins his own practice. Generally B. B. 1:19-1 to 4 and B. B. 1:20-l to 8 set forth the procedures and requirements for admission to the practice of the law. B. B. 1:20-6, entitled “Committees on Character and Fitness,” sets forth the duties and powers of this very important body which performs a most valuable function, not only on behalf of the public but also on behalf of the courts. It is the duty of this Committee to investigate the clerkship and the character and fitness of all candidates for admission to the bar, resident in their county. The Committee may require of the applicant information and sources from which it may base conclusions concerning the adequacy of the clerkship and the clerk’s character and fitness for the practice of law.

B. B. 1:20-7, entitled “Clerkship; Preceptors” sets forth not only the requirements for the clerk but also the duties to be performed by preceptors. The preceptor has the responsibility to see that the clerk attends the courts as well as other divisions of government, such as the Legislature, the office of the sheriff, surrogate and county clerk. Also the preceptor is required to see to it that the clerk maintains a full daily diary setting forth, in detail, a complete log of his activities as a law clerk on each business day of the clerkship. A “complete log” includes the time spent at the office and on each assignment and a brief summary of the work performed. This rule in subsection (g) expressly provides that the diary shall include a record of the days and hours spent in attendance at the courts and agencies and the names of the judges or officials presiding. One of the purposes of such detailed recording is to provide assuranee that the clerk is performing the work which gives him experience in the practice of the law.

The clerkship diaries kept by Miss Petti and supervised by her preceptor are a far cry from the fulfillment of these requirements. We agree as stated, by a Committee member that the diaries are “skimpy” and we agree with the Committee that the clerkship was inadequate. In addition to the many noncomplianees with the rules, we note that “absentee” preceptors necessarily tend to produce such bad results.

We find it unnecessary in the first case of its kind before us to evaluate the blame for this inadequate clerkship. However, the Committee was justified in ruling on January 26, 1959 that Miss Petti’s clerkship was not in accordance with the rules.

On June 11, 1959 Miss Petti changed preceptors and clerked in another office from that date up to September 18, 1959. No question has been raised by the Committee with reference to that clerkship.

II.

Fee Splitting and Unauthorized Practice op Law.

The preceptor and clerk both claim that there was no set agreement or arrangement for payment of compensation to the clerk. Miss Petti testified that although her compensation averaged about $65 per week, there was no fixed amount in advance. Mr. Rothberg stated that they discussed compensation but he told her he could not promise her any set amount, that he would be as liberal with her as he could and that because of her status as a “professional woman,” i. e., as a New York lawyer and a New Jersey accountant, he hoped to pay her as much as $100 per week.

The record shows that the preceptor paid the clerk the following compensation: August 4, 1958, $250; September 18, 1958, $1,200; November 13, 1958, $300; December 25, 1958, $650; March 24, 1959, $480 (plus $3 for stamps); May 1, 1959, $1,000. These payments totalled $3,880. Thus from April 8, 1958 to May 1, 1959, approximately 56 weeks, the applicant received an average of $69 plus per week compensation.

An analysis of the office records shows that these amounts were one-half of the total fees paid in three matters which were brought into the office by Miss Petti. However, Mr. Rothberg denied that her compensation was to be paid only out of these matters. He said that he limited her compensation to monies in the Hackensack office account, that if and when any money came in, she would be paid a fair compensation. He emphatically stated that whether the source of the fees was from matters she brought in or not was immaterial. She corroborated his general testimony along these lines.

The testimony indicates that Miss Petti and Mr. Rothberg treated the Hackensack income more like partnership income than personal services income. They never provided for withholding and social security taxes because they said it never occurred to them. They insisted that these payments were “wages” but when asked why she had not reported the income as “wages” on the Federal tax form, she replied that if reported as wages, withholding was required, and since nothing was withheld from her wages, wages would be an inappropriate category. These explanations are startling in view of her concession that she knew the employment should determine how income was classified. Her obvious knowledge is fortified by the fact that she had worked for the Internal Revenue Service for five years, and as a Certified Public Accountant had been primarily interested in tax work. She also suggested oversight as the basis of her failure to pay these deductions on her wages.

It is this part of the proceedings that disturbs us. We are compelled to conclude that there was some form of fee-splitting arrangement between preceptor and clerk.

Qanon 34 provides: “Ho division of fees for legal services is proper, except with another lawyer based upon a division of service or responsibility.” Although we have had no occasion to interpret this canon, the opinions of the American Bar Association emphasize the basic holding that a lawyer may not split fees with a layman. American Bar Association —Opinions of the Committee on Professional Ethics and Grievances, pp. 31-33 (1957).

Mr. Rothberg is correct in his contention that B. B. l:12-8A(b) states in part that “The preceptor or the firm with which the preceptor is associated may share fees with a law clerk * * However, that subsection starts out by referring to “A duly registered law clerk, who has passed the bar examination and has been sworn and issued a certificate of limited admission as an attorney-at-law of the State * * We intended to permit no division of fees except between a clerk in that category and his preceptor or his preceptor’s firm.

We think the arrangement was one of fee-splitting which is not proper between preceptor and clerk except insofar as it is sanctioned by B. B. l:12-8A(b). We have not had occasion to speak on the subject up to this time. Eor that reason we shall refrain from taking any disciplinary action.

We are not satisfied, however, that the arrangement contemplated that Miss Petti would practice law in his name. Rather we are persuaded the parties contemplated a clerkship arrangement. Albeit it was, in our view, inadequate to satisfy the requirements of the rules.

The remaining question is whether the respondents failed to disclose the facts with the candor required of an applicant and of a member of the bar acting as a proctor.

As to Miss Petti we are satisfied she fell short of the required standard. We refer, for example, to her initial testimony concerning her lack of knowledge of the fee arrangement between Mr. Rothberg and a client she introduced to Mr. Rothberg. There would be no point in an expansive discussion of the testimony. She has already been much delayed in her quest for membership at the bar. We think it appropriate to order that she shall not be permitted to reapply to the Committee until the opening of 1963 for approval to take the bar examination scheduled for July of that year.

As to Mr. Rothberg, the situation is troublesome. The Committee found that he was “guilty of concealment, evasion and false swearing” before it. Mr. Rothberg protests he was never confronted with the charge, furnished specifications, or permitted a hearing with respect to it. The finding is based upon Mr. Rothberg’s testimony in the present matter, rather than testimony given in some other proceeding. We frankly feel, on the present record, that Mr. Rothberg was less than cooperative and candid but in the absence of a hearing addressed to that subject, we could not enter a judgment to that effect. This matter has been protracted, and although the protraction is attributable to respondents alone, yet we feel that the proceedings themselves have had inevitable disciplinary impact and, under all the circumstances, further proceedings would not be warranted.

III.

Commingling op Funds.

The Committee charges Mr. Rothberg with violations of part of Canon 11 which reads:

“Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly, and should not under any circumstances be commingled with his own or be used by him.”

No charge of misappropriations is made.

Mr. Rothberg admits that he did not keep a trustee account in Hackensack and that he deposited clients’ moneys and fees payable to him in those transactions in a bank account upon which he drew to pay expenses for that office. His explanation is that he regarded all monies deposited in that account as belonging to his clients and that he first distributed the monies to his clients’ uses before he drew upon the account for his private purposes. Thus, he claims, his clients were not harmed.

As we stated In re White, 24 N. J. 521, 525 (1957) “although respondent’s infractions of the [same] canon did not involve overreaching of a client or other additional impropriety, nonetheless the naked violations themselves require that she be reprimanded.” We similarly hold and an order to that effect will be entered.