Kelley's Case

627 A.2d 597, 137 N.H. 314, 1993 N.H. LEXIS 81
CourtSupreme Court of New Hampshire
DecidedJune 30, 1993
DocketNo. LD-90-023
StatusPublished
Cited by6 cases

This text of 627 A.2d 597 (Kelley's Case) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelley's Case, 627 A.2d 597, 137 N.H. 314, 1993 N.H. LEXIS 81 (N.H. 1993).

Opinion

Thayer, J.

On September 17,1990, the Supreme Court Committee on Professional Conduct (committee) filed a petition to publicly censure the respondents, Edgar L. Kelley and Philip H. Cahalin for charging a clearly excessive fee, N.H. R. Prof. Conduct 1.5(a), maintaining representation that presented a conflict of interests, id. 1.7(b), and violating the Rules of Professional Conduct, id. 8.4(a). The petition and the respondents’ answers were referred to a Judicial Referee (Bean, J.) for a hearing. The referee determined that the respondents violated each of the rules. We agree that the respondents violated Rules 1.7(b) and 8.4(a), but hold that a violation of Rule 1.5(a) was not proven by clear and convincing evidence.

[316]*316This disciplinary action arises out of the respondents’ representation of Kendra Stanley and Anna Ham, both beneficiaries of a trust created by Kendal C. Ham and funded through the residuary clause of his will. Kendal Ham died in March 1988 and was survived by his widow, Anna, and his daughter, Kendra Stanley, Anna Ham’s stepdaughter. Under the will, Anna Ham was left certain real estate and intangible property. Anna Ham and Kendra Stanley were both named as beneficiaries of the trust. The trust was divided into parts A and B. The corpus of part A was limited to the lesser of two million dollars or thirty percent of the residue. The balance of the residue not needed to fund part A of the trust would be the corpus of part B. Both women could take from part A; only Anna Ham could take from part B. Kendra Stanley’s only interest in her father’s estate was in part A of the trust.

Kendra Stanley met with Edgar Kelley to discuss the estate. She was concerned about possible overreaching and undue influence exercised by a long-time employee of her father’s who was a beneficiary under the will, and a trustee of the trust established for the benefit of the two women. Kelley recommended a will contest and suggested that such a contest would be strengthened if Anna Ham joined. Anna Ham met with Kelley and his associate, Philip Cahalin, and was informed that she had a right to waive the will and take her statutory share of the estate. Both women retained Kelley to represent their interests in the estate.

When the executors were appointed in May 1988, the value of Kendal Ham’s estate was estimated at $6,763,000, based on the value of the two bottling plants that constituted the bulk of the estate’s assets. All of the stock of the New Hampshire bottling company was bequeathed to the individual whom the women suspected of exercising undue influence over Kendal Ham. The largest item in the residue of the estate, which was to fund the trust, was a seventy-six percent interest in a Massachusetts bottling company. In January 1989, however, the executors filed an inventory showing a total estate value of almost $17.7 million. The estate’s interest in the Massachusetts bottling company was valued at $10,778,000.

Cahalin is a member of the New Hampshire bar; Kelley is not. They filed a joint appearance in the Carroll County Probate Court on August 4, 1988. On August 15, 1988, Anna Ham signed a fee agreement with Kelley. Although not a model of clarity, the fee agreement provided for an hourly fee for legal services related to exercising her right to take under the trust and her right to waive the will, and a contingent fee as to those additional interests she received from the [317]*317estate including “any additional sums to be gained by contesting the Will or by uncovering or successfully asserting the right of the estate to sums not included by the Executors in their inventory.” Kendra Stanley later signed the same agreement, which had similar provisions regarding an hourly fee for certain services and a contingent fee for “sums recovered as an heir... by virtue of the contest of [the] Will.” The fee agreement signed by both women provided that “Kendra and Mrs. Ham understand and agree that each retains Kelley in her respective individual capacity, that their interests are coincidental but not identical.” Anna Ham exercised her right to waive the will on September 9, 1988.

It was not until January 10, 1989, that Cahalin moved to permit Kelley to appear pro hac vice. In response to a discovery request seeking financial records of the Massachusetts bottling company which funded the trust, the executors objected to the respondents’ joint representation of Anna Ham and Kendra Stanley. On January 26, 1989, the executors of Kendal Ham’s estate moved to disqualify the respondents because Anna Ham’s election to take her statutory share could have a “substantial negative impact upon a pourover trust which is the only source of benefits for Kendra Stanley.” In early February 1989, Kendra Stanley and Anna Ham each signed a memorandum stating: “Attorney Kelley has shown me a copy of Rule 1.7 of the New Hampshire Rules of Professional Conduct and within the provisions of Rule 1.7(b)(2) I do desire Attorneys Kelley and Cahalin to continue representing my interests in the will contest.”

On April 25, 1989, the Probate Court {Shea, J.) disqualified the respondents from representing Kendra Stanley because

“Kendra’s share in the Estate of Kendal Ham may be diminished because of Anna’[s] election against the will.... Notwithstanding the fact that Kendra Stanley signed a consent for Attorneys Kelley and Cahalin to represent her after consultation and with knowledge of the consequences, the Court finds that a disinterested lawyer would conclude that K[e]ndra Stanley should not agree to the representation by Attorneys Kelley and Cahalin under the circumstances.”

The respondents continued to represent Anna Ham until July 11, 1989, when she informed them that she had retained other counsel.

Both Kendra Stanley and Anna Ham requested an invoice for services rendered. Kelley delegated the responsibility of preparing the invoices to Cahalin. Cahalin testified that he had to cull through notes and documents to reconstruct a schedule of the dates and serv[318]*318ices performed. This exercise in reconstruction resulted in the generation of three invoices based on hourly rates and expenses under the fee agreement. An invoice showing a total of $11,715 for approximately one year of legal services was sent to Kendra Stanley’s attorney. An invoice of $94,756, for approximately eleven months of legal services, was sent to both Kendra Stanley and Anna Ham. Kelley testified that this invoice was for the “joint endeavor” of representing both women in the will contest and that he expected to negotiate how the cost of services would be apportioned between them. A final invoice with a balance of $3,553, after crediting a retainer of $7,500, was submitted to Anna Ham for approximately eleven months of legal services.

After the invoices were sent to the women, Kelley submitted a claim to Anna Ham on July 17, 1989, based on the contingent fee agreement. In his letter, Kelley explained that based in part on the pressure he applied on the executor to accurately value the estate, Mrs. Ham’s share of the estate increased from $2 million to over $7 million. Noting that under their contingent fee agreement, the fee for legal services would be $1.5 — $2.0 million dollars, Kelley concluded by stating “[w]e submit for your approval this charge of $750,000 for services rendered.”

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Cite This Page — Counsel Stack

Bluebook (online)
627 A.2d 597, 137 N.H. 314, 1993 N.H. LEXIS 81, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelleys-case-nh-1993.