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Attorney Anthony Fusco who represents Newark FOP Lodge 12 and most of Newark's Finest facing suspension for unethical behavior |
Discipline Urged for Noted Cop Lawyer Who Split Tort Fees With Lay Manager
Henry Gottlieb
August 26, 2008
Anthony Fusco, a criminal defense lawyer best known for his work for New Jersey police officers in trouble, is facing a one-year suspension for paying $780,000 in unethical fee shares to a non-lawyer employee in his firm’s personal injury department.
In an opinion made public Monday, the Disciplinary Review Board said Fusco & Macaluso in Passaic paid claims manager Adam Greenspan more than one-third of the fees earned in 700 personal injury cases in recognition of his client-generation efforts.
For referrals, Greenspan mined his relationships with friends, relatives and a chiropractor, who was not identified, the DRB said.
The board recommended a censure for partner Roy Macaluso, who handles the 900-case-per-year personal injury side of the practice, but a year’s suspension for Fusco, citing the latter’s exclusive decision-making authority at the firm. Final disposition is up to the state Supreme Court.
Besides representing hundreds of police officers during his 36 years of practice, through his work with the Fraternal Order of Police, Fusco has been a defense attorney in sensational murder cases, has represented boxers Mike Tyson and Chuck Wepner and has been a guest expert on television talk programs, including Montel Williams’ and Mary Grace’s shows.
In 2000, he was the defeated Republican candidate for Democratic Rep. William Pascrell’s seat in Congress.
None of the payments to Greenspan were for Fusco’s criminal defense work or representation of police officers. The DRB stipulated that all the cases referred to the firm were meritorious on behalf of injured plaintiffs and that no runners or smarmy solicitation methods were used.
“The firm consistently obtained good results for its clients and continues to do so,” says Fusco’s lawyer, Justin Walder of Walder, Hayden & Brogan in Roseland. He says he will ask the Supreme Court to review the decision, particularly the recommendation of a one-year suspension.
That’s harsh and out of sync with precedents in which punishments as light as a reprimand were given in fee-sharing cases that didn’t involve the use of runners, Walder says.
The DRB opinion is another reminder to practitioners to avoid incentive plans that reward non-lawyer employees on a blatant percentage-of-fees basis obvious to auditors from the Office of Attorney Ethics, like the one who discovered Fusco’s arrangement.
Earlier this year, the state Supreme Court handed out suspensions to three lawyers in a firm with a similar employee fee-sharing scheme “Tomar, Simonoff, Adourian, O’Brien, Kaplan, Jacoby & Graziano of Cherry Hill ” but suspended the suspensions, mostly because eight years had passed before adjudication of the charges.
Fusco argued that the payments to Greenspan were permitted under an exception to the Rule of Professional Conduct 5.4(a), the prohibition against fee sharing with non-lawyers. The exception, RPC 5.4(a)(4), says a firm may include non-lawyer employees in compensation or retirement plans based on profit-sharing arrangements.
But bona fide profit-sharing comes from the pot of money that remains after all firm expenses are paid, not, as in this case, from a percentage of the gross fees in particular cases, the DRB said.
“If this fee-sharing arrangement were a permissible profit-sharing plan, the RPC 5.4(a)(4) exception would swallow the rule,” the DRB said. “Every attorney could claim that payments of fee shares to non-lawyers were made pursuant to a profit-sharing plan, without being required to demonstrate the legitimacy of that plan.”
Greenspan spent 10 years as an insurance adjuster earning up to $50,000 a year before going to Fusco’s firm in 1996. From 1997 to 2004 at Fusco’s firm, his typical annual salary was $31,200, but that was just for starters.
He received 42.5 percent of the firm’s fees received in cases he referred, but that amount was reduced to 37.5 percent if the cases had to be litigated. He told ethics investigators that he referred relatives and friends to the firm, but also brought in clients treated by a chiropractor he knew. Ninety percent of the firm’s personal injury cases settled.
If a client originally obtained by Greenspan later referred someone to the firm, Greenspan received credit for originating the second case, too.
At first, his shares were paid by Fusco from trust accounts to an unincorporated entity called AEG Enterprises. In 2000, the system was changed. The firm issued checks payable to Fusco, who endorsed the checks over to Greenspan.
In Greenspan’s best year, 2001, he earned $31,000 in salary and $196,000 in percentage payments, for a total of $227,000.
In May 2003, after an auditor for the Office of Attorney Ethics told Fusco the system was improper, Greenspan began receiving an annual salary of $100,000 a year.
The DRB said the purpose of the rule against fee-sharing is to make sure that referrals are in the client’s best interest, not in the interest of the party making the referral.
But Greenspan, who got more money for cases that settled than those that went to trial, “had a financial incentive to settle cases, regardless of whether settlement before litigation was in the clients’ best interests,” the DRB said.
The compensation structure belies Fusco”s argument that the intention was to reward Greenspan for his hard work, the DRB said.
The 700 cases from which Greenspan earned a piece of the fees included cases he worked on, but he only originated 130 cases “2 percent to 3 percent of all the personal injury matters handled by the firm during the six years of the arrangement,” Walder says.
“And the 90 percent settlement rate was for all cases, not just Greenspan’s,” Walder says.
He says putting Fusco out of business for a year would be unjust, particularly in light of the Supreme Court’s suspension of the license revocations of the Tomar, Simonoff lawyers.
Even after the managers of that Cherry Hill firm were told by a partner with ethics expertise that paying a percentage of fees to a non-lawyer office manager was unethical, the firm continued the scheme by funneling checks to the manager through his wife, a lawyer at another firm.
By contrast, Walder says, the DRB acknowledged that as soon as Fusco was told that his deal with Greenspan was unethical he shut it down and then he cooperated fully with the Office of Attorney Ethics.
The purpose of the rule against sharing fees is to prevent giving incentives to runners to bring in cases indiscriminately “cases that a lay person can’t evaluate or won’t examine because of greed, Walder suggests.
In this case, Greenspan was a full-time employee with case evaluation expertise from his years in the insurance business, Walder says.
“There is distinction between a full-time hard-working employee and using a guy who runs a tow truck and you’re giving him some money or you’re doing something with somebody who deals with immigration,” Walder says. “None of that exists here and that becomes an important issue, it seems to me, in terms of discipline.”
Greedy
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