Prior to filing for bankruptcy, the Respondent Peter Herman served as co-lead counsel in two high-value contingency cases. The plaintiffs in those cases prevailed, and under the governing fee agreements, his firm, Tripp Scott, received approximately $10 million in fees. These fees were received by the firm after Herman filed his Bankruptcy Petition, but before March 20, 2012, the date he filed his financial disclosure schedules. In his Report and Recommendation, the referee found that, by failing to disclose his expected bonus from the firm’s $10 million fee, Herman intentionally misled his creditors and the Bankruptcy Trustee. The referee rejected Herman’s advice of counsel defense, concluding: “First and arguably foremost, reliance on advice of counsel is not available as a defense in a Bar discipline proceeding.” As a sanction, the referee recommended that Herman be suspended for 18 months. But the Florida Supreme Court rejected the recommendation and remanded the matter back to the referee.
In Florida Bar v. Adorno, 60 So.3d 1016 (Fla. 2011), the Court found that Adorno violated the Rules when he secretly settled a putative class action solely on behalf of the named plaintiffs and abandoned the putative class, thereby creating a windfall for the named plaintiffs and his firm. In Adorno, the Court declined even to consider the respondent’s advice of counsel defense.
“While we do not fault the referee for interpreting this Court’s precedent as he did, the general principle we articulated in Adorno is not so unyielding as to preclude consideration of Herman’s advice of counsel defense in this case. The reason an advice of counsel defense is usually unavailable in Bar discipline proceedings is that the Bar rules themselves charge Florida lawyers with knowledge of the rules and of the standards of ethical and professional conduct prescribed by this court. But here, Herman does not claim that he relied on the advice of counsel as to the meaning and requirements of any Bar rule. Nor does this case have anything to do with Herman’s work as an attorney serving clients. Instead, Herman himself was the client, and the charges in this case are inextricably intertwined with Herman’s obligations under federal bankruptcy law. The Bar rules at issue did not require of Herman anything over and above what federal bankruptcy law already required – honesty and good faith in completing his bankruptcy schedules. To the extent that federal bankruptcy law permits an advice of counsel defense to negate a finding of bad intent, we conclude that such a defense should also be available to Herman in this Bar discipline proceeding.”
The Court therefore remanded back to the referee. And then: “After considering the amended report of referee and briefs filed in this matter, the Court approves the amended report of referee. Respondent is found not guilty of the alleged misconduct, and the above cause is hereby dismissed.”
Florida Bar v. Herman, 297 So.3d 516 (Fla. 2020) and 2021 WL 4704793 (Fla. Oct. 8, 2021).