Civil rights attorney faces suspension for overcharging

Controversial civil rights attorney STEPHEN YAGMAN [#69737], 53, of Venice faces a one-year suspension from practice for several ethical violations, including overcharging his clients in a police misconduct case. A State Bar Court review panel recommended that Yagman also be placed on three years of probation and must make restitution to five clients. The recommendation requires California Supreme Court approval before it takes effect.

The discipline case against Yagman stemmed from a federal lawsuit he filed against a Los Angeles police unit after the fatal shooting of four robbery suspects at a McDonald’s restaurant. Yagman represented the heirs of the four suspects and one surviving suspect.

After trial, the five were awarded judgments of more than $44,000, from which Yagman deducted 45 percent as his contingent fee. He also deducted costs.

He then sought attorney fees from the court, without disclosing his contingency fee agreement with his clients. The judge awarded him $378,175 in attorney fees.

Yagman’s conduct, the review panel found, amounted to taking an unconscionable fee, in violation of rule 4-200(A) of the Rules of Professional Conduct.

In a 58-page ruling, Judge James Obrien noted that Yagman’s “advocacy skills are unquestioned,” but added, “It must be made clear that more is needed to practice law in this state. A lawyer must treat clients fairly, honestly and with candor.” He upheld a hearing judge’s findings of wrongdoing as well as two additional counts.

Arthur Margolis, Yagman’s attorney, said he will ask the review department to reconsider its ruling; failing that, there is “a good chance” Yagman will appeal to the Supreme Court.

Calling the ruling “incredible,” Margolis said the review panel found his client culpable of misconduct (particularly entering into an illegal fee agreement) he was never charged with.

“Had those things been charged, we would have litigated them,” Margolis said. He accused the review department of developing its own case.

When the judge in the federal case awarded attorney fees to Yagman, he stated, “The court doubts that any lawyer in the greater Los Angeles area, other than plaintiffs’ lead counsel, would or could have represented them in this case, and devoted the time, effort and skill which it took to produce the verdict.”

After Yagman took fees and costs from the clients’ award, it left $810 for each client as their net recovery.

They complained that Yagman was paid twice, once in court-awarded attorney fees and once by the contingency fees.

Obrien acknowledged that civil rights cases frequently address fundamental societal issues and involve “substantially more than a monetary award.”

Despite Yagman’s “superlative performance” in the case, however, Obrien found that “the amount of the fee outweighs the value of the services in light of the results obtained…

“The disproportion between attorney’s fees and the recovery remaining for the benefit of the clients in this case compels the conclusion that in taking 45 percent of the total judgment plus the reasonable fees awarded by the court, [Yagman] exceeded the limits of rule 4-200.”

The bar also charged that Yagman did not notify his clients of a settlement offer by the Los Angeles city attorney.

Yagman claimed he never received the offer, but both the hearing and review judges disagreed.

In total, Obrien found that Yagman failed to communicate a written offer to his clients, promptly pay clients funds to which they were entitled, in two counts failed to give an appropriate accounting, commingled and misappropriated funds, and entered into an illegal fee agreement and collected an unconscionable fee.

The misappropriation, fee agreement and fee collection violations were not found by the hearing judge.

Yagman offered testimony about his good character from a broad spectrum of lawyers and judges, was candid during the discipline proceedings and took action to resolve the dispute with his clients.

Yagman was disciplined in 1989 by the bar for seeking an unconscionable fee in a 1980 case.

In that matter, he was suspended for six months and given a two-year probation.