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In re Layne

Supreme Court of Montana

August 30, 2019

In the Matter of RICHARD M. LAYNE, An Attorney at Law, Respondent,

          ACCEPTANCE OF RULE 26 CONDITIONAL ADMISSION AND AND AFFIDAVIT OF CONSENT, ORDER FOR DISCIPLINE

          KELLY J. C. GALLINGER, CHAIRPERSON

         Hearing on Respondent's Conditional Admission and Affidavit of Consent came before an Adjudicatory Panel of the Commission on July 25, 2019. Commissioners participating in the healing were Kelly J. C. Gallinger, Chair; Pat DeVries; Jean Faure; Dan O'Brien; Nels Swandal; Patt Leikam; Heather Perry; Lori Maloney; and Bob Savage. The Office of Disciplinary Counsel was represented by Acting Chief Disciplinary Counsel, Shaun R. Thompson. Respondent was represented by Attorney Maxon Davis and Respondent appeared and was examined by telephone.

         During the hearing, acting Disciplinary Counsel Thompson and Attorney Davis represented to the Commission that the Office of Disciplinary Counsel had agreed to withdraw all of the Rule violations alleged against Respondent in the Complaint, except for violation of Rule 1.4(a)(1), MRPC, in exchange for Respondent's Conditional Admission and Affidavit of Consent, Accordingly, the only alleged rule violation at issue is Rule 1.4(a)(1), MRPC.

         In his Conditional Admission and Affidavit of Consent ("Conditional Admission") and during the Rule 26 hearing in this matter, Respondent Layne acknowledged the following:

         1. Respondent Richard M. Layne (Layne) is a retired attorney residing outside of Montana. Layne appeared as counsel in two different Montana legal proceedings and consents to the Commission's jurisdiction over him for purposes of the instant disciplinary matter.

         2. Layne entered into a contingency fee agreement with Billie Redding (Redding) to pursue her claims against Anderson 2urMuehlen & Co., P.C (AZ) relating to claims alleging misconduct regarding investment and financial advice rendered by AZ. Redding incurred significant financial damages as a result of the allegedly tortious investment advice from AZ. AZ similarly advised at least six other Montana clients to their alleged detriment.

         3. Layne entered into an agreement with Montana attorney Linda Deola (Deola) to have her act as local counsel in pursuing Redding's claims against AZ in Montana and to share attorneys' fees.

         4. On July 27, 2009, Deola filed a lawsuit on Redding's behalf against AZ and others in Montana First Judicial District Court, Lewis and Clark County, Cause No. ADV 09-649 (the Redding v. AZ, et. at case).

         5. In July 2009, Layne submitted a pro hac vice application to the State Bar of Montana. Layne appeared pro hac vice in the Redding v. AZ, et al case, although he was never formally admitted pro hac vice by the Court, Layne admits that he was required to abide by the Montana Rules of Professional Conduct and agrees he is subject to the jurisdiction of the Montana Supreme Court and the Commission for purposes of discipline.

         6. In March 2011, while preparing for a mediation of Redding's claims against AZ, Layne and Deola discussed with Redding that Deola had been approached by additional claimants against AZ and verbally advised Redding of the potential problems and benefits of joint representation. Layne advised Redding that she did not have to agree to joint representation by Deola or agree to a settlement of her claim. Redding was not advised by Layne specifically that there may be a "conflict of interest." This discussion between Layne, Deola and Redding was not reduced to writing and Redding did not provide written informed consent regarding Deola's joint representation of numerous claimants.

         7. Deola subsequently agreed to represent five additional clients who also had claims against AZ arising out of the same alleged investment misconduct and filed lawsuits against AZ on their behalf. In total, there were seven claimants alleging damages relating to their investments through AZ. Layne represented only Redding. Deola represented' Redding and five other claimants; the seventh claimant was represented by attorney John Bloomquist.

         8. AZ was insured by New York Marine and General Insurance Company (NYM) under a professional liability policy. NYM had underwritten two applicable claims-made policies for AZ, each with policy limits of $2, 000, 000.

         9. The aggregate value of Deola's clients' claims exceeded the insurance proceeds available for settlement under the NYM policies issued to AZ, In the Spring 2012, Layne had further discussions with Redding regarding how a global settlement among all seven claimants would work, how settlement proceeds would be allocated among the seven claimants and the rationale behind the allocation of settlement proceeds and advised Redding that she did not have to agree to a global settlement. These discussions between Layne and Redding were not reduced to writing and Redding did not provide written informed consent regarding the aggregate settlement or how the settlement proceeds were allocated among the seven claimants.

         10. In June 2012, the seven claimants reached a global settlement with AZ. Pursuant to the settlement agreement, NYM contributed $4 million dollars to the settlement and A2 agreed to pay an additional $650, 000 over a number of years for a global settlement of $4.65 million dollars. The aggregate amount of Deola's clients' claims exceeded S4.65 million. The settlement funds were distributed to the seven claimants pro rata based upon the total amount invested by each claimant. Redding's ...


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