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
J. C. GALLINGER, CHAIRPERSON
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.
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.
Conditional Admission and Affidavit of Consent
("Conditional Admission") and during the Rule 26
hearing in this matter, Respondent Layne acknowledged the
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.
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.
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
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).
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.
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
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.
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.
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
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 ...