Attorney Jay Brown asks med pot client for $37,500 nonrefundable fee, 9 percent of business

UPDATE, 9:15 AM, 5/15/14: A state Bar official informs me that the Rule 1.8 (i) of the Rules of Professional Conduct may come into play here:

1.8 (i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:

             (1) Acquire a lien authorized by law to secure the lawyer’s fee or expenses; and

             (2) Contract with a client for a reasonable contingent fee in a civil case.

I guess it depends on what the term "proprietary interest" means....

It seems to me, although I am neither a lawyer nor state bar official, that this might apply, too:

Rule 1.7.  Conflict of Interest: Current Clients.

      (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

             (1) The representation of one client will be directly adverse to another client; or

             (2) There is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

      (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

             (1) The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

             (2) The representation is not prohibited by law;

             (3) The representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

             (4) Each affected client gives informed consent, confirmed in writing.

 

Paragraph (b) says: A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent, except as permitted or required by these Rules.

 

Brown's agreement asks the client to waive any conflict of interest; it does not give him carte blanche to use information "to the disadvantage of the client."

 

Clearly, Brown, who is representing a passel of clients in the medical pot appliocations by his own admission, cannot possible argue that he can't represent all equally and that he might not have to put one above another. Or can he? And is the language here loose enough for him to slip through the loophole?

 

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In remarkable legal documents, well-known attorney Jay Brown asks a medical marijuana client for $37,500 up front, 9 percent of the business for 10 years and freedom to represent other clients whose interests might conflict.

One document, drawn up last month and attached here, is called a “disclosure of profitsharing agreement outside the ownership structure" and the other, from November is the client engagement letter. The former was disclosed to Clark County while the latter is the kind of confidential document lawyers hate to see go public, a rare peek behind the attorney-client relationship and of one involving arguably the most successful lobbyist in local government history.

The first document  was not part of the massive disclosure given out by the government. Nor does it appear that Brown would be subject to the extensive government scrutiny of actual "owners" of the business.

"I am not an owner," Brown declared during an interview. "I have an interest. I have to disclose that."

Brown, who said he started pursuing med pot clients "as soon as the governor signed the bill in July," said he filed several such documents with the county for his double figures in clients.

Brown said he usually "takes a success fee of some kind" and that this is no different. 

In the November engagement letter with the client, whose name I am withholding to protect the source, Brown:

►Asks for a $37,500 “Nonrefundable retainer” and for a “Success Fee in the amount of nine percent of net profits from each licensed dispensary, grow, or edible business for a time period of 10 years.” But, as only a lawyer could do, Brown goes on to say the 9 percent “shall not be considered to have acquired any ownership interest…”

So you have a percentage of the business but are not an owner? Got it.

►Warns the client he “may be in violation of Federal law and may potentially face Federal criminal or civil charges.”

►Asks the client to acknowledge that the attorney may represent others applying for the same license, “potential conflicts of interest…may arise” and the client waives any conflict of interest.

►My favorite and juiciest part: “NO PROMISES OR GUARANTEES OF SUCCESS”

And this: “Please note that it is impossible and inappropriate for the Attorney to Provide You any promises or guarantee about the success or outcome of any grow business license applications (s) at this time.” I love the “at this time” part.

Brown appears to be within the letter of the state bar’s rules of professional conduct:

Rule 1.8.  Conflict of Interest: Current Clients: Specific Rules.

      (a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

             (1) The transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;

             (2) The client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and

             (3) The client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

The document is quite the read and is sure to cause a sensation down on Grand Central Parkway.