VIRGINIA:

BEFORE THE VIRGINIA STATE BAR DISCIPLINARY BOARD

IN THE MATTER OF KENNETH HARRISON FAILS, II

VSB Docket Nos.

00-042-2504

00-042-2638

01-042-1308

01-042-1309

01-042-1387



ORDER OF REVOCATION

On March 22, 2002 this matter came on for hearing upon certification by the Fourth District Committee, Section II, of the Virginia State Bar. The hearing was held before a duly convened panel of the Virginia State Bar Disciplinary Board consisting of William M. Moffet, Chair, presiding, and James L. Banks, Jr., Thaddeus T. Crump, Karen A. Gould, and Roscoe B. Stephenson, III.

The Clerk of the Disciplinary System sent all notices required by law.

The Respondent, Kenneth Harrison Fails, II ("Respondent" or "Mr. Fails") appeared in person and with his counsel, Michael L. Rigsby, Esquire, who stated that his representation of Mr. Fails was limited to representing him on his demand pursuant to Va. Code ▀ 54.1-3915 that these complaints be tried by a three judge panel rather than by the Disciplinary Board. After the hearing on that demand, Respondent and his counsel excused themselves from the remainder of the proceedings.

Seth M. Guggenheim, Esquire appeared as counsel for the Virginia State Bar.

The Chair opened the hearing by polling all members of the panel as to whether there existed any conflict or other reason why any member should not sit on the panel. Each, including the Chair, responded in the negative.

Before proceeding upon the case in chief, Respondent, by counsel, was heard on his demand pursuant to Va. Code ▀ 54.1-3915. The Board acknowledges that William M. Moffet, Chairman of the Virginia State Bar Disciplinary Board, previously heard this matter by telephone conference on March 18, 2002. Upon consideration of the argument of counsel, this panel hereby affirms the order of Chairman William M. Moffet entered March 19, 2002. Respondent's demand for the three-judge panel is untimely and is denied for the reasons set out in that order, which order is hereby incorporated by reference and adopted by this panel. Thereafter, Respondent and his counsel excused themselves from the remainder of these proceedings.

The Virginia State Bar filed twenty- three exhibits which were received and accepted into the evidence without objection.

The Board finds that the following facts have been established by clear and convincing evidence:

General Findings of Fact

1. At all times relevant to the charges in this matter, Respondent Kenneth Harrison Fails, II, has been an attorney licensed to practice law in the Commonwealth of Virginia.

Findings of Fact for VSB Docket Nos. 00-042-2504 and 00-042-2638

2. In 1999 and 2000, the Respondent represented Joseph Geraci and Theresa Geraci in litigation against CRI Mechanical, Ltd., which originated in the Fairfax County, Virginia, General District Court, and which was concluded in the Fairfax County, Virginia, Circuit Court, as an appeal from the General District Court.

3. In the General District Court action, a Motion for Summary Judgment was granted on or about October 27, 1999, in favor of CRI Mechanical, Ltd., because the Respondent failed to file and serve a Bill of Particulars on behalf of his client by the deadlines set by the Court. As an excuse for his failure to file and serve the required Bill of Particulars on time, the Respondent stated that he had to go to his sister's wedding and that his copy machine had been broken.

4. In consequence of the adverse judgment rendered by the General District Court, the Respondent appealed his clients' case to the Circuit Court on or about November 19, 1999. The case was subsequently set for trial, de novo, in the Circuit Court, on February 24, 2000.

5. Although correspondence regarding settlement of the case was exchanged between Respondent and defense counsel, no settlement had been reached as of January 28, 2000. Defense counsel therefore served discovery requests upon Respondent on or about that date.

6. The Respondent failed to make any discovery responses on behalf of his clients, when due, Defense counsel contacted Respondent by facsimile transmission and by phone on February 21, 2000, regarding the outstanding discovery and settlement of the case. On that date, and for the first time, Respondent stated to defense counsel that he might have a scheduling conflict with the trial date, and suggested to defense counsel that the trial, set for February 24, 2000, be continued.

7. Defense counsel discussed the matter of a continuance with his client, and thereafter advised the Respondent, via a facsimile transmission on February 21, 2000, that the defendant would not consent to a continuance of the case from its scheduled trial date.

8. When it became clear to the Respondent that the case could not be continued by agreement, he telephoned defense counsel on the evening of February 23, 2000, to determine if the case set for trial at 10:00 a.m. the following day, might be settled. Without the prior knowledge or consent of his client, the Respondent agreed to settle their case against CRI Mechanical, Ltd., for $500.00.

9. Pursuant to the settlement agreement reached, the Respondent was to draft and forward to defense counsel a proposed release and "Stipulation of Dismissal with Prejudice." Defense counsel was to forward a check on behalf of his client in the sum of $500.00 following defense counsel's receipt of those documents.

10. On March 14, 2000, defense counsel telephoned the Respondent because he had received no settlement documents from the Respondent. The Respondent stated to defense counsel at that time that he, the Respondent, had not informed his clients that he had settled the case; that he was going to inform his clients that he had settled the matter for $2,500.00, and not the $500.00 that he had agreed to with defense counsel; and that he, the Respondent, was going to make up the $2,000.00 difference between the two amounts using his own money.

11. In aid of the Respondent's scheme to misrepresent to his client the particulars of the settlement agreement actually reached on their behalf, the Respondent asked defense counsel to have his client sign a release that would state that the case had been settled for "the sum of $500.00 and other good and valuable consideration." The Respondent further stated to defense counsel that he, the Respondent, would represent to his clients that the "other consideration" of $2,000.00 had already been paid by CRI Mechanical, Ltd. and that was the explanation for the settlement proceeds being paid by two checks and the reason for the wording of the release.

12. Defense counsel informed the Respondent that he would have no part of the scheme detailed in Paragraphs 10 and 11. Thereafter, inasmuch as the Court, sua sponte, had entered a dismissal order on March 6, 2000, to become effective 35 days thereafter, Respondent filed a "Motion to Vacate Order of Dismissal." The Respondent's motion was heard and denied on March 31, 2000. At argument on the Motion the matters set forth in the preceding paragraphs were brought to the attention of the Court. Thereafter, both the presiding Circuit Court Judge and defense counsel separately brought these matter to the attention of the Virginia State Bar.

13. The Respondent acknowledged to a Virginia State Bar investigator that his clients were first informed of the actual outcome of their case at the time that he responded to the Virginia State Bar on or about May 1, 2000.

Nature of Misconduct for VSB Docket Nos. 00-042-2504 and 00-042-2638

The Board unanimously finds, by clear and convincing evidence, that Respondent violated the following Rules of the Virginia Rules of Professional Conduct:

RPC 1.4(a), (b) and (c)

RPC 8.4(a).

The facts clearly establish that the Respondent did not keep his clients advised of the status of the matter or of negotiations. He not only failed to explain developments to his clients but he sought to deceive his clients about negotiations. These findings support violations of RPC 1.4(a), (b) and (c). This scheme to attempt to mislead his clients into believing that the defendant had paid more in settlement than it had and his efforts to enlist opposing counsel's assistance in this scheme clearly violate RPC 8.4(a)



Findings of Fact for VSB Docket No. 01-042-1308

14. In or around the fall of 1999, Medical Science Technologies, Inc., ("MST"), engaged the Respondent to pursue claims against Laborie Medical Technologies, Inc., ("LMT"). On January 3, 2000, the Respondent filed suit on behalf of MST against LMT in the United States District Court for the Eastern District of Virginia, Alexandria Division.

15. During the course of the litigation, and among other wrongful and neglectful conduct Respondent:

a. failed to provide discovery responses in accordance with a consent order compelling such responses, which failure drew a sanction in the sum of $500.00;

b. failed to comply with the terms of the Court's scheduling order and the Federal Rules of Civil Procedure by failing to make disclosures of witnesses and present trial exhibits prior to and at the pretrial conference conducted in the case;

c. served interrogatories and requests for production of documents upon LMT long after the discovery cutoff date set in the case, and without having first obtained leave of Court to do so;

d. certified to the Court that he had faxed and hand-delivered an opposition to a motion filed by LMT, when, in fact, he had not done so;

e. stated in an opposition to a motion filed by LMT that Respondent had served witness and exhibit designations upon LMT when in fact no such documents had been served; and

f. moved for voluntary dismissal of his client's case, citing as reasons for having to file such motion that he had no support staff, had only been practicing for three years, had little federal court experience, and "had great difficulty in keeping up with his practice and obligations."

16. By Order entered on September 14, 2000, and amendments thereto entered thereafter, the aforesaid District Court dismissed MST's complaint, without prejudice, but conditioned its re-filing upon Respondent's personal payment, in advance, of LMT's attorneys' fees in the sum of $30,000.00 and the aforesaid sanction in the sum of $500.00. The Court also ordered that Respondent

may neither file any pleading in this court nor appear before any judge of the United States District Court for the Eastern District of Virginia unless he has associated with him an attorney who has experience practicing before this court. This restriction will not be lifted until [Respondent] provides evidence that he successfully completed a Continuing Legal Education course focusing on federal practice in the United States District Court for the Eastern District of Virginia.



17. At a hearing on motions filed in the matter, the United States District Judge noted for the record that Respondent was late for court; that he had "been consistently late in fulfilling [his] obligations in [the] case"; that he had "failed to conduct any discovery in [the] case"; and that he had "failed adequately to respond to [LMT's] discovery." The Court also stated that the Respondent had "totally failed to comply with the scheduling order in terms of providingÍat the pretrial meeting [a] list of witnesses or exhibits" and that Respondent had "failed to obtain proper leave of court to file out of time."

Nature of Misconduct for VSB Docket No. 01-042-1308

The Board unanimously finds, by clear and convincing evidence, that Respondent violated the following Rules of the Virginia Rules of Professional Conduct:

RPC 1.1

RPC 1.3(a).

There can be no question that Respondent did not provide competent representation of his client in the matter at issue as required in RPC 1.1. He admitted as much when he filed the motion for voluntary dismissal referred to above. Moreover, the record clearly establishes his failure to act with reasonable diligence and promptness in his representation of his client as required by RPC 1.3(a).

Findings of Fact for VSB Docket No. 01-042-1309

18. The Respondent's license to practice law was "administratively" suspended by the Virginia State Bar between November 17, 2000, and December 19, 2000, for his failure to perform all of his membership and Mandatory Continuing Legal Education obligations. The Respondent, by service of certified mail upon his agent, received notice of the commencement of such suspension on November 20, 2000.

19. Notwithstanding the administrative suspension of his license to practice law, Respondent continued to practice law during the period of the suspension. Respondent appeared in open court on December 8, 2000, as counsel for the defendant in United States of America v. Gilchrist, Docket No. 00-M-1063-ALL, pending in the United States District Court for the Eastern District of Virginia, Alexandria Division. He advised the Virginia State Bar investigator that he had actual notice of his suspension and went to court that morning with the intention of advising his client, opposing counsel and the court of his suspension, but changed his mind and decided to proceed on as counsel because the U.S. Attorney offered his client such a good deal. Thereupon, he proceeded on with the hearing without advising the court or opposing counsel of his suspension.

20. At the time of Respondent's appearance in Court on behalf of defendant Gilchrist, the restrictions imposed by the U. S. District Court on September 14, 2000 and as set out in Paragraph 16 above had not been complied with or lifted. Respondent represented defendant Gilchrist in Court without first having associated counsel experienced in practice before said Court. His explanation for this conduct offered to the Virginia State Bar investigator was that he thought the restriction only applied to civil cases even though there is no such limitation in the language of the order.

Nature of Misconduct for VSB Docket No. 01-042-1309

The Board unanimously finds, by clear and convincing evidence, that Respondent violated the following Rules of the Virginia Rules of Professional Conduct:

RPC 8.4(b) and (c).

The record establishes that he knew he was suspended and knew that he was not supposed to appear in court, yet he did so any way because it was expedient to do so. Thus, he committed a criminal or deliberately wrongful act. His failure to advise the court of his status was a misrepresentation of his status to the court. This failure to abide by the laws of the Commonwealth and to do so in open court reflect adversely on the Respondent's honesty, trustworthiness and fitness to practice law. Moreover, these actions involved dishonesty, fraud, deceit and misrepresentation. Thus, the violations of RPC 8.4 (b) and (c).

Findings of Fact for VSB Docket No. 01-042-1387

21. In 2000, the Respondent represented the debtor in In Re: Ida Altamirano, Debtor, Case No.:00-12362-SSM, in the United States Bankruptcy Court, Eastern District of Virginia, Alexandria Division. This representation occurred, in part, during the period when Respondent's license to practice law in Virginia was "administratively" suspended, as set forth in Paragraph 18 hereof.

22. In the course of his representation of the debtor in the aforesaid matter, Respondent filed a document with the court late which resulted in his client losing the benefit of her homestead exemption. As a consequence, the court ordered the debtor to pay the trustee the $4,138.92 amount she was attempting to exempt. The Respondent tendered his own personal check to the trustee in the amount of $4,138.92. However the check was returned for insufficient funds.

23. The Respondent stated to a Virginia State Bar investigator that the bankruptcy matter was Respondent's first bankruptcy case and that the payment made to the trustee was from his personal funds because he had erred in filings required to preserve his client's homestead exemptions.

24. The trustee in bankruptcy procured an Order to Show Cause against the Respondent due to the tender of the worthless check. The matter was ultimately dismissed because the worthless check was made good with a replacement check, and the Respondent reimbursed the trustee for the bank fees incurred by the trustee on account of the worthless check.

Nature of Misconduct for VSB Docket No. 01-042-1387

The Board unanimously finds, by clear and convincing evidence, that Respondent violated the following Rules of the Virginia Rules of Professional Conduct:

RPC 1.1

RPC 1.3(a).

Respondent's conduct demonstrated that he lacked the requisite competency to practice in this area of the law, yet he did so anyway. His lack of competency resulted in his client's rights being prejudiced. Then, he compounded the situation by tendering his own check which was dishonored because of insufficient funds. This conduct violated both RPC 1.1 and RPC 1.3(a).

IMPOSITION OF SANCTIONS

After the Board made its findings of Misconduct on the above matters, the Bar introduced the Respondent's prior disciplinary record into evidence and presented the Bar's argument regarding sanctions. In order to put the Board's action in these matters in proper perspective, it is necessary to briefly review the Respondent's prior disciplinary record.

The first matter is VSB Docket No. 99-042-2832. From October 29, 1998 to August 19,1999 Respondent was administratively suspended from the practice of law for his failure to comply with similar requirements as were involved in VSB Docket No. 01-042-1309 discussed above. Even though he had notice of that administrative suspension, he continued to practice law during that almost ten month period of time. On July 13, 2000, the Fourth District Committee found the above facts to have been proven by clear and convincing evidence and imposed a private reprimand with terms. However, the Respondent did not comply with the terms and the matter was certified to the Disciplinary Board for a trial de novo. At an August 24, 2001 hearing, the Disciplinary Board found that his conduct, as described above, violated DR 1-102 in that he committed a crime or other deliberately wrongful act that reflected adversely on his fitness to practice law and engaged in conduct involving dishonesty, fraud, deceit or misrepresentation which reflected adversely on his fitness to practice law. Accordingly, the Board imposed a three month suspension of his license to practice law.

In the next matter, VSB Docket No. 01-042-1310, the Respondent received a public reprimand upon the Respondent for conduct during 2000. In the underlying matter, the Respondent was hired by his clients to represent them in a fairly simple litigation matter which involved a dispute between his clients and a home improvement contractor. During the course of that representation, the Fourth District Committee found that his conduct violated RPC 1.1 in that he failed to represent his client competently and RPC 1.4 in that he failed to communicate with his clients and keep them reasonably informed about their case.

Thus, even though he practiced from October 29,1998 to August 19,1999 while his license was suspended and he was put on notice that the Bar took this misconduct very seriously in 1999 when VSB Docket No. 99-042-2832 complaint was initiated; even though he was treated relatively leniently by the Fourth District Committee when it imposed a private reprimand with terms for this misconduct on July13, 2000; he took action or inaction which resulted in his license being administratively suspended again just a few short months later on November 17, 2000. Then, with full knowledge of this administrative suspension, he deliberately elected to practice during the time of said suspension because it was expedient to do so. Mr. Fails has received a private reprimand with terms, which he failed to comply with. Then, that matter was certified to the Board and he was given a three month suspension. Then, in November of 2001 he was given a public reprimand for failing to act competently and failing to communicate with his clients in a matter he handled in 2000. Now, in the matters currently before the Board, it has been established that in the first matter he engaged in conduct in 2000 which involved not only the failure to keep his client informed about negotiations, but a consciously conceived scheme to deceive his clients about the true terms of the settlement; in the second matter he handled a matter which he was not competent to handle and his incompetence resulted in prejudice to his client; in the third matter he knowingly and deliberately practiced law when he knew he was not licensed to do so because it was expedient to do so; and in the fourth matter he again handled a matter he was not competent to handle and his incompetence resulted in prejudice to his client. Thus, in the few short years he has been practicing in Virginia, Respondent has been found to have engaged in misconduct in six separate instances ( the four involved in this hearing and the two involved in the prior misconduct proceedings).

In consideration of all of the above, the Board finds that Respondent is either unwilling or unable to comply with the Rules of Professional Conduct and, as such, presents an ongoing threat and danger to the public who might engage Respondent for legal services. Moreover, his misconduct in these four matters alone warrant revocation of his license. However, when his misconduct in these four matters is considered in conjunction with his prior disciplinary record and the risk of future harm to the public, it is abundantly clear that revocation is the appropriate sanction herein.

The Board notes that Respondent chose to not participate in the hearing on these matters after being heard on his demand pursuant to Va. Code ▀ 54.1-3915 that these complaints be tried by a three judge panel rather than by the Disciplinary Board. Mr. Fails' election not to participate had absolutely no bearing upon the Board's findings and imposition of sanctions in this matter. The Board's decision was based solely upon the evidence presented at the hearing.

Accordingly, it is ORDERED that the license to practice law in the Commonwealth of Virginia of KENNETH HARRISON FAILS, II, be, and the same is, REVOKED, effective March 22, 2002.

IT IS FURTHER ORDERED that as directed in the Board's March 22, 2002 Summary Order in this matter, a copy of which was served on Respondent by certified mail, Respondent must comply with the requirements Part Six, Section IV, Paragraph 13 (K)(1) of the Rules of the Supreme Court of Virginia. The time for compliance with said requirements runs from the March 22, 2002 effective date of the Summary Order. All issues concerning the adequacy of the notice and arrangements required by the Summary Order shall be determined by the Board.

IT IS FURTHER ORDERED that the Clerk of the Disciplinary System send an attested and true copy of this Opinion Order to Respondent, Kenneth Harrison Fails, II, Suite 920, 1850 M Street, NW, Washington, DC 20036 and to Seth M. Guggenheim, Assistant Bar Counsel, Virginia State Bar, 707 East Main Street, Suite 1500, Richmond, Virginia 23219.

Tracy J. Stroh, Chandler & Halasz, P.O. Box 9349, Richmond, VA 23227, (804) 730-1222, was the reporter for the hearing and having been duly sworn, transcribed the proceedings.

The Clerk of the Disciplinary System shall assess costs pursuant to Part 6, Section IV, Paragraph 13(K)(10) of the Rules of the Virginia Supreme Court.






ENTERED THIS __ DAY OF ____________, 2002




VIRGINIA STATE BAR DISCIPLINARY BOARD




By _______________________________

William M. Moffet

Chair