Law
This is a follow-up to my article, Attorney Alleged To Have Tried To Hack Judge’s Email Account In Libman (July 25, 2024). That article chronicled allegations that, as the title suggests, an attorney (Libman) who had been ordered to return certain attorney fees decided that the judge in the case was colluding with the opposing attorney, and so decided to attempt to hack into the judge’s mail account to obtain proof. Suffice it to say that such conduct is extraordinary.
The update is that the State Bar Court has recommended that Libman be disbarred, according to the Decision And Order Of Involuntary Active Enrollment, Matter of Libman, Cal. Bar Ct. # 222353 (Jan. 28, 2025). Nine charges of misconduct were brought against Libman, and the State Bar Court held that all of them had been proven by clear and convincing evidence. More on that below, but for now please note that this decision is subject to final review to the California Supreme Court as to whether Libman should be disbarred.
It is not necessary to consider all the charges against Libman, but rather we will here focus on the creditor-debtor aspects of the decision and order.
The Superior Court that was involved in the underlying case (which you can read about in my previous article) ordered Libman to provide an accounting of the $1.65 million or so that Libman had received in attorney’s fees. Instead of providing records, Libman simply submitted a one-page document that listed four dates on which payments were received and the amount of those payments. This led to Libman being deposed in late 2020, but he refused to answer many questions although the Superior Court judge overruled his objections. The questions that Libman refused to answer included those which sought to investigate where Libman had deposited the $1.65 million in fees.
Ultimately, Libman was held in contempt of court for failing to answer these questions and the Superior Court additionally awarded a little over $44,000 in attorney fees against Libman that had been incurred by his failure to respond (and he never did). Soon thereafter, the Superior Court granted an additional monetary sanctions against Libman for a little over $116,000.
The Superior Court also issued so-called “issue sanctions” against Libman which, among other things, deemed established that Libman did not earn the $1.65 million in the attorney fees that he had received. Because of this, the Superior Court next issued a disgorgement order against Libman which ordered him to return the $1.65 million, plus 10% annual interest from the date of the hearing, which was March 24, 2023. Libman was also ordered to do certain other things, such as to list his pending cases and recent settlements, but Libman failed to comply with this part of the Superior Court’s order as well.
At his debtor’s examination, Libman refused to answer questions even though the Superior Court had overruled his objections. All of this conduct by Libman resulted him being held in contempt of court, with apparently a $4,000 additional fine plus a daily fine of $700 to begin August 22, 2023 and continuing until Libman complied with the Superior Court’s orders.
Meanwhile, Liebman had appealed to the California Court of Appeals, which reversed the $116,000 in monetary sanctions but upheld the disgorgement order for the $1.65 million. Ultimately, Libman appealed the decision all the way up to the U.S. Supreme Court, but that court refused to hear his appeal. With the orders of the Superior Court now being final, final, final, and no further avenue of appeal pending, Libman still refused to comply with those orders.
Counts six, seven and eight of the State Bar’s charges against Libman were that he committed an ethical violation by failing to obey the aforementioned court orders. These charges were proven by clear and convincing evidence based on the court records.
And, yes, if you were wondering, the Bar Court also held that Libman’s attempts to hack the Superior Court judge’s e-mail account was an act of moral turpitude, corruption, collusion and dishonesty.
In recommending that Libman be disbarred, the Bar Court wrote:
“Libman’s misconduct is egregious and extensive, encompassing nine serious ethical violations, including acts of moral turpitude, false statements under oath, conflicts of interest, and repeated defiance of court orders. He knowingly acted as a figurehead attorney in a collusive scheme, submitted false declarations to secure $1.65 million in attorneys’ fees, and concealed relationships with opposing counsel. Even after exhausting appeals, Libman refused to return fees as ordered, compounding his misconduct. Beyond this, his deliberate efforts to compromise and access the court and private communications of a sitting judge (and Kabateck) undermines the administration of justice and demonstrates an extraordinary and calculated violation of ethical standards. His actions, rooted entirely in his role as an attorney, reveal a complete disregard for the responsibilities of the legal profession.”
ANALYSIS
An attorney is an officer of the court and is pledged to obeying the orders of a court, even if ― or particularly if ― those orders are directed to the attorney personally. While there are rare situations where an attorney may be required to defy a court’s order while an appeal is pending (such as may be the case where an attorney has been ordered to divulge attorney-client privileged communications), once the appeal has been decided then the attorney must fully comply.
Here, the informational requests made to Libman about where the $1.65 million had gone was not subject to any privilege and Libman properly should have produced that information. Libman similarly should have answered questions at his debtor’s examination once his objections had been overruled by the Superior Court. His failure to do so may very well cost him his license to practice law and all the future income that he might have received therefrom.
Which is all to say that an attorney debtor being pursued by creditors must reasonably respond to document requests and questions at debtor exams, or else they put their license to practice law at considerable risk. An attorney can suffer ethical sanctions for both refusing to answer and also dishonest answers. Attempting to hide where assets have gone ― as Libman did here with the $1.65 million in attorney fees that he received ― will immediately cross ethical boundaries and not in good way.
We have seen cases where attorneys have suffered ethical sanctions for assisting their clients hide assets from creditors, but the situation is even worse when the attorney is the debtor.
Much worse.