From WSJ Law Blog: The Ability to Pay Weighs on a Lawyer’s Sanctions

Aug 1, 2012 | Blog, California State Bar Defense

By Sam Favate, Wall Street Journal Law Blog

Everyone’s heard a defendant – or seen a fictional one on television – tell a judge a fine was too high and that he or she couldn’t afford to pay.

If that defendant is a lawyer in a misconduct case, there’s now some sympathy from the courts.

On Monday, the U.S. Court of Appeals for the Ninth Circuit held that an attorney’s ability to pay should be considered when imposing sanctions, The Recorder reported. Judge Stephen Reinhardt disagreed with a Seventh Circuit decision that said an attorney’s ability to pay shouldn’t bear on sanctions, which are intended to deter misconduct and compensate the litigant opponent.

“Imposing sanctions in an amount many times greater than the attorney will ever be able to pay may in some instances represent only a futile gesture that does little either to compensate victims or to deter future violators,” Judge Reinhardt wrote in his decision.

The case involves attorney Gregory Haynes, who faced $360,000 in sanctions for litigation misconduct. Mr. Haynes argued to U.S. District Judge Jeffrey White that he couldn’t pay, claiming that as a solo practitioner in San Francisco, he had no assets and income of just $20,000 per year.

Judge White referred to a Seventh Circuit decision by Chief Judge Frank Easterbrook, which said the ability to pay shouldn’t affect sanctions, and imposed the burden on Mr. Haynes.

Monday’s ruling by Judge Reinhardt looks like it will have support if it moves up for higher review, as Judges Richard Clifton and N. Randy Smith concurred, and the Second Circuit has issued a similar ruling, The Recorder noted.

The latest decision doesn’t necessarily mean Mr. Haynes is off the hook. Judge Reinhardt held the district court can decide whether to reduce the amount, and if there is to be a reduction, the amount is in the district court’s discretion.