Birmingham City Commissioner's Law License Suspended For 'Dishonest Conduct'

Stuart Sherman (Birmingham Commission photo)

Birmingham City Commissioner Stuart L. Sherman, who formerly served as mayor, and is running for re-election in November, has had his law license suspended for a year for engaging in "dishonesty" and his "stubborn refusal to acknowledge wrongdoing." 

A hearing panel for the state Attorney Discipline Board issued the ruling in late July.

Specifically, the action comes as a result of a 2012 Oakland County Probate Court case in which Sherman took about $400,000 in legal fees from a client for a trust after the judge had directed him not to take any further fees without his approval.

Sherman had his assistant backdate the deposit slips to make it look as if the money was deposited before the judge's order, the panel found.

Sherman, the panel wrote in a decision, "is a classic illustration of a person who, in the throes of personal challenge and adversity, uses excuses and justification to do the wrong thing and then, once exposed, compounds the wrongdoing, digging himself deeper and deeper into a hole." 

"This is a result of a business divorce, " Sherman told Deadline Detroit, pointing out that even though he's an elected official,  "it has nothing to do with the city of Birmingham."

State discipline proceedings, which took place in 2016, focused on two matters: Sherman taking a $112,000 check from the firm when quitting over a dispute. It involved his compensation tied to the trust case.

The other issue involved the collection of about $400,000 in legal fees in the trust case.  

The hearing panel for the  Attorney Discipline Board found no wrongdoing in him taking the check from the firm, in which he was a partner, noting that he was following the advice of his counsel. 

But in the other instance, the panel found fault, resulting in the suspension.

According to Attorney Discipline documents, Sherman represented a client, Barry Bess, who was the trustee for three trusts established by Dr. Kenneth Poss.

Bess and Poss were in conflict and Poss wanted to limit Bess's use of the trusts' assets to pay Sherman's legal fees. A hearing on the legal fees was set for Dec. 3, 2012.

Two weeks before the hearing, Sherman instructed his client, Bess, to send him payment for $181,000 in outstanding invoices, plus  $300,0000 for an additional retainer, "prior to December 4, 2012."

Checks in the Mail

Sherman's client, Bess, took off for a vacation in Hawaii before sending the money. Sherman followed up on the matter with his client, who informed him the weekend before the hearing that he had sent or was going to send the check by FedEx.

A hearing on the dispute was held Dec. 3, 2012 before Oakland County Probate Judge Daniel A. O'Brien. 

During the hearing, the judge pressed Sherman about the amount of legal fees he had received, and asked if it was greater than $200,000. He said he did not think so, and the judge surmised it must have been between $100,000 and $200,000. In actuality, he had received $233,000, the hearing panel noted.

The hearing panel, in its finding, noted that Sherman made no mention to the judge of the money that was forthcoming.

The judge then said in a court that Bess was not to pay himself or Sherman "one more dime" without the court's permission.

Fifteen minutes later, and before the judge's written order was officially entered, Sherman texted his assistant from court to see if the FedEx package had arrived. She informed him that it had not. But a few minutes later, the assistant informed him that it did.  

He then instructed her to deposit the money and date the deposit slips for the previous Saturday. The deposits totaled $394,000.

The judge's written order was entered about 15 minutes after the money was deposited.

In testimony before the state hearing panel last year, Sherman said he didn't tell the judge how much money he got from the trust because he wasn't sure and didn't want to "create an impression that wasn't true." He said he didn't mention the amount that was being mailed because clients often say the check is in the mail when in fact it is not.

He testified that he did not know whether the judge's oral order precluded him from depositing the money before the written order was entered. He also said some of that payment was for money already earned, and believed the judge's order was only for "additional" fees.

He explained that he asked his assistant to backdate the deposit slip because he wanted her to estimate the date in which his client mailed it. 

The disciplinary panel didn't buy his testimony, finding that Sherman's "statement and his concealment involved dishonesty, deceit, and misrepresentation that reflect adversely on respondent's honesty, trustworthiness and fitness to practice law."

Falling Out With Partners

The state hearing panel found that Sherman had a falling out with his law partners, at least in part, because of his handling of the hearing before Judge O'Brien.

Sherman's main contribution to the firm's income in 2012 centered on fees generated from the Poss trusts. "Following the December 3,  2012 hearing, those fees were clearly in doubt," the discipline panel's report said. 

On Dec. 24 of that year, the law partners told Sherman they planned to withhold $112,000 from his year's compensation pending a resolution of the trusts' fee dispute. Sherman decided to leave the firm.

After deciding to leave, he wrote himself a check for about $112,000 upon the advice of his attorney. The partners were outraged and filed a civil suit in Oakland County Circuit Court. A jury in 2014 found that he had embezzled from the firm. He ultimately reached an undisclosed settlement with the firm concerning the $112,000. The firm declined to comment to Deadline Detroit on the matter.

Sherman sued his lawyer for malpractice. The state hearing panel reports says it appears Sherman's lawyer settled the malpractice claim for an undisclosed amount. The discipline panel found no wrongdoing on Sherman's part  for taking the $112,000 because he was following the advice of counsel. 

The hearing panel was far less sympathetic when it came to the legal fees in Probate Court, concluding that Sherman not only deceived Judge O'Brien and violated his order, but was dishonest during the discipline proceedings.

"As the record demonstrates, this case is plagued with dishonesty," the panel wrote."It is a theme that has continued throughout the disciplinary process, giving rise to a pattern of misconduct, which is yet another aggravating factor. The Attorney Discipline Board has made clear that it 'can conceive of few factors deserving of greater weight in aggravation than a finding that an attorney has given false testimony during disciplinary proceedings'."