 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued November 8, 2011            Decided January 20, 2012

                        No. 10-7071

                         KEVIN SO,
                         APPELLEE

                             v.

             LEONARD J. SUCHANEK, ESQUIRE,
                      APPELLANT


          Consolidated with 10-7087 and 10-7113


        Appeals from the United States District Court
                for the District of Columbia
                    (No. 1:08-cv-02091)


    Jason H. Ehrenberg argued the cause for appellant/cross-
appellee. With him on the briefs was James C. Bailey. Brian
Shaughnessy entered an appearance.

    David G. Tripp argued the cause and filed the briefs for
appellee/cross-appellant.

   Before: HENDERSON, Circuit Judge, and WILLIAMS and
RANDOLPH, Senior Circuit Judges.
                                2

   Opinion for the Court filed by Senior Circuit Judge
RANDOLPH.

    RANDOLPH, Senior Circuit Judge: This case is here on
appeal and cross-appeal from the judgment of the district court
ordering attorney Leonard Suchanek to pay his former client
Kevin So $455,933.52, an amount representing a portion of the
legal fees Suchanek collected from So, plus interest.

     So is a citizen of the People’s Republic of China, a resident
of Hong Kong, and the general manager of his family’s
cosmetics company. He does not speak, read, or write English.
So met Lucy Yan Lu in 2004 through a business partner.
Convinced of Lu’s expertise, So granted her written
authorization to serve as his agent in investment matters. In
April 2005 Lu signed an agreement between So and Land Base,
LLC, a California entity operated by Boris Lopatin. The
agreement called for Land Base to make investments on So’s
behalf, and periodically to disburse to him fifty percent of any
profits. Pursuant to the agreement, So transferred $30 million
to a HSBC Bank account in London, England. An “Irrevocable
Bank Instruction” appended to the agreement called for the
funds to be administered by 5th Avenue Partners Ltd., a Land
Base affiliate controlled by Michael Brown.

      The investment initially appeared to be a success. So
received nearly $3 million in profits between May and August
of 2005. These “profits” turned out to be fictitious. As HSBC
later discovered, Brown had been running a Ponzi scheme. So
first learned this in early 2006. By that time, his $30 million
investment had disappeared and HSBC had brought suit in
London against Brown, Lu, So, and others seeking to absolve
itself of any responsibility for the loss. HSBC alleged that the
bank instruction was fraudulent; that Brown had used it to
mislead So into thinking his deposit was secure; and that Land
                               3

Base’s agreement with So was “designed to lend an appearance
of legitimacy to arrangements made for the purpose of money
laundering or some other unlawful purpose.”

      Early in the litigation, Lopatin – who ran Land Base –
referred Lu to Leonard Suchanek, a former administrative law
judge with an office in Washington, D.C. Lu met with
Suchanek in July 2006 and hired him to assist in recovering So’s
funds. She explained to So, through an intermediary, that
Suchanek was a “very powerful U.S. judge” who was willing to
help them “without any service fee.” Lopatin provided a resume
listing Suchanek’s title as “Chief Judge Emeritus” of the “U.S.
Federal Special Contract Court . . . U.S. General Services
Administration.” (Suchanek had served as Chief Judge of the
General Services Administration Board of Contract Appeals; he
resigned in 1992 and entered private practice.)

    Suchanek began representing Lu and So in July 2006
despite the fact that he was already representing Land Base in
connection with the HSBC suit. While Suchanek was
simultaneously representing Lu, So, and Land Base, he prepared
a twelve-page legal opinion on Land Base’s behalf. The opinion
concluded that Land Base’s agreements with So and other
investors did not facilitate an “illegal scheme,” and that any
claim to the contrary was “frivolous.” Suchanek terminated his
representation of Land Base on August 24, 2006. He then sent
an engagement letter to Lu and So on September 10, 2006,
confirming that the representation had begun in July and that its
scope included “obtaining compensation and damages due as the
result of any wrong-doing against you that has been committed
by any person, firm, [or] company.” So paid Suchanek $99,000
shortly after receiving the letter.

    Suchanek coordinated what he described as a “complex
worldwide litigation” campaign on So’s behalf. In this role,
                                  4

Suchanek served primarily as an administrator. He hired
counsel to represent So in London, Hong Kong, New York, and
several other jurisdictions, and managed So’s communication
with these firms, but did not appear in court on So’s behalf.
Suchanek also oversaw the campaign’s finances, including
payment of the various law firms and processing of sums
recovered by them in the HSBC litigation – all through a trust
account he maintained for So. In August 2007, Suchanek
instructed So to wire $2.1 million to this account for litigation
expenses.1 So expressed reservations about the cost, describing
it as “so much higher than my budget,” but complied after
Suchanek assured him a “minimum recovery” of $160 million.

     So began to lose trust in Lu, his agent, just a few months
into the joint representation. In December 2006, he informed
Suchanek that Lu had attempted to fire Kendall Freeman, the
law firm representing them in London, without his consent. And
in February 2007, So complained that Lu had lied to Suchanek
about So’s willingness to pay for her share of the legal fees.
These developments led So to contemplate cancelling Lu’s
authority to act as his agent. Suchanek encouraged So to “keep
the status with [Lu] the same” despite her actions. He attempted
to hold the relationship together by maintaining – or at least
purporting to maintain – separate, confidential correspondence
with Lu and So. The effort fell apart, however, when So notified
Suchanek that Lu had falsified a witness statement bearing his
name in August 2007 (the statement was prepared for use in the
HSBC litigation). Suchanek responded by urging So to cut off
Lu’s authority, but continued to represent Lu and So jointly until
January 31, 2008, when Suchanek terminated his representation
of So.


        1
         Suchanek represented – as it turns out, falsely – that none of
these funds would be used to pay for his services. Suchanek never
sent So an invoice at any point in the representation.
                                 5

    At the conclusion of the representation, Suchanek held back
$400,000 of the funds remaining in So’s trust account for his
“invoice.” So objected, demanding that Suchanek remit the
withheld funds to him and provide a full accounting. When
Suchanek refused, So filed suit for malpractice, breach of
contract, breach of fiduciary duty, and replevin.

     The district court conducted a bench trial and eventually
winnowed the case down to a single claim for breach of
fiduciary duty. On that claim, the court held that Suchanek had
violated the District of Columbia Rules of Professional Conduct
governing conflicts of interest – and thus breached his fiduciary
duty to So – during two distinct periods. The first involved
Suchanek’s simultaneous representation of So and Land Base in
July and August of 2006. The second arose from Suchanek’s
continued representation of Lu and So after August 21, 2007,
when So reported that Lu had falsified his witness statement. To
remedy these breaches, the court ordered Suchanek to disgorge
$400,000 plus interest, for a total of $455,933.52. The court
reasoned that this amount was roughly equal to the sum
Suchanek collected “during the two conflicted periods.”

     Suchanek seeks to have the judgment reversed. So’s cross
appeal seeks disgorgement of the rest of the approximately $1
million Suchanek covertly paid himself over the course of the
representation. While the case was pending on appeal, So
moved to have the $320,100.92 remaining in his client trust
account2 turned over to him “in partial satisfaction of the
Judgment.”      Suchanek responded by moving to stay
enforcement of the judgment pending disposition of the appeal.
The district court denied the motions. In doing so, it ordered


        2
         These funds are a subset of the $400,000 initially held back
by Suchanek as payment for his services, the remainder having been
spent by Suchanek.
                                   6

Suchanek to transfer So’s trust funds to the district court’s
registry, stayed execution of the judgment to the extent of the
amount transferred, and permitted Suchanek to post a
supersedeas bond for the remainder. Suchanek has also
appealed this ruling.

                                   I

     Suchanek denies that he breached his fiduciary duty to So.
Under District of Columbia law,3 a violation of the Rules of
Professional Conduct “can constitute a breach of the attorney’s
common law fiduciary duty to the client.” Griva v. Davison,
637 A.2d 830, 846-47 (D.C. 1994). Although not every ethics
violation rises to the level of a breach of fiduciary duty,
Television Capital Corp. of Mobile v. Paxson Commc’ns Corp.,
894 A.2d 461, 469 (D.C. 2006), a breach occurs “when an
attorney represents clients with conflicting interests,” Hendry v.
Pelland, 73 F.3d 397, 401 (D.C. Cir. 1996).

     Rule 1.7 provides the general rule governing conflicts. D.C.
RULES OF PROF’L CONDUCT R. 1.7. It states, in relevant part,
that a lawyer may not represent a client when the representation
“will be or is likely to be adversely affected by representation of
another client.” Id. R. 1.7(b)(2). This prohibition is conditional,
and ceases to apply when two criteria are satisfied. See id. R.
1.7(c). First, each of the affected clients must provide informed
consent “after full disclosure of the existence and nature of the
possible conflict and the possible adverse consequences of [the
joint] representation.” Id. R. 1.7(c)(1). Second, the lawyer must
“reasonably believe[]” that he “will be able to provide
competent and diligent representation to each affected client.”


        3
         The events in this case took place on three continents, but the
parties agree that District of Columbia law governed Suchanek’s
representation of So.
                                 7

Id. R. 1.7(c)(2). “The underlying premise” of these restrictions
“is that disclosure and informed consent are required [whenever]
. . . there is any reason to doubt the lawyer’s ability to provide
wholehearted and zealous representation . . ..” Id. R. 1.7 cmt. 7.
Thus, “if an objective observer would have any reasonable doubt
on that issue, the client has a right to disclosure of all relevant
considerations and the opportunity to be the judge of its own
interests.” Id.

     The district court correctly held that Suchanek violated Rule
1.7 by simultaneously representing So and Land Base in July
and August of 2006. During that period, Suchanek never
advised So that he might have claims against Land Base. Yet
So’s agreement with Land Base was a but-for cause of So’s loss,
and the Land Base agreement made certain warranties against
any loss to the $30 million So initially deposited in the HSBC
account. As the district court found, “Suchanek could not have
advised So to pursue his warranty claims against Land Base . .
. without violating his obligations to Land Base.”

     Suchanek also prepared the Land Base opinion while he
was representing Land Base and So. The opinion, which was
filed as an attachment to Lopatin’s witness statement in the
HSBC litigation, undercut any claims So might have had against
Land Base by concluding that the Land Base agreements did not
facilitate an unlawful scheme. See D.C. RULES OF PROF’L
CONDUCT R. 1.7 cmt. 13 (stating that a conflict exists when
“there is a significant risk that a lawyer’s action on behalf of one
client . . . will adversely affect the lawyer’s effectiveness in
representing another”). Under these circumstances, Suchanek’s
representation of Land Base clearly compromised his
representation of So. See id. R. 1.7(b)(2). And, because
Suchanek could not have “reasonably believe[d]” that he was
capable of “provid[ing] competent and diligent representation to
each affected client,” he breached his fiduciary duty to So. Id.
                                 8

R. 1.7(c)(2); see also Hendry, 73 F.3d at 401 (describing
lawyers’ duty of “undivided loyalty” to clients).

     The district court’s analysis of the second conflict period,
between August 2007 and January 2008, is also sound. Before
August 2007, So regularly informed Suchanek that Lu was
undermining him, often by acting outside the scope of her
authorization. See infra Part II. Then, on August 21, 2007, So
notified Suchanek that Lu had falsified a witness statement
bearing his name. These developments would have caused an
objective observer to doubt whether Suchanek could continue to
“wholeheartedly and zealously” represent both So and Lu. D.C.
RULES OF PROF’L CONDUCT R. 1.7 cmt. 7; see also id. cmt. 14
(joint representation “improper when it is unlikely that
impartiality can be maintained”). Suchanek recognized the
gravity of Lu’s transgression, describing it as “very serious,”
and even recommended that So immediately terminate Lu’s
authority to act on his behalf. He also told So that a court order
issued in the HSBC litigation was “based upon
misrepresentations by [Lu].” Yet he continued the joint
representation, without making any effort to secure So’s
informed consent, in clear contravention of his ethical and
fiduciary duties. See id. R. 1.7(b)(2), (c); Hendry, 73 F.3d at
401; Griva, 637 A.2d at 845 (informed consent required
whenever “dual representation creates a potential conflict of
interest” (emphasis added)).

    Suchanek’s remaining argument concerns the district
court’s post-trial ruling. His brief contends that the district
court erred “in denying Suchanek’s post-judgment Motion to
Stay, granting in part So’s post-judgment turnover motion,4 and


        4
          This is not accurate – the district court did not grant, in
whole or in part, So’s turnover motion. The order states in bold text
that the motion was denied.
                                  9

ordering Suchanek to deposit the sum of $320,100.92 into the
Court’s registry.” Suchanek’s basic point is that So’s cross-
appeal automatically superseded the judgment – thus vitiating
any duty Suchanek had to post an appellate bond.

     In Price v. Franklin Investment Co., 574 F.2d 594, 597
(D.C. Cir. 1978), we held that “a litigant may not accept all or
a substantial part of the benefit of a judgment and subsequently
challenge the unfavorable aspects of that judgment on appeal.”
When a judgment contains “separable or divisible” parts,
however, a “firmly established exception” to the rule allows a
prevailing party to “accept the benefit of the separable or
divisible feature in his favor and challenge the feature adverse
to him.” Id. (quoting Luther v. United States, 225 F.2d 495, 497
(10th Cir. 1954)). The judgment in this case falls within the
exception. It consisted of two divisible parts: one favorable to
So (disgorgement of fees collected during two parts of the
representation), another not (denial of So’s disgorgement request
with respect to the rest of the representation). So’s cross-appeal
focuses exclusively on the latter, and seeks only additional
damages. See BASF Corp. v. Old World Trading Co., 979 F.2d
615, 616 (7th Cir. 1992); Price, 574 F.2d at 597.

     Suchanek had a choice: he could face execution of the
judgment or post a bond to suspend its effect. See FED. R. CIV.
P. 62(d) (“If an appeal is taken, the appellant may obtain a stay
by supersedeas bond . . ..”). The choice was particularly stark
with respect to the $320,100.92 held by Suchanek in So’s trust
account.5 Suchanek opted not to release the funds to So, and did
not post a supersedeas bond. Under those circumstances, the


        5
          We are unsure whether these funds, which appear to be So’s
property, can be used to satisfy a judgment against Suchanek. In light
of our decision in Part II below, we leave it to the district court to
decide the question.
                                  10

district court had broad discretion to determine the type of
security needed. See, e.g., Fed. Prescription Serv., Inc. v. Am.
Pharm. Ass’n, 636 F.2d 755, 759 (D.C. Cir. 1980). The court’s
order requiring Suchanek to deposit the trust funds in the
registry was proper in light of Suchanek’s history of moving
So’s money, without authorization, into other bank accounts –
sometimes spending it rather than returning it to So or to So’s
trust account.

     For these reasons, we affirm the rulings below as they
pertain to Suchanek’s appeal.

                                  II

     On cross-appeal, So contends that the district court erred in
ordering disgorgement of only some of the fees Suchanek
collected. Total disgorgement is required, So maintains,
because Suchanek’s conflicts of interest were not limited to the
two periods identified by the district court. Instead, they
persisted throughout the representation, from start to finish. The
sources of these conflicts included Suchanek’s personal
interests, those of his assistant, Mira Meltzer, and Suchanek’s
representation of several other parties involved in the HSBC
litigation.

     Disgorgement is an equitable remedy entrusted to the sound
discretion of the district court. See United States v. Nacchio,
573 F.3d 1062, 1080 (10th Cir. 2009); BASF Corp. v. Old World
Trading Co., 41 F.3d 1081, 1096 (7th Cir. 1994). “A district
court by definition abuses its discretion when it makes an error
of law.”6 Teachey v. Carver, 736 A.2d 998, 1004 (D.C. 1999)


        6
         This statement implies that courts have discretion in deciding
pure questions of law. Of course, they do not. The import of the rule,
which does not line up precisely with its text, is that a discretionary
                                 11

(quoting Koon v. United States, 518 U.S. 81, 100 (1996)). Here,
the district court misapplied Rule 1.7 – and thus abused its
discretion – when it held that Suchanek had a conflict of interest
only during the two periods described above.

      Suchanek’s joint representation of Lu and So is illustrative
in this regard. The only ethics expert to testify at trial opined
that the representation was conflicted from the outset because So
had potential claims against Lu, based on her decision to sign
the Land Base agreement on So’s behalf. Suchanek claims that
he did not initially perceive a conflict between Lu and So, but
we are not concerned with his subjective impressions. Under
Rule 1.7, the question is whether there was “any reason to doubt
[Suchanek’s] ability to provide wholehearted and zealous
representation” to both Lu and So. D.C. RULES OF PROF’L
CONDUCT R. 1.7 cmt. 7. This depends on whether an objective
observer – with Suchanek’s prior knowledge of Lopatin, Land
Base, and the particulars of the fraudulent scheme – would have
had a “reasonable doubt” of his ability to represent jointly a
victim of the scheme and the person who got him involved in it
in the first place. See id. The answer, we think, is clearly yes.

     These doubts would have grown even more substantial as
the representation progressed. In August 2006, Suchanek
learned that Kendall Freeman attorneys had accused Lu of
destroying critical evidence. Suchanek prepared Lu’s response
to these allegations. Later in 2006, So informed Suchanek that
Lu had lied to Suchanek about the division of attorneys fees,
falsely claiming that So had agreed to pay her share. So also
indicated that Lu had attempted to fire the Kendall Freeman firm
without his, So’s, consent. Similar disputes between Lu and So



ruling is subject to reversal when it is founded on an erroneous view
of the law.
                                12

continued through mid-2007, as So accused Lu of repeatedly
exceeding her authorization to act on his behalf.

     Suchanek was fully aware of these problems. Meltzer, who
prepared, read, and sent all of Suchanek’s correspondence
(Suchanek is blind), explained at trial that So’s complaints made
it impossible to tell whether Lu remained So’s agent. Rather
than addressing these issues through the informed consent
process contemplated by Rule 1.7(c), Suchanek attempted to
assuage So’s concerns by telling him their communications were
secret and would not be disclosed to Lu. The commentary
accompanying Rule 1.7 makes clear that joint representation
“will almost certainly be inadequate” when such confidences are
necessary. Id. R. 1.7 cmt. 16.

     These considerations would have put any reasonable
attorney on notice that a conflict existed between Lu and So well
before August 21, 2007 – the date the district court identified as
the start of the second conflict period. See id. R. 1.7 cmt. 7; see
also Griva, 637 A.2d at 845. The district court’s error in
assessing the conflict between Lu and So influenced the scope
of the remedy it selected. In ordering Suchanek to disgorge
$400,000 plus interest, the court used the amount Suchanek paid
himself “during the two conflicted periods” as a guide. It
follows that the court would have awarded a larger sum if it had
(correctly) found a conflict during other parts of the
representation.

     We will therefore remand the case to the district court for
further review of the record and issuance of a supplemental
remedy, greater than the amount already ordered. On remand,
the district court should consider the conflict between Lu and
So, as well as the variety of other serious conflicts of interest
                                 13

alleged in So’s brief.7 The remedy it fashions should account
for the full extent of the conflicts found; the need to deter
attorney misconduct; the “fundamental principle of equity . . .
that fiduciaries should not profit from their disloyalty”; and the
decreased value of the services provided to So resulting from
Suchanek’s rampant misconduct. Hendry, 73 F.3d at 402; see
also RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS
§ 37 cmt. e (2000) (“Ordinarily, forfeiture extends to all fees for
the matter for which the lawyer was retained . . ..”).

                                                        So ordered.




        7
          We do not reach these additional claims. The district court
need not receive further evidence when addressing them since the
record is already well-developed.
