Self-Dealing with a Vulnerable Client Under a Power of Attorney Warrants Disbarment:
Commentary on Matter of Galarza, 2025 NY Slip Op 06318 (2d Dep’t)

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I. Introduction

Matter of Galarza is a disciplinary decision of the Appellate Division, Second Department, rendered on November 19, 2025, that results in the disbarment of attorney Julio Ceasar Galarza. The case provides a stark illustration of what happens when an attorney:

• Uses a client’s trust and powers of attorney to gain control of substantial funds,
• Charges excessive fees for both legal and nonlegal services,
• Fails to provide the written engagement letters required for substantial, separate matters, and
• Places his own financial interests ahead of those of a particularly vulnerable client.

The opinion is procedurally straightforward but factually and ethically rich. The Grievance Committee for the Tenth Judicial District brought a five-charge petition against Galarza, all arising out of his representation of a single client, referred to as JH. A Special Referee sustained all five charges. The Appellate Division then:

• Confirmed the Special Referee’s report in full,
• Struck a pleading paragraph containing purported “affirmative defenses” as non-compliant with CPLR 3014 and 3018, and
• Imposed the “severest of sanctions”: disbarment, effective immediately.

Substantively, the decision emphasizes that when an attorney:

• Holds a client’s funds via a power of attorney or trust,
• Makes himself trustee and remainder beneficiary of that trust,
• Names a close family member as successor trustee, and
• Uses those funds to pay his own personal credit card bills and large “fees” drawn on his own say-so,

the conflict of interest and self-dealing are so fundamental and corrosive of the attorney–client relationship that disbarment is warranted, especially where the client is vulnerable (here, with serious mental health concerns and confined at Creedmoor Psychiatric Center for much of the relevant time).

The decision also reinforces:

• The importance of written letters of engagement or retainer agreements when total fees will exceed $3,000;
• The breadth of the prohibition on excessive fees under Rule 1.5(a);
• How conflicts arising from an attorney’s personal financial interests are analyzed under Rule 1.7; and
• The courts’ increasing willingness to treat failures of candor and failure to appreciate the gravity of misconduct as aggravating factors justifying disbarment.

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II. Summary of the Opinion

A. Procedural Posture

The Grievance Committee for the Tenth Judicial District initiated a formal disciplinary proceeding by serving a notice of petition and verified petition (December 16, 2022) against Galarza, who had been admitted to the bar in 1995. Galarza answered and later amended his verified answer.

Pursuant to 22 NYCRR 1240.8(b)(1), the Appellate Division referred the matter to a Special Referee, the Honorable Arthur J. Cooperman, to hear and report. After a three-day evidentiary hearing in January 2024, the Special Referee issued a May 2, 2024 report sustaining all five charges.

The Grievance Committee moved:

• To confirm the Special Referee’s report,
• To strike paragraph 66 of Galarza’s amended answer (purported “affirmative defenses”) for noncompliance with CPLR 3014 and 3018, and
• For the imposition of discipline.

Galarza opposed, arguing that only charge one (failure to provide written engagement letters) should be sustained, the other charges dismissed, and any sanction limited to an admonition or public censure.

B. The Charges

1. Charge One – Rule 1.5(b): Failure to communicate in writing the scope of representation and basis or rate of fees and expenses for multiple new matters (traffic, criminal, Mental Health Court, and Court of Claims) in which total fees exceeded $3,000.
2. Charge Two – Rule 8.4(d): Conduct prejudicial to the administration of justice by failing to provide written letters of engagement or retainer agreements to JH.
3. Charge Three – Rule 1.5(a): Charging and collecting excessive fees, including:
   • Charging attorney rates for nonlegal services (e.g., supervising a move, picking up mail);
   • Charging a separate “secretarial” hourly rate; and
   • Retroactively increasing his hourly rate from $300 to $400 and charging backward-looking “adjustments.”
4. Charge Four – Rule 1.7: Representing JH despite a significant risk that his professional judgment would be adversely affected by his own financial and personal interests, by:
   • Having JH execute powers of attorney naming him as agent;
   • Creating a revocable living trust while JH was at Creedmoor, naming himself as trustee and remainder beneficiary if JH died without surviving children;
   • Appointing his son (with no prior affiliation with JH) as successor trustee; and
   • Using trust funds to pay his personal credit card bills and make large payments to himself.
5. Charge Five – Rule 8.4(h): Engaging in conduct that adversely reflects on his fitness as a lawyer, based on the cumulative misconduct in charges one through four.

C. The Court’s Disposition

The Appellate Division:

• Confirmed the Special Referee’s report, sustaining all five charges;
• Granted the motion to strike paragraph 66 of the amended answer because the purported affirmative defenses were not properly pleaded under CPLR 3014 and 3018 and were more appropriately considered as mitigation;
• Rejected Galarza’s attempt to characterize his conduct as a “reasonable and well-intentioned mistake” and found that he did not appreciate the severity of his misconduct; and
• Imposed disbarment, effective immediately, under Judiciary Law § 90, with the usual injunction against practicing law, appearing as an attorney, or giving legal advice, and the obligation to comply with 22 NYCRR 1240.15 (rules for disbarred or suspended attorneys).

In doing so, the Court expressly described the matter as involving a “course of self-dealing” in which the respondent “actively took financial advantage of a vulnerable individual” and “actively ignored his duties required by the Rules of Professional Conduct and his duty as a fiduciary to safeguard his client’s limited assets.” It concluded that the “severest of sanctions” was necessary, citing Matter of D’Angelo, 158 AD3d 107, as a benchmark for disbarment in comparable levels of misconduct.

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III. Factual Background and Context

A. Initial Representation: Real Property / Specific Performance Action

JH retained Galarza by a February 15, 2019 letter of engagement/retainer agreement to defend a specific performance action concerning a contract to sell her East Meadow property. Key points:

• The purchaser sued for specific performance when JH sought to back out of the sale.
• Galarza agreed to a $7,500 flat fee for the defense, without specifying hourly rates or distinguishing legal from nonlegal services.
• He negotiated a new contract of sale and closed on May 15, 2019, increasing the sale price from $185,000 (original contract) to $240,000.
• At closing, Galarza received $7,500 (described on the closing statement as “Power of Attorney Preparation and Execution”), while attorney Elliot Small received $3,500 for seller’s attorney services and $500 for “preparation and execution of durable power of attorney related to the closing.”
• Net proceeds of approximately $194,000–$195,000 were deposited into Small’s IOLA escrow account.

Significantly, on March 13, 2019, JH had executed three powers of attorney (two statutory short forms and one statutory gift rider), each naming Galarza as her agent. The documents recited that they were prepared by Galarza, despite his later testimony that he “had nothing to do” with them and that Small drafted them. The closing documents show that Galarza signed as JH’s agent under power of attorney.

B. Subsequent Matters: Expanding Representation Without New Written Engagements

After the property matter, Galarza undertook multiple additional representations for JH, all without new written retainer agreements or letters of engagement:

• Traffic Matter: Representation in the Suffolk County Traffic and Parking Violations Agency beginning around July 2019 (fees at least $3,920).
• Criminal Matter: Representation in a criminal case in Nassau County District Court beginning around November 2019 (fees at least $9,400).
• Mental Health Court Matter: Representation from around July 2020 in the Mental Health Court Part, Supreme Court, Queens County (fees at least $17,352.50).
• Court of Claims Matter: Representation beginning around December 2020 in a personal injury claim in the New York State Court of Claims (fees at least $21,140).

Despite the cumulatively large sums, Galarza did not:

• Provide written letters of engagement for these separate matters, or
• Clearly define in writing the scope of each representation and the basis or rate of his fees and expenses.

Initially, he charged $300 per hour for legal services and $175 per hour for his secretary’s services. On October 16, 2019, he unilaterally raised his rate to $400 per hour and applied this increase retroactively to previously completed work, demanding an additional $1,330 for work performed in June–July 2019.

C. Billing Patterns: Nonlegal Tasks and Secretarial Time

The opinion highlights that Galarza repeatedly billed:

• Attorney time at $400/hour for nonlegal tasks such as:
  • Supervising JH’s move from one storage unit to another,
  • Reviewing and sorting JH’s mail, and
  • Picking up JH’s mail at the post office (at least 19 occasions).
• Secretarial time at $175/hour for tasks like opening and reviewing mail, also billed on numerous occasions (at least 19 charges).

He submitted affirmations of services to Small, who, as escrow agent, paid him directly from the sale proceeds. JH’s role in authorizing payments was minimal to non-existent; Galarza effectively used his power of attorney and control over the funds to generate payments to himself through Small’s escrow account.

One striking example: on August 19, 2019, he billed 4.3 hours at $400/hour (total $1,720) to accompany JH to a psychiatric appointment, where JH discussed her diagnoses and conditions.

D. Recognition of JH’s Vulnerability

By December 2019, JH was incarcerated in Nassau County Jail and shortly thereafter transferred to Creedmoor Psychiatric Center. In a December 9, 2019 letter to Adult Protective Services, Galarza himself wrote that he questioned JH’s ability to care for herself and conduct herself rationally, indicating his clear awareness of her vulnerability.

While at Creedmoor, JH was represented by counsel from Mental Hygiene Legal Service (MHLS). Galarza did not coordinate with MHLS counsel when taking critical steps affecting JH’s financial affairs, including creating the trust.

E. Creation and Use of the Revocable Living Trust

On April 25, 2020, while JH was at Creedmoor, Galarza, acting as JH’s agent under the power of attorney, executed a revocable living trust naming:

• JH as grantor;
• Galarza as trustee; and
• Galarza as remainder beneficiary if JH died leaving no surviving children.

The trust also appointed Galarza’s son, Jason, as successor trustee, despite Jason’s complete lack of prior relationship with JH. JH never saw, and was never read, the trust document before it was executed; she was not given a copy afterwards. Galarza could not recall reading the trust to her over the phone.

On April 30, 2020, Galarza opened a bank account titled in the name of the trust. He then:

• Requested that Small transfer the remaining proceeds held in escrow to him;
• On May 4, 2020, deposited $110,809.18 from Small’s escrow account into the trust account;
• On June 25, 2020, deposited an additional $17,667.85 from Small’s escrow account.

The opinion indicates that as of April 17, 2020, when the trust documents were drafted, the amount to be placed in the trust was $113,126.33—already a substantial reduction from the nearly $195,000 originally left after the real estate closing.

Galarza used the trust account not merely to pay JH’s bills, but also:

• On June 2, 2020, to wire $8,000 to pay his personal Lowe’s credit card;
• On June 12, 2020, to wire $1,500 to pay his personal Home Depot credit card;
• Between August 13, 2020, and December 15, 2020, to make three payments to himself from the trust, totaling $45,330.25 (including a $20,130.25 payment on August 13, a $18,000 payment on October 15, and a $7,200 payment on December 15).

He testified that sometimes he “advanced” money to himself based on “guesstimated” hours, writing checks first and generating detailed billing records later. He also claimed that he often performed additional unbilled “courtesy” work, though the Court plainly found that these assertions did not mitigate the fundamental conflict and self-dealing.

F. Dissolution of the Relationship and Funds Remaining

By April 2021, the relationship with JH had deteriorated. Galarza:

• Resigned as trustee of the trust, and
• Returned the balance of the trust funds to JH.

He testified that he believed roughly $49,000 remained, but the actual balance returned was $38,423.48. He also claimed there were uncollected bills of $7,279.43, further underscoring his view that large portions of the funds disbursed to himself represented legitimate fees.

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IV. Legal Framework and Precedents

A. Key Rules and Statutes Applied

1. Rule 1.5(b) of the Rules of Professional Conduct (22 NYCRR 1200.0)

   Requires that when a lawyer has not regularly represented a client, and the fee is expected to be $3,000 or more, the lawyer must communicate:

   • The scope of the representation; and
   • The basis or rate of fees and expenses;

   preferably in writing, and in New York typically in the form of a letter of engagement or written retainer. This rule interacted in practice with 22 NYCRR 1215.1 (the “letter of engagement rule”), though the opinion specifically grounds the violation in Rule 1.5(b).

2. Rule 8.4(d) – Conduct prejudicial to the administration of justice

   This broadly framed provision prohibits conduct that undermines the proper functioning of the legal system. Repeated failure to comply with the letter-of-engagement requirements and fee disclosure rules has been treated in disciplinary law as prejudicial to the administration of justice.

3. Rule 1.5(a) – Prohibition on excessive fees

   A lawyer shall not make an agreement for, charge, or collect an excessive or illegal fee. Whether a fee is “excessive” depends on multiple factors, such as:

   • Time and labor required;
   • Difficulty of the questions involved;
   • Skill required;
   • Fee customarily charged in the locality for similar services;
   • Amount involved and results obtained;
   • Experience, reputation, and ability of the lawyer; and
   • Whether the fee is fixed or contingent.

   Here, the Court found that charging attorney-level rates for nonlegal errands and charging secretarial time at $175/hour, among other practices, crossed the line into excessiveness.

4. Rule 1.7 – Conflict of interest: current clients

   A lawyer shall not represent a client if a reasonable lawyer would conclude that either:

   • The representation will involve the lawyer in representing differing interests; or
   • There is a significant risk that the lawyer’s professional judgment on behalf of the client will be adversely affected by the lawyer’s own financial, business, property, or other personal interests.

   Such conflicts may be waivable with informed consent in writing under stringent conditions, but the Court’s opinion strongly implies that the nature of this conflict (lawyer as trustee and remainder beneficiary, paying personal debts from client funds) was fundamentally incompatible with fiduciary duty, especially given JH’s vulnerability.

5. Rule 8.4(h) – Conduct adversely reflecting on fitness as a lawyer

   This is a residual, catch-all provision. It is often used to capture patterns of misconduct that, taken together, show a lawyer is not fit to be a member of the bar, even if each individual act might be covered by more specific rules.

6. Judiciary Law § 90

   The statute under which the Appellate Division has authority to discipline attorneys, including suspension and disbarment, and to regulate the practice of law.

7. 22 NYCRR 1240.8(b)(1) and 22 NYCRR 1240.15

   1240.8(b)(1) authorizes the Appellate Division to refer disciplinary matters to a referee or judge to hear and report. 1240.15 governs the obligations and procedures applicable to disbarred or suspended attorneys, such as notification of clients and the return of secure courthouse passes.

8. CPLR 3014 and 3018 – Pleading requirements and affirmative defenses

   These civil practice rules, applied by analogy in disciplinary pleadings, require that defenses be pleaded in a clear, concise manner, with factual support, and that affirmative defenses specifically set forth matters constituting avoidance or mitigation of the claim. The Court held that Galarza’s paragraph 66—asserted as “affirmative defenses”—did not comply and were properly treated as mitigation, not as true defenses.

B. Precedent: Matter of D’Angelo, 158 AD3d 107

The opinion cites Matter of D’Angelo, 158 AD3d 107, as authority for imposing disbarment (“see Matter of D’Angelo”). Although the present opinion does not recount the facts of D’Angelo, the citation serves two main functions:

• Sanction Benchmark: It signals that the Appellate Division views the level of misconduct in Galarza—notably, self-dealing, misuse of fiduciary powers, and exploitation of a vulnerable client—as comparable in gravity to prior cases in which the court has deemed disbarment appropriate.
• Consistency with Prior Jurisprudence: The Court is making clear that disbarment is not an outlier but consistent with the trajectory of its attorney discipline jurisprudence when lawyers misuse client funds or positions of trust for their own economic advantage.

In other words, Galarza does not create an entirely new legal doctrine; it applies well-established principles of fiduciary duty, conflict of interest, and fee regulation in a fact pattern involving powers of attorney and a client trust. D’Angelo is cited to underscore that disbarment is the expected sanction at this level of breach.

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V. Analysis of the Court’s Legal Reasoning

A. Charge One & Two: Fee Disclosures and Written Engagement Letters

The first two charges address Galarza’s failure to provide written engagement letters or retainer agreements for new, substantial matters beyond the original property litigation. The Court accepted the Special Referee’s findings that:

• Each of the traffic, criminal, Mental Health Court, and Court of Claims matters was a distinct new engagement, not simply a continuation of the original real estate representation;
• Fees in each of several of these matters independently exceeded $3,000; and
• Galarza failed to provide the written disclosures required by Rule 1.5(b).

By charging these failures not only under Rule 1.5(b) but also under Rule 8.4(d) (conduct prejudicial to the administration of justice), the Grievance Committee and the Court treat the letter-of-engagement obligations as part of the structural guarantees that protect clients and promote transparency in fee arrangements. The omission is not framed as a mere technicality; rather, as the Court implicitly recognizes, the absence of written fee terms was a key enabling condition for the subsequent overbilling and self-dealing.

Moreover, Galarza’s conduct—retroactively increasing his hourly rate and then billing backward at the new rate—was facilitated by the absence of a clear, written agreement. A written retainer would typically fix the rate and conditions under which it could change, or at least require negotiation and new consent. By dispensing with that documentation, Galarza retained unilateral control.

B. Charge Three: Excessive and Unconscionable Fees

The finding of excessive fees under Rule 1.5(a) rests on several interlocking factors:

• Nonlegal Services at Attorney Rates: Charging $400/hour to:
  • Pick up mail,
  • Supervise a move, and
  • Attend routine appointments as a sort of escort or chaperone,
  is far removed from what the profession recognizes as legal services. While lawyers may occasionally help clients with ancillary tasks, charging full legal rates for effectively clerical or personal assistance is highly suspect.
• Premium Rates for Secretarial Work: Billing secretarial work at $175/hour is far above typical market rates for even paralegal services, and secretarial time is not customarily billed to clients at all unless clearly disclosed, necessary, and reasonably priced. Here, the secretarial charges duplicated many of the same nonlegal tasks also billed at attorney rates.
• Retroactive Rate Increases: Raising the hourly rate from $300 to $400 is not inherently unethical, but applying it retroactively to work already performed— without explicit, contemporaneous client consent—crosses into unreasonable and opportunistic billing.
• Control Over the Payment Mechanism: Because Galarza controlled the disbursement mechanism (initially via power of attorney and triaging bills through Small’s escrow, and later solely through the trust), he was able to secure payment of these excessive charges without meaningful, informed client review or objection.

Taken together, these factors create exactly the kind of “excessive fee” scenario Rule 1.5(a) is designed to prevent: the multiplication of charges beyond what is justified by the nature of the services and the vulnerability and dependence of the client.

C. Charge Four: Conflict of Interest and Self-Dealing Under Rule 1.7

Charge four is the centerpiece of the opinion and the primary driver of the disbarment sanction. It focuses on the creation and use of the revocable trust, as well as Galarza’s status as power-of-attorney agent, trustee, remainder beneficiary, and ongoing counsel. The Court accepted the Special Referee’s findings that:

• Galarza’s financial interests and personal interests were deeply interwoven with his role as JH’s lawyer and fiduciary;
• There was a significant risk that his judgment on her behalf would be adversely affected by those interests; and
• He in fact acted on those interests—by, among other things, paying his personal credit card bills and making large payments to himself from the trust.

Crucially, this was not a case in which:

• The client, fully competent and independently advised, asked her lawyer to serve as trustee and to receive a clearly structured fee or legacy;
• The remainder interest was modest or symbolic; or
• There were robust safeguards (independent co-trustee, court oversight, etc.).

Instead:

• JH was confined in a psychiatric institution and represented by MHLS; Galarza did not consult her independent counsel about the trust;
• JH never saw or read the trust instrument, and Galarza did not credibly show any informed consent to its financial terms;
• The trust named Galarza as the full remainder beneficiary if JH died without children, despite his own admission that JH had no one she wanted to leave the money to—and despite his after-the-fact claim that he really intended to donate the remainder to charity;
• He appointed his 23-year-old son (a stranger to JH) as successor trustee; and
• He then used the trust funds to satisfy his personal financial obligations and pay himself substantial fees.

These facts neatly satisfy Rule 1.7’s core concern: a lawyer must not place himself in a position where his own financial interests compete with the duty of undivided loyalty to the client. Even if one accepted that Galarza occasionally did helpful things for JH, that cannot neutralize the fundamental problem that he structured and used the trust in a way that directly benefitted himself at the expense, and without meaningful contemporaneous consent, of a mentally fragile client.

D. Charge Five: Fitness to Practice Law (Rule 8.4(h))

The final charge, under Rule 8.4(h), aggregates the conduct in the earlier charges to conclude that Galarza’s actions “adversely reflect on his fitness as a lawyer.” This conclusion follows naturally once one accepts:

• Repeated disregard of fee disclosure rules;
• Systematic overbilling and charging for nonlegal tasks at inflated rates;
• Creation of a conflicted trust structure that favors the attorney and his family;
• Use of client trust funds to pay personal credit cards; and
• Failure to reimburse or meaningfully acknowledge the impropriety.

The Court’s emphasis that Galarza “does not appreciate the severity of his misconduct” is particularly important. A common theme in discipline jurisprudence is that an attorney’s recognition of wrongdoing and genuine remorse can mitigate sanction. Here, by contrast, the Court perceived Galarza’s stance as minimizing and rationalizing, not as contrition. That lack of insight supported the conclusion that he is unfit to continue in practice.

E. Treatment of Paragraph 66: Pleadings vs. Mitigation

The Court also addressed a somewhat technical but significant procedural issue: paragraph 66 of Galarza’s amended answer, labeled as containing “affirmative defenses.” The Grievance Committee sought to strike it because it did not comply with CPLR 3014 and 3018.

The Special Referee had observed that the content of paragraph 66—largely self-serving arguments about Galarza’s good intentions, stress, and absence of venal intent—was “more appropriately considered as mitigating factors” rather than affirmative defenses. The Appellate Division agreed and granted the motion to strike.

This distinction matters:

• Affirmative defenses are legally cognizable doctrines that, if proven, would bar or reduce liability notwithstanding the truth of the petition’s factual allegations (for example: statute of limitations, collateral estoppel, lack of jurisdiction, etc.).
• Mitigation accepts the misconduct but seeks to lessen the sanction based on circumstances such as health issues, lack of prior discipline, cooperation, and good character.

By striking paragraph 66 as a matter of pleading, the Court made clear that one cannot recharacterize mitigation or excuse as a “defense” to professional charges. The facts alleged and found by the Special Referee established violations of the Rules; arguments about the respondent’s state of mind and life circumstances properly go to penalty—not to liability.

F. The Sanction: Why Disbarment?

The Court’s sanction analysis is concise but emphatic. It notes that, “Notwithstanding the mitigation advanced, we find that the respondent’s actions necessitate the severest of sanctions.” The reasoning rests on several aggravating themes:

• A Course of Self-Dealing: This was not an isolated lapse but a sustained pattern of conduct in which Galarza used his power-of-attorney and trustee roles to access and deplete his client’s limited assets.
• Exploitation of a Vulnerable Client: JH was in a demonstrably fragile mental state, subject to psychiatric hospitalization and represented by MHLS. Galarza recognized her vulnerability (as his own APS referral letter showed) yet nonetheless structured the trust and billing in ways that benefitted himself.
• Misuse of Fiduciary Positions: Lawyers are fiduciaries both as attorneys and as holders of powers of attorney or trustees. Galarza “actively ignored his duties required by the Rules of Professional Conduct and his duty as a fiduciary to safeguard his client’s limited assets.”
• Lack of Remediation: The opinion notes that he had not reimbursed funds to JH and that he asserted uncollected fees rather than acknowledging overcollection.
• Failure to Appreciate Gravity: The Court found that Galarza “does not appreciate the severity of his misconduct,” suggesting that continued practice poses a risk of recurrence.

Against this backdrop, and with the D’Angelo precedent as a benchmark, the Court concluded that nothing less than disbarment would adequately protect the public, maintain the integrity of the bar, and deter similar misconduct by others.

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VI. Complex Concepts Simplified

A. What is a Fiduciary Duty in This Context?

A fiduciary is someone legally obligated to act with the highest degree of loyalty and care toward another’s interests. Lawyers are fiduciaries to their clients. So are:

• Agents under powers of attorney,
• Trustees, and
• Escrow agents handling funds for another.

In Galarza, the respondent simultaneously held multiple fiduciary roles:

• Attorney to JH,
• Agent under her powers of attorney, and
• Trustee of her revocable living trust.

Fiduciary duty demands:

• No self-dealing (i.e., not using the position to benefit oneself at the beneficiary’s expense);
• Full candor and transparency;
• Meticulous care of funds; and
• Avoidance of conflicts between personal interests and fiduciary obligations.

B. What is Self-Dealing?

“Self-dealing” occurs when a fiduciary uses his position to obtain gains for himself from assets or opportunities that belong to the beneficiary. In this case:

• Making himself remainder beneficiary of the trust;
• Appointing his son as successor trustee; and
• Paying his personal credit card debts from the trust;

are all classic instances of self-dealing. The Court characterizes the entire matter as a “course of self-dealing,” underscoring that the misconduct was not accidental but structural and repeated.

C. Power of Attorney (POA) and Why It’s So Sensitive

A power of attorney allows a designated agent to act on behalf of the principal in financial and other matters. It is extremely powerful because:

• The agent can sign documents, move money, and make financial decisions as if they were the principal; and
• The principal may be elderly, ill, or otherwise unable to monitor what is being done.

When the agent is also the principal’s lawyer, the potential for conflict is heightened. While it is not automatically unethical for an attorney to hold a POA for a client, the attorney must:

• Use the power solely for the client’s benefit;
• Avoid benefiting personally from the client’s funds unless there is clear, informed consent and appropriate safeguards; and
• Consider involving independent counsel or neutral fiduciaries where the client is vulnerable.

Galarza’s conduct—creating a trust in his own favor while using the POA, without the client seeing or truly understanding the document—illustrates why such arrangements are fraught with ethical danger.

D. Trusts, Trustees, and Remainder Beneficiaries

A trust is an arrangement in which:

• A grantor transfers property to a trustee,
• To be held for the benefit of one or more beneficiaries,
• With terms set out in a written trust instrument.

A remainder beneficiary is the person (or persons) who receives whatever is left in the trust after the primary beneficiary’s death or after certain conditions are met.

In a typical estate plan, a lawyer may draft a trust in which the client leaves money to family or charities. It is far more problematic when:

• The lawyer himself is the trustee and remainder beneficiary; and
• The client is mentally fragile and does not receive or understand the trust documents.

This structure creates an obvious incentive for the lawyer to conserve less for the client and more for himself and his family—exactly the conflict that Rule 1.7 is designed to prevent.

E. Letters of Engagement and Written Retainers

New York requires, with limited exceptions, that when a lawyer undertakes a new matter for a client and expects the fee to exceed $3,000, the lawyer must provide a written letter of engagement or retainer agreement. It should:

• Define what the lawyer will do (scope of representation);
• Specify how fees will be calculated (hourly, flat fee, contingency, etc.); and
• Explain how expenses will be handled.

This requirement is not mere “paperwork.” It:

• Reduces misunderstandings about fees;
• Allows clients to make informed decisions; and
• Facilitates oversight if the fee is later challenged.

In Galarza, the lack of written engagement letters for multiple substantial matters opened the door to retroactive rate increases and opaque billing practices.

F. “Venal Intent” vs. “Good Faith Mistake”

Disciplinary decisions often examine whether a lawyer acted with venal intent (dishonesty, fraud, deception, or knowing exploitation) or whether the misconduct arose from negligence or misjudgment. Lawyers sometimes argue for leniency by claiming that mistakes were “well-intentioned” or rooted in misunderstanding rather than bad faith.

Here, Galarza explicitly argued that he did not act with venal intent and that his conduct was a “reasonable and well-intentioned mistake.” The Court plainly rejected that narrative, emphasizing:

• The sustained pattern of self-benefiting activity;
• The vulnerability of JH; and
• His lack of full appreciation of the gravity of what he had done.

The decision implies that even if he did not consciously set out to defraud JH at the outset, the cumulative pattern of conduct amounted to exploitation inconsistent with any claim of innocent error.

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VII. Impact and Implications

A. For Attorney Discipline in New York

Matter of Galarza reinforces several important themes in New York’s disciplinary law:

• Disbarment as the Default Sanction for Self-Dealing with Client Funds: When an attorney misuses fiduciary authority (POA, trustee) to advance personal financial interests and deplete client assets, especially for a vulnerable client, disbarment is likely.
• Overlap of Ethics Rules: The Court’s willingness to sustain multiple overlapping charges (1.5(a), 1.5(b), 1.7, 8.4(d), 8.4(h)) underscores that attorney misconduct is often multi-dimensional and will be charged accordingly.
• Limited Weight of “No Venal Intent” Assertions: Mere denials of bad faith, without restitution or genuine insight, carry limited mitigating weight where the objective facts demonstrate serious, sustained benefit to the attorney at the client’s expense.
• Importance of Credibility: The opinion implicitly credits the Special Referee’s findings, including the contradictions between the documentary evidence (e.g., who prepared the powers of attorney, what the bills show) and Galarza’s testimony. Where documentary evidence undermines the respondent’s narrative, courts are more prone to view the conduct as intentional and aggravated.

B. For Lawyers Serving as Agents or Trustees for Clients

The decision stands as a cautionary precedent for lawyers who:

• Agree to serve as an attorney-in-fact under a client’s power of attorney;
• Agree to serve as trustee of a client’s trust; or
• Become significantly involved in managing client funds outside a traditional escrow context.

Key lessons:

• Avoid Conflicted Beneficiary Roles: Lawyers should almost never make themselves remainder beneficiaries of client trusts absent independent counsel, full disclosure, and clear evidence that the client’s intent is informed and freely given.
• Guard Against “Mission Creep”: When legal representation expands into day-to-day financial management, the risk of conflicts and boundary violations grows. Lawyers should consider whether a professional fiduciary, family member, or guardian should be appointed instead.
• Document Everything: Written retainer letters, detailed bills, and separate accounts help avoid disputes and disciplinary risk. Where a client is vulnerable, contemporaneous documentation is especially vital.

C. For Representation of Vulnerable or Impaired Clients

Although the opinion does not expressly discuss Rule 1.14 (clients with diminished capacity), its facts are squarely within that domain. JH was:

• Homeless or near-homeless at one point (living in her car);
• Subject to mental health crises severe enough to warrant incarceration and later psychiatric hospitalization; and
• Represented by specialized counsel from MHLS.

In such situations, the attorney’s responsibilities shift. Instead of taking over the client’s financial life through conflicted structures, lawyers should:

• Work with the client’s existing institutional or court-appointed counsel;
• Consider court appointment of a neutral guardian or conservator where needed;
• Avoid becoming the direct beneficiary of the client’s estate plan or trust; and
• Ensure that any fiduciary role they accept is fully transparent and consistent with the client’s capacity and best interests.

Galarza thus serves as a practical warning: claiming to be “taking care of everything” for a vulnerable client is not a defense if it results in financial benefit to the lawyer and corresponding depletion of the client’s resources.

D. For Billing Practices and Letters of Engagement

The case reinforces:

• Mandatory Written Retainers for New Matters: Once fees in a new matter are expected to exceed $3,000, lawyers should not rely on an old retainer or oral understandings. Fresh, matter-specific letters of engagement protect both client and lawyer.
• Limits on Billing for Nonlegal Tasks: Lawyers should not assume that every helpful act in a client’s life is billable at full attorney rates. If they are going to charge for atypical services, that should be clearly explained and reasonably priced.
• Transparency in Rate Changes: Any change in hourly rates, especially retroactive changes, must be clearly disclosed and agreed upon. Retroactive increases without documented consent are particularly risky.

E. For Pleading Practice in Disciplinary Proceedings

Finally, the Court’s decision to strike paragraph 66 as improperly pleaded affirmative defenses has implications for counsel defending disciplinary charges:

• Do Not Conflate Defenses with Mitigation: A defense must, if proven, negate or bar the charge; mitigation accepts the charge but seeks a lesser penalty.
• Draft Defenses in Compliance with CPLR: Even in disciplinary matters, civil pleading standards apply. Vague, argumentative, or conclusory assertions belong in a mitigation submission or in testimony, not in the list of affirmative defenses.

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VIII. Conclusion: Key Takeaways and Broader Significance

Matter of Galarza is a paradigmatic modern New York disciplinary case about what happens when an attorney misuses fiduciary structures—powers of attorney and a client trust—to benefit himself at the expense of a vulnerable client. The decision illustrates several core principles:

1. Self-dealing with client funds, especially via fiduciary roles, will almost invariably lead to disbarment. The combination of acting as attorney, power-of-attorney agent, trustee, and remainder beneficiary while paying one’s own personal debts from client funds is fundamentally incompatible with the ethical obligations of the bar.
2. Vulnerable clients are entitled to heightened protection, not greater exploitation. The Court was especially troubled that Galarza “actively took financial advantage of a vulnerable individual,” one whom he had personally flagged to Adult Protective Services.
3. Written retainer agreements and transparent billing are not optional formalities. They are essential safeguards. The absence of written engagement letters for multiple new matters—and the use of retroactive billing—facilitated the misconduct.
4. Claims of “no venal intent” carry little weight against sustained, self-benefitting conduct. The Court found that Galarza failed to appreciate the severity of his actions, a factor that strongly supported disbarment rather than a lesser sanction.
5. Pleading strategy in disciplinary matters must respect the distinction between liability and mitigation. Attempts to repackage excuses or subjective justifications as “affirmative defenses” will not succeed and may be stricken as non-compliant.

From a broader perspective, Galarza serves as a clear reminder that:

• Lawyer–client relationships involving control over client funds demand scrupulous adherence to fiduciary standards;
• Conflicts of interest based on personal financial benefit—particularly where vulnerable clients are concerned—are among the most serious violations the Court can address; and
• The Appellate Division remains willing to impose the ultimate professional sanction of disbarment when necessary to protect the public and preserve confidence in the legal profession.

For practitioners, the case is a powerful caution: even if one genuinely believes one is “helping” a distressed client, the moment the lawyer’s own financial interests become intertwined with the client’s assets in a way that lacks transparency, independent oversight, and informed consent, the risk of catastrophic professional consequences becomes very real. Matter of Galarza thus occupies an important place in New York’s disciplinary jurisprudence as a vivid illustration of those boundaries and the severe consequences for crossing them.