Roy Herron removed as trustee for Cody Wade
Story by Shannon Taylor Senior Investigative Reporter
Attorney Roy Herron has been removed as Trustee for Cody Wade after findings of Herron violating Supreme Court Rule 8, violating his fiduciary duty by failing to protect assets, not substantiating or justifying his fees and acting as a conflict of interest.
Weakley County Chancery Court Judge Jeff Parham heard the case regarding the conservatorship of Cody Wade on Nov. 2, 2022, and further on Jan. 30, 2022, addressing issues with the Trustee, the accounting of the trust, billing and fees related to the Trustee, along with attorney fees. The order, filed Feb. 24, 2023, addresses the issues with the case.
Cody Wade received a confidential settlement after a jury trial was rendered in his favor which was approved by Judge William Acree and placed under seal in 2014 and is still sealed today. Roy Herron was one of the attorneys of record in the Circuit Court case for healthcare liability. Herron was also legal counsel in ancillary legal proceedings which included a lawsuit with TennCare and a conservatorship hearing on Wade.
In the conservatorship matter, Herron represented the paternal grandparents, Ronnie and Reba Wade and he successfully got them appointed co-conservators over Wade. Herron represented and advised the Wades since the inception of the lawsuit and continues to represent them as their attorney to this day.
Based on Wade’s physical and mental condition, the net proceeds from the settlement were placed in a supplemental needs trust to be administered for his benefit. At the time of the 2014 settlement, Wade had a life expectancy of nine years and Herron suggested to the Wades after the settlement that Attorney William Harbison draft the supplemental needs trust agreement (SNTA).
Herron contacted both Regions Bank and Cumberland Trust regarding acting as Corporate Trustee of the trust and to inquire of their fee schedules. The SNTA was executed in April 2014 and named the Wades as grantors since they were the co-conservators and had prosecuted the lawsuit resulting in the settlement. It further named Randy Wade as trust protector.
The SNTA named Herron as the Trustee and Regions Bank as investment advisor of the trust.
Herron’s only prior experience as a fiduciary was acting as a director of a local bank and he had no actual experience acting as a Trustee. Herron never advised the Wades to get independent legal advice about any potential conflict of interest, “even though the Dec. 2014 letter clearly said they inquired if it would be a conflict.”
On Dec. 16, 2014, seven months after the trust was drafted, the parties executed a letter agreement for Herron to charge as a trustee fee of 1% annually which amounted to $48,000 per year based upon the Cumberland fee schedule. Herron responded to the inquiry that, “I’ve checked and our (Herron) serving as Trustee does not stop us from continuing as your and Cody’s law firm.”
Herron never obtained a formal ethics opinion from the Board of Professional Responsibility and, furthermore, while acting as Trustee, Herron and his firm continued to be legal counsel for the Wades and to bill their time in addition to the Trustee fees.
Herron was also found not able to testify or give any specific duties of the Trustee. Herron said he met with the Investment Advisor on payment of expenses and Herron stated his other duty was to keep in contact with the Wades and Al Creswell, their CPA.
Herron nor his staff never kept time records of items they did as Trustee even though the Dec. 2014 letter stated that they would. Herron and his firm also billed as attorney time for many items that should have been a duty of the Trustee as set forth in the trust agreement.
Herron never properly protected the trust assets currently in the amount of 5.5 million dollars. Herron also testified to and provided a copy of his professional legal malpractice insurance policy in the aggregate amount of $750,000 as proof that his duties as Trustee were insured. “The correspondence between the carrier and Herron clearly stated the protection is limited to legal work, not fiduciary work.”
Conclusions of law regarding the case
The Chancery Court found that Herron violated Supreme Court Rule 8 by entering into a business transaction (acting as Trustee) with the Wades, then a current client, without advising them in writing of the desirability of seeking and the opportunity to seek the advice of independent legal counsel for the transaction.
The Chancery Court also found that Attorney William Harbison was the pick of Herron and therefore not independent legal counsel.
The Chancery Court found that the Wades never executed a document of informed consent as provided by Rule 1.8(a)(3) because they were informed by Herron that no conflict existed.
The Chancery Court found that Herron violated his fiduciary duty to the trust by failing to properly protect the assets through bond or insurance and that he never justified or substantiated his Trustee fee charges. The court also found that Herron has a conflict of interest in acting as Trustee and as the attorney for the Wades, the Wade Conservatorship and any other legal capacity with the Wades.
The Chancery Court found that prior fees charged by Herron, as Trustee and Herron & Herron Law Firm, will not be ordered to be repaid, but that Herron is removed as Trustee effective no later than May 1, 2023, and that a Successor Trustee be submitted before that date. The court also ruled that the time entries of Martha Stutts, Paralegal from Herron Law Firm be modified to $100 per hour and approved from July 1,2020 to June 30, 2021, in the amount of $7,229.
Herron is also facing a legal negligence action suit in Hardeman County for “failure to comply with the applicable standard of care” in his representation of Sheriff John Doolen who retained Herron when Doolen filed a salary suit against the Hardeman County mayor. The negligence suit states that Herron, and other defendants listed in the suit failed to disclose in response to interrogatories more than 20 fact witnesses and 2 expert witnesses which essentially deprived Doolen of the evidence necessary to prove that he was entitled to recover the relief he sought for his salary suit case. The suit states that the unfavorable result in the case was directly caused by Herron’s and other defendants listed failure to supplement their discovery responses in a manner that was consistent with the rules of the court. Doolen lists damages in the amount of more than 2 million dollars. The case is pending trial.
DISCLOSURE: All information contained herein came from Chancery Court Docket No. 20,132 filed with the Weakley County Chancery Court and Case number 19502 filed with the Hardeman County Chancery Court.