Wednesday, September 12, 2007
Disciplinary cases where the state high court reduces the proposed sanction can provide insight into the standards for ethical practice of that court. A recent example may be found in a decision of the Oklahoma Supreme Court reducing a proposed suspension of two years and a day (which the court calls tantamount to disbarment) to a 60 day slap on the wrist.
The case involves two instances of misconduct in handling entrusted funds. In one, the attorney was obligated to hold $6,500 in trust. The account balance fell to $31.31. The money was used for operating expenses. The attorney admitted and apologized for the misconduct, blaming his inattention and a miscommunication with office staff. Court: "There is no evidence that [the attorney] purposely deprived [the client] of the funds by deceit or fraud or that [the attorney] intentionally inflicted on [the client] grave economic harm." Apparently, the fact that the attorney "transferred the money from the trust account to his operating account and used the money for personal expenses" is insufficient to establish misappropriation.
The second case also involved escrowed funds. The court found that "the accounting records associated with the trust account were very poorly kept...it is difficult to accurately state figures disbursed or transferred from the account." Applying the standard quoted above, the court found the evidence did not establish misappropriation.
One dissenting judge would have imposed public reprimand; another "would impose greater discipline."
Take away points: 1. The standards for establishing misappropriation by Oklahoma lawyers appear to equate intentional misconduct (which the court says merits severe discipline) with theft or fraud. My understanding has been that intentional violations could be proved with establishing evil intent. 2. Bad record keeping may help the lawyer avoid disbarment when the bar is looking into potential escrow violations. To me, encouraging sloppy records has always been a bad policy.
To further explore the question of whether bad or no records may make it more difficult to discipline a lawyer for trust account irregularities, here's a recent informal admonition from the District of Columbia Bar Counsel. (Mike Frisch)