Friday, May 30, 2008

Perils Of Partnership

An Arizona bar discipline case that involved charges against a lawyer who had gone into practice with a classmate at the College of Law at Arizona State University may serve as a cautionary tale. The two partners had been friends for thirty years and partners for fifteen years and were each fifty percent shareholders of the firm. One was a crook; the other was not. Bad Partner confessed to Good Partner and a paralegal that he had taken entrusted funds to support a gambling addiction. The confession was motivated by the unraveling of Bad Partner's scheme. Good Partner immediately froze the firm's trust account and money market accounts and reported the incident to the State Bar. The thefts, from money market accounts, involved a tad under $3 million. Bad Partner consented to disbarment.

Disciplinary charges were then brought against Good Partner. A hearing officer found that each partner assumed responsibility for balancing ledgers and monitoring the accounts of their clients. Bad Partner was always first in the office to see incoming mail and kept the incriminatory records in a locked credenza. Good Partner consented to findings of trust account violations and failure to make reasonable efforts to have measures in place to give reasonable assurance that all firm lawyers complied with ethical obligations. The Arizona Supreme Court imposed public censure and two-years probation with an assessment of his office procedures, a trust accounting course and periodic review of his trust account management. (Mike Frisch)

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