Thursday, September 4, 2008

Overdraft Notice Draws Scrutiny

The Maryland Court of Appeals declined to impose a 60-day suspension sought by Bar Counsel and imposed reprimand in a matter where the attorney had used an escrow account for personal reasons but had not misused client funds. The lawyer also had been dilatory in responding to Bar Counsel. The court concluded:

There are several mitigating factors in this case. Bar Counsel made clear that there was no allegation of misappropriation or commingling of client funds. Respondent's misuse of his escrow account occured at a time when he was intending to close his practice. Although respondent failed to make timely responses to Bar Counsel's requests for information, the hearing judge found that he ultimately "responded thoroughly and openly" and that he was mentally depressed and was not functioning normally.

The court sustained Bar Counsel's exceptions to certain legal conclusions of the trial court that (1) the misuse of the escrow account did not violate ethics rules and (2) there is no time limit for responding to Bar Counsel. The court found that the duty obligates the attorney to provide a reasonably prompt response.

Practice note: the escrow matter came to Bar Counsel's attention as a result of an overdraft notice entirely unrelated to the misuse of entrusted funds. As in many jurisdictions, all trust account overdrafts are reported by the bank to Maryland Bar Counsel. (Mike Frisch)

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