Monday, October 12, 2009
An attorney ("Respondent") with an unblemished record in over 40 years of practice was disbarred by the Maryland Court of Appeals. He had a "business oriented" practice with the same partner for 30 years. The partner had focused his attention on an outside resort business that eventually experienced financial problems. The problems led to litigation between the business partners. Respondent ran the business of the law practice, as his partner's attention was directed to the litigation.
The partner brought in a client with a stated up business in magnetic imaging. Eventually, Respondent played a dual role as company president and counsel to the company. He could sign business checks with the co-signature of the company's managing general partner, who was a shareholder and longtime friend of Respondent's partner. He had a signature stamp for the managing general partner, which he applied to a $58,000 check paid to his law firm for past services. He felt he had been underpaid and made a "unilateral decision to go back 14 years and increase his fee..." The managing general partner learned of the payment and confronted Respondent. Respondent admitted he had also authorized a loan to himself from the company that remained unpaid. He also had diverted another payment due to the company. Eventually, Respondent was discharged and a complaint was filed with Bar Counsel.
Respondent contented that he was acting as a company officer and "consistently believed his roles [as attorney and company president] to be separate." His actions were a desperate reaction to the financial pressures on him in running his law firm. The court found he had misappropriated funds, acted dishonestly and engaged in serious conflicts of interest. The court agreed with Bar Counsel that disbarment was the proper sanction.
If you ethics profs out there are looking for a teaching case on the dangers of mishandling entrusted funds and the dual roles of counsel/business associate, this case may be worth a look. (Mike Frisch)