Wednesday, September 22, 2010

Inside Information

An attorney who purchased 14,000 shares of stock in a firm client after learning confidential information from his law partner is the subject of a one-year suspension recommendation by the Illinois Review Board. The attorney also had falsely denied that he misused confidential information in making the purchases. He had used information learned from a partner's e-mail to purchase stock and realized a profit of almost $135,000.

The review board concluded that he had violated his duties of confidentiality and honesty and (over a dissent) engaged in criminal conduct that adversely reflected on his fitness to practice. The attorney had not been convicted of any criminal offense. He had been subject to a civil enforcement action and repaid double the amount of the stock sale profit as a penalty.

A hearing board had recommended a two-year suspension. The review board concluded that the sanction was unduly harsh:

The Hearing Board...declined to consider [the attorney's] family problems in mitigation. The Hearing Board discounted this evidence, reasoning that there was no real correlation between [his] misconduct and his family problems. In our opinion, the Hearing Board took too strict a view in assessing this evidence.

[The attorney] testified that he committed the acts in question because he was acting irrationally, in response to depression and problems that he was having with a teenaged daughter. [He] and his ex-wife testified in detail about serious problems affecting one of their daughters, beginning in July 2004 and continuing through at least May 2006, the time of [his] misconduct. Each testified that their daughter’s problems with drugs and problems brought about by persons with whom she was associating caused very significant emotional stress for the family. The family ultimately placed the young woman in remote residential treatment facilities, at significant expense.

[The attorney] sought and received treatment for depression between August 2005 and April 2006 and in October and November 2006. In addition, [his] father died, in December 2005, and [he] assumed responsibility for his late father’s affairs, out-of-state, which added additional stress. [He] testified that, as a result of these factors, he was not using his best judgment at the time of his misconduct. He testified that his "life was going down the tubes." The facts which [he] and his ex-wife described support that statement.

[His] very difficult family circumstances do not excuse his misconduct. They do, however, provide a framework from which to reasonably assess this respondent’s actions. These circumstances were ongoing at the time of [his] misconduct. A temporal connection between a respondent’s misconduct, ill mental health, and family problems is properly considered in mitigation. (citation omitted)

While we do weigh the mitigating factors differently than did the Hearing Board, they are not sufficient in this case to justify a lesser suspension than one year, given the facts of this case as a whole.

The majority questions the appropriateness of bringing the criminal conduct charge absent a conviction, notwithstanding governing case law that makes clear that conviction is not a necessary predicate to the violation. (Mike Frisch)

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