Wednesday, July 20, 2011

Advanced Fee Misappropriation Taken Seriously In Michigan

An attorney who misappropriated advanced fees was suspended for 2 1/2 years by a Michigan panel. The attorney appealed, seeking lesser discipline. The Grievance Administrator cross-appealed and sought revocation.

The Attorney Discipline Board agreed with the Administrator and imposed revocation (disbarment):

Respondent was the only witness at the hearing. His testimony included assertions that he
did not keep close track of whether funds in his trust account had been earned or not, and he
admitted - and Exhibit 1 demonstrates - that he paid Walmart, Comcast, and a host of other
personal and business expenses out of the trust account. A portion of his testimony shows that
respondent possesses, if not the integrity to act as a fiduciary, at least the common sense and
intellectual honesty to reject an overture to blame his misconduct entirely on poor bookkeeping:

RE-EXAMINATION BY MR. COTE:
Q. If you had been a better bookkeeper and if you had had
bookkeeping support staff that you had previously, this
wouldn't have happened would it?
A. . . . Bookkeeping would have helped but I think just things
outside of bookkeeping would have been better too. I mean
when you get something like this where you have to pay
somebody money back and you know you owe it from day
one, I think that I should have given it the attention it
deserves and put that right next to pictures of my family
basically is what it amounts to.

We agree. Attempts to blame misuse of client funds on poor bookkeeping practices seldom
make any sense. With respect to the handling of trust funds, "poor bookkeeping" is often actually
a refusal to assign priority to the lawyer's role as a fiduciary. The public is asked to trust lawyers
with their confidences, their liberty, and their fortunes. The public is also asked to trust lawyers as
repositories of funds. The duty to keep client and third party funds safe and separate from lawyer
funds is a fundamental one.

The board found no "compelling mitigation" that would warrant a lesser sanction.

The board reached the same result in a second case where a hearing panel had suspended the attorney for 120 days.

Fair warning from member Kienbaum's concurring opinion in the first case:

On the same day we heard this Respondent's case, another case...was before us. In that case, the Grievance Administrator asked for an increase of the 120 day suspension imposed on that Respondent - but he did not seek disbarment, only a one year suspension. The facts were almost identical - certainly there were no material distinctions - and we were compelled there to increase the penalty to revocation, just as we did in this case. We have not done so lightly in either case, and can only hope that the message this Board sent to the profession in Grievance Administrator v Petz...is again heard clearly.

Both attorneys had practiced for over 30 years without a disciplinary blemish. (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2011/07/an-attorney-who-misappropriated-advanced-fees-was-suspended-for-2-12-years-by-a-michigan-panel-the-attorney-appealed-seeki.html

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