February 27, 2013
Thy Brother's Keeper
The New York Appellate Division for the Second Judicial Department reaffirmed an eariler determination to impose a two-year suspension in circumstances described by the court:
Whether, and to what extent, attorneys are subject to discipline under circumstances where a defalcation was occasioned by someone other than the attorney within the attorney's firm, depends on a number of factors: (1) the subject attorney's partnership status and/or level of experience; (2) the presence (or absence) of "early warning signs" of financial improprieties, whether such signs were ignored and, if so, for how long; (3) whether the proper authorities were notified of defalcations upon their discovery; (4) the presence (or absence) of monetary loss to clients and the magnitude thereof; and (5) whether the attorney attempted to reimburse client losses caused by another (citations omitted) The foregoing factors were all considered in this matter, particularly the presence of "warning signs" and "red flags;" the extent of the clients' monetary losses; and the fact that there has been no reimbursement of the client losses caused by the respondent's brother.
The cases proffered by the respondent in support of his argument that he should be, at most, publicly censured, are inapposite. Unlike those cases, the respondent herein was charged with having been unjustly enriched by the use of clients' funds for his personal benefit, and that charge was sustained.
The most fundamental obligation of attorneys entrusted with client funds is the duty to safeguard those funds. As the Court of Appeals stated, that duty, if no other, is "crystal clear" and " a reasonable attorney, familiar with the Code and its ethical strictures, would have notice of what conduct is proscribed'" Matter of Galasso, 19 NY3d 688, *4, quoting Matter of Holtzman, 78 NY2d 184, 191). We reiterate that the respondent failed to maintain appropriate vigilance over his firm's bank accounts, resulting in actual and substantial harm to clients.
The ABA Journal had this earlier coverage. (Mike Frisch)
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