Thursday, March 28, 2013

Attorney Suspended, Falsely Claimed Reliance On Ethics Hotline Advice

The District of Columbia Court of Appeals has ordered an eighteen month suspension with reinstatement conditioned on disgorgement of funds paid to a client by the Attorney-Client Arbitration Board ("ACAB"). 

The attorney had charged an unreasonable fee, commingled and failed to promptly return client funds after the ACAB award.

Additionally, the attorney "falsely testif[ied] that he received advice from the D.C. Bar Ethics Hotline to retain the disputed funds in his operating account" and "requir[ed] the client to withdraw [the] bar complaint against him pursuant to a settlement agreement."

The Board on Professional Responsibility ("BPR") had proposed a six-month suspension.

The court disagreed with the BPR on a number of issues.

Because the attorney claimed to have taken client funds shortly before learning they were in dispute, the BPR found that Rule 1.15 did not apply.

The court, which considered the public protection aspect of safeguarding entrusted funds, educated the BPR on the point:

We are unconvinced by the Board's reasoning that, once disbursed, funds can "no longer [be] client or protected funds." If disbursing funds from a client trust account automatically removed the funds from the protection of Rule 1.15, an attorney could easily circumvent the protections afforded by this rule by disbursing putatively earned fees without ever providing clients an opportunity to dispute the fee...We cannot accept an interpretation of the rule that would so easily allow an attorney to circumvent its protections.

Thus, the bar is placed on this notice:

...we hold that if a client in any future matter, with reasonable promptness, disputes an attorney's fee after the attorney has already withdrawn his fee from the client trust account, the attorney must place the disputed amount in a separate account in accordance with Rule 1.15. What is "reasonable promptness" will be a case - specific inquiry...Going forward, an attorney who, like [respondent], claims he learned of a dispute "later that same day" in circumstances such as these will be required to return the disputed funds to a separate account under Rules 1.15(a) and (c).

The court also found, contrary to the BPR, that the attorney's efforts to avoid paying the ACAB award was a violation of the duties on termination of the representation under Rule 1.16(d).

The court here makes new law in the area of conduct that interferes with the operation of the disciplinary process.

An important precedent and reassuring to know the court did not accept the BPR's pro-attorney/ anti-client approach to the duty to protect entrusted funds.  (Mike Frisch)

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