Thursday, December 7, 2017

Suspension For Failure Of Diligence and To Supervise Partner-Thief

The District of Columbia Court of Appeals adopted the proposed sanctions of its Board on Professional Responsibility that a thieving partner of a law firm be disbarred and that the more senior partner who had failed to supervise him be suspended for six months.

Senior Judge Reid authored the opinion, joined by Associate Judges Glickman and Fisher.

This attorney disciplinary case involves the main partner in a small law firm, respondent Deborah Luxenberg, and an attorney, respondent Dorrance Dickens, who started at the firm as a law clerk but became an associate and eventually a partner. Disciplinary Counsel charged Ms. Luxenberg with several violations of the District of Columbia Rules of Professional Conduct after Mr. Dickens allegedly stole at least $1,434,298.50 from three estates, including that of Ms. Luxenberg‘s client, Michelle Seltzer. Following his theft, Mr. Dickens fled to an island outside of the United States.

The Board on Professional Responsibility ("the Board") has recommended that Mr. Dickens be disbarred from the practice of law due to his violation of multiple rules of professional conduct, including Rule 1.15 (a) and (c), commingling and misappropriation, and Rule 8.4 (c), conduct involving dishonesty, fraud, deceit, or misrepresentation. The Board also has recommended that Ms. Luxenberg be suspended from the practice of law for six months due to her violation of Rules 1.3 (a), 5.1 (a), and 5.1 (c)(2), relating to the responsibility of partners in law firms to ensure competency and ethical behavior by attorneys in the firm.

The respondents

The findings of fact contained in the voluminous Report and Recommendation of the Board‘s Hearing Committee Number 12, and supporting record evidentiary documents, reveal the following factual context. Ms. Luxenberg commenced her practice of law as a member of the District of Columbia Bar in 1975. Eventually she was joined in practice by her husband, Stephen Johnson. While Mr. Dickens was completing his legal studies, he became a law clerk at the firm; he was hired in October 1995 because of his computer skills. His status changed to that of an associate in the firm in October 1996 when he became a member of the District of Columbia Bar.

In 1998, the firm incorporated in Maryland as Luxenberg and Johnson, and in 2003, when Mr. Dickens became a partner, the firm changed its name to Luxenberg, Johnson and Dickens. The firm had no partnership agreement but Ms. Luxenberg always retained a 52% interest in the firm. Ms. Luxenberg‘s practice has been devoted to family matters such as divorce and custody. Although she has never been the managing partner of the firm, she decided which clients the firm would represent and who would handle the client matters. Mr. Johnson also had a family law practice, and he took on cases in other areas of the law.

The victim was a longstanding client who Dickens stole from as her attorney

The record reveals Ms. Luxenberg‘s failure to recognize, at least by July 2009 that her longstanding trust in Mr. Dickens was not warranted, especially in the face of Ms. Seltzer‘s declining health and anxiousness to complete work on the documents reflecting her wishes to protect and provide for her adult children.

Although Ms. Luxenberg had become a seasoned lawyer with an admirable track record of service to her clients and the legal profession, her actions and omissions manifested a consistent failure to carry out her obligation of diligence to Ms. Seltzer. Ms. Luxenberg ignored clear warning signs that the trust and confidence Ms. Seltzer had placed in her and Mr. Dickens was no longer justified. The warning signs included (a) Mr. Dickens‘ long delay in addressing Ms. Seltzer‘s 2009 request for additional modifications of her trust and estate documents; (b) Mr. Dickens‘ frequent travels abroad while work on Ms. Seltzer‘s matter was pending, and his notice to the Luxenberg firm that he would be moving to Italy; (c) Mr. Dickens‘ failure to honor Ms. Luxenberg‘s September 2009 request that he submit copies of the Seltzer trusts and estate documents to the firm‘s central files; (d) Mr. Dickens‘ failure to notify Ms. Luxenberg about Ms. Seltzer‘s November 2009 visit to the Luxenberg firm‘s Maryland office to sign the Seltzer Family Trust agreement; (e) the delay in Mr. Dickens‘ transmittal of the redraft of the Seltzer will to the client; (f) Mr. Dickens‘ failure to meet Ms. Seltzer at the bank on December 23, 2009, as planned and Ms. Luxenberg‘s confusion as to the reason for his failure; and (g) Mr. Dickens‘ lack of notice to Ms. Luxenberg, a co-trustee of the 1990 amended trust, that he would seek Ms. Seltzer‘s signature, on February 23, 2010, on a letter of instruction regarding the transfer of assets from the 1990 amended trust to the Seltzer Family Trust created by Mr. Dickens.

The court plows ground on the duty to supervise

Here, as of 2007, not only was Mr. Dickens in a new office in a jurisdiction where he was not licensed to practice law, Virginia, but he also decreased his attendance at meetings in the firm‘s Maryland office, a jurisdiction in which he was also not licensed to practice law. He was no longer in the same office with his mentors and partners. Particularly when warning signs appeared that things definitely were not in order with respect to Mr. Dickens‘ work on the Seltzer trusts and estates matter, as a partner with managerial authority over the Seltzer matter, Ms. Luxenberg should have instituted periodic reviews and intervened to make certain that Mr. Dickens was doing the Seltzer work in a timely manner and was conforming to the Rules of Professional Conduct in his handling of the Seltzer trust assets...

We emphasize that there is no record evidence that Ms. Luxenberg participated in Mr. Dickens‘ acts of misconduct or had actual knowledge of Mr. Dickens‘ misappropriation/theft of the Seltzer assets, before his misconduct was discovered—after the fact—by Ms. Shaw and the attorneys for Mr. Seltzer and Ms. Falk. However, Ms. Luxenberg was the main, majority partner in a very small firm with, as of 2007, a central office in Maryland and satellite offices in Virginia and the District of Columbia. The Hearing Committee found that Ms. Luxenberg brought most of the business to the firm, and Ms. Seltzer not only was Ms. Luxenberg‘s client but Ms. Luxenberg also was the co-trustee of Ms. Seltzer‘s 1990 trust, as amended in 2004. While Ms. Luxenberg‘s contacts with Mr. Dickens were frequent when the firm‘s main office was in the District of Columbia and Mr. Dickens worked out of that office, the contacts were increasingly less frequent after Ms. Luxenberg and Mr. Johnson moved their offices to Maryland and Mr. Dickens chose to work out of the Virginia office. Under these circumstances – and at the first signs that Mr. Dickens was not adhering to firm policies (including attendance at firm meetings), failed to complete the work on the Seltzer matter in a reasonable time period, failed to send the Seltzer documents to the firm‘s central files, missed a meeting with Ms. Seltzer, failed to inform Ms. Luxenberg of the new 2009 trust document which implicated the 1990 amended trust of which Ms. Luxenberg was a co-trustee, and failed to inform Ms. Luxenberg of the date of the execution of the 2009 trust or the nature of the letter of instruction that Ms. Luxenberg was asked to witness – Ms. Luxenberg should
have become more vigilant in monitoring Mr. Dickens‘ adherence to the Rules of Professional Conduct. At these warning signs, and others discussed above in our consideration of Ms. Luxenberg‘s violation of Rule 1.3 (a), ―[w]e believe a lawyer of reasonable prudence and competence would have made the inquiry necessary to determine‖ whether Mr. Dickens was properly handling Ms. Seltzer‘s trusts and estates matter in a timely fashion.

A key part of the case - relied on by Disciplinary Counsel - involved the signing of the document that facilitated Dickens's thefts. It was witnessed by Luxenberg during a visit with the dying client in hospice care.  Luxenberg claimed that she did not read the document that she witnessed.

The BPR and Court accepted this explanation as a lack of diligence.

The events surrounding the letter of instruction substantiated Ms. Luxenberg‘s consistent failure to carry out her obligation of diligence to her client, Ms. Seltzer. Notwithstanding Ms. Luxenberg‘s friendship with Ms. Seltzer, Ms. Luxenberg had an attorney-client, and hence, a fiduciary relationship with Ms. Seltzer. That relationship not only covered the legal work that Ms. Seltzer had requested in 2009 which had been unduly delayed, but also Ms. Luxenberg‘s fiduciary role as co-trustee of Ms. Seltzer‘s 1990 trust. Yet, Ms. Luxenberg had little idea about the content of the document – the letter of instruction – that Ms. Seltzer asked her to witness on February 23. Nevertheless, Ms. Luxenberg understood that the document concerned "marshall[ing] assets for the trust for [Ms.] Seltzer that were left in the PNC Bank." Even with this limited understanding, Ms. Luxenberg as co-trustee of Ms. Seltzer‘s 1990 trust did not bother to read the one sentence instruction to the officers of the PNC Bank, "[p]lease cash-in or liquidate all of the Certificates of Deposit that I have in your bank, including, but not limited to all those listed on the attached two sheets and give the proceeds to Dorrance D. Dickens, who is my attorney." Because she did not read the one-sentence instruction, she of course did not realize that nothing was attached to the letter of instruction, and did not comprehend the significance of the missing schedule of Ms. Seltzer‘s assets. Ms. Luxenberg‘s failure to carry out her obligation of diligence to Ms. Seltzer under Rule 1.3 (a) left a clear path not only for Mr. Dickens to go to the PNC Bank on February 26 to transfer some of Ms. Seltzer‘s PNC assets to an account over which he had control, but also paved the way for Mr. Dickens to return to the bank in April and July 2010, with Ms. Luxenberg, to transfer assets from the amended 1990 trust to the 2009 trust, assets that Mr. Dickens began to transfer into his personal account.

The court followed the strong presumption in favor of the BPR recommendation.

Note that Maryland took a different tack as reported by the Attorney Grievance Commission in its 2013 report

LUXENBERG, Deborah Y. – Commission Reprimand for failing to make reasonable efforts to ensure the firm had in effect measures giving reasonable assurance that all lawyers in the firm conform to the Maryland Lawyers’ Rules of Professional Conduct.  Such failures permitted a substantial loss of trust/estate assets.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2017/12/the-district-of-columbia-court-of-appeals-his-attorney-disciplinary-case-involves-the-main-partner-in-a-small-law-firm-resp.html

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Comments

Her website says she has "retired from the practice of law" (www.luxlaw.com), but her Linked In profile still shows her as active, https://www.linkedin.com/in/deborah-luxenberg-9a8a2a21/

Posted by: Andy Patterson | Dec 7, 2017 7:12:30 AM

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