Sunday, February 25, 2018

Commingling In D.C.

A District of Columbia Hearing Committee has recommended a reprimand for an attorney's Rule 1.15 violations in connection with a so-called "advanced fee" for representation in a criminal appeal.

The payments were deposited into a business account rather than escrow 

At no time before or during the representation did Respondent advise Mr. Garrett, or his agents, that he would place the advanced fees into his business account, rather than into a trust account. Stip. ¶ 5.

Mr. Garrett did not consent to the advanced legal fees being placed into a non-escrow account. Stip. ¶ 6.

Subsequent to the receipt of the complaint made by Mr. Garrett, Respondent attended a D.C. Bar sponsored CLE on the application of In re Mance, 980 A.2d 1196 (D.C. 2009) to retainer agreements in the District of Columbia. Stip. ¶ 8.

A clear case of commingling

Commingling occurs when an attorney fails to hold entrusted funds in an account separate from his own funds. In re Moore, 704 A.2d 1187, 1192 (D.C. 1997) (per curiam) (appended Board Report). Thus, “commingling is established ‘when a client’s money is intermingled with that of his attorney and its separate identity is lost so that it may be used for the attorney’s personal expenses or subjected to the claims of its creditors.’” In re Malalah, Board Docket No. 12-BD038 (BPR Dec. 31, 2013), appended HC Rpt. at 12 (Sept. 27, 2013) (quoting In re Hessler, 549 A.2d 700, 707 (D.C. 1988) (appended Board Report)), recommendation adopted, 102 A.3d 293 (D.C. 2014) (per curiam); see also Moore, 704 A.2d at 1192 (“Commingling occurs when an attorney fails to hold entrusted funds in a special account, separate from his own funds.”). To establish commingling, the entrusted and non-entrusted funds must be in the same account at the same time.

As to sanction

the Hearing Committee finds that Respondent’s misconduct was inadvertent and ultimately harmless in this circumstance, but nonetheless sanctionable given the protections to clients afforded by Rules 1.15(a) and 1.15(e) and how those Rules have been interpreted. There is no evidence here, however, of a pattern of wrongdoing, dishonesty, or any attempt by the Respondent to dissemble or avoid responsibility once he received the complaint; and, conversely, there is evidence of proactive steps by Respondent to address the issue once raised by Disciplinary Counsel and to modify his actions going forward to comply with the letter of Rules 1.15(a) and 1.15(e).''

While Disciplinary Counsel did not introduce the fact into evidence at the hearing, we note that Respondent received an informal admonition in 2012 for violating North Carolina Rules of Professional Conduct 1.1, 1.4(a)(2), 1.4(a)(3), and 1.4(b). While Respondent notes in his brief that this previous admonition resulted from his status as the supervisor of a staff attorney in his office who violated the Rules, and the misconduct is distinct from the behavior at issue before the Hearing Committee, we do not ignore the prior North Carolina informal admonition entirely. It is a mildly aggravating factor in our view.

The committee took judicial notice of the prior admonition. 

Here, the Hearing Committee finds it a close question whether the adequate and appropriate sanction should be a Board reprimand or public censure. Respondent’s inadvertence and other professionalism, remorse, efforts to educate himself and others as to the importance of maintaining finances according to the Rules, and general cooperation with Disciplinary Counsel provide clear support to impose a sanction short of a suspension. Although Respondent’s prior informal admonition, albeit six years ago, in another state on another unrelated issue that may have only indirectly related to him, cannot be completely ignored, given all
the circumstances, the Hearing Committee concludes that a Board reprimand is the appropriate sanction here.

The case is In re Brian McDaniel, Board Docket No. 17-BD-076, Disciplinary Docket No. 2012-D371.

Note from the case numbers that this quite straightforward matter was under investigation for nearly five years before charges were filed. (Mike Frisch)

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