Monday, November 19, 2018
A District of Columbia Ad Hoc Hearing Committee addresses the ethical implications of advance fees in an attorney's handling of two immigration matters.
The committee finds the conduct amounted to misappropriation of entrusted funds and recommends disbarment.
The decision explores the notable Mance decision as well as the post-Mance guidance provided by the Bar and the Court of Appeals.
Both matters involve Respondent’s handling of flat fees paid in advance and deposited in Respondent’s law firm operating account, and drawn down before the legal work was completed. Both raise questions left unresolved since In re Mance, 980 A.2d 1196 (D.C. 2009) (“Mance”), in which the Court clarified that under Rule 1.15(e) an advance payment of flat fees for legal services remains a client’s property.
In the Moya Complaint, the Hearing Committee must address the effect of Mance on a flat fee received before 2009 and deposited in an attorney’s operating account, and not moved into a trust account until its refund in November 2012. In the Gur Complaint, the Hearing Committee must address whether members of the D.C. Bar had adequate information and guidance on how to conform their practice to Mance and, if not, whether that fact might justify a finding of no more than negligent misappropriation under Rule 1.15(e).
Based on clear and convincing evidence, the Hearing Committee concludes with respect to both complaints that Respondent committed commingling and misappropriation in violation of Rule 1.15(a) and Rule 1.15(e) and should be disbarred.
The same respondent has made previous law in the area of entrusted funds (I teach his case).
Here the committee details the extensive educational outreach to the Bar after Mance
When the D.C. Court of Appeals decided Mance, it announced for the first time that for purposes of then Rule 1.15(d), a flat fee paid in advance for legal services remains the client’s property, and the attorney may not treat any portion of the money as his or her own until it is earned or unless the client has agreed otherwise. 980 A.2d at 1199.The Court concluded that the public is “better served by requiring that the lawyer keep flat fees in a trust or escrow account.” Id. at 1203.
The Moya matter
The Hearing Committee finds by clear and convincing evidence that Respondent committed commingling and misappropriation in violation of Rules 1.15(a) and 1.15(e) by holding Mr. Moya’s funds in Respondent’s COA and by using Mr. Moya’s funds without authorization for over three years after Mance, from October 2009 until November 2012.
As to the timing
well before Respondent received Mr. Moya’s first payment in July 2008, the Court had announced that the prepayment of legal fees and costs would no longer be considered the property of the lawyer on receipt.
The Board on Professional Responsibility argued a [pro-attorney, anti-client] view similar to Respondent’s in Mance, which the Court rejected. Agreeing with Disciplinary Counsel (then known as Bar Counsel) instead, the Court found that advances of flat fees paid in 2004 had remained the client’s property, notwithstanding Mr. Mance’s good faith but mistaken contrary view. See Mance, 980 A.2d at 1199. But because Mr. Mance’s mistaken view was reasonable and widespread, the Court made its holding prospective so as not to “discipline attorneys for inadvertent violations based on reasonable, but mistaken interpretation of the rules.” Id. at 1206 (citing In re Haar (Haar II), 698 A.2d 412, 424 (D.C. 1997)). Based on the Court’s reasoning in Mance, the Hearing Committee concludes that any legal fees and unincurred costs that Mr. Moya may have advanced to Respondent in July and August 2008, for future work to be performed on his behalf, did not thereby become Respondent’s property.
The cite is to respondent's earlier disciplinary encounter.
Culpability in the Moya matter
The Hearing Committee rejects Respondent’s attempt to hold the D.C. Bar responsible for his lack of knowledge of Mance. Disciplinary Counsel demonstrated by clear and convincing evidence that the D.C. Bar began offering guidance and instruction on Mance within two months of the decision, and has continued to do so ever since. The Committee concludes that Respondent chose not to avail himself of any of the proffered resources until it was too late. See, e.g., Tr. 119 (acknowledging awareness of Washington Lawyer magazine, admitting he did not read it), 206 (admitting he did not read magazine’s reports on latest disciplinary actions); see also R. Br. at 38 (conceding that Respondent could have learned about Mance by reading the D.C. Bar magazine). The Committee also concludes that the D.C. Bar acted in accordance with the Court’s expectation in Mance and disagrees with Respondent and his expert that still more is required, for example, mandatory CLE. Tr. 205, 256. As described below, even after attending a CLE on the handling of client funds, Respondent failed to implement the rule of Mance...
The handling of the Moya fee was either intentional or reckless misappropriation.
The post-Mance Gur misappropriation was found to be intentional.
Having concluded that the Respondent committed reckless misappropriation with respect to the Moya Complaint and intentional misappropriation with respect to the Gur Complaint, the Hearing Committee is compelled to recommend disbarment, there being no extraordinary circumstances or other mitigating factors warranting departure from that presumptive sanction.
The case is In re Paul Haar and can be accessed here. (Mike Frisch)