Monday, July 15, 2019
In line with the preceding post, a reciprocal discipline opinion where a short suspension had been imposed in Utah for misappropriation is summarized in this headnote from the New Jersey Supreme Court
In this ethics proceeding, the Court considers whether Joseph Peter Barrett, an attorney who received a 150-day suspension for knowing misappropriation of law firm funds in Utah -- a jurisdiction that applies a preponderance of the evidence standard and recognizes no business dispute defense -- may, based only on the Utah record, be disbarred under New Jersey’s clear and convincing evidence standard.
In two separate law firm matters in Utah, respondent traded legal fees earned for his law firm for construction work performed at his home in Utah. In disciplinary proceedings in Utah, respondent, in order to explain and justify his conduct, sought to testify about a business dispute he had with his law firm. The court determined the evidence was relevant only to the motive and credibility of testifying law firm partners.
At the hearing’s conclusion, the Utah judge found by a preponderance of the evidence that respondent had knowingly misappropriated law firm funds and imposed a 150-day suspension from the practice of law. The Utah Supreme Court affirmed the 150-day suspension. In re Discipline of Barrett, 391 P.3d 1031, 1037-38 (Utah 2017).
Following entry of the Utah order, the New Jersey Office of Attorney Ethics (OAE) moved before the Disciplinary Review Board (DRB) for reciprocal discipline and requested respondent’s disbarment. Relying on In re Siegel, 133 N.J. 162, 170 (1993), the DRB recommended disbarment. The Court dismissed without prejudice the OAE’s motion for reciprocal discipline, noting that “the findings of the tribunal in Utah were based on a preponderance of the evidence standard instead of the clear and convincing standard applicable to New Jersey disciplinary proceedings.” 234 N.J. 81, 82 (2018). The OAE filed a motion for reconsideration, which the Court granted. ___ N.J. ___ (2018).
HELD: Because the Utah court limited the presentation of evidence of a business dispute between respondent and the law firm, and because evidence that may exist in Utah cannot be compelled by respondent here, the Court cannot conclude that the OAE has proven by clear and convincing evidence that respondent knowingly misappropriated law firm funds under circumstances justifying greater discipline than that imposed in Utah.
- In reciprocal discipline cases, the Court should impose the same discipline as the foreign jurisdiction unless the matter is within one of five enumerated exceptions. One of the exceptions is germane to this case -- that “the unethical conduct established warrants substantially different discipline.” R. 1:20-14(a)(4)(E). To “argue that the law of this state or the facts of the case do or should warrant the imposition of greater discipline than that imposed in [the] other jurisdiction,” the Director of the OAE must “establish such contentions by clear and convincing evidence.” Id. § 14(a)(4). (pp. 5-6)
- When a New Jersey attorney misappropriates law firm funds, the facts and circumstances of the particular case determine the sanctions warranted, up to and including disbarment. See Siegel, 133 N.J. at 170 (“[K]nowingly misappropriating funds -- whether from a client or from one’s partners -- will generally result in disbarment.” (emphasis added)); see also In re Sigman, 220 N.J. 141, 158 (2014) (explaining that Siegel’s holding “is not, and has never been, absolute” and that “[t]he Court has recognized in other settings that there are cases that warrant discipline short of disbarment”). (pp. 6-7)
- The only evidence produced by the OAE in support of sanctions greater than a 150- day suspension is the record of proceedings before the Utah court. Importantly, in New Jersey disciplinary proceedings, evidence of a business dispute may be a defense to the misappropriation of law firm funds. Utah has no such business dispute defense, the Utah record lacks facts necessary to establish a business dispute defense, and evidence of the existence of a business dispute would be integral, in New Jersey, to defending against a charge of knowing misappropriation of law firm funds. In Utah, respondent’s incentive to produce evidence of a business dispute was far different than what his motivation to produce such evidence in New Jersey would have been. (pp. 7-8)
- Respondent claims that if permitted and motivated to do so, he could have produced additional evidence of a business dispute in Utah. Any such evidence that may have been available during the Utah proceedings remains in Utah, outside of respondent’s and the OAE’s reach. It would therefore be fundamentally unfair and contrary to established rules to disbar respondent in New Jersey -- a greater discipline than that imposed in Utah -- based only upon the record of proceedings in Utah. (pp. 8-10)
The Court imposes a 150-day retroactive suspension of respondent’s license to practice law in New Jersey.
The misconduct found in Utah
In two separate law firm matters handled by respondent while engaged in the practice of law in Utah, respondent traded legal fees earned for his law firm in exchange for construction work performed at his home in Utah; he did so without the knowledge or consent of his law firm and in violation of his law firm’s employment contract. Respondent’s actions deprived his law firm of more than $20,000 in legal fees.