Friday, September 13, 2019
Theft from an employer drew a suspension without possibility of reinstatement for four months from the Iowa Supreme Court.
The court announced a prospective stringent rule for stealing from an attorney's employer.
Curtis Den Beste is an Iowa attorney. He received his license to practice law in 2000. In 2007, Den Beste received an offer from Steve Howes to practice at the Howes Law Firm, P.C. (Howes) in Linn County, Iowa. The misconduct giving rise to this proceeding occurred while Den Beste worked at Howes.
Den Beste entered into a fee agreement with Howes requiring him to deposit all earned client fees into a trust account or the general law firm account. Pursuant to the agreement Den Beste was then paid fifty percent of the fees he earned, and Howes retained the remainder to cover overhead and other expenses. Beginning in 2015, Den Beste accepted cash payments from some clients and kept the proceeds for himself rather than deposit them as required by the fee agreement.
The misconduct came to light in 2017
[Respondent] agreed to self-report his misconduct to the disciplinary board and to provide an accounting of the diverted funds as well as a repayment plan. The accounting revealed he retained a total of $18,200. Accounting for the fifty-percent split, and other tax and reimbursement considerations, respondent wrongfully deprived Howes of $9200. A Client Security Commission auditor investigated the issue and found no evidence to conclude Den Beste’s accounting was inaccurate.
It is certainly true that, in many cases, fee disputes between a lawyer and his or her current or former law firm might simply be contract disputes and nothing more. For example, a lawyer with a good-faith claim to fees should not be sanctioned merely for exercising or asserting such a claim. But not all fee disputes between a lawyer and a law firm are garden variety contract disputes. Some involve outright and undisputed theft. In such cases, the imposition of discipline is clearly appropriate.
The question then arises whether theft from a client is more serious than theft from a law firm or other third party. In our prior cases, the difference has often been dramatic. Theft of any amount by a lawyer from a client ordinarily results in revocation. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Parrish, 925 N.W.2d 163, 170–71 (Iowa 2019); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Guthrie, 901 N.W.2d 493, 500–01 (Iowa 2017). But theft of funds from a law firm can result in much lesser sanctions. Henrichsen, 825 N.W.2d at 529–30.
There are, perhaps, some reasons for the distinction between client theft and law firm theft. For instance, many clients have little power against a lawyer in whom the client places trust. A lawyer who steals from a client is preying on those often in an extremely vulnerable position who have placed trust in the lawyer and advanced funds to the lawyer to protect their interests. The relationship between a law firm and a lawyer ordinarily will have less of a power imbalance. The firm is in a better position, perhaps, than a client to monitor the proper handling of fees.
Yet, a lawyer who acts dishonestly toward an employer raises serious questions of whether the lawyer has the necessary integrity to practice law.
As the song goes, "From this moment on"
...we think the time has come to ratchet up the disciplinary sanctions for nonclient theft. That said, this case may not be the appropriate case to do so. In particular, given our caselaw, Den Beste was not on notice that he faced a possible revocation when he entered into the stipulation in this case. Cf. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cepican, 861 N.W.2d 841, 845 (Iowa 2015) (finding the attorney did not waive his right to contest a complaint of theft-based misconduct by failing to respond because he did not receive adequate notice of the allegation of theft). Thus, we rely on our precedent and impose a sanction in this case consistent with our prior cases. At the same time, we use this case as a vehicle to put the bar on notice that an attorney who steals from a law firm without a colorable claim may well incur stiffer disciplinary sanctions than have been imposed in our past cases.
On multiple occasions, Den Beste knowingly embezzled money from his law firm and then attempted to conceal what he had done. He had no colorable claim to nor was there any fee dispute regarding that money. “[I]t is almost axiomatic that the licenses of lawyers who convert funds entrusted to them should be revoked.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Irwin, 679 N.W.2d 641, 644 (Iowa 2004). Accordingly, I would revoke Den Beste’s license to practice law.