Tuesday, March 21, 2023

Restitution And Reinstatement

The Michigan Attorney Discipline Board affirmed a hearing panel's denial of a reinstatement petition

Forced or compelled restitution is not mitigating in a discipline case. ABA Standard 9.4(a). And we have “warned against an overemphasis on restitution as mitigation in misappropriation cases”  because not every lawyer will have the means to make restitution and such ability may come and go. The ability to make restitution neither establishes the character requisite to hold a law license or provides assurance to the public that only those fit to act as repositories of their funds will be able to practice law. Our sanctions must not result in clients having to gamble on the financial health of their attorneys when they entrust funds to them. By analogy, making restitution for theft of client or third party funds does not entitle a disciplined attorney to reinstatement. It is but one indicator of rehabilitation and fitness, and it is certainly not enough by itself to earn the proclamation of fitness contemplated by MCR 9.123(B).

As the case law referenced above repeatedly underscores, whether an attorney who deliberately violated the fundamental fiduciary responsibility to not steal client funds should be reinstated to the practice of law will depend upon a truly compelling showing of change and rehabilitation. Here, no evidence of moral rehabilitation is in the record. Petitioner’s conduct since disbarment and the activity leading to it does not evidence a genuine transformation in any respect and there is nothing in the record to support a conclusion that petitioner could now be safely recommended to the public as a fiduciary in light of his misconduct. This is so even before considering petitioner's failure to pay one dime to reimburse the Illinois Client Protection Program for the compensation it paid to the victims of his theft (or towards his IRS obligations) despite having the ability to do so. When the panels and this Board reference these failures, the point is not that payment will result in reinstatement. Rather, the point is that the failure even to comprehend the importance of righting the egregious wrong of theft from a client while having substantial resources to do so is evidence that petitioner has not changed his ways or his character. Again, petitioner’s failure to meet the burden imposed by MCR 9.123(B) is about so much more than payment or nonpayment. His failure to grasp this has likely contributed to his inability to meet that burden.

(Mike Frisch)


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