In re PRB Docket No. 2013.153, 2014 VT 35 (mem.)
By Andrew Delaney
So this one isn’t really a SCOV decision—it’s a Professional Responsibility Board (PRB) decision that the SCOV orders published in the Vermont Reports sans briefing or argument. As a wise woman named Beyonce once said, “If you like it, then you oughta put a ring on it . . . .”
This is a case involving proper management of trust accounts. If you’re the least bit familiar with professional responsibility law, you know that there are two surefire ways to get in hot water with the bar: (1) commit some heavy-duty crime like murder, embezzlement, arson, or insurance fraud; or (2) screw up your trust accounts. The parties filed stipulated facts, conclusions of law, and recommendations for sanctions with the PRB. It appears respondent didn’t properly manage his trust accounts.
Respondent’s trust accounts were selected for an audit as part of Disciplinary Counsel’s “super-fun-surprise” audit program. (It’s not really called the “super-fun-surprise” audit program, just to be clear.) A certified public accountant (CPA) checked respondent’s accounts for compliance with the trust-account rules for a just-under-three-years period.
The CPA found a number of problems. First, accounts hadn’t been reconciled and a discontinued account hadn’t been closed out. Second, advance payments of legal fees were regularly put into an operating account rather than a trust account (respondent mistakenly believed that some of these fees—for example, respondent charged a flat fee for all pretrial DUI work—were earned when paid). Third, some trust accounts were not labeled trust accounts. Finally, there was no centralized accounting system or other single identification source for all of respondent’s accounts.
Respondent instituted new policies to address the problems. The PRB notes that there were no improper uses of funds and there was no evidence of client or third-party harm. Respondent has been practicing law since the ’70s in Vermont.
The PRB concluded that respondent’s substantial experience practicing law and several prior disciplinary offenses were aggravating factors, but respondent’s lack of dishonest or selfish motives, good-faith efforts to rectify the problems, cooperation with Disciplinary Counsel, and the remoteness and dissimilarity of the prior offenses were mitigating factors.
The PRB found that respondent had violated the rules of professional conduct governing separation of personal and clients’ property; proper accounting for clients’ funds; and use of advance deposits. The PRB found that respondent’s mistaken belief that certain fees were of an earned-when-paid nature did not excuse the violation.
Respondent also violated the accounting-system-related rules when he failed to reconcile his trust accounts to bank and client balances; failed to maintain a centralized accounting system; failed to close out a discontinued trust account; and failed to label certain trust accounts as such.
In the end, respondent gets an admonition from disciplinary counsel. The PRB explains that this sanction is in line with ABA Standards and prior Vermont cases. The PRB explains that under the ABA Standards, it will first look to the duty violated, the attorney’s mental state, and the actual or potential injury to find the presumptive sanction. Then the PRB will consider aggravating and mitigating factors.
Here, the PRB finds that respondent breached a number of duties related to management of clients’ funds. It wasn’t malicious though—just negligent. And there was no actual injury to clients or third parties. The ABA standards basically say admonition is appropriate when a lawyer is negligent dealing with client property but it causes little or no actual harm. Looks like we have a presumptive sanction.
On to mitigation and aggravation . . . on the plus side, respondent had no bad motive, immediately took steps to fix the problems, and cooperated in the disciplinary proceedings. On the negative side, respondent has been practicing a long time and he has three prior disciplinary offenses. Because the prior offenses were remote and dissimilar, however, the PRB doesn’t give them much weight. There’s a somewhat-lengthy discussion of cases involving trust account violations as compared to respondent’s situation and what sanctions were imposed. We’ll spare you the gory details. All told, none of the factors sway the PRB toward a greater or lesser sanction, and respondent—as agreed—gets admonished by disciplinary counsel.
Tidy up your trust accounts boys and girls. You don’t want a mess on your hands when Disciplinary Counsel comes a-knockin’.