Opinion
Misc. Docket AG No. 20, September Term, 1999
Filed: June 23, 2000
Bell, C.J., Eldridge, Rodowsky, Raker, Wilner, Cathell, Harrell, JJ.
The Attorney Grievance Commission, acting through Bar Counsel, filed a petition for disciplinary action against Warren Anthony Brown and Lawrence Barry Rosenberg. Respondents, for violation of the Rules of Professional Conduct. Bar Counsel recommends that Respondents' license to practice law be suspended for one year. On or about March 10, 1999, the Review Board directed Bar Counsel to file charges against the Respondents as set forth in the petition. The petition alleged that Respondents violated Maryland Rules 1.15, 1.3, 5.3 (a)(b), 5.5(b), 8.4(d), §§ 16-607 and 16-609.
Maryland Rule 1.15 (Safekeeping property) provides, in pertinent part, as follows:
(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and of other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.
(b) Upon receiving funds or other property in which a client or third person has interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.
Maryland Rule 1.3 (Diligence) provides as follows:
A lawyer shall act with reasonable diligence and promptness in representing a client
Maryland Rule 5.3 (Responsibilities regarding non-lawyer assistants) provides, in pertinent part, as follows:
With respect to a non-lawyer employed or retained by or associated with a lawyer:
(a) a partner in the law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;
(b) a lawyer having direct supervisory authority over the non-lawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer.
Maryland Rule 5.5(b) (Unauthorized Practice of Law) provides, in pertinent part, as follows:
A lawyer shall not:
(b) assist a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice of law.
Maryland Rule 8.4(d) (Misconduct) provides, in pertinent part, as follows:
It is professional misconduct for a lawyer to:
(d) engage in conduct that is prejudicial to the administration of justice.
Maryland Rule 16-607 (Commingling of funds) provides, in pertinent part, as follows:
a. General prohibition. An attorney or law firm may deposit in an attorney trust account only those funds required to be deposited in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule.
b. Exceptions.
* * * * * *
2. An attorney or law firm may deposit into an attorney trust account funds belonging in part to a client and in part presently or potentially to the attorney or law firm. The portion belonging to the attorney or law firm shall be withdrawn promptly when the attorney or law firm becomes entitled to the funds, but any portion disputed by the client shall remain in the account until the dispute in resolved.
Maryland Rule 16-609 (Prohibited Transactions) provides, in pertinent part, as follows:
An attorney or law firm may not borrow or pledge any funds required by these Rules to be deposited in an attorney trust account, obtain any remuneration from the financial institution for depositing any funds in the account, or use any funds for any unauthorized purpose. An instrument drawn on an attorney trust account may not be drawn payable to cash or to bearer.
Pursuant to Maryland Rule 16-709(b), we referred the matter to Judge Richard T. Rombro of the Circuit Court for Baltimore City to make findings of fact and proposed conclusions of law. Following an evidentiary hearing, Judge Rombro found that both Respondents had violated Rules 1.3, 1.15, 5.3(a)(b), §§ 16-607 and 16-609 but that Respondents had not violated Rules 5.5(b) or 8.4(d).
I.
Judge Rombro filed the following findings of fact and proposed conclusions of law:
Respondents, through counsel and in testimony, essentially admitted the factual averments of the Petition. Thereafter both Respondents testified primarily in mitigation of the charges. Based on the admissions of counsel and the testimony presented, this Court makes the following Findings of Fact:
1. Respondent Warren A. Brown was admitted to the Tennessee Bar in 1978 and to the Maryland Bar on May 21, 1981. After serving as an attorney with the Legal Aid Bureau, Inc., State's Attorney's Office, and the Federal Public Defender's Office, Respondent Brown began the solo practice of law in 1988, practicing primarily in the area of criminal law.
2. The Respondent Lawrence B. Rosenberg was admitted to the Maryland Bar on June 21, 1973. Respondent Rosenberg spent ten years as a prosecutor in the State's Attorney's Office of Baltimore City and spent a number of years in private practice.
3. The Respondents entered into an association for the practice of law on or about April 1, 1990. Respondent Brown's Secretary, Pamela Heath, was retained as secretary for the firm of Rosenberg and Brown, P.A. Ms. Heath's background as a legal secretary included processing and preparing personal injury cases for settlement. Neither Respondent had any experience in handling personal injury cases and both testified that they relied upon Ms. Heath to handle personal injury cases that came into the office. Ms. Heath did everything necessary for the preparation of a personal injury case that a lawyer would do. Without supervision or reporting to either lawyer she interviewed clients, referred the clients to doctors, negotiated and made demands with insurance company adjusters, received settlement proceeds, prepared settlement memoranda, prepared settlement checks, signed Respondent Brown's name to the checks with his authorization and made disbursement to the client.
4. One of the law firms' clients was a Ms. Patricia Lamb. The firm represented Ms. Lamb in four or five personal injury cases. One of the cases was rather substantial, settling for $25,000. Prior to the settlement Ms. Lamb had borrowed money from a finance company which was to be repaid from the settlement proceeds. The $25,000 settlement was put in the Respondents' trust account on November 9, 1993. The sum of $5,746.48 was withheld from Ms. Lamb's settlement and was shown as a miscellaneous deduction on the settlement memorandum. The firm's file contained a fax from the finance company stating that the amount due from Ms. Lamb was $5,746.48. It is clear that the money withheld from Ms. Lamb was to be sent to the finance company. When the money was not remitted the company obtained a judgement against Ms. Lamb for the unpaid amount. Respondent Brown, after retaining present counsel, was advised to immediately send the money to the finance company. Brown testified that he had not earlier sent the money because he believed once proceedings had been started against him it would have been an unethical act on his part to do so.
5. The Respondents failed to withdraw fees which were due to them as a result of settlements of personal injury cases; instead counsel permitted the fees to accumulate in the escrow account. The Respondents did not draw checks for fees until December, 1990 when twenty-six checks were written for fees. The Respondents again let the fees accumulate from December, 1990 until June of 1991. In that month the Respondents drew a check directly from the escrow account payable to Shearson Lehman Hutton in the amount of $50,000 for the funding of their pension plan.
6. For a short period of time in 1991, five checks were drawn on the law firm's escrow account by the Respondent Brown made payable to cash. Petitioner Brown testified that he had been given money by his brother-in-law, Noble Matthews, to hold because his brother-in-law did not have a checking account. As Mr. Matthews needed money he would ask Mr. Brown to withdraw money from the escrow account and Mr. Brown would do so.
7. The law firm was dissolved in December, 1993.
Conclusions of Law
Based upon the foregoing Findings of Fact, this Court submits the following conclusions of law:
1. The Respondents violated the Rule of Professional Conduct 1.15(a) and then Maryland Rule BU7 (now Rule 16-607) by permitting fees from personal injury cases to accumulate in the escrow account.
2. The Respondents violated the Rules of Professional Conduct 1.15(b) and 1.3 by failing to promptly pay the finance company the funds which had been withheld from Ms. Lamb's settlement for that purpose.
3. Respondent Brown violated Rule BU9 (now Rule 16-609) by drawing checks from the escrow account to "cash."
4. The Respondents jointly violated Rule of Professional Conduct 5.3(a)(b) in that they permitted Ms. Heath to handle personal injury cases without any supervision by them.
5. The Court does not find by clear and convincing evidence that the Respondents violated Rule 5.5. The Court believes that the type of activity charged against the Respondents is more appropriately covered by Rule 5.3. This Court has already made a finding with regard to that Rule.
6. This Court does not find by clear and convincing evidence that the Respondents engaged in conduct prejudicial to the administration of justice, for reasons set out in the next section.
Mitigation
This Court, having heard the Respondents and their counsel, finds the following in mitigation. The problems of both Respondents arose from their negligence and lack of understanding of the basic rules of the practice of civil law. The background of both Respondents is completely in the field of criminal law with little if any exposure to civil law practice.
The Court does not find that any of the Respondents clients were injured financially; indeed the failure to follow the rules resulted in the Respondents depriving themselves of funds to which they were entitled. The testimony is clear that personal injury fees were permitted to accumulate in their trust accounts for periods of more than one year. Had the Respondents withdrawn the fees due to them promptly, they would have had the use of the money at a much earlier date.
Ms. Lamb's case will be discussed separately.
There is no evidence that either of the Respondents were motivated by venality or greed. Rather their shortcomings can be ascribed to negligence and ignorance of the rules.
The one instance in which a client may have suffered some loss is problematic. In Ms. Lamb's case the Respondents withheld monies to pay the finance company. As a result of the failure to pay, Ms. Lamb was sued and a judgment was entered against her. While clearly the Respondents were negligent in not making the payments, the Court believes that they were not even aware that the money had been withheld because they had permitted Ms. Heath to completely handle their personal injury practice. The Respondents did not know that Ms. Lamb had been sued and indeed Ms. Lamb testified that she did not tell the Respondents that suit had been filed against her.
This Court accepts the Respondent Brown's testimony that once the grievance was instituted, he felt that it would be improper for him to pay the finance company. Upon receiving contrary advised from his trial counsel, he promptly paid the finance company.
Respondent Brown had been represented by counsel. That attorney himself became the subject of an attorney grievance and was suspended from practice of law for a period of time. The Respondent then retained George Russell, Esquire who entered his appearance after the case was set for trial.
The Court notes that the actions which are the subject of this grievance occurred over six years ago. Since 1993, the Respondents have practiced separately and there has been no recurrence of any of the problems which gave rise to this grievance. In fact, the Court was advised that the Respondents in their separate practices had put in place mechanisms to insure that there will be no recurrence.
Introduced into evidence was a letter from Dominic Iamele. Esquire, President of the Maryland Criminal Trial Lawyers Association. Mr. Iamele states that in his opinion both Respondents are among the premier criminal defense attorneys in the Baltimore metropolitan area and that each has a large practice. This Court has had experience with both Respondents as indeed has every judge on this Bench. They have appeared in numerous cases before this Court and have always conducted themselves in a competent and professional manner.
II.
This Court has original and complete jurisdiction over disciplinary proceedings. Md. Rule 16-709(b). See Attorney Griev. Com'n v. Shaw, 354 Md. 636, 646, 732 A.2d 876, 881 (1999). We therefore make an independent and in-depth review of the entire record. See Attorney Greiv. Com'n v. Sheridan, 357 Md. 1, 17, 741 A.2d 1143, 1151 (1999). The hearing court's findings of fact are deemed prima facie correct and will not be disturbed unless they are clearly erroneous. See Attorney Griev. Com'n v. Mooney, ___ Md. ___, ___ A.2d ___ (2000).
Bar Counsel excepts to several findings and conclusions of the hearing judge. First, Bar Counsel excepts to the hearing judge's failure to find that Respondents' conduct with regard to their handling of the firm's escrow account also violated Rules 5.3(a)(b) and Rule BU9 (now Rule 16-609). Bar Counsel also excepts to the hearing judge's finding that Respondents did not violate Maryland Rules 5.5(b) and 8.4(d). We agree with Bar Counsel and shall sustain the exceptions.
The hearing judge found that Respondents violated Rule 5.3(a) and (b) in that they permitted Ms. Heath to handle personal injury cases without supervision. Bar Counsel excepts to the hearing judge's failure to find that the Respondents' handling of the firm's escrow account also violated this Rule. We have reviewed the record and conclude that Respondents violated Rule 5.3(a) and (b) by their failure to oversee the handling of the escrow account records by Ms. Heath. Rule 5.3 requires lawyers to make reasonable efforts to ensure that their employees conduct is "compatible with the professional obligations of the lawyer." Ms. Heath was responsible for maintaining the escrow accounts. Respondents did not instruct her in the handling of the account records; they did not review her record keeping; nor did they reconcile the bank statements with the client ledgers. When the firm was dissolved in 1993, Respondents made no attempt at that time to reconcile the escrow account.
The hearing judge found that Respondent Brown violated Rule BU9 by drawing checks to "cash" from the escrow account. Bar Counsel excepts to the hearing judge's failure to find that both Respondents violated this Rule by using funds deposited in their escrow account for an unauthorized purpose. We conclude that Respondents also violated Rule BU9 in that, at the very least, $5,746.48, representing funds withheld from Ms. Lamb's settlement to pay the finance company, was used for an unauthorized purpose. This money was never accounted for and the Respondents ultimately paid this debt through their personal accounts.
Bar Counsel also excepts to the court's failure to find a violation of Rules 5.5. Respondents permitted Ms. Heath to handle the personal injury cases. They permitted her to evaluate the cases for settlement purposes, to make settlement demands, and to settle cases, all without their review or supervision. Respondents Brown and Rosenberg allowed their paralegal, Ms. Heath, to preform duties normally reserved for an attorney. The hearing judge found that the Respondents' activities with respect to Ms. Heath were more appropriately covered by Rule 5.3.
The purpose of Rule 5.5 is to protect the public from those not competent to practice law. See Attorney Griev. Com'n v. Hallmon, 343 Md. 390, 397, 681 A.2d 510, 514 (1996). To discern whether the Respondents activities also fall under Rule 5.5, we must determine whether Ms. Heath's activities constituted the unauthorized practice of law. In Hallmon we stated:
There is no question that paralegals' work constitutes the practice of law. Whether paralegals engage in the unauthorized practice of law depends on whether they are adequately supervised . . . . [If] the supervision is illusory because the attorney knows nothing about the field in which the paralegal is working, the paralegal is engaged in the unauthorized practice of law.
Id. at 399, 681 A.2d at 515 (quoting In re Opinion No. 24 of the Comm. on the Unauthorized Practice of Law, 607 A.2d 962 (1992)). The hearing judge found that neither Respondent had any experience handling personal injury cases, that they relied upon Ms. Heath to handle those cases from beginning to end without supervision, and that Ms. Heath did everything a lawyer would do for the preparation of a personal injury case. As these activities fall within the definition of unauthorized practice of law, Respondents violated Rule 5.5(b). Accordingly, we sustain Bar Counsel's exception.
Bar Counsel next claims that Respondents' actions were prejudicial to the administration of justice and thus amounted to violation of Maryland Rule 8.4(d). Respondents permitted an unsupervised paralegal to operate their civil practice, they continually failed properly to maintain their trust account, and their failure to pay the finance company on behalf of Ms. Lamb resulted in an unwarranted judgment against her, as well as a wage garnishment. We conclude that such conduct is prejudicial to the administration of justice and therefore sustain Bar Counsel's exception.
III.
We turn now to determine the appropriate sanction to be imposed in this case. Bar Counsel recommends that Respondents be suspended from the practice of law for a period of one year. Respondents suggest a reprimand.
In fashioning the appropriate sanction, we are mindful that our purpose in imposing sanctions is to protect the public rather than to punish the erring attorney. See Attorney Griev. Com'n v. Tolar, 357 Md. 569, 584, 745 A.2d 1045, 1053 (2000). Moreover, the public is protected when the sanctions imposed are commensurate with the nature and gravity of the violations and with the culpability of intent with which they were committed. See Attorney Griev. Com'n v. Glenn, 341 Md. 448, 483, 671 A.2d 463, 480 (1996). In addition to the facts underlying the misconduct, the attorney's prior disciplinary history and other mitigating factors are part of the equation. See Attorney Griev. Com'n v. Atkinson, 357 Md. 646, 656, 745 A.2d 1086, 1092 (2000).
The hearing judge recommended that this Court impose a reprimand. He found that several mitigating factors existed in this case. First, neither Respondent has been the subject of any prior disciplinary action. Second, he found that the problems of both Respondents arose from their negligence and ignorance of the rules rather than from venality or greed. Although ignorance does not excuse a violation, a finding of ignorance or negligence with respect to the intent with which a violation was committed can mitigate the sanction imposed. See Attorney Griev. Com'm v. Awuah, 346 Md. 420, 435, 697 A.2d 446, 454 (1997). Third, the hearing judge found that, aside from Ms. Lamb, none of the Respondents' clients were injured financially and that Respondents were totally unaware of the loss to Ms. Lamb. Finally, any of the following can mitigate the sanction imposed: timely good faith efforts to make restitution or to rectify consequences of misconduct; full and free disclosure to the disciplinary board or cooperative attitude toward proceedings; character or reputation; delay in disciplinary proceedings; remorse; and, remoteness of prior offenses. See Glenn, 341 Md. at 489, 671 A.2d at 483 (citing ABA STANDARD FOR IMPOSING LAWYER SANCTION, Standard 9.32, at 334 (1987)).
The record reflects that Respondents were cooperative and forthright with Bar Counsel and that as soon as they were advised by counsel that it would not be improper to repay the finance company, they made restitution for their misconduct. The hearing judge also found that since this incident, Respondents have put mechanisms in place in their now individual practices to insure that there will be no recurrence. We take note that the conduct alleged here took place between seven and ten years ago, and in that time Respondents have been productive and well respected members of the legal community practicing law in Baltimore. Under these circumstances, we conclude that a reprimand is the appropriate sanction. The public interest is served when this Court imposes a sanction which demonstrates to members of the legal profession the type of conduct that will not be tolerated. See Attorney Griev. Com'n v. Kerpelman, 288 Md. 341, 382, 420 A.2d 940, 959 (1980), cert. denied, 450 U.S. 970, 101 S.Ct. 1492, 67 L.Ed.2d 621 (1981).
IT IS SO ORDERED: RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING THE COSTS OF ALL TRANSCRIPTS, PURSUANT TO MARYLAND RULE 16-715(c), FOR WHICH SUM JUDGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMMISSION OF MARYLAND AGAINST WARREN A. BROWN AND LAWRENCE B. ROSENBERG.