Trust Account – Trusted Employee; Social Media Trouble; End of Run

Best Practice: Trust yourself

Lawyers use trust accounts to hold cash that belongs to someone other than the lawyer. Usually the funds belong to a client, or are prepayments for fees that have not yet been earned.  Solo and small firm lawyers often have a trusted employee monitor and handle the account. The employee may write checks on the account under the direction of the managing lawyer.  The best practice is for the lawyers or partners to have the only signature authority. Second best practice is to have safeguards in place to catch mistakes.

Jay Foonberg and the ABA wrote the book on how to handle trust accounts “The ABA Guide to Lawyer Trust Accounts.”  

The worst practice is to ignore the account and the employee handling it, thinking that the State Bar Counsel will contact you when there are bounced checks. They will, but it will not be pleasant.

Michael Krebes of Kokomo, IN used the worst practice.   “She started working for me in the summer of 2002,” said Krebes. “She worked for me in the private sector. She was court reporter for me when I was judge, and when I left the bench, she came with me.  I had blind trust in her. She was like the little sister I never I had. I knew her kids, her husband, her family.”

Now tens of thousands of dollars later, with disciplinary issues staring him in the face, his practice in shambles, and clients heading out the door, having lost significant sums, Krebes realizes his mistake, and the results.  “I have refunded money to some clients already. I’ll take care of everyone; it’s just not something I can do overnight. The clients are understandably anxious to get this resolved, and I don’t blame them. I have to make these people right,” said Krebes. “I can’t just say it was her fault. They didn’t hire her; they hired me. The money was in my trust account. I am the responsible party. In order to keep my license, I have to make it right.”

Whatever your trust practice now, it is time to double-check the procedures you have to protect the clients (you are a fiduciary in your relationship with them), yourself and your license and livelihood.

Foonberg’s book has an 89 question self test. You might want to find or buy a copy (I have recommended this book to several lawyer clients who had trust account problems) and take the test.

You may want to: 1) require two signatures on all trust checks; 2) open the trust account statement (and certify that each such statement is opened by you) to review all checks that went through the account in the prior month; 3) re-read Rule 1.15 of the RPC and the IOLTA regs in the Admission and Discipline Rules Governing Attorney Trust Account Overdraft Reporting; 4) check on the several cases, and the reported punishments.  The Supreme Court does not take these situations lightly.

****

Caution about Live Tweeting

Sarah Peterson was working for an appellate court in Kansas when she screwed up.  Watching an appellate hearing on her office computer she just had to share her thoughts.  Her bosses did not think that she did a very good job sharing those thoughts, finding that “The overall tone of her comments revealed a disrespect for a litigant before the appellate courts as well as a disrespect for the Supreme Court panel hearing the case,”

Well she is working no longer, and after seven months, she is still looking.  The details are at the link above.

H/T Vic Indiano

***

End of the Run with this Blog Series

This has been a good way to learn more about blogging, and the defense of lawyer discipline matters has made the time worthwhile, but staying on top of lawyer discipline is not a fun way to spend extra time.  I started this thinking that a reminder to “Look both ways” would pay dividends for you and me. It has not paid dividends for me, so I will be closing Lawyers with Troubles after this the 66th in the series, and reviving the old blog Ted’s Legal Blawg at http://tedwaggoner.wordpress.com/ soon.

I like most of the people who have chosen to be lawyers, and do not enjoy seeing so many get in trouble here or around the country.  I will be pleased to continue to help those who need to respond to allegations by the Disciplinary Commission, and will provide LPM practice advice to help lawyers stay out of trouble.  But I am done sharing the troubles of lawyers with you in this blog.

Another topical blog will be coming, and I may promote it with this site, but for now watch for Ted’s Legal Blawg at http://tedwaggoner.wordpress.com/.

Be good to one another and to your clients.

Be Careful Helping your Friends – Sharing with Friends – Treating Staff and Litigants

When is a Lawyer just a Friend — in trouble?

Jameson Conrad was with a friend on New Year’s Eve, in Charleston WV. Conrad’s friend got into a dispute with another man, and used his gun to make his point. The shooting was caught on tape. Conrad then used his lawyerly skills to advise friend to “run,” he then kept friend’s cell phone and refused to identify friend when police asked.

When you are a fact witness, it is hard to claim a lawyer-client privilege, because the police think you are an “accessory to malicious wounding.” It might work, we will know in several months.

But, upon these facts, WV Bar Counsel alto thinks you are enough of a menace to make a prompt Complaint to the Investigation Commission, seeking suspension from the practice, and to report it when asked by the local paper.

H/T Gary Welsh.

***

Who do YOU Trust with your Client’s Secrets?

It is only a little secret. Something you learned while working with the world’s most famous writer. Surely your wife’s best friend can be trusted not to tell what you should not have told her.  But she told, and now you pay, in a couple of ways.

JK Rowling has been known to write some pretty good books, sold millions of books, and movie tickets from the Harry Potter series.  She ought to be able to trust her secrets to her solicitors.  But Robert Galbraith’s identity was not safe with Christopher Gossage, one of her lawyers.  Robert Galbraith is the pseudonym Rowling used on a new book she wrote, trying to see if she could enjoy writing without the hype and expectations of her name.  She was displeased, even though the book sales jumped after the word was leaked by the trusted friend of Gossage’s wife.

The law firm fell on the sword, quickly admitting that Gossage had shared the information with Judith Callegari during a private conversation. “The disclosure was made in confidence to someone he trusted implicitly.”  Not a great judge of character there.

Who do you trust implicitly enough to turn your license over for their discretion? The Solicitors Regulation Authority in England fined Gossage £ 1,000. for the breach of confidentiality.  Rowlings charged even more.

There was a winner in this matter. “The Soldiers Charity” was the recipient of all the book proceeds, plus the settlement damages Gossage and his firm, as well as his trusted friend paid to Ms. Rowling. Nice touch.  Hard for a billionaire to get much in the way of sympathy for herself.

***

Judge Suspended for Treatment of Staff, Lawyers and Litigants.

The Judge Kimberly Brown story is a big story in Indiana legal circles. She has been through a protracted hearing before the Master Panel to determine a recommended punishment, based on a multi-count complaint of judicial misconduct. She was reported to have mistreated staff, lawyers and litigants in unusual and contemptible ways.

The Master Panel has recommended her removal in spite of some clever legal maneuvering by her new lawyer-team, after firing her earlier team of lawyers.  Now the Supreme Court has temporarily suspended Judge Brown and will take further action in due course.  Her suspension, as recommended is with pay.

***

Ted Waggoner will be offering the annual kickoff session to the IVY Tech Agricultural Seminar Series on Jan. 22, at the Cole campus in Logansport. The topic – Family Farm Ownership: What is the Right Solution for You and Your Family. For more information, contact Julie Byrd at IVY Tech, 765-459-0651 x 288.

Legal Websites with Comments – Strike Back at Critical Client? What are these Sites? Fake a Review?

Social Media is a Tool, You are a Lawyer, Don’t be the Fool

So a lawyer in the Chicago area Betty Tsamis, is active with AVVO, a lawyer rating site.  Her AVVO page is here. She has a 6.2 rating, pretty good.  Tsamis handled a case for a client, Rinehart and appealed his denial of Unemployment Benefits case against American Airlines, and the case did not go well, which happens.  Whose fault?  It depends on who you believe.  Client wrote an unfavorable review and said that he paid her fee, which she took “knowing full well” he would lose the case.

The trouble for the lawyer came about when Tsamis replied with facts and information that she got during the confidential client communications. The details are here. She stated in the reply to his review that he had beaten up a woman co-worker, and not advised her of that before she filed the appeal. (If you beat up co-workers, you usually do not get UE coverage).  The IL disciplinary office has filed charges for breaching Rule 1.6 of the RPC.  Tsamis still posts replies to critical comments, but they are now toned down.

***

The Ratings Game – Martindale Hubbell to AVVO to Super Lawyer to Yelp, and beyond.

Lawyer ratings were once the sacred province of now absorbed publisher Martindale-Hubbell. Today there are several lawyer and law firm ratings sites,  Avvo (above) offers ratings on lawyers and other professionals. [full disclosure, my AVVO rating linked here]  AVVO seems the most aggressive of the new generation.  MH did the same kind of ratings, but in the old days, the rating was bound in a series of books taking up 5-6 feet of library shelf space and costing hundreds of dollars and updated yearly, but MH is now is found online at http://www.martindale.com {my martindale.com rating is here].  AVVO allows client comments, as does Martindale. Both sites focus on lawyers and other professionals.

Another new entrant in the legal and medical fields does it differently. SuperLawyers.com names what it calls the “super lawyers” in most of the states. It works with magazine publishers and sends out ad-filled supplements annually on lawyers nominated and selected as the best.  [full disclosure – I am told I have been nominated, but I have not been selected as a super lawyer (or as a colleague calls them “the superest duperest lawyers”) in Indiana]. There are several ethics opinions on the propriety of advertising the designation. Most states seem to have lost interest in prosecuting this issue, even though there are regulations on lawyer advertising.

Yelp offers webpages for most businesses in the country, in an online “yellow page” style that gives the business name, address, phone number, and then lets customers comment on every business in town, from spas to restaurants and lawyers. The business owner can claim the page and edit the information about the business.

Breach of Yelp’s Policy

San Francisco lawyer Julian McMillan stands accused of taking the review matter just a step further, by allegedly having his staff create and post favorable reviews.  Favorable reviews are hard to come by, and may have a positive economic benefit to the lawyer praised. As Ms. Tsamis can attest, unfavorable reviews may have more impact.

So Yelp claims that it monitors and prosecutes businesses and now lawyers who abuse the comments policy. It should be noted that McMillan responds that he had sued Yelp and won in the trial court on an advertising contract dispute.  He suggests this is payback by Yelp.

We will see how this comes out over the next few months.

***

Ernie the Attorney’s take on these matters!

The leading blogger in the legal field, Ernie the Attorney and I were discussing the “dangerous tool” of social media last week.  I do not agree with ethics guru Stephen Gillers, that all lawyers should avoid social media, and who Ernie takes apart in this post (else I would not be posting here).

Any tool can be dangerous.  Lawyers get trained  to look out for danger in every area of life. I advocate removing dangerous tools from idiots and infants, who are found in lots of places.

I hope there are few idiots and no infants among the lawyers who are posting on any of the social media sites. But still be careful out there, and learn how to run spell checker on the site.

More Sex & Law Troubles, Bad Actor; Bad Ideas

BIGLAW guy gets it

Arthur J. Usher IV was a Bose partner when his troubles started, a Kreig DeVault partner when everything blew up, now he is out of BIGLAW, and out of the profession for awhile.

In what sounds like the plot line of a cheap romance novel, Usher got focused on a woman at Bose, and went overboard in a really weird way. If you have the time you have to read the story here. Long story short, he got infatuated, rebuffed and went ballistic, trying to destroy “Jane Doe” and her career. He recruited his paralegal to help him further the campaign. He used fictitious emails to spread his bizarre tale, trying to cost Doe her career at Bose, and elsewhere.

His actions started in 2008, the opinion is dated May 17, 2013. I can only imagine the nearly 5 years of trouble that Jane Doe has put up with waiting on a resolution. There was a civil lawsuit, and it appears to have settled on the courthouse steps with “a payment of an undisclosed amount to [Doe]”. The Supreme Court did not allow that to take the place of the disciplinary process.

The Court found violations of Rules 3.3(a)(1) Candor to tribunal, false statements, 8.1(a) False statement Bar application or Disciplinary Process, 8.1(b) failure to disclose facts to correct, 8.4(a, b, c, & d) Misconduct of various stripes. The Court found for him, agreeing with the Hearing Officer, that his problem was with Jane Doe, and not with all women, which would have been a violation of 8.4(g)

The disciplinary ruling:  For Respondent’s professional misconduct, the Court suspends Respondent from the practice of law in this state for a period of not less than three years, without automatic reinstatement, beginning June 28, 2013.

****

A Chicago law firm, Prenda Law Inc., found a spot to be innovative lawyers or scoundrels.  A California federal judge decided that scoundrels fit, better than lawyers.  A fight is going on. On one side is a self-professed millionaire copyright lawyer and his team, who have sued over 20,000 for illegally downloading pornography, the other a judge who says it is a scam and shakedown effort.

Now the judge has reported the team to disciplinary groups, and to the federal prosecutors for RICO violations.  He says the team identifies alleged copyright infringers by IP addresses, it then alleges that the download of porn occurred, in a demand letter that requests an amount “just below the cost of a bare-bones defense” to the suit, if the alleged infringer does not settle.  Public embarrassment to a person’s reputation forces settlement, whether there was a violation or not. Hundreds of lawsuits have been filed when payment did not come.  These lawsuits are unraveling. At a recent hearing before the trial judge, the plaintiffs’ lawyers from Prenda took the Fifth Amendment, to avoid subjecting themselves to criminal prosecution.  Not a good step in any case.

The lawyers who started representing Prenda have bailed out of the case, the appellate court is not telling the district judge to back off, One lawyer is alleged to have committed identity theft in getting a named party for the suits filed. Just a mess, as reported in AM LAW’s daily digest and Forbes.

h/t Patrick Olmstead.

***

Two things: 1) PWP FB page:  If you haven’t seen the recent FB page for the law firm Peterson Waggoner & Perkins, LLP you have missed the Run in a Dress for MS photo.  Having fun, raising funds, and supporting family.  https://www.facebook.com/PetersonWaggonerPerkinsLLP

2) Glitch: In starting this blog entry, the little finger on my right hand missed the Shift Key, hitting the Return Key.  Somehow that published part of the title to the blog entry for this week.  My apologies for filling in your mailbox/reader.

Thanks for reading.

Thanks for reading

Report the Claim; Trust Account Abuse

Lawyer Messed Up Deal, Better Report

Koransky Bouwer & Poracky P.C. had an associate mess up. It ended up in Federal Court, then the 7th Cir. <here>.  Lots to put on the back of an associate.

The young associate filed a signed contract rather than send it to the parties as evidence that the deal was completed. The party not represented by the firm withdrew its acceptance before delivery of the contract to all parties, black letter law allows that. Client is justifiably upset.

While this is going on, the law firm that the associate works for, Koransky & Bouwer, renews its malpractice coverage with The Bar Plan, its professional liability carrier. In the process, there is a question that reads something like “are there any claims or potential claims in existence, now or before we renew?”  Firm, which knew about this problem, with one of the name partners being involved in the matter, said “no problem” [or words to that effect].

Client, not happy to have lost the contract sues the firm, who turns the complaint over to the PLP company.  It says something like “wait, from these dates and all, it appears you knew of this claim when you renewed your insurance, and you did not tell us.” Another black letter issue in the law is that a misstatement in an insurance application will void the application. So the Bar Plan says: “We have no duty to defend or pay for the claim!” K&B filed for declaratory judgment on that issue in ND Ind. federal court, the trial court said “sorry law firm, no coverage.” The 7th Circuit agreed.
Lesson? The quick response application often found in policy renewals is not your friend. Your duty to disclose still exists. Does that mean you must report every disgruntled client who might conceivably file a claim? This blog does not offer legal advice, but I recommend you read the underlying policy about when you need to submit a timely claim.

One lawyer has suggested that the insurance company should be required to show that it was prejudiced by the delay in the notice, but that is not the current state of the law, in this Circuit.

****

Watch the Trust Account

Edguardo Martinez Suarez is a Hamilton County lawyer, with a pattern of trust account problems. In 2006 he bounced a trust account check, which automatically brought the Disciplinary Commission in via the rule of mandatory reporting of bounced trust checks by a bank holding an IOLTA account. Suarez said “it is a mistake” but could not show how the mistake occurred. In 2009 the Commission demanded a CPA audit of the account, but the CPA reported there was a lack of documents to allow for an audit.

With that, the Commission started an in-house audit. The Supreme Court characterized the findings as many “violations, which took place from 2006 through 2012, includ[ing] at least six instances of paying personal and business expenses from the trust account, 55 instances of disbursing funds in excess of the amount held in trust for each corresponding client, and making 14 cash withdrawals.”

Then to compound problems he committed another violation, keeping more than “a nominal balance of” personal funds commingled to protect the account. But the court, in reviewing the Agreed Stipulation with Suarez, found three good things: no prior discipline history; no selfish motive on Suarez’s part; and, no client lost any funds from his violations.

The parties agreed to a 60 day suspension, stayed with two years probation. For two years he must: 1) maintain his trust account in accordance with the Disciplinary Commission’s 51 page white paper on Trust Account Management: Handling Client and Third Party Funds most recently updated in March 2012; 2) Have the Trust Account monitored by a CPA approved by the Commission, and have quarterly reports made to the Commission; and, 3) Agree that a violation of probation will cause the 60 day suspension to go into effect, and there will be no automatic reinstatement after the suspension. Finally, at the end of probation Suarez will be required to petition for dismissal of the probation. Somehow he was not ordered into the CLE on trust account management.

Seems like an appropriate disposition, as no clients were harmed by the mistakes. Management of the trust account is one of the most critical skills an attorney with trust account duties must have. Failure there is a ticket to Discipline World, and it is tough to get out with your skin intact.

There are CLE courses on Trust Account management, the DC staff often are speakers. Indiana’s Solo and Small Firm Conference has done sessions on this in 2004 and 2007, and likely will do more. ISBA-CLE and ICLEF do sessions annually. A great book is out there by one of the ABA’s most successful writers, Jay Foonberg titled “The ABA Guide to Lawyer Trust Accounts” (my version is dated 1996.)

Protect yourself and your clients and your license. Review Rule 1.15 of the Rules of Professional Conduct, and Admission & Discipline Rule 23 Sec. 29-30, and Overdraft Rule 2.

Be nice to your SO; Get along with the Voters; Be a Careful Witness

Don’t Hit Your SO

BigLaw partner loses his job, and family, after being charged with assault. During a dispute with his Significant Other, King and Spaulding lawyer Steven Guynn, forgot the basic concepts of alternative dispute resolution, and allegedly resorted to hitting.

Reading the news today (and any day since you were three years old) a lawyer, especially a 59-year-old corporate lawyer, should know that hitting girls is not an effective means of winning a dispute.

He is no longer listed on the BigLaw firm’s website, and they will not answer questions about him.

These things never lead to good outcomes, Guynn’s wife has now filed for dissolution of the marriage.  The wife was not the hittee, that was his mistress (to use an old-fashioned term, which 59-year-old lawyers can do).  Several bad decisions rolled into one situation.

Too bad the generals are not reading this blog.

******

The Voters have Spoken

Judge Cynthia Brim shoved a Chicago courts deputy last March, and was charged with Battery. She was also barred from the courthouse without a court approved escort, by the presiding panel of judges. Suspended from the job, and charged with a crime, she still sought judicial retention while also pleading temporary insanity for her act of Battery.

With a retention vote of 67.5%, she gets to keep her job, or at least her paycheck.

She returned to Court the day after the election, but it was to answer to the misdemeanor Battery charges. At that hearing she submitted her insanity defense to the charge. The court appointed psychiatrist agrees she was suffering from bi-polar disorder at the time of the crime, but while properly medicated can stand trial, and could return to work.

The Chicago Bar Association had recommended that Judge Brim lose her position, but the Cook County Democratic Party endorsed her retention. The voters retained Judge Brim. No report that the judicial panel has said if she can return to her courtroom yet.

As a supporter of merit selection with retention ballots, I must admit that the system is not perfect. I hope the IL JLAP program is on the case.

There are serious issues involved in bi-polar disorder, and the medical profession is working hard in its efforts to help those suffering. Lawyers and judges who are medically affected by a variety of illnesses must seek treatment early, and not allow the illness to interfere with the rights of clients or litigants. The ABA Journal report does not tell us if Judge Brim is doing that, yet.

H/T Professor George Smith.

*****

Trying to Make a Point as an Expert

Dean Borland is a lawyer and computer expert.  He testifies as an expert in trials. He explains his analysis with computer skills and tries to make his points to the jury in an understandable fashion.  This time he succeeded too well. [paywall protected]

In a criminal trial about child pornography, he showed the jury how easy it is to replace the face of an adult porn model with the face of a child, twice. He showed them that a possessor of such a photo would not be able to know that the image was modified.  Doing this, he committed the very crime he was testifying about, in open court, on the record, of “possessing an image modified to appear as if a minor is engaging in sexually explicit conduct.”

He was charged with that crime, and entered a pretrial agreement with the Cleveland US Attorney, and apologized to all through the Cleveland Bar Journal.

Lesson learned, right?  Well, no. The children’s images he used were professional models, and by putting their image on the body of a nude model (makes it sound less sleazy to say ‘nude’), he exploited the children in a way that also violates the federal law. A victim of a sex crime who suffers any kind of personal injury is entitled to a judgment of not less than $150,000, irrespective of the actual damages. There were two child victims who sued.  The federal trial court first threw out the case, saying no real harm was done, but the Sixth Circuit Appellate Court disagreed.  Borland ends up paying the $300,000 for the damages he did.

As the Sixth Circuit Court said “Congress meant business in awarding the damages the way that it did.”  Borland learned that lesson the hard way, and so have you, at much lower cost.  Be safe out there.

H/T Olmstead