The ABA Journal reported this week about an Iowa Supreme Court opinion regarding discipline of an attorney on allegations of misconduct including "trust account violations, misconduct surrounding fee agreements, the taking of fees, failure to satisfy a hospital lien with settlement proceeds, conflict of interest, the unauthorized practice of law, as well as dishonesty, incompetence, and neglect."
The decision includes findings of fact related to four separate client representations. In the first, the lawyer received monies from his client which were considered to be unearned funds in anticipation of work to be done. However, each time he received these monies he failed to deposit them into his trust account, and did not provide the client with invoices or other documentation of the work performed and the fees charged. Not surprisingly, the client fired the lawyer and filed a complaint with the state's disciplinary board.
In the second case, the lawyer represented an estate on a wrongful death claim. pursuant to a contingency fee agreement. The agreement did not specifically state whether litigation expenses would be deducted before or after the contingency fee was calculated. When the case was settled, the lawyer deposited the funds into an improper account and deducted his fee without filing the appropriate paperwork with the court or receiving an order from the probate court permitting him to be compensated for his services in the case.
In addition to representing the estate in the wrongful death action, the attorney was retained to aid in the administration of the estate, whose sole asset was the wrongful death suit. However, (after receiving a notice of delinquency for failing to probate the estate), the attorney filed an inventory noting that the estate had no assets, failing to disclose the proceeds of the wrongful death settlement. The administrator of the estate, upon learning of these actions, sought the attorney's removal as attorney for the estate, noting also a failure to pay claims against the estate and a failure to distribute funds to the heirs.
Following his removal as attorney for the estate, the lawyer returned some of his 'fee' from the settlement proceeds for the wrongful death action and a judgment was entered against him for the remainder. He also failed to return the estate's file to subsequent counsel in a timely manner.
In the third case, the lawyer undertook representation of a client for personal injuries sustained in a motor vehicle accident. Again, the representation was to be on a contingent fee basis, but the attorney failed to prepare a written engagement agreement. The hospital where the client received treatment filed a lien with the tortfeasor's insurer against the proceeds of the suit, of which the attorney was aware.
When the case was settled, the lawyer once again deposited the funds into an improper account and then withdrew his fee, but failed to satisfy the hospital lien and failed to provide his client with an accouting of the settlement proceeds. According to the settlement agreement which was executed, the client was obligated to pay all liens from the settlement proceeds.
The hospital sued the insurer for the amount of its lien, and a third party action was commenced against both lawyer and client. The lawyer then filed an answer on behalf of both himself and his (former) client without obtaining permission from his client to do so. The insurer's lawyer pointed out the conflict of interest in the lawyer's representation of both himself and his former client in the third party action. As a result, the lawyer moved to withdraw the previous answer and filed an answer on his own behalf, asserting cross-claims against his former client.
Finally, in the fourth matter under review, the attorney undertook the representation of a client in a sales tax dispute, despite having already been suspended from the practice for failing to file a required annual client security report. The attorney convinced his client to execute a power of attorney in his favor and accepted a retainer fee from her, once again failing to deposit the retainer funds in an appropriate client trust account. He failed to communicate with the client and did not do the work she requested. As a result, the client terminated his representation and demanded a refund of her retainer and return of her records. He failed to do either, and the client filed a complaint. Subsequently, the attorney refused to turn her file over to the board.
Needless to say, the lawyer was found to have violated numerous Iowa Rules of Professional Conduct as well as some Iowa Court Rules.
The decision says it all when it concludes, "In short, [the lawyer's] handling of his clients' property is a textbook example of how not to operate a law office."
It must be noted that the court did find a mitigating factor in that the lawyer apparently had some short term memory loss stemming from treatment for a brain tumor. However, the court also noted a number of serious aggravating factors, including that the alleged misconduct occurred over a period of years and the lawyer had been previously reprimanded.
Although the general rules seem very basic and straightforward, apparently, they cannot be reiterated too often:
- Heed your jurisdiction's ethical rules
- Be exceptionally careful with client funds
- Set up accounts and deposit client funds pursuant to the requirements of your juridsiction
- Always put your fee agreements in writing
- Communicate with clients regularly, especially when it comes to fees, withdrawal from trust accounts, or accounting for client funds or property in your possession
- Always consider the best interests of clients and former clients first
- Don't ignore or refuse to cooperate with disciplinary authorities