If It’s Not Conversion, It’s Not Disbarment
An attorney was charged with 35 counts of professional misconduct in the course of representing a client in a matrimonial matter. A New York hearing panel that reviewed a referee’s report sustained 26 of the charges and recommended a suspension of 2 1/2 years plus restitution. A majority of the Appellate Division for the First Judicial Department accepted the proposed discipline:
“With regard to sanction, we note that the breadth of respondent’smisconduct is troubling, for at almost every turn throughout thematrimonial matter, respondent committed some form of misconduct,whether it be false notarizations, disregard of a court order, chargingan exorbitant fee, threatening her client to pursue that fee, or usingclient funds that were in dispute. In light of this, we conclude thatrespondent should be suspended from the practice of law for a period oftwo and one-half years (citation omitted) and she is directed to make restitution to her client in the amount of $30,464.
We disagree with the dissent with regard to the severity of thesanction to be imposed, and in that vein, note the mitigating factorspresent, including respondent’s 28-year legal career, which waspreviously unblemished by any disciplinary history, and the fact thatshe is 68 years old, suffering from a variety of ailments, and is thesole means of support for her divorced daughter and grandson. We alsotake into account the Referee’s finding that respondent has acceptedresponsibility for her actions and is remorseful. More importantly, andas the dissent also notes, the Committee “did not characterize”respondent’s conduct as conversion; indeed, while the Referee’s reportstates that respondent’s actions “could be deemed a conversion offunds,” no finding of conversion, or venality, was made, a factapparently not lost on the Referee, or the Hearing Panel, when theirrecommendations for sanctions were made. Given the totality of thecircumstances presented and the absence of an opportunity to contestthe allegation of intentional conversion, we disagree with thedissent’s recommendation of disbarment.”
The dissent finds misappropriation and would disbar:
“…respondent, over the course of approximately three years, mademultiple withdrawals totaling over $30,000 from two accounts containingfunds belonging to Mr. Tebbetts. Respondent knew that the money inthose accounts belonged to Mr. Tebbetts; two court orders and ajudgment clearly required that the funds respondent used for her ownpurposes were to be given to Mr. Tebbetts to reimburse his 401(k) plan.Thus, respondent repeatedly and intentionally used Mr. Tebbetts’escrowed funds for her own purposes without Mr. Tebbetts’ permission…and our rule requires disbarment absent “extreme mitigating circumstances” (citation omitted)
That the Committee did not characterize as “conversion”respondent’s conduct in misappropriating Mr. Tebbetts’ money isimmaterial. No authority or principle of law requires such acharacterization or allegation to trigger our general rule that anattorney who intentionally uses on multiple occasions a client’s moneyshould be disbarred. Indeed, the applicable disciplinary rule, DR9-102(A), does not itself use the term ‘conversion’ (‘ProhibitionAgainst Commingling and Misappropriation of Client Funds or Property. Alawyer in possession of any funds orother property belonging to another person, where such possession isincident to his or her practice of law, is a fiduciary, and must notmisappropriate such funds or property or commingle such funds orproperty with his or her own’).
Until now, the determinative inquiry, as we stated in Matter of Nitti (268 AD2d at 42), has been whether the lawyer ‘repeatedly and intentionallyuse[d] clients’ escrowed funds for h[er] own purposes withoutpermission’ (emphasis added). When that misconduct is committed, ‘[t]his Court has clearly established that, as a rule, disbarment iscalled for’ (id.). Unfortunately, the majority forsakes thissubstantive inquiry and stresses that a particular label was not usedby the Committee. Similarly focusing on form instead of substance, themajority disregards the fact that respondent knew she was being chargedwith misappropriating Mr. Tebbetts’ money and relies on ‘the absence ofan opportunity to contest the allegation of intentional conversion.’
Moreover, no extreme mitigating circumstances are present warranting a departure from the typical penalty of disbarment…”
(Mike Frisch)