“A Highly Fluid, Rapidly Changing, And Perhaps Confusing Situation…”

An attorney who had exercised self-help in a dispute over fees with his former law firm was suspended for 90 days by the Wisconsin Supreme Court. The court accepted the referee’s findings of the following facts:

Thesedisciplinary proceedings arise from Attorney Maynard’s billings and paymentsreceived for services he performed as a shareholder with his former law firmfrom August 1, 2005, through June 30, 2006.  On August 1, 2005, Attorney Maynard joinedwith Attorneys Bruce McIlnay, James Button, and James Schmitt in the law firmof Maier, McIlnay, Schmitt & Button, Ltd. Soon after, the firm became known as Maynard, McIlnay, Schmitt &Button and used the acronym of MMSB or MMS&B.  The referee found that the individualsunderstood the firm to be a corporation and regarded one another asshareholders.  The referee found thatwhen Attorney Maynard became a shareholder at MMS&B, he entered a highlyfluid, rapidly changing, and perhaps confusing situation with little discussionamong the other shareholders regarding their rights or obligations to the firm.  The firm’s shareholders testified generally thatthe money received from clients was “firm income”; the question ofhow the money would thereafter be divided was never discussed. 

Thereferee found the shareholders intended to practice law in an arrangementthrough which expenses were to be incurred and paid by the corporate entity andrevenues were to be paid to and distributed by that entity.  The referee found:

In particular, [Attorney] Maynard did understand that,during the period of his association with the Firm, invoices for legal serviceswere to be transmitted under the Firm’s name, and paid to, and then distributedby the Firm, to its creditors and shareholders, in a manner to be determined.

AttorneyMaynard’s compensation plan was similar to the other shareholders’ plans,consisting of a draw plus a monthly bonus. On or about January 1, 2006, Attorney Maynard’s monthly compensation wassubstantially reduced.  When AttorneyMaynard announced in the spring of 2006 he would be leaving the firm, he wasoffered, and agreed to, the opportunity to remain with the firm “ofcounsel.”  The referee found thatdespite the absence of a formal signed agreement, from at least July 1, 2006,until the final parting of ways in February 2007, Attorney Maynard and the firmboth understood he was no longer a shareholder but was to have “of counsel”status. 

Asof July 2006 there remained some open matters on which Attorney Maynard hadworked as a shareholder but had not yet been billed.  From July 2006 through October 2006 AttorneyMaynard transmitted invoices to three clients for legal services he hadrendered while he was a shareholder.  Theinvoices all stated, “PLEASE MAIL YOUR PAYMENT TO: MMS&B, P.O.

BOX 253

, GRAFTON, WI 53024IN THE ENVELOPE PROVIDED.”

Withoutinforming anyone connected with the law firm, Attorney Maynard applied for apost office box, inscribing the form with “John R. Maynard Principal”as the applicant and “MMS&B” as the name to which the box numberwas to be assigned.  The address he gavefor the box holder was apparently that of his personal residence.  Other firm members did not know AttorneyMaynard had opened this post office box. The referee found the invoices were misleading in that they indicatedMMS&B would be receiving the money, while only Attorney Maynard knew of andhad access to the post office box.

Inresponse to the misleading invoices he sent, Attorney Maynard personally receivedand deposited into his personal checking account payments from clients totaling$7,776.84.  Attorney Maynard did notinform the firm he had received these funds and the firm did not receive any ofthese funds.  The firm did not learn ofthe post office box or of Attorney Maynard’s receipt of the funds until muchlater as a result of its own efforts.

Onecheck that Attorney Maynard received had been made out to the firm.  Although no longer a shareholder but “ofcounsel,” he endorsed the check and kept the proceeds.  He had no express authority from the firm todo so; he made the endorsement and kept the money without the firm’sknowledge.  The referee found that by histestimony, Attorney Maynard acknowledged and understood the money billed forthe work he performed as a shareholder was firm income to be divided among allthe shareholders after the payment of overhead. The referee concluded that by receiving the funds for services performedwhile a shareholder, but not notifying the firm about the receipt of thosefunds and not delivering those funds to the firm or at least to a trustee, thecourt, or an arbiter, Attorney Maynard violated former SCR 20:1.15(d)(1), as charged…

The referee rejected the proffered defense that the attorney had been “drastically underpaid” and that the fees related to work he had done for his clients. (Mike Frisch)