Disbarment, Not A Philosophical Debate
As we prepare for the fall semester of teaching ethics to law students, a useful reminder from the Utah Supreme Court
Intentionally misappropriating a client’s money is at or near the top of the list of things a lawyer should never do. But that is what Alvin Lundgren did when he took Janet Best’s money from his client trust account for his own purposes. Upon discovering the defalcation, Ms. Best reported Mr. Lundgren to the Utah State Bar Office of Professional Conduct (OPC).
Following an investigation, the OPC filed a complaint in district court against Mr. Lundgren. Based on his admitted misconduct, the district court granted the OPC’s motion for summary judgment and disbarred Mr. Lundgren. Mr. Lundgren timely appealed. We affirm his disbarment and state again that a Utah attorney who intentionally misappropriates client funds will be disbarred unless the attorney can show truly compelling mitigating circumstances.
The misappropriation involved funds withheld by the attorney to pay medical bills in a workers’ compensation case.
The court
Because intentional misappropriation of client funds is so deeply concerning and intolerable to our profession, an attorney who is guilty of it should be disbarred. The only exception to this rule occurs if an attorney can show “truly compelling mitigating circumstances.” In re Discipline of Ince, 957 P.2d 1233, 1237 (Utah 1998); Babilis, 951 P.2d at 217. We have never explicitly defined the phrase “truly compelling mitigating circumstances,” but we have said that the “mitigating factors must be significant,” Ince, 957 P.2d at 1237–38, and should be construed “relatively narrowly.” Grimes, 2012 UT 87, ¶ 40; see also Corey, 2012 UT 21, ¶ 37 n.17. Again, the standard for sanctioning such behavior is purposely strict in order to serve the public and the profession by maintaining the trust that is so critical to the attorney-client relationship…
The fact that no attorney in Utah to date has been able to show that he acted under truly compelling mitigating circumstances when he misappropriated client funds does not indicate that there is a problem with the standard, nor does it render the standard “illusory,” “vague,” or unenforceable. Nor do we agree with Mr. Lundgren that the standard is “worthless and of no material benefit.” To the contrary, we find our strict standard for imposing sanctions in cases of intentional misappropriation to be extremely explicit, worthy, and highly beneficial to the legal profession and the public.
And the mitigation was insufficiently compelling
It is true that Mr. Lundgren ultimately restored Ms. Best’s funds, but this factor is not mitigating where there is no evidence to show that remorse was his motivation for restoring the funds. Tellingly, Mr. Lundgren did not self-report his unethical conduct or restore the funds to Ms. Best until after she had lodged a complaint with the OPC. Thus, it seems likely that his restoration of the funds was merely an attempt to avoid punishment. Under rule 14-607(c)(1) of the Supreme Court Rules of Professional Practice, “compelled restitution” cannot be considered a mitigating factor.
And Mr. Lundgren misses the ethical point entirely when he attempts to minimize his misappropriation by asserting that it is “philosophically debatable if the client does not know of the removal of funds over which the client does not have control, whether there is actual injury.” It is not philosophically debatable whether stealing money is okay so long as the victim never finds out.
Utah attorneys be forewarned
Today we reaffirm that the sanction for intentional misappropriation of client funds is disbarment unless an attorney can show truly compelling mitigating circumstances. Mr. Lundgren intentionally misappropriated client funds and failed to show any truly compelling mitigation. We therefore affirm the district court’s order of disbarment.
The District of Columbia Court of Appeals has a similar approach to intentional misappropriation cases.
The D.C. court has a line of cases that treat recovery from substance abuse as a factor that justifies a lesser sanction than disbarment, The seminal Kersey case is one that I handled.
Outside of that line of cases, there is one where the court found truly compelling mitigation. I called that case (where I think some skewed fact finding drove the result) the Altruistic Theft. (Mike Frisch)