Another Good Day In D.C. As Consent Discipline In Misappropriation Case Submitted To Court

A District of Columbia Hearing Committee has approved a consent disposition of a two-year suspension with fitness of an attorney for negligent misappropriation and related misconduct.

The investigation, which began in 2012, was not the result of a client complaint; rather, it involved ac series of trust account overdrafts reported to Disciplinary Counsel.

The hearing committee report

Negotiated discipline in cases involving misappropriation must be rejected when a “serious question exists on the face of the record whether respondent acted negligently, or instead  recklessly . . . .” Harris-Lindsey, 19 A.3d at 784. We find no such question here. Although Respondent is an experienced attorney, her practice did not routinely call for holding client funds in trust. Her misappropriation resulted from a combination of accounting structures in place in her firm that were inadequate to safeguard entrusted funds and her failure to supervise new staff and to review client funds obtained from other firm lawyers. Respondent’s affidavit, the stipulated facts and our in camera review of the file all support a finding that Respondent was negligent in her duties with respect to entrusted funds and the supervision of staff. The brief duration of these actions – six months – the lack of any harm to her clients and her cooperation and correction of her failures once identified, do not raise a serious question that her actions rose to the level of recklessness.

Nor do we believe that the agreed upon sanction is unduly lenient for three instances of negligent misappropriation. While negligent misappropriation typically only results in a six month suspension, the combination of misappropriation and other violations warrants a lengthier suspension. When negligent misappropriation is added to other misconduct, the sanction is much harsher.

Further, the fitness requirement was found to be appropriate.

The proposed consent discipline now goes to the Court of Appeals to approve or reject.

The case is In re Kathy Bailey and can be accessed at this link. (Mike Frisch)