Leaving A Firm Is Hard To Do (If You Are Stealing from Your Partners)
The Wisconsin Supreme Court has approved a proposed 18-month suspension of an attorney who stole from his law firm.
According to the amended complaint, Attorney Hotvedt was formerly employed at the Burlington, Wisconsin law firm of Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry, S.C. He was a stockholder, director, and officer of the firm and had practiced with the firm since he graduated from law school. By common and accepted practice, and pursuant to written employment agreements, all attorneys at the firm understood and agreed that revenues generated by the practice of law belonged to the firm.
In January 2014, Attorney Hotvedt and Attorney Todd Terry told firm shareholders that they would be withdrawing from the firm and establishing their own law practice in Kenosha. The shareholders of the firm agreed to dissolve the corporation effective May 31, 2014. All firm members signed a dissolution agreement winding up the corporation.
Subsequent to the dissolution of the firm, and in connection with the winding up of the firm, Attorney Dennis Lynch, the former President of the firm, noticed billing discrepancies attributable to Attorney Hotvedt, including writing off substantial amounts of firm billings in the years 2011 through 2013. In many instances, Attorney Hotvedt had written off client billings, but clients reported to the firm that they had paid legal fees directly to Attorney Hotvedt.
Review of firm accounts showed that Attorney Hotvedt had deposited client fee payments directly into his own personal bank account rather than depositing the fees into the law firm account. Attorney Hotvedt did not disclose to the firm’s shareholders that he was depositing firm funds paid by clients into his personal bank account. Attorney Hotvedt continued his conduct of depositing client funds belonging to the firm into his personal bank account during 2014, after he had announced his departure from the firm and after he had executed a dissolution agreement.
As part of its investigation into the grievance filed against Attorney Hotvedt, the OLR discovered that in 2014 Attorney Hotvedt established his own consulting company, JBG Consulting Services, during the time period in which he was preparing to leave the firm. Through this consulting company, Attorney Hotvedt converted additional attorney’s fees belonging to the firm. The OLR’s investigation revealed that the total amount of identifiable client funds converted by Attorney Hotvedt from his former law firm was over $173,000.
Sanction
The referee went on to say that an 18-month suspension for a relatively new attorney who recently started a new firm is a significant discipline, particularly considering the additional time it may take for him to be reinstated under the reinstatement procedures dictated by SCR 22.28(3). The referee noted that Attorney Hotvedt has no prior disciplinary history; he reached an agreement with his former firm regarding restitution; and he ultimately was willing to enter into a stipulation and no contest agreement. Upon consideration of all those factors, the referee said he had no difficulty agreeing to recommend the 18-month suspension recommended by both the OLR and Attorney Hotvedt as part of the stipulation.
(Mike Frisch)