Risky Business

The Kansas Supreme Court ordered a partially-stayed two-year suspension of an attorney, affirming findings of a hearing panel that he had engaged in escrow violations and a prohibited business transaction with his client.

The court rejected the attorney’s contentions with respect to both findings and held he had failed to “promptly deliver” entrusted funds

Here, as the respondent testified, he was undisputedly obligated to return at least $10,000 to R.K. Both R.K.’s and the respondent’s testimony indicates the respondent was obligated to return the money on demand. Under those circumstances, the terms “on time” and “without delay” would mean that the $10,000 should have been returned to R.K. immediately or, at least, very soon after R.K. made it clear in his November 3, 2014, complaint filed with the Disciplinary Administrator that he wanted his money returned. The Disciplinary Administrator’s office transmitted the complaint to the respondent via a letter dated November 6, 2014. On November 26, 2014, the Disciplinary Administrator’s office sent a second letter, noting: “It has now been well over 15 days since that letter was mailed to you and to date this office has not received a response.” The second letter indicated a formal complaint would be filed unless a response was received within 10 days. On December 5, 2014, the respondent wrote the Disciplinary Administrator’s office and said he would respond by December 12, 2014. Then, on December 17, 2014, the respondent sent a letter to the office of the Disciplinary Administrator addressing the complaint. The next day, R.K. signed a receipt acknowledging he had “[i]n hand received from John P. Biscanin” the $10,000 cash and the two checks, one for funds held in trust related to the respondent’s representation and the other from the respondent’s business account.

Sanction

The recommendations of the hearing panel and office of the Disciplinary Administrator are advisory only and do not prevent us from imposing greater or lesser sanctions. Kansas Supreme Court Rule 212(f) (2017 Kan. S. Ct. R. 255); see In re Holste, 302 Kan. 880, 888, 358 P.3d 850 (2015). A majority of this court rejects the hearing panel’s recommended discipline of 2 years’ suspension, with a truncated period of 3-months’ suspension and supervised probation for a period of 2 years. While we unanimously agree on the appropriateness of a 2-year suspension with some portion being stayed while the respondent serves a 2-year period of probation, a majority of the court would require the respondent to serve a 6-month suspension before the stay.

Additionally, we agree with the Disciplinary Administrator’s office that an independent audit of the respondent’s client trust account is appropriate in this case. Accordingly, the respondent is ordered to file an amended probation plan with the Disciplinary Administrator before the start of his probation period, which shall include a provision for an independent audit to assess whether the respondent still possesses client funds belonging to R.K. The respondent shall also comply with Kansas Supreme Court Rule 218 (2017 Kan. S. Ct. R. 262). Before reinstatement is allowed, the respondent shall comply with Rule 219(b) (2017 Kan. S. Ct. R. 263) (verified petition for reinstatement). A reinstatement hearing shall not be required.

Video of oral argument is linked here. (Mike Frisch)