Stayed Suspension For Premature Taking Of Personal Representative Fees

The Missouri Supreme Court has a summary of a bar discipline decision

The chief disciplinary counsel’s office seeks discipline for an attorney’s conduct while serving as the personal representative of an estate in a probate case. In a decision written by Judge Laura Denvir Stith, the Supreme Court of Missouri orders discipline. All seven judges agree the attorney violated rules of professional conduct when he paid himself his personal representative fees prior to the final settlement of the estate, and should be disciplined. All seven judges agree the misconduct alone warrants suspension of the attorney’s law license with no leave to apply for reinstatement for six months. Four judges agree mitigating factors, including the attorney’s eventual entitlement to the fees, lack of harm to the estate, lack of dishonest motive, remorse and history of good character justify staying the suspension and placing the attorney on probation with conditions.

Judge W. Brent Powell dissents. He believes the attorney’s misconduct damaged the integrity of the legal profession and diminished public confidence in the justice system and probate process, justifying requiring the attorney to serve the suspension.

Facts: Sedalia attorney R. Scott Gardner served as the personal representative for an estate. He submitted a motion to be paid his personal representative fees early. The circuit court only approved early payment of half of the fees and specifically directed the remainder of Gardner’s fees would be paid only at final settlement. Gardner nonetheless paid himself most of the remainder of his fees a few months later, prior to final settlement, in violation of the court’s order and in violation of a state statute requiring personal representatives to obtain prior court approval to be paid all or part of their personal representative fees before final settlement. The amount Gardner paid himself early, however, did not exceed the fees to which he eventually was entitled. But Gardner failed to inform the circuit court of his payments to himself prior to disbursing the funds and, in the estate’s final settlement, did not state he had already taken the payment, although he did attach a copy of the check. The chief disciplinary counsel began disciplinary proceedings. Following a hearing, the disciplinary hearing panel found Gardner violated certain rules of professional conduct and recommended Gardner’s license be suspended, with no leave to apply for reinstatement for six months. The chief disciplinary counsel asks this Court to discipline Gardner’s license.

DISCIPLINE ORDERED.

The law

Mr. Gardner’s only explanation for his conduct is his contention he believed he could pay himself his fee without court approval because his fee request would be treated as a claim under the statutes governing claims of creditors against the estate. See §§ 473.360-473.444. Personal representatives are not mere creditors of the estate. They  have a fiduciary obligation to the estate and must avoid conflicts of interest. Estate of Keen, 488 S.W.3d 73, 92 (Mo. App. 2016). For this reason, Missouri probate statutes require court approval of many of the personal representative’s actions in a supervised estate.

His state of mind

was in part negligent and in part knowing.

Sanction

Most importantly, there is no evidence Mr. Gardner acted with a selfish or dishonest motive. Although the dissent suggests Mr. Gardner was acting for his own financial benefit, Mr. Gardner did not take more money than he earned. There is no evidence to suggest Mr. Gardner took the fees early because he was suffering personal financial difficulties or because he needed the funds early for cash-flow purposes. The record does not show any self-serving motivation as Mr. Gardner did not, in fact, benefit more from taking the funds in June than if he had waited to take the funds when he filed  the settlement two months later. Instead, the evidence shows Mr. Gardner undertook this early payment after speaking with the tax advisor and then failed to immediately inform the circuit court out of carelessness and an erroneous belief minor deviations from the statutory procedure would be acceptable even if not proper.

The court majority relied on evidence of good character and the absence of client harm.

Too forgiving according to Justice Powell’s dissent

I respectfully dissent to draw attention to the gravity of Mr. Gardner’s misconduct, which the principal opinion understates by staying Mr. Gardner’s suspension. Mr. Gardner knowingly violated a court order when he took the remainder of his personal representative fee from his client’s estate before the estate was closed. This gross misconduct caused damage to the integrity of the legal profession and diminished public confidence in our system of justice. This Court, therefore, should suspend indefinitely Mr. Gardner from the practice of law with no leave to apply for reinstatement for six months.

(Mike Frisch)