Two attorneys charged with misconduct in the settlement of 

the $210,000 Respondents took for themselves from the overall settlement and deposited in their IOLTA account on January 5, 2009, were “client funds” under Rule 1.15(a). While Respondents may have had an interest in their clients’ recovery (based on fee agreements—to the extent they existed—or based on a quantum meruit claim) those funds were nonetheless client funds. See id. (a lawyer is an unsecured creditor who has no right to self-help). Without their clients’ consent, Respondents could not use these funds as fees. And, as Respondents knew, they did not have their clients’ consent.

Respondents did not have their clients’ consent or authorization to take the funds as fees because, as discussed above, Disciplinary Counsel proved by clear and convincing evidence that Respondent Kennedy deliberately withheld the material terms of the settlement with Inter-Con from their clients, including the fact that they
were arrogating to themselves two-thirds of the settlement as their legal fees. Disciplinary Counsel also proved by clear and convincing evidence that Respondent Kennedy deliberately withheld this information to avoid putting the settlement, and their receipt of attorneys’ fees, at risk. Disciplinary Counsel did not establish by clear and convincing evidence, however, that Respondent Dolan was an active participant in the deliberately dishonest withholding of the material terms of the settlement. See FF 68-75, supra.

One of the attorneys engaged in intentional misappropriation; the other negligent.

Whether Respondents might have been entitled to a reasonable fee in the InterCon matter for work done prior to any unethical conduct is entirely moot here. Respondents were not entitled to exact any fees from their clients’ settlement—let alone 67% of the settlement ($210,000 out of $310,00—without their clients’ knowledge and authorization)…

The Hearing Committee finds that while both Respondents Kennedy and Dolan misappropriated the total of $210,000 in client funds, Disciplinary Counsel only proved that Respondent Kennedy engaged in intentional misappropriation; the Hearing Committee finds that Disciplinary Counsel established Respondent Dolan’s misconduct in connection with this misappropriation charge resulted from negligence. Disciplinary Counsel established by clear and convincing evidence that Respondent Kennedy engaged in dishonest conduct and by knowingly taking unauthorized fees, and that he intentionally misappropriated the $210,000 in fees. Respondent offered no mitigating factors to rebut the presumption of disbarment. We recommend that Respondent Kennedy be disbarred for intentional misappropriation.

In addition to the dishonest misappropriation in violation of Rules 1.15(a) and 8.4(c), the Hearing Committee concludes that Respondent Kennedy also violated Rules 1.2(a), 1.4(a), (b) and (c), 1.5(a) and (b), 1.15(a) (recordkeeping), 1.15(c), and 1.8(f). In the event the Court ultimately determines that Respondent Kennedy’s misappropriation was negligent, rather than reckless or intentional, the Hearing Committee recommends a three-year suspension with fitness based on the deliberate nature of Respondent’s dishonesty in connection with the communication and collection of the Inter-Con fees, in addition to these additional Rule violations.