To Disbar Or Not To Disbar

A potentially significant bar discipline matter involving entrusted funds will be argued this Wednesday in the District of Columbia Court of Appeals.

The panel consists of Associate Judges Beckwith and McLeese and Senior Judge Ruiz. 

The D.C. rules governing advanced fees was changed in 2000 to require such fees to be escrowed until earned. 

In re Mance, decided in 2009, held that the rule applied to flat fees. 

Here, one such fee was pre-Mance; the other post-Mance. 

In the matter, a hearing committee found that the attorney had engaged in reckless misappropriation meriting disbarment

Both matters involve Respondent’s handling of flat fees paid in advance and deposited in Respondent’s law firm operating account, and drawn down before the legal work was completed. Both raise questions left unresolved since In re Mance, 980 A.2d 1196 (D.C. 2009) (“Mance”), in which the Court clarified that under Rule 1.15(e) an advance payment of flat fees for legal services remains a client’s property.

In the Moya Complaint, the Hearing Committee must address the effect of Mance on a flat fee received before 2009 and deposited in an attorney’s operating account, and not moved into a trust account until its refund in November 2012. In the Gur Complaint, the Hearing Committee must address whether members of the D.C. Bar had adequate information and guidance on how to conform their practice to Mance and, if not, whether that fact might justify a finding of no more than negligent misappropriation under Rule 1.15(e).

Based on clear and convincing evidence, the Hearing Committee concludes with respect to both complaints that Respondent committed commingling and misappropriation in violation of Rule 1.15(a) and Rule 1.15(e) and should be disbarred.

The Board on Professional Responsibility downgraded the violations and discipline

This matter arises out of Respondent’s representation of two clients in immigration cases. Its outcome turns on the application of In re Mance, 980 A.2d 1196 (D.C. 2009), in which the Court clarified that a flat fee payment for legal services is considered an “advance[] of unearned fees,” required by D.C. Rules of Professional Conduct 1.15(a) and (e) to be safeguarded as client property until earned.

In the first matter (involving client Ramiro Moya), Respondent received a flat fee more than a year before the Court issued its opinion in Mance. Consistent with common practice at the time (Mance, 980 A.2d at 1206), he treated the fee as his own. After Mance was decided, Respondent did not identify or transfer any unearned portion of the Moya fee to a trust account.

In the second matter (involving client Yalcin Gur), Respondent received a flat fee, three years after the Court decided Mance. He again treated it as his own before he earned it, but did not have the client’s consent to do so.

Board’s finding on intent

We conclude that Mance did not require Respondent to audit his file and reallocate the unearned portion of Mr. Moya’s flat fee to his trust account. We thus dismiss the charges arising from the Moya matter.

In the Gur matter, we agree that Respondent was obligated to hold his flat fee in trust until earned and that he engaged in misappropriation and commingling when he instead treated it as his own without his client’s consent. However, Disciplinary Counsel did not prove by clear and convincing evidence that Respondent’s failure to comply with Mance resulted from anything other than his good faith mistake of law, and consequently proved only that Respondent acted negligently.

As to ignorance of the law

The Hearing Committee concluded that Respondent’s ignorance of Mance does not excuse his misconduct because he is presumed to know the law, including his obligations under the Rules of Professional Conduct. We agree.

But it mitigates sanction!

Disciplinary Counsel did not prove by clear and convincing evidence that Respondent’s handling of Mr. Gur’s flat fee, in compliance with pre-Mance law, was anything other than a “non-intentional, non-deliberate, non-reckless” mistake of law. Respondent committed commingling and negligent misappropriation in the Gur matter.

From Disbarment to Not

Because Respondent violated Rules 1.15(a) and 1.15(e) in the Gur matter, we recommend that he be suspended from the practice of law for seven months, followed by one year of probation with conditions.

Notably, the attorney has prior discipline for violation of the rules governing safekeeping property. 

Also notable that the complaints were docketed for investigation in 2012 and 2013.

As my mentor Len Becker used to say, these cases do not age like a fine wine. (Mike Frisch)