Fee Diversion Draws Suspension
An agreed one-year suspension was accepted by the New York Appellate Division for the First Judicial Department
The stipulation of facts recites that in October 2016, respondent, who is a transactional attorney largely focused on tax law, joined a law firm (Firm) as a nonequity “contract” partner, a position he held until November 9, 2018. He was paid an annual salary, with the understanding that he could earn bonuses based on hours worked and client origination. Respondent was not to receive any compensation for Firm work directly from the Firm’s clients. At some point, respondent became personally acquainted with a particular family consisting of three brothers and their mother. At respondent’s suggestion, the family retained the Firm in connection with a late relative’s estate, which held real property to which the ownership was disputed. Respondent was credited as the originating attorney for the matter.
As respondent was neither an estate attorney, nor a litigator, the work on the family’s case was handled mostly by other Firm attorneys but, due to their personal acquaintance, the family utilized respondent as a conduit between them and those Firm attorneys working on their case. Respondent also performed other work for the family, both through the Firm and independent of it. Respondent was designated by the Firm as the billing partner for the case, meaning that he was tasked with having the Firm’s bills forwarded to the family for payment to the Firm, and they made such payments directly to the Firm on a regular basis.
In or about March 2018, respondent was informed by a Firm partner that his contract would not be renewed. In or about April 2018, respondent received two checks from a member of the family, which totaled $9,405 and were made payable to respondent instead of the Firm. Respondent deposited the checks into his personal account and later used the funds for his own personal and business purposes without permission or authority from the Firm. Between May and October 2018, respondent received four additional checks from the family, which totaled $47,389, which were made payable to him instead of the Firm. Respondent also deposited these checks into his personal account and used the funds for his own personal and business purposes without permission or authority.
The Firm discovered respondent’s conduct prior to his November 9, 2018 departure and he swiftly made full restitution to the Firm, making a partial payment on November 8, 2018, and paying the remaining amount on December 8, 2018 (after the Firm requested an additional payment on November 27, 2018). On or about December 18, 2018, the Firm filed a disciplinary complaint against respondent. On or about March 29, 2019, respondent submitted an answer to the complaint in which he admitted some of the allegations, denied others, and offered the following explanation for his actions: “he [respondent] believed that he was allowed temporarily to maintain the funds because of a dispute with his Firm partners who misled him [regarding the amount of work he would receive from the Firm] and he knew that his departure from the Firm was imminent.” Respondent stipulated that, by this statement, he falsely implied that he had maintained the fee payments given directly to him by the family intact in an account based on a legitimate “dispute” with the Firm.
Respondent admits that his actions, as set forth above, violated the three charges alleged in the petition of charges. Specifically, respondent conceded that, by keeping the legal fees paid to him by the family instead of forwarding them to the Firm, and by using those fees to pay for his own personal and business expenses without permission or authority from the Firm to do so, he engaged in “conduct involving dishonesty, fraud, deceit, or misrepresentation” in violation of rule 8.4(c) of the Rules of Professional Conduct (22 NYCRR 1200.0). Respondent additionally admitted that, by making a false representation to the AGC in his answer to the Firm’s complaint implying that he had maintained intact the Firm fees given to him directly by the family as part of his purported “dispute” with the Firm, when he had in fact spent those funds on his own personal and business expenses without permission [*3]or authority from the Firm to do so, he engaged in “conduct involving dishonesty, fraud, deceit, or misrepresentation” in violation of rule 8.4(c). Finally, respondent stipulated that, by committing all the misconduct above, he engaged in “conduct which adversely reflects on [his] fitness as a lawyer” in violation of rule 8.4(h).
(Mike Frisch)