Unsettled Questions And Litigation Risk; Common Sense Prevails For Once

Kudos to the District of Columbia Court of Appeals for rejecting the position of the Board on Professional Responsibility and accepting a negotiated consent sanction

This appeal concerns a petition for negotiated discipline that involves misconduct that may merit a charge for an ethical violation that the petition did not include. In the amended petition here, respondent George A. Teitelbaum admitted to violating D.C. R. Pro. Conduct 1.15(a) by failing to keep complete records of account funds. The agreed-upon sanction reflects that charge. The stipulated facts also reflect that the funds in the account were insufficient to meet the financial obligations Mr. Teitelbaum had to his client, although the representation did not result in any financial loss to his client. The Board on Professional Responsibility (“Board”) argues that the fact that the account had insufficient funds established misappropriation of the funds, and therefore we must reject the negotiated disposition and order further factual development to assess if the recommended sanction is too lenient. The Office of Disciplinary Counsel (“ODC”), which cofiled the petition with respondent, counters that the sanction is appropriate because its “investigation did not uncover clear and convincing evidence” that the deficiency at issue was “negligent, reckless, or intentional.” We conclude that a determination that Mr. Teitelbaum committed misappropriation in violation of the Rules of Professional Conduct would depend on the resolution of unsettled legal questions and on facts that do not amount to clear and convincing evidence of misappropriation. We also conclude that, under the circumstances of this case, proposed discipline that does not include a charge of misappropriation is not unduly lenient. We therefore approve the amended petition for negotiated discipline.

The court

we will not reject a negotiated discipline because it declines to stipulate a violation if, after reasonable factual investigation, there is a substantial risk that ODC would not be able to establish the violation by clear and convincing evidence. Conversely, we will reject a negotiated discipline if ODC does not stipulate a charge that clear and convincing evidence, as set forth in the stipulated facts, supports. In that latter scenario, the failure to stipulate the charge results in a sanction that is not justified and therefore may be unduly lenient.

Unsettled questions and litigation risks

We now apply this standard to respondent’s negotiated discipline. ODC gives several reasons why it did not stipulate a misappropriation charge. Without addressing every reason ODC provided, we conclude that, on these facts, litigation risks from three unsettled legal questions about misappropriation justified omitting a misappropriation charge. These risks could reasonably lead ODC to conclude, based on its reasonable investigation of the alleged misconduct, that it lacked clear and convincing evidence of misappropriation. We therefore decline to reject the petition for negotiated discipline because of its finding that misappropriation did not occur.

…litigation risks made it uncertain whether a misappropriation charge against respondent could be proven in a contested case by clear and convincing evidence. Because of this uncertainty, we will not reject respondent’s negotiated discipline for not stipulating a charge of misappropriation.

The court accepted the proposed stayed 30 day suspension and probation.

The Board report is linked here.

I have never understood the Board’s hostility toward consent sanctions in a system beset by decades-long delays. Here, common sense prevailed over hypertechical objections. (Mike Frisch)