Lion’s Share: A Raisin In The Sun

A District of Columbia Hearing Committee has recommended disbarment of an attorney for his handling of settlement proceeds received on behalf of a client who is a raisin producer.

Lion Farms, LLC, is a California limited liability company that produces raisins in Fresno and Madera Counties in the San Joaquin Valley, California.

Misconduct

Here, Respondent received the settlement funds in the Lion Farm trust account on November 22, 2019. FF 21. Respondent did not notify Lion Farms that he had received it; rather, on November 26 and 27, 2019, he told Lion Farms that it would receive the funds directly from the government. FF 22-23. On December 6, 2019, Respondent opened a second trust account, where he would transfer the entire settlement amount plus accrued interest. FF 26. He ignored Lion Farms’s inquiries about the status of the settlement funds throughout the first half of 2020. FF 29. Lion Farms did not learn that Respondent had been holding the settlement funds until July 2020, after it contacted the government directly. FF 31. Thus, Respondent violated Rule 1.15(c) when he failed to inform Lion Farms that he had received its settlement funds in November 2019 or any time thereafter.

Misappropriation

Here, in December 2019, Respondent transferred $150,000 of the settlement funds to his personal bank account despite knowing that Lion Farms was still expecting to receive the settlement funds directly from the government and that it had not responded to his claim that he was entitled to a 1/3 contingency fee. FF 24-25, 27. Thus, contrary to Lion Farms’s expectation that it could negotiate a fee agreement with Respondent after it received the settlement funds, Responden secretly began taking settlement funds for himself. FF 25. After spending those funds on personal expenses, the balance in his personal account fell below $50,000 by January 10, 2020. FF 28. Thus, by spending over $100,000 of the settlement funds, while knowing he was not acting pursuant to a fee agreement and lacked authorization to take any particular amount of the settlement as his fee, Respondent engaged in intentional misappropriation, in violation of Rule 1.15(a). See Anderson, 778 A.2d at 339.

After Lion Farms learned that Respondent had received the settlement funds, Respondent sent it a check for 2/3 of the total amount. FF 35. Bruce Lion immediately emailed Respondent on August 4, 2020, offering a $1 million fee as opposed to the 1/3 contingency fee Respondent had previously asserted. FF 36-37. Respondent did not respond to that email or multiple follow-up emails and calls. FF 36-37. Instead, while he was ignoring his client’s inquiries, Respondent resumed withdrawing funds from the trust account, in $10,000 increments, between October and December 2020. FF 41. He used those funds to pay personal expenses, and by December 10, 2020, the balance in his personal account fell below $7,500. FF 42. By continuing to use the settlement funds for his own purposes, while he and Lion Farms had not agreed on the amount of his fee, Respondent again engaged in intentional misappropriation, in violation of Rule 1.15(a). See Anderson, 778 A.2d at 339. Lion Farms’s offer of a $1 million fee did not entitle Respondent to withdraw
any portion of the settlement funds, since there had been no clear, unequivocal agreement to that effect. See FF 37-38; Haar I, 667 A.2d at 1354-55 (explaining that a client, by making a settlement offer, did not concede that the respondent was entitled to withdraw that amount).

The committee further found dishonesty and failure to participate in the disciplinary matter

It is particularly disturbing to the Hearing Committee that Respondent, a sworn officer of the court, chose to ignore all legal process in the disputes with his client. It is unnecessary to reiterate all the repeated efforts to serve Respondent in the numerous judicial and administrative proceedings, including this one; Respondent simply refused to participate. He has clearly demonstrated a total disregard for the legal system that he swore to uphold. These are strong words, but his conduct allows for no other conclusion. His absence before this Committee makes our task rather straightforward…

Disciplinary precedent clearly establishes that the sanction for intentional misrepresentation is disbarment. The compound effect of all the other proven violations further supports the disbarment decision.

(Mike Frisch)