A Conscious Disregard

When it comes to sanctions for unauthorized use of entrusted funds, labels matter in the District of Columbia. 

In a recent case, the Board on Professional Responsibility concluded that misappropriation had been reckless rather than negligent

The Hearing Committee determined that if Respondent was being paid on an hourly basis, as Respondent herself claims, her own time records prove that she received unearned fees during May and June 2005, which she treated as her own before they were earned, and therefore misappropriated. HC Rpt. at 31-33. The Hearing Committee also determined that, in the alternative, if Respondent and Ms. Manago had agreed to a flat fee of $5,000, Respondent engaged in misappropriation when she accepted $6,300 of payments from Ms. Manago, $1,300 more than the flat fee agreement, which she treated as her own before they were earned. Id. at 34-35. We agree with the Hearing Committee that there is clear and convincing evidence that Respondent misappropriated unearned fees under either scenario, since Respondent admits that she always treated Ms. Manago’s funds as her own upon receipt. 

On the issue of Respondent’s intent, the Hearing Committee found that it was a close question, but that Disciplinary Counsel had not proven anything more than negligent misappropriation because the evidence showed only that Respondent engaged in misappropriation and commingling, and kept poor records. HC Rpt. at 35-38. Relying on In re Anderson, 778 A.2d 330, 339-342 (D.C. 2001), the Hearing Committee concluded that misappropriation, commingling, and poor record keeping was not enough to establish recklessness. HC Rpt. at 37. We disagree, because the evidence in this case shows more misconduct than in Anderson. Respondent admits that she treated Ms. Manago’s payment as her own property as soon as it was paid. FF 37. Significantly, the client paid at least $500 before Respondent did any substantial work on the case. FF 39. If, as Respondent contends, she was entitled to an hourly fee, she knew she had not earned the first $500 when it was received. Treating this unearned fee as Respondent’s own property would constitute intentional misappropriation…At a minimum, Respondent’s conduct reflects a conscious disregard for the safety of Ms. Manago’s funds, as she made no efforts to determine if she was entitled to treat Ms. Manago’s money as her own. See id. (“[R]ecklessness is a state of mind in which a person does not care about the consequences of his or her action.” (internal citations and quotation marks omitted)). This is more than sloppy record-keeping. Respondent used Ms. Manago’s funds as her own even though Respondent’s own records showed that she had not earned them. As we find that Respondent’s handling of Ms. Manago’s funds was, at a minimum, reckless, we recommend that she be disbarred because the record does not contain extraordinary circumstances that would permit departure from the presumptive sanction of disbarment pursuant to In re Addams, 579 A.2d 190, 191 (D.C. 1990).

The Hearing Committee had recommended disbarment on other grounds.

The case is In re Olekanma A. Ekekwe-Kauffman and can be found here. (Mike Frisch)