A Fine Line
A private admonition for trust account violations was imposed by the Vermont Supreme Court, based on its conclusion regarding the attorney’s mental state
We agree with the hearing panel, particularly given this fine line between mental states and the seriousness of imposing suspension or public reprimand over private admonition. Although we treat violations of trust account rules seriously, the ABA Standards provide no indication that client trust account violations are subject to a different analysis. And we decline to conclude that any time an attorney should have known his conduct violated the rules, because he is charged with comprehensive knowledge of the content of those rules, that he presumptively will be suspended. In Fink, we differentiated between mental states in defending against violations and mental states as applied to sanctions. 2011 VT 42, ¶ 41. We stated that “knowing conduct does not encompass both knew or should have known” because “[i]f the definition extended to constructive knowledge then no misconduct would be negligent.” Id. (quotation omitted). We explained that “while a lawyer’s good faith, but unreasonable, belief that his actions are not misconduct is not a defense to a violation, such an error can be a factor in imposing discipline.” Id. We agree that under the Fink analysis the presumptive sanction in this case is a public reprimand.
In reaching this conclusion, we also note that the potential injury to the client is less severe than in Farrar. Although any mishandling of client property is serious, we consider that attorney took pains not to commingle funds by creating separate subaccounts for distinct purposes and keeping careful, detailed records of each account to ensure no client funds were confused with his personal funds. In Farrar, on the other hand, the attorney’s bookkeeper transferred money back and forth between the business and client trust accounts, directly commingling the funds. 2008 VT 31, ¶ 3. The potential that client funds would be used for nonclient related purposes was far greater there than here. Based on attorney’s mental state, the lack of actual injury, and the low potential for injury, we conclude that public reprimand is the presumptive sanction.
With public reprimand the starting point, we consider whether the mitigating factors reduce the appropriate sanction from public reprimand down to private admonition. As Disciplinary Counsel recognized, attorney took additional affirmative steps in hiring a CPA at his own expense, ordering bank and court records, and diligently tracking every irregularity going back to the opening of his IOLTA account in 1997. His personal investigation far exceeded that of Disciplinary Counsel, resulting in details of violations and irregularities that Disciplinary Counsel would not have uncovered. He disclosed far more information than was required, including several bookkeeping errors and other irregularities that already had been remedied. Attorney’s extensive efforts go beyond what was required of him and weigh heavily in our consideration of mitigating factors.
We also add to the scale several other mitigating factors stipulated to by the parties: absence of a prior disciplinary record, lack of selfish or dishonest motive, presence of personal problems, positive character and reputation, presence of physical disability, and remorse. The only aggravating factor is attorney’s thirty years of experience. The weight of the mitigating factors over the aggravating factors is far greater than in Farrar, 2008 VT 31, ¶ 12, and merits a reduction in sanction.
Judge Robinson concurred with misgivings
I fear that the Court’s holding in this case will have the unintended consequence of reducing the presumptive sanction to public reprimand in the vast majority of cases involving improper dealings with client property. I have no doubt that the vast majority of lawyers who maintain their trust accounts in a way that violates the rule against commingling do not realize that their practice violate the rules. But I can imagine a wide range of practices that we would agree a lawyer should know violate the rules. If we read the “should know” prong out of the description of the presumptive sanction in § 4.12, then we are essentially setting up ignorance of the applicable ethical rules as a defense (or at least a mitigating factor) in a disciplinary proceeding arising from a violation of those rules. This approach undermines the ability of the Board of Professional Responsibility and this Court to ensure compliance with the rules, and can only undermine public confidence in our effective regulation of the bar.
Judge Durkins joined the concurrence. (Mike Frisch)