Monthly Archives: September 2019

Iowa lawyer suspended for 4 months without possibility of reinstatement for misappropriating fees from his law firm

Hello everyone and welcome to this Ethics Alert, which will discuss the recent Iowa Supreme Court opinion which suspended a lawyer for 4 months without the possibility of reinstatement for misappropriating fees from his law firm and stated that “(w)e think the time has come to ratchet up the disciplinary sanctions for nonclient theft.”  The case is Iowa Supreme Court Disciplinary Board v. Curtis Den Beste, No 19-0360.  The September 13, 2019 Iowa Supreme Court opinion is here: https://www.iowacourts.gov/courtcases/7209/embed/SupremeCourtOpinion.

The lawyer began practicing law in Iowa in 2000.  He received an offer in 2007 to practice with a law firm and entered into an agreement with the law firm regarding fees.  The agreement required him to deposit all earned client fees into the firm trust account or the general/operating account and he would be paid fifty percent of the earned fees and the firm would keep the remainder.

Beginning in 2015, the lawyer accepted cash payments for fees from some clients and kept the fees instead of depositing them as required by his agreement with the firm.  According to the opinion, after his misconduct was discovered, “(the lawyer) agreed to self-report his misconduct to the disciplinary board and to provide an accounting of the diverted funds as well as a repayment plan.”

The lawyer’s accounting (which was confirmed by the Iowa Bar/Disciplinary Board) showed that he received a total of $18,200.00 and, after for the fifty-percent split and other tax and reimbursement considerations, the lawyer wrongfully misappropriated $9,200.00 from the law firm.

“It is certainly true that, in many cases, fee disputes between a lawyer and his or her current or former law firm might simply be contract disputes and nothing more. For example, a lawyer with a good-faith claim to fees should not be sanctioned merely for exercising or asserting such a claim. But not all fee disputes between a lawyer and a law firm are garden variety contract disputes. Some involve outright and undisputed theft. In such cases, the imposition of discipline is clearly appropriate.”

“The question then arises whether theft from a client is more serious than theft from a law firm or other third party. In our prior cases, the difference has often been dramatic. Theft of any amount by a lawyer from a client ordinarily results in revocation. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Parrish, 925 N.W.2d 163, 170–71 (Iowa 2019); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Guthrie, 901 N.W.2d 493, 500–01 (Iowa 2017). But theft of funds from a law firm can result in much lesser sanctions. Henrichsen, 825 N.W.2d at 529–30.”

“There are, perhaps, some reasons for the distinction between client theft and law firm theft. For instance, many clients have little power against a lawyer in whom the client places trust. A lawyer who steals from a client is preying on those often in an extremely vulnerable position who have placed trust in the lawyer and advanced funds to the lawyer to protect their interests. The relationship between a law firm and a lawyer ordinarily will have less of a power imbalance. The firm is in a better position, perhaps, than a client to monitor the proper handling of fees.”

“Yet, a lawyer who acts dishonestly toward an employer raises serious questions of whether the lawyer has the necessary integrity to practice law.”

“(W)e think the time has come to ratchet up the disciplinary sanctions for nonclient theft. That said, this case may not be the appropriate case to do so. In particular, given our caselaw, Den Beste was not on notice that he faced a possible revocation when he entered into the stipulation in this case. Cf. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cepican, 861 N.W.2d 841, 845 (Iowa 2015) (finding the attorney did not waive his right to contest a complaint of theft-based misconduct by failing to respond because he did not receive adequate notice of the allegation of theft). Thus, we rely on our precedent and impose a sanction in this case consistent with our prior cases. At the same time, we use this case as a vehicle to put the bar on notice that an attorney who steals from a law firm without a colorable claim may well incur stiffer disciplinary sanctions than have been imposed in our past cases.”

Thus, we rely on our precedent and impose a sanction in this case consistent with our prior cases. At the same time, we use this case as a vehicle to put the bar on notice that an attorney who steals from a law firm without a colorable claim may well incur stiffer disciplinary sanctions than have been imposed in our past cases.

“Upon full consideration of this matter, we order that the license of Curtis W. Den Beste to practice law in Iowa be suspended indefinitely with no possibility of reinstatement for a period not less than four months, effective with the filing of this opinion.”

A dissenting justice would have revoked the lawyer’s license to practice law.

“On multiple occasions, Den Beste knowingly embezzled money from his law firm and then attempted to conceal what he had done. He had no colorable claim to nor was there any fee dispute regarding that money. “[I]t is almost axiomatic that the licenses of lawyers who convert funds entrusted to them should be revoked.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Irwin, 679 N.W.2d 641, 644 (Iowa 2004). Accordingly, I would revoke Den Beste’s license to practice law.”

Bottom line:  The opinion discusses the differences between law firm theft and theft from the client and others.  The Iowa Supreme Court has provided notice to lawyers that future law firm theft will result in stiffer disciplinary sanctions than in the past.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Please note:  My office has moved and the new office address is 2999 Alt. 19, Palm Harbor, FL 34683.  All other contact information remains the same.

Joseph Corsmeier

about.me/corsmeierethicsblogs

Advertisements

Leave a comment

Filed under Attorney discipline, Attorney Ethics, deceit, dishonesty, joe corsmeier, Joseph Corsmeier, Lawyer criminal conduct, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer misappropriation, Lawyer misappropriation of fees, Lawyer stealing from law firm, Misappropriation from law firm suspension, Uncategorized

ABA formal ethics opinion provides guidance for recusal of judge because of a personal relationship

Hello everyone and welcome to this Ethics Alert, which will discuss ABA Formal Opinion 488, which provides guidance on a judge’s obligation to recuse because of a social or close personal relationship with a lawyer or party.  ABA Formal Opinion 488 is here:  https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba_formal_opinion_488.pdf

According to the opinion, which was released on September 5, 2019, a judge is not required to automatically recuse or be disqualified if a lawyer or party in a matter before the judge is an acquaintance or friend; however, recusal or disqualification is necessary when the judge is in a close personal relationship with a lawyer or party in a matter.

Formal Opinion 488 interprets the Model Code of Judicial Conduct Rule 2.11, which requires judges to identify situations where their impartiality might reasonably be questioned—an age-old and fluid determination, beyond the specific provisions in Rule 2.11(A)(1)-(6).  The opinion states “that relationships vary widely, potentially change over time, and are unique to the people involved.” As such, the opinion trifurcates judge’s social interactions and relationships into (1) acquaintanceships; (2) friendships; and (3) close personal relationships.

Rule 2.11(A)(1) addresses the standard of when “impartiality might reasonably be questioned.” In addition, Rule 2.11(A)(2) specifies situations where “the judge knows that the judge, the judge’s spouse or domestic partner, or a person within the third degree of relationship to either of them, or the spouse or domestic partner of such a person is:

(a) a party to the proceeding, or an officer, director, general partner, managing member, or trustee of a party;

(b) acting as a lawyer in the proceeding;

(c) a person who has more than a de minimis interest that could be substantially affected by the proceeding; or

(d) likely to be a material witness in the proceeding.”

The opinion notes that a judge must recuse or be disqualified when the judge has or pursues a romantic relationship with a lawyer or party in a matter; however, other “close personal relationships” (such as amicably divorced individuals who maintain joint custody), require that the judge follow Rule 2.11(C), which permits disclosure and waiver of the recusal.

Under Rule 2.11(C), a judge subject to disqualification because of a friendship or close personal relationship may disclose on the record the basis of the potential disqualification and ask the parties and their lawyers to consider, outside the presence of the judge and court personnel, whether to waive the disqualification.  If the parties and lawyers agree after the disclosure (and without participation by the judge or court personnel), that the judge should not be disqualified, the judge may participate in the proceeding. The stipulation must be incorporated into the record of the proceeding.

The opinion states that a close personal relationship is covered by Rule 2.11(A)(2) and requires disqualification, but acquaintances do not.  Further, whether friendships should result in disclosure and recusal depends on the specific facts. The opinion does not address social media (such as Facebook “friendships”) and states that interaction on social media does not itself indicate the type of relationship participants have with one another either generally or for purposes of the opinion.

Bottom line:  This opinion provides guidelines for judges (and lawyers) on a judge’s obligation to recuse (or be subject to disqualification) because of a social or close personal relationship with a  lawyer or party.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Please note:  My office has moved and the new office address is 2999 Alt. 19, Palm Harbor, FL 34683.  All other contact information remains the same.

Joseph Corsmeier

about.me/corsmeierethicsblogs

1 Comment

Filed under ABA formal opinions, ABA opinion 488 recusal of judge because of personal relationship, joe corsmeier, Joseph Corsmeier, Judicial ethics, Uncategorized

Utah Supreme Court approves pilot program to permit non-traditional legal services, including non-lawyer firm ownership

Hello everyone and welcome to this Ethics Alert, which will discuss the unanimous Utah Supreme Court approval of a pilot program to permit non-traditional legal services, including non-lawyer firm ownership.  The report of the Utah Work Group on Regulatory Reform titled Narrowing the Access-To-Justice Gap by Reimagining Regulation is here:  https://www.utahbar.org/wp-content/uploads/2019/08/FINAL-Task-Force-Report.pdf

In an opinion dated August 29, 2019 (which is not yet published), the Utah Supreme Court voted unanimously to approve the recommendations of the work group which called for “profoundly reimagining the way legal services are regulated in order to harness the power of entrepreneurship, capital, and machine learning in the legal arena.”

The work group proposed the creation of a new structure in Utah for the regulation of legal services that would provide for broad-based investment and participation in business entities that provide legal services, including non-lawyer investment in and ownership of these entities.  The report stated that this goal should be achieved in two ways:

  1. Substantially loosening regulatory restrictions on the corporate practice of law, lawyer advertising, solicitation, and fee arrangements, including referrals and fee sharing and;
  1. Simultaneously establishing a new regulatory body, under the supervision of the Supreme Court, to advance and implement a risk-based, empirically-grounded regulatory process for legal service entities.

The Utah Supreme Court’s approval of the recommendations begins the first stage the report’s recommendations, which includes the creation of an implementation task force that will establish the new regulatory body as a pilot program that will be in place for about two years. The regulatory body will work with the Utah State Bar, which will continue to maintain its authority over lawyers and licensed paralegal practitioners (LPPs) and regulate non-traditional legal services which is not currently allowed under Utah’s rules.

Stage one of the plan also includes the creation of a “regulatory sandbox” which will be managed by the new regulating body, and will allow a limited market of non-traditional legal entities to provide legal services in the state. According to the report, “The goal is to allow the Court and aspiring innovators to develop new offerings that could benefit the public, validate them with the public, and understand how current regulations might need to be selectively or permanently relaxed to permit these and other innovations.”

The report also requested the Supreme Court to order three changes that would allow the pilot to operate as part of the first stage, including:

  1. Creation of the regulating body as an implementation task force of the court and delegate regulatory authority to set up and run the regulatory sandbox;
  2. Establish that providers approved to participate in the regulatory sandbox are not engaged in the unauthorized practice of law in Utah; and
  3. Establish that lawyers will not be subject to discipline for entering into business with or otherwise providing services with providers in the sandbox.

The court has not issued a written order and a Utah Supreme Court Justice who was on the Task Force stated that he expects the court to issue a press release soon providing further details.

As I previously blogged, the Utah Supreme Court previously approved Limited License Practitioner Rules which became effective November 1, 2018 and the first LLPs in Utah were expected to be licensed in 2019.  This makes Utah the most recent state to license non-lawyers to practice law and will allow LLPs practice without a lawyer’s supervision in three areas, including matters involving temporary separation, divorce, parentage, cohabitant abuse, civil stalking, custody and support, and name change, matters involving forcible entry and detainer, and debt collection matters in which the dollar amount in issue does not exceed the statutory limit for small claims cases.  LLPs will not be permitted to appear in court on behalf of a client.

Bottom line:  This is a very significant step toward the acceptance of non-traditional and non-lawyer practice in Utah and in the United States.  All of the states which have approved such rules are in western states, so far.  The beat goes on…stay tuned.

Be careful out there. 

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Please note:  My office has moved and the new office address is 2999 Alt. 19, Palm Harbor, FL 34683.  All other contact information remains the same.

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

Leave a comment

Filed under 2018 Utah rules permitting non-lawyer legal practice, 2019 Utah pilot program permitting non-traditional legal services, including non-lawyer firm ownership, Attorney Ethics, joe corsmeier, Joseph Corsmeier, Lawyer sharing fees with non-lawyers, Non-lawyer ownership, Non-lawyer ownership of law firms, Non-lawyer practice of law, Non-lawyer practicing law, Uncategorized