Hello everyone and welcome to this Ethics Alert which will discuss the recent (November 21, 2018) Florida Supreme Court disciplinary opinion which disbarred a lawyer for misusing client trust funds and, inter alia, “engag(ing) in dishonest and deceitful conduct by using one client’s funds to pay obligations owed to another client.” The referee had recommended that no discipline be imposed. The case is: The Florida Bar v. Jeremy W. Alters, Case No.: SC14-100 and the link to the case is here: http://www.floridasupremecourt.org/decisions/2018/sc14-100.pdf
Procedurally, the lawyer was suspended on an emergency basis on December 28, 2011 after the Bar filed a petition for emergency suspension; however, he was reinstated by the Court based upon the referee’s recommendation on January 25, 2012. The Bar filed a Complaint on January 22, 2014 and, after hearing oral arguments on May 21, 2018, the Court suspended the lawyer on its own motion, pending the issuance of this opinion.
According to the facts, the lawyer’s partner supervised the trust account an, starting in September 2009, multiple improper transfers were made from the trust account. The lawyer was the majority shareholder of the firm and he became aware of those improper transfers in February 2010. He also became aware of additional improper transfers in December 2010. The Bar Complaint states that all of the trust account shortages were repaid by September 2011; however, there were shortages of over $1 million in 2010 and 2011.
The lawyer did not report the improper transfers to the Bar or to other firm partners and, according to the opinion, he did not make any efforts to prevent further improper transfers and ensure compliance with trust accounting rules. The partner who supervised the trust account when the improper transfers occurred later left the firm and was also charged with violating Bar rules. That lawyer made consent agreement for discipline with the Bar and testified at this lawyer’s disciplinary hearing.
The referee discounted testimony from the law firm’s comptroller that the lawyer personally directed many of the improper transfers; however, according to the opinion, there was unchallenged evidence that at least 10 transfers were made to the firm’s operating account to cover payments made to the lawyer’s personal bank account, the improper transfers continued after the lawyer took direct control of the trust account, and the lawyer personally made a transfer of one client’s funds to cover the obligations to another client in December 2010.
The lawyer also deposited personal funds, loans, and proceeds from a co-counseling agreement to make up shortages, which constitutes commingling. The Bar Rules have been revised to permit this commingling to cover shortages and lawyers are also required to report trust account shortages to The Florida Bar.
The lawyer argued that he did not intend to violate the Bar Rules. The opinion rejected that argument and cited several cases, including Florida Bar v. Riggs, 944 So. 2d 167, 171 (Fla. 2006), which held that “(k)nowingly or negligently engaging in sloppy bookkeeping amounts to intent under rule 4-8.4(c).” The opinion also stated that the court “has disbarred attorneys even for gross negligence in maintaining a trust account,” pointing to cases where although the attorneys may have not directly taken trust account funds, they had “abandoned their professional duty to safeguard their clients’ funds.”
According to the opinion, “the referee recommends that (the lawyer) only be found guilty of having violated Bar Rules 4-1.15 (Safekeeping Property) and 5-1.1(b) (Application of Trust Funds or Property to Specific Purpose)” and “(b)ased on her findings of fact, recommendations as to guilt, and findings in aggravation and mitigation, the referee recommends that (the lawyer) not be further sanctioned.”
The unanimous opinion reversed the referee’s not guilty findings on multiple rule violations, including improperly transferring funds out of the trust account and failing to report trust account shortages to the Bar, and disbarred the lawyer stating “(t)he Court has long held that the misuse of client funds is one of the most serious offenses a lawyer can commit”. “Disbarment is the presumptively appropriate sanction, under both the (Florida) Standards (for Imposing Lawyer Sanctions) and existing case law, when a lawyer intentionally misappropriates trust funds.”
The opinion further stated that disbarment was appropriate because, in addition, the lawyer did not stop the improper transfers once he learned of them, did not initiate corrective procedures, and the wrongful transfers continued after he took control of the trust account. “(The lawyer) entirely abandoned his duty to protect clients’ funds held in trust.” “This Court will not allow attorneys to abdicate their responsibility to protect clients’ property and enjoy the privilege of practicing law.”
With regard to the imposition of costs, the referee recommended that the Bar be awarded “only its administrative costs of $1250, and that (the lawyer) be awarded his costs in the amount of $143,913.35, despite recommending that (he) be found guilty of having violated two Bar Rules…we find that the referee abused her discretion; we disapprove the referee’s recommended award of costs, award the Bar its costs of $305,360.03, and award (the lawyer) nothing.” The opinion also states “the court directs that no further proceedings in this case shall be held before Circuit Judge Marcia B. Caballero as referee.”
Bottom line: This Florida Bar disciplinary case, which began in 2011, was one of the most media intensive, protracted, and contentious that I have seen in my many years of practice. The Florida Supreme Court has made it very clear in its opinion that it will not tolerate trust account violations such as these, even if the lawyer claims that he or she did not intend to violate the Bar rules.
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.
29605 U.S. Highway 19 N. Suite 150
Clearwater, Florida 33761
Office (727) 799-1688
Fax (727) 799-1670
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