Hello everyone and welcome to this Ethics Alert, which will discuss the recent Delaware Supreme Court opinion suspending a lawyer for 6 months and permanently prohibiting him from handling law firm financial records due to failure to supervise. The disciplinary case is In the Matter of Andrew M. Beauregard, Delaware Supreme Court Case No. 477,2017. The June 5, 2018 opinion is here: http://php.delawareonline.com/news/assets/2018/06/andre_beauregard_law_license_suspended.pdf
According to the opinion, in March 20015, a client filed a complaint with the Delaware Office of Disciplinary Counsel after receiving two $1,000.00 checks in a retainer refund, when there should have been just been a $1,000.00 payment. The lawyer investigated and suspended the employee and hired two new bookkeepers who advised him that there were no missing funds.
A law firm compliance audit in 2015 found issues with bank reconciliations, failing to remove earned fees from accounts, and negative client balances in a fiduciary account in the amount of approximately $7,000.00 to $8,000.00 each month. The lawyer stated that he addressed the deficiencies, hired inside and outside bookkeepers, upgraded the firm’s accounting software, and increased the time he spent supervising nonlawyer employees.
The opinion stated that the lawyer was “responsible for the maintenance of his law firm’s books and records. As managing partner of the firm, (the lawyer) failed to exercise reasonable supervision over non-lawyer employees charged with the keeping of the law firm’s books and records, failed to take reasonable action to correct known books & records violations, and misrepresented his law firm’s compliance on his 2015 Certificate of Compliance.”
The opinion further stated that, although the lawyer reviewed trust account records each month, the review “could not have been done with any precision” since there were negative balances for four to five clients over a five-month period ending in April 2015. The lawyer discussed the shortages with the employee handling the firm’s trust accounts, who was a PhD in business administration and had worked at other law firms, and the employee said the negative balances were a “glitch in the program” and had nothing to do with any shortages. The employee later testified that there had been some overpayments which resulted in the negative balances.
The lawyer had previously been publicly reprimanded in 2005 for failing to supervise client funds after an employee stole $140,000.00 from his prior law firm where he served as managing partner. The 2005 reprimand order mentioned that the lawyer’s mother and father-in-law died, he had shoulder surgery, and he was “diagnosed with a debilitating medical condition” and ordered him to dissolve the law firm.
The 2018 opinion found that the lawyer’s prior discipline was an aggravating factor. “(The lawyer) was previously disciplined for substantially the same books and records violations, and thus should have been in a hyper-vigilant state when he assumed the same supervisory responsibilities at his new law firm.” “Lawyers cannot stick their heads in the sand and blind themselves to their professional obligations.”
The opinion also found mitigating factors of lack of dishonest or selfish motive, timely and good faith effort to correct violations, cooperation in the disciplinary proceedings, and good character and reputation evidence. The lawyer was suspended for 6 months beginning July 2, 2018 and was permanently prohibited from handling firm financial books and records; however, he will be permitted to represent defendants in criminal cases assigned by the Delaware Office of Conflicts Counsel during the suspension.
Bottom line: This lawyer failed to properly supervise non-lawyers who were supposed to be properly maintaining his law firm’s trust records and “stuck his head in the sand” with regard to his professional obligations. In addition, I am not aware of any previous Bar case where a Court permanently barred a lawyer from supervising his law firm trust accounts and financial records. Lawyers beware: we are ultimately responsible for our trust account’s compliance with the Bar Rules in our jurisdiction. This lawyer paid for the failure to comply with a 6 month suspension and permanent ban on handling trust accounts.
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.
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Clearwater, Florida 33761
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