Appeal from a Report and Recommendation of the Board on Professional Responsibility.
En Banc. Rogers, Chief Judge, Newman, Ferren, Belson, Steadman, Schwelb, Farrell, Associate Judges, and Gallagher, Senior Judge. Opinion for the court by Chief Judge Rogers. Concurring opinion by Associate Judge Ferren. Dissenting opinion by Associate Judge Schwelb.
The opinion of the court was delivered by: Rogers
This matter was originally before the court on the Report and Recommendation of the Board on Professional Responsibility (the Board). The Board unanimously found that respondent Addams violated DR 9-103 (A) (misappropriation) and DR 1-102 (A)(4) (dishonesty) as a result of intentionally misappropriating client funds and misrepresenting the fact to his client. Four members of the Board recommended that respondent be disbarred and four members recommended that he be suspended for one year and a day. Before the court Addams contended that the record did not support the Board's findings, and, alternatively, that the appropriate sanction was suspension for no more than one year. A division of this court held that the record supported the Board's findings of disciplinary violations and that, in view of our decision in In re Buckley, 535 A.2d 863 (D.C.1987), disbarrment was the appropriate sanction. In re Addams, 563 A.2d 338 (D.C.1989). On January 24, 1990, the court granted respondent's petition for rehearing en banc, and vacated the division opinion, in order to consider whether there should be a per se disbarrment rule for intentional misappropriation and, if not, the extent to which mitigating factors are relevant in determining the appropriate sanction. Order of February 27, 1990.
We now reaffirm that in virtually all cases of misappropriation, disbarrment will be the only appropriate action unless it appears that the misconduct resulted from nothing more than simple negligence. While eschewing a per se rule, we adhere to the presumption laid down in our prior decisions and shall regard a lesser sanction as appropriate only in extraordinary circumstances. We have found such circumstances in In re Kersey, 520 A.2d 321 (D.C. 1987), and may find other circumstances calling for a lesser sanction in the future. But, as a matter of course, the mitigating factors of the usual sort, see, e.g., In re Reback, 513 A.2d 226, 233 (D.C.1986) (en banc), will suffice to overcome the presumption of disbarrment only if they are especially strong and, where there are aggravating factors, they substantially out weigh any aggravating factors as well. In this case, the mitigating factors fail to meet this standard. Accordingly, We order that Respondent Addams shall be disbarred.
The decision of the division sets forth in detail the evidence on which the Board unanimously found that Respondent Addams had violated DR 9-103 (A) *fn1 and DR 1-102 (A)(4) *fn2 by the intentional, unauthorized use of funds given him by his client, Norlisha Jackson, for placement in a trust account to pay the holder of Ms. Jackson's promissory note. In re Addams, supra, 563 A.2d at 339-341. We incorporate Parts I and II of the division opinion upholding the findings of the Board of disciplinary violations save only to clarify that we view Ms. Jackson to have been at all times the owner of the funds in the escrow account. See id. at 341.
Turning to the issue of sanction, the court is deciding de novo what is the appropriate sanction for Addams' intentional misappropriation of client funds. *fn3 As the opinion by the division makes clear, the members of the Board recommending disbarrment acknowledged that this is an unusual case since Addams' client, Ms. Jackson, was satisfied with Addams' representation and Addams was brought to the attention of the Board by the losing party in the lawsuit which Addams won for his client. Id. at 432. These factors, as Well as differing views on the effect of the usual mitigating factors, *fn4 caused the Board to split on its recommendation to the court of an appropriation sanction.
The four members of the Board recommending that Addams be disbarred relied on Buckley, supra, 535 A.2d 863. Buckley was disbarred for violating DR 9-103 (A) and DR 1-102 (A)(4) by commingling and misappropriating client funds which he was supposed to hold in trust to pay his client's medical bills, notwithstanding the existence of a number of mitigating factors. *fn5 These Board members found that Addams' "misappropriation, like Buckley's, was knowing and intentional," and they viewed Addams' concealment of the withdrawals in the false accounting that he gave to his client to be an aggravating factor. They found no mitigating factors adequate to form a "basis to impose any sanction other than that which is called for by Buckley," interpreting Buckley to stand for the proposition that "the absence of prior discipline is not a factor which serves to mitigate a sanction in a misappropriation case," and they rejected as irrelevant the substantial legal fees Ms. Jackson owed Addams since they viewed such consideration "the functional equivalent of arguing that Addams had no 'corrupt intent.'" They also declined to view client satisfaction as having anything to do with sanction, concluding that it did not alter the Board's responsibility to protect "the entire consuming public."
The other four members of the Board, who recommended a suspension, relied on six mitigating factors, comparable to those in Buckley, in concluding that suspension for a year and a day was the appropriate sanction. *fn6 They, too, noted that the complainant was the losing defendant in the client's lawsuit, and maintained that their reliance on these mitigating factors was not an attempt to probe the degree of corruptness of Addams' intent but simply an effort to avoid a "mechanistic per se approach." *fn7
The Board did not find that Addams' intent in misappropriating funds was "corrupt" or would satisfy the mens rea for theft or embezzlement under the s. No such finding is required, see note 9, infra, and the court, like the Board, has no occasion to stigmatize Addams' conduct unnecessarily in this opinion as "theft" or "embezzlement." Subject only to that qualification, it is appropriate to begin our Discussion with an observation of the court a generation ago in In re Quimby, 123 U.S.App.D.C. 273, 274, 359 F.2d 257, 258 (1966):
The administration of Justice under the adversary system rests on the premise that clients and the court must be able to rely without question on the integrity of attorneys. An act against a client evidencing moral turpitude, even though attributable to some aberration or stress that would warrant the prosecutor in abstaining from criminal prosecution, may nevertheless warrant severe disciplinary action concerning an officer of the court.
When a member of the bar is found to have betrayed his high trust by embezzling funds entrusted to him, disbarrment should ordinarily follow as a matter of course. Such misconduct demonstrates absence of the basic qualities for membership in an honorable profession. Only the most stringent of extenuating circumstances would justify a lesser disciplinary action, such as suspension, which implies the likelihood that at some future time the court may again be willing to hold out the embezzler as an officer of the court worthy of clients' trust. The appearance of a tolerant attitude toward known embezzlers would give the public grave cause for concern and undermine public confidence in the integrity of the profession and of the legal system whose functioning depends upon lawyers.
Other courts have reached a similar Conclusion. *fn8 Thus, in In the Matter of Wendell R. Wilson, 81 N.J. 451, , 409 A.2d 1153, 1154 (1979), Chief Justice Wilentz, speaking for a unanimous court, pointed out that client trust is "built on centuries of honesty and faithfulness . . . in the legal profession, the bar as an institution," and that abuse of this trust has "always been recognized as particularly reprehensible." Id. at 1154-55. Noting that the sanctions have varied because of the presence of mitigating circumstances, Chief Judge Wilentz wrote:
It is therefore important that we reemphasize that the principal reason for discipline is to preserve the confidence of the public in the integrity and trustworthiness of lawyers in general.
There is nothing clearer to the public . . . than stealing a client's money and nothing worse. Nor is there anything that affects public confidence more--much more than the offense itself--than this Court's treatment of such offenses. Arguments for lenient discipline overlook this effect as well as the overriding importance of maintaining that confidence.
The highest court in Maryland has long been in agreement, stating in Attorney Grievance Comm'n of Maryland v. Cockrell, 304 Md. 379, , 499 A.2d 928, 935 (1985), that "when an attorney is found to have betrayed the highest trust imposed in him by appropriating to his own use funds of others entrusted to him, then, absent the most compelling extenuating circumstances, disbarrment should follow as a matter of course." Citing Attorney Griev. Comm'n v. Velasquez, 301 Md. 450, , 483 A.2d 354, 358 (1984) (disbarment ordered for misappropriation of clients' escrow account, as assets of clients are "a sacred trust") (noting cases going back to 1941). The New Hampshire Supreme Court has adopted a rule like our own, see Carroll's Case, 127 N.H. 390, 393, 503 A.2d 750, 751 (1985) ("rdinarily, the misuse of a client's funds justifies disbarment"), emphasizing that "the opportunities and duties of our profession flow from the willingness of clients to trust us with what they value," and thus, " lawyer's obligation to refrain, at the least, from misuse of a client's property must therefore stand among the most insistent of professional norms. Connolly's Case, 127 N.H. 786, 508 A.2d 1054, 1057 (1986). See also People v. Radosevich, 783 P.2d 841, 842 (Colo. 1989) (en banc) ("conversion of client funds destroys trust essential to the attorney-client relationship, severely damages the public's perception of attorneys and erodes public confidence in our legal system").
This court, sitting en banc, made clear in In the Matter of Burka, 423 A.2d 181 (D.C. 1980), that disbarrment would be the sanction for intentional misappropriation. The court rejected the suggestion that alleged mitigating factors should cause the court to reject the Board's recommendation of disbarment, as a result of unauthorized withdrawals from an estate account and commingling, of an attorney who had practiced law for twenty-one years without disciplinary infraction; corrupt intent was not a factor in the court's Conclusion about sanction. 423 A.2d at 182 n.1. At the same time this court, like others, has recognized that a per se rule would be inequitable since there may be circumstances in which disbarrment will not be the appropriate discipline for intentional misappropriation of client funds. *fn10 Along with other jurisdictions, the court has viewed chronic alcoholism as such a circumstance. In re Kersey, supra, 520 A.2d at 321. *fn11 See also Attorney Griev. Comm'n. v. Nisbett, 316 Md. 464, 560 A.2d 18 (1989); Waysman v. State Bar, 41 Cal.3d 452, 459, 714 P.2d 1239, 1244, 224 Cal.Rptr.101, 105 (1986); In re Johnson, 322 N.W.2d 616, 618 (Minn. 1982); In re Kumbera, 91 Wash.2d 401, , 588 P.2d 1167, 1170 (1979). Committee on Professional Ethics and Conduct of the Iowa State Bar Association v. Brodsky, 318 N.W.2d 180 (Iowa 1982) (indefinite suspension with right to reapply after three years for isolated incident of dishonest conduct where attorney, who had spotless record for over eighteen years, used client's property as his own and presented untruthful defense to grievance commission). Compare In re Pekor, 257 Ga. 800, 364 S.E.2d 578 (1988) (in light of history of alcoholism two-year suspension and completion of treatment appropriate for attorney who obtained controlled substances by means of fraud and misappropriation), with Office of Disciplinary Counsel v. Silva, 63 Haw. 585, 595, 633 P.2d 538, 545 (1981) (attorney disbarred for misappropriation of client funds in light of lack of showing progress in alcoholism treatment). There may well be other circumstances involving a member of the Bar that will cause the court to reach a similar Conclusion. *fn12 We have no occasion to define those circumstances here other than to reaffirm that it is appropriate for the court to consider the surrounding circumstances regarding the misconduct and to evaluate whether the mitigating factors are highly significant and, where there are aggravating factors, they substantially outweigh any aggravating factors such that the presumption of disbarrment is rebutted. The circumstances are likely to be limited, however, and our statement in In re Hines, 482 A.2d 378, 386 (D.C.1984) ("There may be instances of misappropriation Which, for any number of reasons, may call for a lesser sanction") should not be read too broadly. In all events, it must be clear that giving effect to mitigating circumstances is consistent with protection of the public and preservation of public confidence in the legal profession.
The court noted in Hines, supra, 482 A.2d at 384 & n. 19, that of the twenty-eight cases coming to the court since the establishment of the present disciplinary system in 1972, although disbarrment has been the usual sanction for commingling, eight had not resulted in disbarment, and in many such cases in which disbarrment was recommended, there were additional factors, such as a prior disciplinary record, repeated instances of misconduct, or violations of other disciplinary rules. *fn13 In 1984 the Board on Professional Responsibility expressly urged this court to adopt a rule that "misappropriation of client funds in cases involving more than simple negligence would ordinarily result in disbarrment even though the proof does not rise to the level of willful corruption." In re Hines, supra, 482 A.2d at 386 (quoting the report of the Board on Professional Responsibility). In Hines the court put the Bar on notice that henceforth disbarrment would be the usual sanction for misappropriation not involving simple negligence. Id. at 386-87. Before and since then this court has repeatedly emphasized both the seriousness of the misuse of client funds as well as the need to maintain if not enhance public confidence in the Bar. See notes 15 & 16, (infra). Most recently, the court has adopted new rules of professional conduct, to be effective January 1, 1991, which continue to impose upon an attorney fiduciary obligations in holding the property of others. *fn14 The District of Columbia Bar contributes members' dues to the Client Security Fund precisely so that clients whose attorneys break their faith with the client can receive some recompense. See D.C. Bar Rule XII, § 1.
Buckley was the first occasion after Hines in Which the court addressed the appropriate sanction for intentional misappropriation. The court viewed the result of disbarrment to be required under prior rulings, 535 A.2d at 866, *fn15 and thus rejected the several mitigating factors cited there, see note 5, (supra) , as insufficient to outweigh the conscious and continuing nature of his misconduct. 535 A.2d at 866-67. Since Buckley, the court has taken into account various mitigating factors in determining an appropriate sanction where an attorney has improperly dealt with client funds, but to date none has sufficed to overcome the presumption of disbarrment where intentional misappropriation involving more than simple negligence was involved. *fn16
Thus, we have declined to join those jurisdictions which treat intentional misappropriation of client funds as it would any other disciplinary violation. Not only do we agree that public confidence would be irreparably shaken were we to relax our vigilance in such matters at this late date, but we find that the standards used by these jurisdictions endorse the notion of degrees of corruptness, something that seems alien to so basic a part of an attorney's obligation to the client. *fn17
For example, the Louisiana Supreme Court has attempted to devise categories of sanctions based on the moral corruptness of the misconduct. Louisiana State Bar Ass'n v. Hinrichs, 486 So.2d 116, 122-23 (La.1986). In that case the attorney was unable to pay the client the amount due as a result of the settlement of a worker's compensation case because of payment of a personal debt. After eight months of effort by the client to recover, having retained new counsel, the attorney paid the $11,200 owed plus an additional $3,500 in damages. Id. at 119. Although the court found that there was clear and convincing evidence that Hinrichs "knew or should have known of the reckless gamble he took with the client's money," the court concluded that Hinrichs' misconduct warranted only a three-year suspension in view of Hinrichs' state of mind and other, presumably, mitigating factors. Id. at 123. *fn18 The court defined the issue as whether the attorney "is morally fit to continue in practice by evaluating his understanding of and dedication to the ethical precepts of his profession as well as his inner strength and resolve to adhere to them in the future." It viewed reimbursement prior to the filing of a disciplinary complaint or legal proceedings "as a reliable indicator of conscience and moral character." Id. at 120. It also viewed prompt compliance with the client's request to turn over property as similarly indicative of good character, and deemed the attorney's previous disciplinary record; cooperation in the disciplinary proceedings, reputation among his peers and in the community, his age, health, and experience as factors to be taken into account. Id. See also Louisiana State Bar Ass'n v. Perez, 550 So.2d 188, 191 (La.1989) (attorney acting as notary public disbarred after withdrawing funds from account, in bad faith and through the use of fraudulent actions, and making no effort to repay account). See Grievance Comm'n. v. Walton, 251 N.W.2d 762 (N.D. 1977) (in view of unblemished record, character testimony, full restitution, little if any danger of repetition, attorney suspended for six months). We find more persuasive the New Jersey court's analysis of the insufficiency of mitigating factors, suggesting that restitution, whether before or after the disciplinary process begins, may be largely a matter of financial means and have little to do with an attorney's continued fitness to practice; that the absence of prior discipline cannot excuse an "offense against common honesty should be clear even to the youngest "; and that neither cooperation with the disciplinary body (which is already required by the ethical rules) nor contrition is sufficient to put at risk "the continued confidence of the public in the integrity of the bar and the judiciary." See Wilson, supra, 409 A.2d at 1156-57. Contra Hinrichs, supra, 486 So.2d at 120.
Other jurisdictions, while adopting a less subjective test than Louisiana, nevertheless place insufficient emphasis, in our view, on maintenance of public confidence in the bar. See In re Deragon, 398 Mass. 127, , 495 N.E.2d 831, 834 (1986) (public censure for misappropriation by endorsement of client's signature on checks without express authority and commingling since acts arose from weakness, not malevolence); id. at , (Wilkins, J. and Hennessey, C.J., Dissenting) (modest discipline of public censure threatens public respect for the legal profession and will impair public confidence in the court's regulation of the bar, noting attorney's conduct was intentional and continued for more than a year until client complained, full restitution not made); In re Holz, 125 Ill.2d 546, 127 Ill.Dec. 736, 533 N.E.2d 818, 824 (1988) (for commingling and conversion of client funds, three-year suspension conditioned on restitution in amount of excessive fee, in view of attorney's candor, character testimony, commencement of restitution, and fact that violations occurred 12 to 15 years earlier).
The Bar of the District of Columbia has had sufficient notice of the gravity with which the court views intentional misappropriation, and we decline to restrict application of the presumption in favor of the sanction of disbarrment in intentional misappropriation cases to circumstances involving multiple clients over an extended period of time. *fn19 See note 15, (supra) ; Silva-Vidor v. State Bar of California, supra, 264 Cal. Rptr. at , 782 P.2d at 684 (disbarment where large number of clients adversely affected over an extended period of time). Accordingly, in general, neither the usual mitigating factors, see note 4, (supra) , nor subsequent proper bookkeeping practices or client satisfaction can overcome the presumption that for "his his offense against common honesty," Wilson, supra, 81 N.J. at , 409 A.2d at 1157, disbarrment will be the appropriate sanction. See, e.g., Attorney Grievance Commission v. Cockrell, 304 Md. 379, , 499 A.2d 928, 933-34 (1985) (rejecting economic instability of attorney's personal and professional life as a defense to change of use of escrow accounts for personal purposes; Fitzpatrick's Case, 132 N.H. 211, 566 A.2d 157, 161 (1989) (citing Eshleman's Case, 126 N.H. 1, 6, 489 A.2d 571, 574 (1985) (mitigating factors do not necessarily preclude disbarment)); Connolly's Case, supra, 508 A.2d at 1057-58 (factors such as attorney's cooperation in audit of trust accounts, ill health and pressures of work and illness and death among friends and relations more appropriate for consideration upon attorney's application for readmission to the bar). While we recognize that the sanction for intentional misappropriation of client funds will be harsh in comparison to sanctions for other disciplinary violations involving conduct same may view as roughly equivalent misconduct, see, e.g., Reback, supra, 513 A.2d at 226 (imposing six months suspension for filing falsely signed court documents and lying to client); In re Hutchinson, 534 A.2d 919 (D.C.1987) (en banc) (one-year suspension for lying to a federal law enforcement agency), our concern is that there not be an erosion of public confidence in the integrity of the bar. Simply put, where client funds are involved, a more stringent rule is appropriate.
Having sought his advice and relying on his expertise, the client entrusts the lawyer with the transaction--including the handling of the client's funds. Whether it be a real estate closing, the establishment of a trust, the purchase of a business, the investment of funds, the receipt of proceeds of litigation, or any one of a multitude of other situations, it is commonplace that the work of lawyers involves possession of client's funds. That possession is sometimes expedient, occasionally simply customary, but usually essential. Whatever the need may be for the lawyer's handling of clients' money, the client permits it because he trusts the lawyer.
Wilson, supra, 409 A.2d at 1154. The breach of trust is so reprehensible, striking at the core of the attorney-client relationship, that the respondent must carry a very heavy burden in rebuttal.
Addams was entrusted by Ms. Jackson with the funds required to stave off the foreclosure of her home. He jeopardized her ability to do so when he took funds from the escrow account and tendered a check to the noteholder which was returned for insufficient funds. He took funds from the escrow account on more than one occasion. His actions were not the result of simple negligence but were, as he admits, intentional. In addition, he presented his client with an accounting that did not reveal the moneys that he had withdrawn from the escrow account in 1982. To make matters worse, he presented conflicting explanations of his actions to Bar Counsel, the Hearing Committee and the Board. That he promptly made good on the bounced check offers little reliable evidence of moral qualities since he knew he had no right to take the escrow money in the first place. His many years of practice makes suspect his claims of client authorization.
On the other hand we recognize, as did the Board, that this is not the usual case of intentional misappropriation. The client is not the complainant, but rather is fully satisfied with Addams' representation of her. Addams undertook to represent Ms. Jackson vigorously even though she was continually behind in paying his legal fees and reimbursing him for costs associated with the litigation. As a result of his efforts, Ms. Jackson did not lose her house and she was relieved of liability to the noteholder when the note was declared null and void. All of this is commendable. In addition, Addams had practiced law for twenty-two years without disciplinary action. Furthermore, unlike the misconduct involved in many instances of misappropriation, Addams' misconduct was not aggravated by commingling.
It also is understandable that Addams wanted to be paid for his work and reimbursed for his expenses. He was entitled to this and he had the right to look to Ms. Jackson and to insist on prompt payment. He also had the right to pursue legal remedies against her, such as filing a lien. But he did not have, and he knew he did not have, the right to take money from the escrow account without her permission.
In one sense this is an unusual case, but in another sense it is all too usual. *fn20 The court cannot countenance a rule that would permit attorneys to misappropriate their legal fees from their clients while winning their cases and then cover-up the fact from their clients. That, and no less, would be the result were we to hold that the mitigating factors here were sufficient to rebut the presumption that Addams should be disbarred. While the complainant was the disgruntled third-party noteholder and not Addams' client, that circumstance offers no solace when the purpose of the severe sanction is to maintain public confidence in the bar. Indeed, the aggravating factor--Addams' dishonesty in presenting a false accounting and conflicting explanations for his conduct--compel the Conclusion that Addams did not meet his burden to demonstrate that the presumption should not apply. He knowingly used his client's money as if it were his own, and it would be extraordinary, particularly in view of the long-announced presumptive rule in this jurisdiction. In re Quimby, supra, 123 U.S.App.D.C. at 274, 359 F.2d at 258, for the court to apply to a lesser standard to Addams' knowing and intentional misuse of his client funds, on more than one occasion, and his attempt to hide his actions from his client, and thus, abruptly abandon or relax that rule in favor of a less rigorous standard.
ORDERED that Addams shall be disbarred from the practice of law effective thirty days from the date of this opinion. *fn21
FERREN, Associate Judge, Concurring in the result: I concur in the result of the court's opinion disbarring respondent, but my analysis differs. I agree With the majority that a presumption of disbarrment applies to intentional misappropriation cases and that, after all the mitigating and aggravating factors are evaluated in this case, respondent has failed to overcome that presumption. I write separately, however, for two reasons. First, I differ both with the majority and with Judge Schwelb about the implications of In re Hines, 482 A.2d 378 (D.C.1984). Unlike the majority, I believe Hines announced a prospective rule; unlike Judge Schwelb, I believe the new Hines rule does not apply to the facts of this case. Second, I believe that, despite disclaimers to the contrary, the majority has effectively adopted a per se disbarrment rule that will inevitably lead to inequitable results. Both Judge Schwelb, in Dissent, and the Board on Professional Responsibility, in its post-argument submission, make a number of valid points about the use of mitigating factors in determining the appropriate sanction in misappropriation cases. I would adopt their approaches to mitigation as applied to a presumption of disbarment.
I agree with the majority that disbarrment has been the normal sanction in this jurisdiction for intentional misappropriation of client funds--without regard to whether the intent was "corrupt" or "non-corrupt"--at least since In re Burka, 423 A.2d 181 (D.C.1980) (en banc). *fn1 See ante at 10. If, by the time of Burka, there was already a presumption of disbarrment in all intentional misappropriation cases, the question arises: what was the significance of our later announcement in Hines that "from this moment on, in disciplinary cases involving attorneys who misappropriate their clients' funds, disbarrment will be the norm unless it appears that the conduct resulted from nothing more than simple negligence"? 482 A.2d at 386-87. While the majority is correct when it states, as a general proposition, that sanctions in a disciplinary case are not circumscribed by ex post facto restriction, see ante at 18 n. 19, I cannot accept the majority's implication that Hines did not announce a prospective rule. If that were true, there Would be no plausible ...