Before Farrell, Glickman, and Washington, Associate Judges.
The opinion of the court was delivered by: Farrell, Associate Judge
On Report and Recommendation of the Board on Professional Responsibility
The Board on Professional Responsibility (the Board) has recommended that respondent be suspended from practicing law in the District of Columbia for six months. The proposed discipline stems from findings by a Hearing Committee, accepted by the Board, that respondent had violated three Rules of Professional Conduct: Rule 1.15 (a) (commingling and misappropriation); Rule 1.15 (b) (failure to notify and deliver funds to third-party claimant); and Rule 1.17 (a) (failure to designate trust or escrow account). Contrary to the determination of the Hearing Committee, however, the Board concluded that respondent's misappropriation of client funds had not been either intentional or reckless, and it therefore rejected the Committee's recommendation of disbarrment, see In re Addams, 579 A.2d 190 (D.C. 1990) (en banc), instead proposing his suspension for six months.
Because the Board's report and the initial briefs filed with the court reflected some uncertainty about the governing legal principles, we requested supplemental briefs addressing, among other things, which party bears the burden of proof on whether misappropriation of funds by an attorney carried with it sufficient features of culpability to justify the presumptive sanction of disbarrment imposed by Addams. We remove any uncertainty in the answer our precedents give to that question and hold that the burden of proving misappropriation "result[ing] from more than simple negligence," Addams, 579 A.2d at 191, remains always with Bar Counsel. We then identify the kinds of aggravating circumstances that have caused the Board and this court to find intentional or reckless - rather than negligent - misappropriation in particular cases, and we conclude by explaining why we agree with the Board that respondent's unauthorized use of entrusted funds did not rise to that level and thus properly warrants suspension rather than disbarrment.
Respondent (hereafter Anderson) became a member of the District of Columbia Bar in 1989 and worked as an associate at a law firm doing personal injury work. Thereafter, he opened his own practice, sharing office space with another attorney who was not a member of the D.C. Bar. In the spring of 1991, Mark Calligan hired Anderson to represent him in a personal injury matter arising from an automobile accident. From March 5 through April 12 of 1991, Calligan received medical treatment from the practice of Drs. Phillips & Green for injuries suffered in the accident. Up until March 1992, Phillips & Green made repeated telephone calls to Calligan and some to Anderson about the unpaid status of bills for the treatment. Eventually a collection agency became involved, and Calligan received regular calls from it regarding the bill. In turn, he repeatedly called Anderson and occasionally left messages at his door about the matter.
In March 1993, Anderson settled the personal injury claim for $6,500. On or about March 15, he deposited the settlement check into a checking account at Signet Bank, N.A., which was the only account he used in his practice. On March 24, 1993, Anderson presented Calligan with a settlement disbursement sheet reflecting that Anderson would receive $2,166.33 for his legal fee; $1,207.50 would be remitted to Phillips & Green for the outstanding medical bills; and Calligan would receive the balance (after deducting minor expenses) of $3,100. Although Anderson immediately paid Calligan his share, he made no payment to Phillips & Green at that time.
On or about April 2, 1993, the balance in Anderson's checking account fell below the $1207.50 due the medical provider; it remained there for about a month. Twice more, in February and April of 1994, the balanced dipped below the obligated amount for appreciable periods. In April of 1994, Anderson contacted Phillips & Green about an unrelated matter and was told of the outstanding bill in the Calligan case, whereupon he paid the medical providers the $1207.50.
Testifying before the Hearing Committee, Anderson asserted that he had simply forgotten to make the payment to Phillips & Green following settlement. He explained that at the same time the Calligan matter was settled, he was concluding a settlement in another personal injury case for a client named James Green. On the same day he gave Calligan the settlement sheet showing intended disbursements, he purchased a cashier's check payable to James Green for $3,700, and the following week purchased a cashier's check for $1,090 to pay Green's medical provider, Dr. Wyatt. Having made these payments, he mistakenly believed - until informed otherwise thirteen months later - that he had also paid Drs. Phillips & Green.
Using cashier's checks in the above manner was part of the "system" Anderson followed generally to keep track of client funds and disbursements. As the Board recognized, this system had obvious pitfalls because "it did not permit [Anderson] to verify that he had written every check required for each client's settlement, a defect that proved to be especially problematic when two cases were settled at the same time." Specifically, although Anderson prepared settlement sheets listing required distributions for each case that resulted in a settlement, and made corresponding notations on the case file, he kept no separate trust or escrow account nor ledgers or books reflecting receipts and disbursements. He explained that, since he had relatively few clients, once he received a settlement check he would deposit it and then "immediately get [the] checks together [of everybody who was owed some money] and send them out," keeping record of these transactions "in [his] head."
Calligan testified that after the March 1993 settlement and receipt of his share, he received additional telephone calls from the collection agency telling him that the medical bill had not been paid. Between one and two months after the settlement he spoke with Phillips & Green and was told "the bill had been discharged." In the meantime, he left messages on Anderson's answering machine but could not remember whether in them he had said "anything more than please call me," rather than (or in addition to) giving the reason for the call. He was positive, however, that he had never spoken with Anderson after settlement about the unpaid medical bill.
The Hearing Committee found that Anderson had committed commingling and misappropriation (Rule 1.15 (a)), and had failed both to notify and pay third-party claimants (Rule 1.15 (b)) and to designate a trust or escrow account (Rule 1.17 (a)). In concluding that the misappropriation resulted from recklessness and not simple negligence, it rejected Anderson's defense that the failure to pay the medical bill was inadvertent. First, the Committee reasoned, his "mere explanation . . . that he `forgot' to pay the medical providers" was not "sufficient to establish `simple negligence' under applicable precedents"; rather, his "failure to maintain any system of documentary record-keeping constitutes recklessness, which in this context stands on the same footing as knowing and intentional misappropriation." Second, and "more importantly," the Committee "d[id] not credit [Anderson's] explanation of events as resulting from an honest, good faith lapse in memory." Rather, it found that his "self-serving testimony on inadvertence and regret are not credible given the time taken to pay the medical providers and the failure to respond to Mr. Calligan's payment status inquiries."
Before the Board, Anderson excepted only to the determination of recklessness and hence the recommendation for disbarrment. The Board agreed with the Committee that he had violated all three ethical rules, but rejected the Committee's conclusion that the misappropriation was reckless. After analyzing this court's decisions at length, the Board concluded that they do not permit a conclusion that "the lack of any system of documentary bookkeeping," without additional circumstances in aggravation, supports a determination that misappropriation stemmed from recklessness. And, in the Board's view, the kinds of aggravating circumstances that support such a finding were absent in this case. Second, although acknowledging its duty to defer to the Hearing Committee on questions of credibility, the Board rejected as flawed the Committee's finding that Anderson's claim of inadvertence was not credible. That finding, it said, was "explicitly predicated . . . upon [the Committee's] conclusion that [Anderson] had failed to respond to Calligan's payment status inquiries over an extended period of time," a finding that lacked substantial support because no clear and convincing evidence contradicted Anderson's testimony "that no one reminded him about the outstanding medical provider bill after the settlement check ...