On Report and Recommendation of the Board on Professional Responsibility (Bar Docket No 453-98)
Before Steadman, Schwelb and Glickman, Associate Judges.
The opinion of the court was delivered by: Per Curiam
The Board on Professional Responsibility recommends that respondent Donald A. Clower be publicly censured for not fulfilling his fiduciary and record-keeping obligations with respect to a client's settlement proceeds. The Board concluded that respondent violated Rule of Professional Conduct 1.15 (b) by failing to furnish prompt notice of the settlement and make prompt payment to a third party who had an interest in the funds. The Board further concluded that respondent violated Rule 1.15 (a) and D.C. Bar R. XI, § 19 (f), by failing to maintain complete records regarding the disbursements that respondent made from the settlement proceeds. Respondent takes partial exception to the Board's report. Respondent acknowledges that he violated the notice and payment requirements of Rule 1.15 (b) but disputes that he violated the "complete records" requirements of the other rules. In addition, respondent argues that the recommended sanction is too harsh. We disagree with respondent on both counts and adopt the disposition that the Board proposes.
Respondent represented Claudia Bradford in a personal injury action against the District of Columbia. In connection with that action, respondent and Ms. Bradford executed an "authorization and assignment" agreement with Nathaniel Randolph, who was Ms. Bradford's physical therapist. The agreement obligated respondent to pay Mr. Randolph's fees from the proceeds of any recovery in the personal injury action. Mr. Randolph thereafter continued to provide therapy to Ms. Bradford and testified on her behalf at trial. The jury returned a verdict in Ms. Bradford's favor for $192,000, and the District of Columbia noted an appeal.
Two years later, while the appeal was pending, the District of Columbia and Ms. Bradford agreed to settle. On May 7, 1996, the District forwarded to respondent a $100,000 settlement draft payable to Ms. Bradford and respondent. Respondent deposited the draft into his escrow account and prepared a settlement and disbursement statement for his client's approval. The statement allocated $5,499 of the settlement to Mr. Randolph. *fn1 The statement further provided that respondent would receive $35,496.10 ($33,000 in attorney's fees and $2,496.10 for costs that respondent had advanced). Except for a few hundred dollars payable to Suburban Credit, Ms. Bradford was allocated the balance of the settlement, $58,565.64.
Ms. Bradford approved the proposed distributions and, for personal reasons, requested that respondent defer distributing her share of the settlement proceeds to her. As an accommodation to his client, who was disabled, respondent agreed to continue to hold Ms. Bradford's portion of the settlement funds in his escrow account. In accordance with the settlement and disbursement statement, respondent paid himself and Suburban Credit. He did not, however, pay Mr. Randolph.
On May 9, 1996, respondent prepared a letter to Mr. Randolph advising him that the lawsuit had been settled and asking him to accept a fifty percent reduction in his fee. The letter stated that the full $5,499 due Mr. Randolph would be held in escrow for him. For unknown reasons, this letter was never sent. Mr. Randolph did not learn of the settlement until he made inquiry of respondent over two years later, in September 1998. Meanwhile, between July 1996 and September 1998, respondent issued a series of checks distributing the remaining settlement funds to Ms. Bradford herself and to three payees who were not listed on the settlement and disbursement statement. Until August 1998, respondent still held sufficient funds in his escrow account to pay Mr. Randolph the $5,499 that the statement showed he was entitled to receive. By then, however, respondent had forgotten about his obligation to pay Mr. Randolph. In August and September 1998, respondent distributed the last of the settlement funds in his possession. Respondent never checked his records before making these distributions to ensure that he had made all the payments called for on the settlement and disbursement statement.
When Mr. Randolph finally contacted respondent in September 1998, respondent informed him that Ms. Bradford's case had been settled and that all of the settlement funds had been distributed. Mr. Randolph complained to Bar Counsel that respondent had failed to pay his bill as required by the authorization and assignment agreement that respondent and Ms. Bradford had signed. Bar Counsel opened an investigation.
In the course of the investigation, Bar Counsel requested records demonstrating that Ms. Bradford had authorized the payments from her settlement funds to the several persons who were not listed on the settlement sheet. In response to that request, Ms. Bradford provided a letter confirming that respondent had made those payments with her knowledge and consent. However, respondent had no contemporaneous written records evidencing his client's authorization or explaining why he made the disbursements from her funds in his escrow account.
By virtue of the authorization and assignment agreement, Mr. Randolph had an interest in the settlement proceeds. Rule 1.15 (b) therefore required respondent to "promptly notify" Mr. Randolph upon his receipt of those proceeds and to "promptly deliver" to Mr. Randolph the funds he was entitled to receive. *fn2 The Board on Professional Responsibility found, and respondent does not dispute, that respondent violated these requirements. See In re Shaw, 775 A.2d 1123, 1125(D.C. 2001); In re Ross, 658 A.2d 209, 211 (D.C. 1995). We agree. We also note that while respondent's failure to notify and pay Mr. Randolph was, in the Board's words, "a negligent oversight," respondent prolonged his failure to pay even after Mr. Randolph brought the oversight to respondent's attention. Mr. Randolph still had not been paid by January of 2000, when he appeared before the Hearing Committee in this matter.
The Board concluded that respondent also violated Rule 1.15 (a) and D.C. Bar R. XI, § 19 (f), by failing to keep "complete records" of the settlement funds he held for Ms. Bradford between May 1996 and September 1998. *fn3 The Board found that respondent's records were incomplete because they were "devoid of any written explanation as to why he was distributing his client's funds to various third parties" whose names were not shown on the settlement and disbursement ...