On Report and Recommendation of the Board on Professional Responsibility (BDN 205-05).
The opinion of the court was delivered by: Thompson, Associate Judge
Before KRAMER, FISHER, and THOMPSON, Associate Judges.
In this reciprocal disciplinary proceeding, the Board on Professional Responsibility (the "Board") has unanimously recommended that Robert Joel Zakroff, a member of the District of Columbia Bar, be disbarred. The Board's recommendation is based upon Zakroff's disbarrment by the Court of Appeals of Maryland (sometimes referred to hereafter as "the Maryland court") for conduct, including intentional misappropriation of client funds and dishonesty, that violated a number of Maryland's Rules of Professional Conduct ("MRPC"). We agree with the Board that reciprocal discipline is appropriate. However, for the reasons explained below, which relate to the Maryland court's finding that during the relevant time period Mr. Zakroff was impaired by "significant depression,"*fn1 we cannot conclude whether discipline identical to that imposed by Maryland is warranted. We remand the matter to the Board for a determination as to whether Respondent has been substantially rehabilitated and, if so, for a recommendation about what alternative sanction is appropriate.
I. Background: The Maryland Proceedings
The Maryland court entered its order of disbarrment on June 23, 2005, revoking Respondent's license to practice law in that jurisdiction.*fn2 In a 54-page opinion issued on the same date, the court sustained findings of law by the Honorable Durke Thompson of the Circuit Court for Montgomery County, Maryland, reached after six days of evidentiary hearings and arguments, that Respondent violated the following Maryland Rules of Professional Conduct (2005): Rules 1.15 (a) ("[a] lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property"); 1.15 (b) ("[u]pon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person"); 3.3 (a) ("[a] lawyer shall not knowingly . . . make a false statement of material fact or law to a tribunal"); 8.4 (a) (it is professional misconduct for a lawyer to "(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another"); 8.4 (b) ("[i]t is professional misconduct for a lawyer to . . . (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects"); 8.4 (c) ("[i]t is professional misconduct for a lawyer to . . . (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation"); and 8.4 (d) ("[i]t is professional misconduct for a lawyer to . . . (d) engage in conduct that is prejudicial to the administration of justice"). Judge Thompson also found that Respondent violated provisions of the Maryland Business Occupations and Professional Code (Md. Code Ann., Bus. Occ. & Prof. Art §§ 10-306 and 10-606, relating to a lawyer's use of trust money entrusted to the lawyer). With several corrections and exceptions, the Maryland Court of Appeals accepted Judge Thompson's findings of fact, which we summarize below.*fn3
A. Findings by the Circuit Court for Montgomery County
Respondent maintained an office for the practice of law in Bethesda, Maryland, practicing under the name Zakroff & Associates, P.C. He was the sole stockholder of the firm, which practiced primarily in the areas of personal injury, bankruptcy and collections. At the time of the hearing, the volume of the firm's cases was approximately 250 bankruptcy matters, 320-400 personal injury cases, and 1500-2000 collection matters. Respondent was the only person in the firm who could sign checks to make disbursements.
When a personal injury case was settled and the firm received settlement proceeds, clients were not promptly notified and "[n]o information was provided to the client as to the date of the actual receipt of the settlement proceeds by the law firm." 876 A.2d at 669. Some portions of the settlement proceeds were payable by the firm to clients' medical care providers, but Respondent often would not sign checks that had been prepared for his signature for periods of several months. On some occasions, respondent instructed his staff to respond to payment inquiries from medical care providers by telling them that cases had not settled, even when the cases had in fact settled and the law firm had received the settlement proceeds. Respondent also instructed his staff to provide clients of the law firm with misleading information when they called about settlement of their cases.
Respondent maintained several bank accounts in two different banks, including an escrow or trust account into which proceeds of client settlements were deposited and operating accounts for payment of firm expenses. When staff received calls from one of the banks indicating that an account balance was low, Respondent would direct staff to transfer funds between accounts. From time to time Respondent would also deposit personal funds into the client trust account to cover checks written from those accounts to clients and third parties. An auditor for the Maryland Attorney Grievance Commission found that for the audit period January 2, 2000 through July 31, 2002, the client trust account had a shortfall "ranging from a low of $174,000.00 to a high of approximately $421,000.00." Id. at 672. One specific finding by the auditor was that on May 11, 2000, the balance in the client trust account was less than $700. The next day, a settlement in the Diaz case resulted in a deposit into the trust account of $22,600. That amount was used to make disbursement to four other clients totaling $9,500, "causing insufficient funds to be available to satisfy the needs for the Diaz disbursement." Id. Respondent also withdrew from the trust account lump sums payable to Zakroff & Associates and "[o]nly rarely did the withdrawals represent sums properly earned as fees and costs advanced." Id.
For the January 2000 to July 2002 audit period, the auditor calculated the length of time between deposits of settlement proceeds and disbursement to third parties and clients and found that in twenty-four cases the time difference was more than six months, and in a few cases was as long as sixteen months, eighteen months, and nearly twenty-three months. Id. Judge Thompson found that "[w]hile some of the delay is accountable to a variety of possibilities, the pattern of delay together with the established balances in the trust account, demonstrate that the Respondent, who was the sole signatory for the accounts of the firm, knew there were insufficient balances to satisfy clients, medical and third party service providers because the Respondent had withdrawn money from the trust account and paid it into firm operating accounts in order to satisfy financial needs. The reason for the financial needs was, in part, due to the appropriation of monies from the business accounts to the Respondent personally."*fn4 Id. at 673.
During 1999-2000, Respondent, who "had experienced a dysfunctional family upbringing," encountered marital problems and sought therapy. Id. Licensed clinical social worker Paulette Hurwitz testified to her belief that Respondent's depression "interfered with [his] ability to think clearly and the depression interfered with the analysis of whether taking money from the trust account was more than a means to an end of solving some immediate problem." Id. at 673. Respondent "initially eschewed [taking] medication" for his depression because "his wife is a trained 'healer' using holistic treatment for ills." Id. at 674. Hurwitz opined that Respondent "did not think in terms of using the trust account monies as a wrongful act," id. at 673, but had no opinion as to whether Respondent "knew that taking monies was wrongful." Id.
Judge Thompson noted that Respondent "paints a picture of [his] practice as a chaotic affair with periodic crises" that was in this state because of "his own depression and his unwillingness to disappoint potential clients causing him to take on improvident cases"; that Respondent "asserts he never intended nor did he steal any monies from any client" and that "everyone who is due any monies have [sic] been paid in full"; and that Respondent "d[id] not deny the status of his trust account, but pleads ignorance to the precise balances and believed there were sufficient monies to cover the checks" he directed his staff to prepare. Id. at 674. However, Judge Thompson found "not credible" Respondent's assertion that he did not know of the deficiencies in the trust account and his professed ignorance of the multiple occasions of his depositing personal funds (including $80,000 in proceeds of a life insurance loan that Respondent took out) into the trust account. Id.
Judge Thompson also made findings about a bankruptcy matter handled by Respondent's law firm. The client, Patterson, had initially consulted Respondent about filing for bankruptcy. Associates in Respondent's firm presented for the client's signature and presented to the bankruptcy trustee bankruptcy schedules that did not list as an asset a claim that the client had against the Little estate, a claim being handled personally by Respondent. The claim also was not disclosed during a meeting of creditors when the bankruptcy trustee asked about the existence of any additional claims. See 876 A.2d at 675. After one of the associates who was the attorney of record for the bankruptcy matter learned of the claim, he advised the bankruptcy trustee of the claim. Id. at 676. The bankruptcy court sanctioned "counsel for the debtor" for the improper claim of an exemption. Id. at 685.
Judge Thompson also noted that several mental health professionals saw Respondent after the Attorney Grievance Commission commenced its investigation. Dr. Christianne Tellefsen, "a highly experienced psychiatrist," id. at 676, saw Respondent at the request of his counsel. Dr. Tellefsen "was not familiar with any allegations of wrongful conduct," id., but opined that Respondent had "depression with elements of mania and that the conditions were static for the entire adult life of Respondent," that he also evidenced "some attention deficit," that he "tended not to pay attention to problems until they became a crisis and then respondent provided a quick fix but did not address the root of the problem," and that he had "no deliberate intent to violate the rules, but only to cope." Id. at 676. Respondent "probably knew that taking the trust monies for his own use was wrong and that he felt badly about it. This dynamic only created more stress and more depression." Id. at 676-77.
Dr. Michael Spodak, a forensic psychiatrist, opined that Respondent had "mental difficulties [that] evidenced themselves in everyday life and not just in his practice" and "a debilitative mental condition that was the cause of the conduct in the allegations facing" him. Id. at 677. Respondent's symptoms included "disorganization, sleeplessness, irritability, stress, detachment, lack of emotion, procrastination, dishevelment, late payment of bills, expenditure of $40,000 for a pool to please his wife and then burying it, selling property at a loss, too much work, bad employees, late taxes, and the refusal to confront his daughter [who also suffered from depression] about remaining reclusive in the house." Id. Dr. Spodak "d[id] not believe that the Respondent intended to steal money" but his "depression caused the Respondent to not care about consequences and to not consider ethical responsibilities, although he did not let everything go to pieces." Id. Dr. Spodak agreed that Respondent "utilized quick fixes to meet his crises." Id. Dr. Spodak "felt that the Respondent had the ability to control his behavior, even though it was somewhat impaired." Id.
Dr. Jeffrey Janofsky, also a forensic psychiatrist, "agreed that the Respondent suffers from depression" but "believed it was much less than a major depression." Id. Dr. Janofsky cited to "Respondent's ability to restore the trust account by repayment, develop a methodology to cover shortages in the trust account, and [to] undert[ake] a determined assault on the medical insurers and medical providers for his ...