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Commonwealth of Massachusetts

NO: BD-2001-002



This matter came before me on an information and record of proceedings filed January 11, 2001, and the vote and memorandum of the Board of Bar Overseers (board) dated November 13, 2000. The case was initiated by bar counsel's petition for discipline brought before a special hearing officer. The petition alleged that Robert W. Walker (respondent) violated various disciplinary rules arising out of his mishandling of client funds. A special hearing officer assigned to hear the disciplinary proceeding concluded that the respondent intentionally commingled client funds; negligently misused them, with actual deprivation to a client resulting; and that he subsequently made restitution. The special hearing officer recommended a six-month suspension. Both parties appealed to the board. The board denied both parties' appeals and adopted the hearing officer's findings of fact, conclusions of law, and her recommendation of a suspension of six months. The board filed an information with the county court pursuant to S.J.C. Rule 4:01, § 8 (4), as appearing in 425 Mass. 1309 (1997). Both parties seek modification of the discipline recommendation of the board: bar counsel urges a suspension of not less than two years; the respondent requests reduction to a public reprimand.

1. Facts. The hearing officer made the following findings of fact, which were adopted by the board and have not been contested before me by the parties. In October, 1988, the respondent became successor counsel in an action to recover compensatory damages to an architectural firm for loss resulting from water damage. He represented the principals of the firm (the architects) as well as the insurer of the building, Royal Insurance Company of America (Royal). In September, 1990, settlement papers were exchanged. It was agreed the action would settle for $135,000, $100,000 of which was for the architects. Pursuant to an agreement between Royal and the respondent and his predecessor counsel, the remainder of the settlement ($35,000) would be divided among them.

In October, 1990, the settlement check was received in the respondent's law office while the respondent was out of State. He instructed his secretary to deposit the check and make the disbursement of the funds. The respondent expected his secretary to deposit the money in his local operating account, deliberately commingling the funds with his own, because he had not opened an IOLTA account near his new office in Concord. The respondent further instructed his secretary to draw a check for the architects and assumed that she would also make disbursements to satisfy liens, which would include Royal's part of the settlement. The respondent told his secretary that he would pay predecessor counsel on his return. The respondent's secretary, however, made payment only to the architects and did not issue a check to Royal. Royal was not otherwise advised that the settlement proceeds had been received.

After returning to Massachusetts, the respondent paid predecessor counsel and sent him a disbursement schedule that indicated Royal had been paid. The respondent, however, did not review his checkbook to ascertain, and therefore did not know, whether a check had actually been drawn and sent to Royal. By late November, 1990, the balance of the respondent's operating account had decreased to below $800.

An adjuster from Royal informed the respondent in July, 1992, that Royal had not received its settlement check. The respondent expressed surprise and promised to review his file on the matter. In September, the adjuster again spoke with the respondent, who stated that his file notes reflected payment had been made to Royal. He promised to have his accountants look into the matter.

Following a call from Royal's in-house counsel in February, 1993, the respondent wrote to Royal acknowledging that his records indicated that Royal had not been paid its share of the settlement proceeds. The respondent's letter apologized for the situation, stated that the matter would be corrected as soon as possible, and requested Royal to consider accepting two-thirds of its share in settlement of the account. Royal rejected the offer of partial payment; the respondent, although acknowledging his responsibility for not paying the money, informed Royal's in-house counsel that his present financial situation prevented his making full payment at that time. The respondent offered to execute a promissory note for the amount owed. Royal accepted this offer, and on March 18, 1993, the respondent executed a twelve-month note for the amount owed plus interest.

The respondent missed the first payment on the note in April, 1993. In mid-May, he sent Royal a check for $1,000 withdrawn from his IOLTA account. Due to continuing financial difficulties, the respondent was unable to make any scheduled payments until March, 1994, when he made one month's payment and requested a twelve-month extension of the note. Royal agreed to extend the note. The respondent then made sporadic payments until July, 1995, totaling $1,560.06. In July, 1995, the respondent advised Royal that he could not make further payments on the note due to his personal financial problems, but that he intended to pay the note in its entirety and would resume payments when financially able. In August, Royal demanded immediate payment of the July installment and later reported the matter to the Office of Bar Counsel. The respondent's financial situation subsequently improved, and he satisfied his obligation under the note in November, 1996.

The hearing officer concluded that the respondent violated Canon 9, DR 9-102 (B) (requiring prompt notification of receipt of client funds) based on the respondent's unintentional failure to notify Royal that he had received the settlement proceeds. The hearing officer further found that the respondent's intentional commingling of funds, failure to pay Royal promptly, and negligent use of those proceeds to pay personal obligations violated Canon 1, DR 1-102 (A) (6) (conduct reflecting adversely on fitness to practice), and Canon 9, DR 9-102 (A) and (B) (commingling funds and failing to safeguard and pay over client funds promptly when due). The hearing officer rejected bar counsel's contention that the $1,000 check to Royal from the respondent's IOLTA account evidenced a further act of commingling. See note 4, supra.

The hearing officer noted the respondent's prior disciplinary history in aggravation of his misconduct. In 1993, the respondent received an informal admonition for unilaterally deducting legal fees from settlement proceeds without his client's unequivocal prior permission and failing to maintain or place the disputed legal fees in an escrow account until after the dispute was resolved. In 1994, the respondent received an admonition for failing to return a client's file on request and for failing to cooperate with bar counsel's inquiries.

The hearing officer characterized the respondent's mitigation evidence as "typical" and gave it little weight. See Matter of Alter, 389 Mass. 153, 157 (1983) (listing "typical" mitigation evidence). The hearing officer did note, however, that between 1993 and 1996 the respondent went through a divorce and had suffered continuing financial difficulties. As a result of these problems, he was unable to reimburse Royal more promptly.

2. Standard of review. Both bar counsel and the respondent challenge the board's recommendation of a six-month suspension. The discipline recommendation of the board is entitled to "substantial deference." See, e.g., Matter of Kersey, 432 Mass. 1020, 1020 (2000); Matter of Doyle, 429 Mass. 1013, 1013 (1999); Matter of Tobin, 417 Mass. 81, 88 (1994). Although the effect of the recommended discipline on the respondent is an important factor for consideration, the primary factor is the effect on, and perception of, the public and the bar. Matter of Alter, supra at 156. Ultimately, the discipline matters approved by this court should promote "even-handed" results in similar cases. Id.

3. The appropriate sanction. The general standards for the discipline of attorneys who have mishandled client funds are set forth in Matter of the Discipline of an Attorney, (known as Three Attorneys), 392 Mass. 827 (1984):

"Intentional commingling of clients' funds with those of an attorney should be disciplined by private reprimand. Unintentional, careless use of clients' funds should be disciplined by public censure.

"Intentional use of clients' funds, with no intent to permanently or temporarily deprive the client, and no actual deprivation, should be punished by a term of suspension of appropriate length.

"Intentional use, with intent to deprive or with actual deprivation, should be disciplined by disbarment or indefinite suspension."

Id. at 836.

The court explained that these standards are only presumptive and that "[e]ach case must be decided on its own merits and every offending attorney must receive the disposition most appropriate in the circumstances." Id. at 837. In the present case, both the hearing officer and the board concluded that the respondent intentionally commingled client funds and unintentionally misappropriated the funds, resulting in an actual deprivation. Neither party disputes this conclusion.

The respondent's misconduct does not fall neatly into one of the standards set forth in the Three Attorneys case. The board noted that the presumptive sanction for deliberate commingling of funds accompanied by unintentional use is a public reprimand. Three Attorneys, supra at 836. In this case, it determined, however, that the respondent's two prior instances of discipline, the minimal mitigation evidence, and the respondent's unintentional deprivation of client funds, made a public reprimand inadequate. Before this court, the parties disagree concerning the level of appropriate discipline. As indicated, bar counsel seeks a suspension for a term not less than two years; the respondent contends his conduct warrants a public reprimand.

In support of his recommendation, bar counsel relies on three decisions imposing suspensions for negligent deprivation of client funds. See Matter of Newton, 12 Mass. Att'y Discipline Rep. 351 (1996) (two years); Matter of Zelman, 10 Mass. Att'y Discipline Rep. 301 (1994) (two years); Matter of Barnes, 8 Mass. Att'y Discipline Rep. 8 (1992) (three years, with last year suspended, subject to conditions). As the hearing officer and the board concluded, these cases are distinguishable because each involved more substantial misconduct and multiple incidents of negligent deprivation of client funds. Newton totally failed to maintain a separate IOLTA account for client funds (making it his practice to commingle client funds), used other client funds to satisfy the demands of clients who had already suffered a deprivation, and signed his client's name to a check without authority. Matter of Newton, supra at 356-358. Zelman not only negligently deprived two clients of their funds, but attempted to conceal his negligent use by failing to communicate with both clients after demands for payment had been made. Matter of Zelman, supra at 302. Barnes violated the terms of an escrow agreement, signed his client's name to a check without authority, and twice made false representations to a client regarding the status of client funds. Matter of Barnes, supra at 9-10.

By contrast, the respondent's case involves only one instance of intentional commingling resulting in one instance of negligent misuse. The respondent did not misrepresent the status of funds to Royal or attempt to conceal the use of Royal's funds. Rather, the findings in this case reflect that, following the discovery of his negligent use of client funds, the respondent admitted to the misconduct, accepted responsibility, apologized, and attempted to take whatever action was possible to correct the deprivation--his efforts being frustrated by his continuing financial difficulties. Here, as the board concluded, there is no other misconduct: no failure to communicate, no concealment, no shirking of responsibility for mistakes, no impact on any other clients. This case is in stark contrast to Matter of Newton, Matter of Zelman, and Matter of Barnes, supra.

The respondent contends that his misconduct warrants only a public reprimand. He points to facts showing that he responded to Royal's requests for information about the status of the case and that, once nonpayment of the lien was brought to his attention, he did not misrepresent the status of the settlement, but, rather, acknowledged his error. The respondent also emphasizes that he cooperated with Royal by executing a promissory note to protect Royal's interest and making payments on the note until he was financially unable to do so. Finally, the respondent highlights his communication to Royal of his financial predicament and his declared intention to pay the entire obligation.

These factors are entitled to weight. However, they have already been taken into account both by the hearing officer and by the board in distinguishing this case from those cases in which lengthier suspensions have been imposed. Further, I believe that a public reprimand is inadequate in view of respondent's two prior private disciplinary matters, one of which involved mishandling of client funds. I give substantial weight to the fact that this is not the first time this attorney's conduct has warranted discipline and it is that factor that convinces me that a reduction of the sanction to a public reprimand is not warranted here.'

4. Disposition. Applying the general guidelines set forth in Three Attorneys, supra at 836, to the circumstances of this case and giving "substantial deference" to the board's disciplinary recommendation, I conclude that a six-month suspension is appropriate.

A judgment shall be entered suspending the respondent from the practice of law for six months.

Judith A. Cowin
Associate Justice

Entered: March 30, 2001

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