Title: Office of Lawyer Regulation v. Matthew H. Marx

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2016 WI 75 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2016AP101-D 
COMPLETE TITLE: 
In the Matter of Disciplinary Proceedings 
Against Matthew H. Marx, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Matthew H. Marx, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST MARX 
 
 
OPINION FILED: 
July 22, 2016 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
      
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
      
 
COUNTY: 
      
 
JUDGE: 
      
 
 
 
JUSTICES: 
 
 
CONCURRED: 
 
 
DISSENTED: 
      
 
NOT PARTICIPATING:          
 
 
 
ATTORNEYS: 
 
 
 
 
 
 
 
 
 
2016 WI 75
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2016AP101-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Matthew H. Marx, Attorney at Law: 
 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Matthew H. Marx, 
 
          Respondent. 
 
 
FILED 
 
JUL 22, 2016 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   We review a stipulation, as revised, 
filed pursuant to Supreme Court Rule (SCR) 22.12 by the Office 
of Lawyer Regulation (OLR) and Attorney Matthew H. Marx. 
Attorney Marx stipulates to the misconduct alleged by the OLR, 
stipulates, 
further, 
that 
he 
should 
be 
ordered 
to 
pay 
restitution to two clients and that his license to practice law 
in Wisconsin should be suspended for nine months. 
No. 
2016AP101-D   
 
2 
 
¶2 
We adopt the stipulated facts and conclusions of law. 
We agree that Attorney Marx's professional misconduct warrants 
the suspension of his Wisconsin law license for a period of nine 
months.  We further agree that restitution is appropriate. 
Because 
this 
matter 
was 
resolved 
by 
stipulation 
without 
appointment of a referee, we will not impose the costs of this 
proceeding upon Attorney Marx.  
¶3 
Attorney Marx was admitted to the practice of law in 
Wisconsin 
in 
1996. 
Although 
he 
has 
not 
previously 
been 
disciplined 
by 
this 
court, 
Attorney 
Marx's 
license 
is 
administratively suspended for failing to pay State Bar dues and 
for failing to maintain his CLE requirements. In addition, his 
law license has been temporarily suspended since March 18, 2014 
for noncooperation with the OLR's investigation into this 
matter. 
¶4 
On 
January 
13, 
2016, 
OLR 
filed 
a 
disciplinary 
complaint 
against 
Attorney 
Marx 
alleging 
22 
counts 
of 
misconduct. The first seven counts of the OLR's complaint 
alleged, and the parties have stipulated, that Attorney Marx 
violated various provisions of SCR 20:1.15, the trust account 
rule.1  He violated SCR 20:1.15(b)(1)2 and/or SCR 20:1.15(b)(3)3 
                                                 
1 Effective July 1, 2016, substantial changes were made to 
Supreme Court Rule 20:1.15, the "trust account rule."  See S. 
Ct. Order 14-07, (issued Apr. 4, 2016, eff. July 1, 2016).  
Because the conduct underlying this case arose prior to July 1, 
2016, unless otherwise indicated, all references to the supreme 
court rules will be to those in effect prior to July 1, 2016. 
2 20:1.15(b)(1) provides:  
(continued) 
No. 
2016AP101-D   
 
3 
 
by paying from his trust account $2,102.03 in personal and 
business expenses; $215 in filing fees for a client who had no 
funds in trust; and at least $301.33 in credit card surcharges. 
He violated SCR 20:1.15(b)(3)3 when he deposited and retained 
$3,800 in personal funds in his trust account. He violated SCR 
20:1.15(f)(1)a., b., and g.4 by failing to maintain a transaction 
                                                                                                                                                             
 
A lawyer shall hold in trust, separate from the 
lawyer's own property, that property of clients and 
3rd parties that is in the lawyer's possession in 
connection with a representation. All funds of clients 
and 3rd parties paid to a lawyer or law firm in 
connection with a representation shall be deposited in 
one or more identifiable trust accounts.  
 
3 SCR 20:l:15(b)(3) provides: "No funds belonging to the 
lawyer or law firm, except funds reasonably sufficient to pay 
monthly account service charges may be deposited or retained in 
a trust account." 
4 SCR 20:1.15(f)(l)a., b., and g. provide:  
Complete records of a trust account that is a 
draft account shall include a transaction register; 
individual client ledgers for IOLTA accounts and other 
pooled trust accounts; a ledger for account fees and 
charges, if law firm funds are held in the account 
pursuant to sub. (b)(3); deposit records; disbursement 
records; 
monthly 
statements; 
and 
reconciliation 
reports, subject to all of the following: 
a. Transaction register. The transaction register 
shall contain a chronological record of all account 
transactions, and shall include all of the following:  
1. the date, source, and amount of all deposits; 
2. the date, check or transaction number, payee 
and amount of all disbursements, whether by check, 
wire transfer, or other means; 
(continued) 
No. 
2016AP101-D   
 
4 
 
                                                                                                                                                             
3. the date and amount of every other deposit or 
deduction of whatever nature; 
4. the identity of the client for whom funds were 
deposited or disbursed; and 
5. 
the 
balance 
in 
the 
account 
after 
each 
transaction.   
b. Individual client ledgers. A subsidiary ledger 
shall be maintained for each client or 3rd party for 
whom 
the 
lawyer 
receives 
trust 
funds 
that 
are 
deposited in an IOLTA account or any other pooled 
trust account.  The lawyer shall record each receipt 
and disbursement of a client's or 3rd party's funds 
and the balance following each transaction. A lawyer 
shall not disburse funds from an IOLTA account or any 
pooled trust account that would create a negative 
balance with respect to any individual client or 
matter. . . . 
g. 
Reconciliation 
reports. 
For 
each 
trust 
account, the lawyer shall prepare and retain a printed 
reconciliation report on a regular and periodic basis 
not 
less 
frequently 
than 
every 
30 
days. 
Each 
reconciliation report shall show all of the following 
balances and verify that they are identical: 
1. the balance that appears in the transaction 
register as of the reporting date; 
2. the total of all subsidiary ledger balances 
for IOLTA accounts and other pooled trust accounts, 
determined by listing and totaling the balances in the 
individual client ledgers and the ledger for account 
fees and charges, as of the reporting date; and  
3. the adjusted balance, determined by adding 
outstanding deposits and other credits to the balance 
in the financial institution's monthly statement and 
subtracting outstanding checks and other deductions 
from the balance in the monthly statement. 
No. 
2016AP101-D   
 
5 
 
register and client ledgers, and violated SCR 20:1.15(e)(7)5 by 
failing to produce a transaction register, client ledgers, and a 
monthly reconciliation.  Attorney Marx also violated SCR 
20:1.15(e)(4)e.6 by authorizing credit card and other electronic 
payments be deposited into his trust account, and violated SCR 
20:1.15(e)(4)c.7 by making internet deposits and disbursements 
from his trust account. 
¶5 
Counts 8 and 9 of the complaint allege and the parties 
have stipulated that Attorney Marx committed misconduct in his 
representation of D.A. in her divorce action. Attorney Marx 
failed to hold D.A.’s funds in trust in violation of SCR 
20:1.15(b) and then failed to cooperate with the investigation 
                                                 
5 SCR 20:1.15(e)(7) provides: "All trust account records 
have public aspects related to a lawyer's fitness to practice. 
Upon request of the office of lawyer regulation, or upon 
direction of the supreme court, the records shall be submitted 
to the office of lawyer regulation for its inspection, audit, 
use, and evidence under any conditions to protect the privilege 
of clients that the court may provide. The records, or an audit 
of the records, shall be produced at any disciplinary proceeding 
involving the lawyer, whenever material. Failure to produce the 
records constitutes unprofessional conduct and grounds for 
disciplinary action." 
6 SCR 20:l.15(e)(4)e provides: "A lawyer shall not authorize 
transactions by way of credit card to or from a trust account. 
However, earned fees may be deposited by way of credit card to a 
lawyer's business account." 
7 SCR 20:l.15(e)(4)c provides: "A lawyer shall not make 
deposits to or disbursements from a trust account by way of an 
Internet transaction." 
No. 
2016AP101-D   
 
6 
 
of this matter, in violation of SCR 22.03(2)8 and SCR 22.03(6),9 
enforced via SCR 20:8.4(h).10   
¶6 
Counts 10-16 of the complaint allege, and the parties 
have stipulated, that Attorney Marx also committed misconduct in 
his representation of C.W. in a divorce. Attorney Marx violated 
SCR 20:1.15(e)(4)h.11 by allowing the deposit of C.W.’s credit 
                                                 
8 SCR 22.03(2) provides: 
Upon commencing an investigation, the director shall 
notify the respondent of the matter being investigated 
unless 
in 
the 
opinion 
of 
the 
director 
the 
investigation of the matter requires otherwise.  The 
respondent shall fully and fairly disclose all facts 
and circumstances pertaining to the alleged misconduct 
within 20 days after being served by ordinary mail 
request for a written response.  The director may 
allow additional time to respond.  Following receipt 
of the response, the director may conduct further 
investigation and may compel the respondent to answer 
questions, 
furnish 
documents, 
and 
present 
any 
information deemed relevant to the investigation. 
9 SCR 
22.03(6) 
provides: 
 
"In 
the 
course 
of 
the 
investigation, the respondent's wilful failure to provide 
relevant information, to answer questions fully, or to furnish 
documents and the respondent's misrepresentation in a disclosure 
are misconduct, regardless of the merits of the matters asserted 
in the grievance."  
10 SCR 20:8.4(h) provides:  "It is professional misconduct 
for a lawyer to:  . . . . fail to cooperate in the investigation 
of a grievance filed with the office of lawyer regulation as 
required by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(6), or SCR 
22.04(1)." 
11 SCR 20:1.15(e)(4)h. provides: 
(continued) 
No. 
2016AP101-D   
 
7 
 
                                                                                                                                                             
Exception:  Fee and cost advances by credit card, 
debit card or other electronic deposit.  A lawyer may 
establish a trust account, separate from the lawyer's 
IOLTA account, for the purpose of receiving legal fees 
and costs by credit card, debit card or other 
electronic deposit, provided that the lawyer complies 
with all of the following: 
1.  the separate trust account shall be entitled:  
"Credit Card Trust Account"; 
2. 
 
lawyer 
or 
law 
firm 
funds, 
reasonably 
sufficient to cover all monthly account fees and 
charges and, if necessary, any deductions by the 
financial institution or card issuer from a client's 
payment 
by 
credit 
card, 
debit 
card, 
or 
other 
electronic deposit, shall be maintained in the credit 
card trust account, and a ledger for account fees and 
charges shall be maintained;  
3.  each payment of legal fees or costs by credit 
card, 
debit 
card 
or 
other 
electronic 
deposit, 
including, if necessary, a reimbursement by the lawyer 
or law firm for any deduction by the financial 
institution or card issuer from the gross amount of 
each payment, shall be transferred from the credit 
card trust account to the IOLTA account immediately 
upon becoming available for disbursement subject to 
the following requirements.  
a.  All advanced costs and advanced fees held in 
trust under sub. (b)(4) shall be transferred by check 
to the IOLTA account.  
b. 
 
Earned 
fees, 
cost 
reimbursements, 
and 
advanced fees that are subject to the requirements of 
sub. (b)(4m) shall be transferred by check into the 
business account.  
(continued) 
No. 
2016AP101-D   
 
8 
 
card payment into his client trust account. He violated SCR 
20:1.15(g)(1)12 by failing to provide C.W., in writing, at least 
five business days prior to withdrawing his funds for payment of 
fees, (a) an itemized bill or other accounting showing services 
rendered, (b) notice of the amount owed and anticipated date of 
withdrawal, and (c) a statement of the balance of his funds in 
                                                                                                                                                             
4. within 3 business days of receiving actual 
notice that a chargeback or surcharge has been made 
against the credit card trust account, the lawyer 
shall replace any and all funds that have been 
withdrawn from the credit card trust account by the 
financial institution or card issuer; and shall 
reimburse the account for any shortfall or negative 
balance caused by a chargeback or surcharge.  The 
lawyer shall not accept new payments to the credit 
card trust account until the lawyer has reimbursed the 
credit card trust account for the chargeback or 
surcharge.   
12 SCR 20:1.15(g)(1) provides:   
Withdrawal of non-contingent fees from trust 
account.   
(1) Notice to client.  At least 5 business days 
before the date on which a disbursement is made from a 
trust account for the purpose of paying fees, with the 
exception of contingent fees or fees paid pursuant to 
court order, the lawyer shall transmit to the client 
in writing all of the following: 
a.  an itemized bill or other accounting showing 
the services rendered; 
b.  notice of the amount owed and the anticipated 
date of the withdrawal; and  
c. a statement of the balance of the client's 
funds 
in 
the 
lawyer 
trust 
account 
after 
the 
withdrawal.   
No. 
2016AP101-D   
 
9 
 
the trust account following the withdrawal. He violated SCR 
20:1.4(a)(4)13 by failing to respond to C.W.’s telephone calls 
and emails requesting information and violated SCR 22.26(1)(a),14 
enforced via SCR 20:8.4(f)15 by failing to notify C.W. by 
certified mail of the suspension of his license to practice law 
and 
his 
consequent 
inability 
to 
represent 
him 
further.  
Additionally, he violated SCR 20:1.16(d)16 by failing to refund 
unearned fees to C.W. upon termination of the representation and 
                                                 
13 SCR 20:1.4(a)(4) provides in part:  "A lawyer shall . . . 
promptly comply with reasonable requests by the client for 
information . . . . 
14 SCR 22.26(l)(a) provides: "On or before the effective 
date of license suspension or revocation, an attorney whose 
license is suspended or revoked shall do all of the following: 
Notify by certified mail all clients being represented in 
pending matters of the suspension or revocation and of the 
attorney's consequent inability to act as an attorney following 
the effective date of the suspension or revocation."  
 
15 20:8.4(f) provides:  "It is professional misconduct for a 
lawyer to violate a statute, supreme court rule, supreme court 
order or supreme court decision regulating the conduct of 
lawyers." 
 
16 SCR 20:1.16(d) provides:   
Upon termination of representation, a lawyer shall 
take steps to the extent reasonably practicable to 
protect 
a 
client's 
interests, 
such 
as 
giving 
reasonable notice to the client, allowing time for 
employment of other counsel, surrendering papers and 
property to which the client is entitled and refunding 
any advance payment of fee or expense that has not 
been earned or incurred.  The lawyer may retain papers 
relating to the client to the extent permitted by 
other law.  
 
No. 
2016AP101-D   
 
10 
 
violated SCR 20:8.4(c)17 by making misrepresentations to the OLR.  
He also violated SCR 22.03(2) and SCR 22.03(6), enforced via SCR 
20:8.4(h), by failing to respond to OLR's letters regarding C.W. 
matter. 
¶7 
Counts 17-22 of the complaint allege, and the parties 
have stipulated, that Attorney Marx committed misconduct by 
violating the terms of his temporary license suspension. 
Specifically, he failed to report his license suspension to the 
U.S. District Court for the Eastern District of Wisconsin, 
thereby violating SCR 20:3.4(c)18 and SCR 22.26(1)(c),19 enforced 
via SCR 20:8.4(f).  
¶8 
In addition, by failing to notify his client, J.L., of 
his suspension and her need to hire successor counsel, Attorney 
                                                 
17 SCR 20:8.4(c) provides that it is professional misconduct 
for a lawyer to "engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
18 SCR 20:3.4(c) provides:  "A lawyer shall not: . . . . 
knowingly disobey an obligation under the rules of a tribunal, 
except for an open refusal based on an assertion that no valid 
obligation exists." 
19 SCR 22.26(1)(c) provides:  "On or before the effective 
date of license suspension or revocation, an attorney whose 
license is suspended or revoked shall do all of the following:  
. . . . (c) Promptly provide written notification to the court 
or administrative agency and the attorney for each party in a 
matter pending before a court or administrative agency of the 
suspension or revocation and of the attorney's consequent 
inability to act as an attorney following the effective date of 
the suspension or revocation. The notice shall identify the 
successor attorney of the attorney's client or, if there is none 
at the time notice is given, shall state the client's place of 
residence."   
No. 
2016AP101-D   
 
11 
 
Marx violated SCR 22.26(1)(a) and (b),20 enforced via SCR 
20:8.4(f), and, by continuing to represent J.L. and filing 
numerous documents in support of the U.S. District Court case, 
Attorney 
Marx 
violated 
SCR 
22.26(2),21 
enforced 
via 
SCR 
20:8.4(f).   
¶9 
In addition, by misrepresenting to OLR that he had 
notified all his active clients of his March 18, 2014 
suspension, when he continued to represent J.L., Attorney Marx 
violated SCR 20:8.4(c).  
¶10 Finally, in failing to respond to OLR's letters sent 
January 23, 2015 and February 18, 2015, requesting a response to 
OLR's inquiry, Attorney Marx violated SCR 22.03(2) and (6), 
enforced via SCR 20:8.4(h).   
¶11 In late February 2016, the OLR and Attorney Marx 
executed a stipulation addressing the complaint. In addition to 
stipulating to the facts as set forth above, the parties 
                                                 
20 SCR 22.26(l)(b) provides:  (1) On or before the effective 
date of license suspension or revocation, an attorney whose 
license is suspended or revoked shall do all of the following: 
. . . .  (b)  Advise the clients to seek legal advice of their 
choice elsewhere.   
21 SCR 22.26(2) provides:  "An attorney whose license to 
practice law is suspended or revoked or who is suspended from 
the practice of law may not engage in this state in the practice 
of law or in any law work activity customarily done by law 
students, law clerks, or other paralegal personnel, except that 
the attorney may engage in law related work in this state for a 
commercial employer itself not engaged in the practice of law. 
 
No. 
2016AP101-D   
 
12 
 
stipulated to discipline in the form of a nine-month suspension 
of Attorney Marx's Wisconsin law license. The OLR filed a 
memorandum in support of the stipulation. The memorandum 
discusses 
attorney 
disciplinary 
cases 
that 
resulted 
in 
comparable suspensions for professional misconduct. The OLR 
deems analogous the matter of Disciplinary Proceedings Against 
Maynard, 2014 WI 13, 352 Wis. 2d 629, 845 N.W.2d 648.  
¶12 Attorney Maynard's law license was suspended for one 
year for misconduct consisting of failing to notify his clients 
and the courts that his license was suspended, continuing to 
practice 
law 
while 
suspended, 
engaging 
in 
dishonesty, 
misrepresenting his license status to the court, making false 
statements in his affidavit of compliance, continuing to use his 
letterhead and making false communications that he was permitted 
to practice in Wisconsin, and providing false information to OLR 
during its investigation. See also Disciplinary Proceedings 
Against Wood, 2013 WI 11, Id., 345 Wis. 2d 279, 825 N.W.2d 473; 
Disciplinary Proceedings Against Scanlan, 2006 WI 38, 290 
Wis. 2d 30, 712 N.W.2d 877.  The OLR advises the court that 
Attorney Marx's misconduct is much like Attorney Maynard's in 
that Attorney Marx failed to comply with SCR 22.26, made 
misrepresentations regarding his license status, and provided 
false information to OLR.  
¶13 This court reviewed the stipulation.  Noting that the 
stipulation did not provide for restitution, the court issued an 
order directing the parties to consider specific modifications 
No. 
2016AP101-D   
 
13 
 
to the stipulation to address whether the court should order 
Attorney Marx to pay restitution to two clients, D.A. and C.W.   
¶14 On April 28, 2016, the parties filed a revised 
stipulation. The revised stipulation reiterated previous terms 
and also stipulated that the court should order Attorney Marx to 
pay restitution to D.A. in the amount of $994.50, reflecting the 
balance that remained in his trust account attributable to D.A. 
as of February 25, 2013. The parties further agreed that the 
court should order Attorney Marx to pay restitution to C.W. in 
the amount of $1,568, the amount that should be returned to C.W. 
after Attorney Marx's payment of the $198 filing fee and $500 
worth of work that Attorney Marx performed on C.W.'s case.   
¶15 The stipulation, as revised, provides that it is not 
the result of a plea bargain. Attorney Marx verifies that he 
fully understands the misconduct allegations, the ramifications 
if this court should impose the stipulated level of discipline, 
his right to contest the matter, and his right to consult with 
counsel. He further verifies that his entry into the stipulation 
was made knowingly and voluntarily, and that it represents his 
admission of all misconduct and his assent to the level and type 
of discipline sought by the OLR.  
¶16 We 
adopt 
the 
stipulation, 
as 
revised, 
and 
the 
stipulated facts and conclusions of law, and impose the 
stipulated discipline. We agree that the seriousness of Attorney 
Marx's misconduct warrants the suspension of his Wisconsin law 
license for nine months and payment of restitution to D.A. and 
C.W. We agree that Attorney Marx's mismanagement of his trust 
No. 
2016AP101-D   
 
14 
 
account 
evidences 
a 
careless 
disregard 
for 
the 
basic 
requirements of segregating trust funds from personal funds and 
record keeping and that his misconduct was exacerbated by his 
apparent indifference to making restitution. In light of the 
stipulation, the OLR does not seek costs, so we do not impose 
costs. 
¶17 IT IS ORDERED that the license of Matthew H. Marx to 
practice law in Wisconsin is suspended for a period of nine 
months, effective the date of this order.  
¶18 IT IS FURTHER ORDERED that Matthew H. Marx shall 
comply with the provisions of SCR 22.26 concerning the duties of 
a person whose license to practice law in Wisconsin has been 
suspended.  
¶19 IT IS FURTHER ORDERED that compliance with all 
conditions of this order is required for reinstatement. See SCR 
22.28(2).  
¶20 IT IS FURTHER ORDERED that the March 18, 2015 
temporary suspension of Matthew H. Marx’s license to practice 
law in Wisconsin, due to his wilful failure to cooperate with 
the OLR's grievance investigation in this matter, is lifted.  
¶21 IT 
IS 
FURTHER 
ORDERED 
that 
the 
administrative 
suspension of Matthew H. Marx’s license to practice law in 
Wisconsin, due to his failure to pay mandatory bar dues and 
failure to comply with continuing legal education requirements, 
will remain in effect until each reason for the administrative 
suspension has been rectified, pursuant to SCR 22.28(1).  
No. 
2016AP101-D   
 
15 
 
¶22 IT IS FURTHER ORDERED that Matthew H. Marx shall pay 
restitution to D.A. in the amount of $994.50, and to C.W. in the 
amount of $1,568.   
¶23 IT IS FURTHER ORDERED that no costs are imposed in 
this matter. 
 
No. 
2016AP101-D   
 
 
 
1