Title: Office of Lawyer Regulation v. Lyle Paul Schaller

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2006 WI 40 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2004AP2991-D 
 
 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Lyle Paul Schaller, Attorney at Law: 
 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Lyle Paul Schaller, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST SCHALLER 
 
 
OPINION FILED: 
May 5, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
2006 WI 40
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2004AP2991-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Lyle Paul Schaller, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Lyle Paul Schaller, 
 
          Respondent. 
 
FILED 
 
MAY 5, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   We review the recommendation of the 
referee that Attorney Lyle Paul Schaller's license to practice 
law in Wisconsin be suspended for two years for professional 
misconduct.  The misconduct consists of conversion of funds 
while employed at his former law firm.  Attorney Schaller also 
failed to report the conversion of funds as income on tax 
returns and engaged in the practice of law while his license was 
suspended for failure to pay bar dues.  The referee recommended 
No. 
2004AP2991-D   
 
2 
 
that Attorney Schaller be required to pay restitution and pay 
the costs of this proceeding which were $1032.15 as of December 
19, 2005.  In addition, the referee recommended that Attorney 
Schaller 
continue 
legal 
education 
while 
suspended 
and 
demonstrate 
an 
understanding 
of 
the 
seriousness 
of 
his 
misconduct as conditions for reinstatement.   
¶2 
We 
determine 
that 
the 
seriousness 
of 
Attorney 
Schaller's professional misconduct warrants the suspension of 
his license to practice law for a period of two years.  We 
further accept the referee's recommendations for restitution, 
costs, 
legal 
education, 
and 
the 
need 
to 
demonstrate 
an 
understanding of the seriousness of his misconduct as a 
condition for reinstatement.   
¶3 
Attorney Lyle Paul Schaller was admitted to the 
practice of law in Wisconsin in 1996 and most recently practiced 
law in Cashton.  He has not been previously disciplined.  
Although Attorney Schaller filed an answer to the Office of 
Lawyer Regulation (OLR) complaint, there were no major factual 
disputes because Attorney Schaller agreed with all of the OLR's 
factual assertions, including converting monies delivered to his 
former law firm to his own personal use, failing to report the 
funds on his income tax returns, and engaging in the practice of 
law while his license was suspended.  Because Attorney Schaller 
failed 
to 
subsequently 
appear 
and 
participate 
in 
these 
proceedings, the referee granted the OLR's motion for a default 
judgment.  No appeal has been filed.   
No. 
2004AP2991-D   
 
3 
 
¶4 
The 
OLR's 
complaint 
alleged 
three 
counts 
of 
misconduct.  Count One alleged that by converting monies that 
were delivered to his former law firm to his own personal use, 
Attorney Schaller engaged in conduct involving dishonesty, 
fraud, deceit or misrepresentation, contrary to SCR 20:8.4(c).1  
The complaint alleged that while working from his firm's 
satellite offices, Attorney Schaller hid receipt of certain 
client funds by utilizing the firm's billing system in several 
ways:   
• Attorney Schaller would open a client file, but 
would not send the client a bill or would write 
off some of his time, so the client would not be 
able to see how the client's paid fee was 
applied; 
• Attorney Schaller would create a client file, 
keep the fee paid directly to him by the client, 
and never write any time down for the file.  When 
the file was ready to be closed, Attorney 
Schaller would write off a minimal amount on the 
particular 
file 
and 
the 
client would 
never 
receive a bill; 
• Attorney Schaller would create client files and 
not enter them into the firm's billing records, 
even though he had received a fee from the 
client. 
¶5 
Attorney Schaller's law firm discovered his scheme 
after a client called indicating his bill mistakenly showed only 
a $500 credit, as opposed to the $1000 fee he had paid to the 
firm.  After reviewing Attorney Schaller's files, the firm 
                                                 
1 SCR 20:8.4(c) states that it is professional misconduct 
for a lawyer to "engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
No. 
2004AP2991-D   
 
4 
 
determined that Attorney Schaller improperly converted a minimum 
of $4290.85 from payments made by various clients, which was not 
disclosed to the firm.  Attorney Schaller admitted he retained 
funds in the amount of $4290.85 for his own personal use.   
¶6 
The OLR also alleged that by failing to report the 
$4290.85 he converted from the law firm as income on his federal 
and state income tax returns for the years in which the income 
was received, Attorney Schaller engaged in conduct involving 
dishonesty, fraud, deceit or misrepresentation, contrary to SCR 
20:8.4(c).  Attorney Schaller admitted that he did not report 
his receipt of the client funds on his income tax returns.   
¶7 
The OLR alleged that Attorney Schaller engaged in the 
practice of law on various occasions for at least 11 clients 
during the time his license was suspended between November 1, 
2003, and February 18, 2004, due to his failure to pay bar dues, 
contrary to SCR 10:03(6)2 and 20:8.4(f).3  The complaint alleged 
that on October 2, 2003, Attorney Schaller signed a receipt for 
a certified letter from the Wisconsin State Bar notifying him 
                                                 
2 SCR 10.03(6) provides: 
 
(6) Penalty for nonpayment of dues.  If the 
annual dues or assessments of any member remain unpaid 
120 days after the payment is due, the membership of 
the member may be suspended in the manner provided in 
the bylaws; and no person whose membership is so 
suspended for nonpayment of dues or assessments may 
practice law during the period of the suspension. 
3 SCR 20:8.4(f) provides that 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." 
No. 
2004AP2991-D   
 
5 
 
that he had not yet paid his state bar dues for fiscal year 2004 
and if his payment was not received by 5:00 p.m. on October 31, 
2003, his license to practice law would be suspended.  On 
November 5, 2003, by certified letter, the state bar notified 
Attorney Schaller that his license to practice law had been 
suspended effective October 31, 2003, for his failure to pay 
state bar dues.  On November 10, 2003, Attorney Schaller signed 
a receipt for the certified letter from the Wisconsin State Bar.   
¶8 
Attorney Schaller paid his outstanding bar dues on 
February 18, 2004, and his license was reinstated that same day.  
During the period of time his license was suspended between 
November 1, 2003, and February 18, 2004, Attorney Schaller 
engaged in the practice of law in at least 11 client matters.   
¶9 
The referee made findings of fact and conclusions of 
law consistent with the complaint's allegations.  The referee 
determined that there was no significant factual dispute because 
in his answer Attorney Schaller agreed with all of the OLR's 
factual assertions.  The referee found that Attorney Schaller 
had been afforded numerous opportunities to avail himself of his 
day in court and failed to take advantage of the opportunities.  
The referee concluded that the repeated and intentional acts of 
conversion from his employer and clients, together with the 
substantial amount of money involved, violated his duties to his 
clients, 
colleagues, 
and 
the 
profession, 
thus 
warranting 
significant discipline.  The referee also concluded that 
Attorney Schaller's conduct was somewhat mitigated by his 
No. 
2004AP2991-D   
 
6 
 
willingness to acknowledge his wrongdoing but was aggravated by 
his failure to cooperate with the OLR and the referee.   
¶10 The 
referee 
determined 
that 
Attorney 
Schaller's 
actions did not appear to reflect a lack of knowledge about 
proper procedure or ethics that may be ameliorated by continuing 
legal education alone.  Rather, the referee found that his 
actions indicated that he intentionally appropriated property of 
his clients and his employer, and intentionally misrepresented 
his receipt of those funds to the government on his income tax 
returns.  Accordingly, the referee concluded that although 
Attorney Schaller had not been formally disciplined previously, 
the severity of his misconduct and the implementation of his 
conversion scheme over time were aggravating factors.  In 
addition, the referee concluded that his blatant disregard for 
the prior temporary suspension of his license indicated that he 
fails to appreciate the importance of the rules of professional 
conduct and the gravity of his misconduct.   
¶11 A referee's findings of fact on a disciplinary matter 
will not be set aside unless clearly erroneous.  See In re 
Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 
Wis. 2d 662, 636 N.W.2d 718.  We review conclusions of law 
de novo.  Id.  Although this court considers the referee's 
recommendations as to appropriate discipline, we do not accord 
them conclusive or great weight.  See In re Disciplinary 
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 
N.W.2d 686.  It is this court's responsibility to determine 
No. 
2004AP2991-D   
 
7 
 
appropriate discipline and in making that determination we may 
impose discipline more or less severe than recommended.  Id.   
¶12 We adopt the findings of fact and conclusions of law 
as set forth in the referee's report and addendum.  We further 
agree that the seriousness of Attorney Schaller's misconduct 
warrants the recommended discipline.  See In re Disciplinary 
Proceedings Against Rihn, 182 Wis. 2d 89, 513 N.W.2d 136 (1994).   
¶13 IT IS ORDERED that the license of Attorney Lyle Paul 
Schaller to practice law in Wisconsin is suspended for a period 
of two years, effective June 9, 2006. 
¶14 IT IS FURTHER ORDERED that Attorney Schaller comply 
with the provisions of SCR 22.26 concerning the duties of a 
person whose license to practice law in Wisconsin has been 
suspended.   
¶15 IT IS FURTHER ORDERED that Attorney Schaller pay 
restitution to his former law firm in the amount of $4290.85.  
If restitution is not made within 60 days from the date of this 
order, the license of Attorney Schaller to practice law in 
Wisconsin shall remain suspended until further order of this 
court. 
¶16 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Attorney Schaller pay to the Office of Lawyer 
Regulation the costs of this proceeding.  If the costs are not 
paid within the time specified, and absent a showing to this 
court of his inability to pay the costs within that time, the 
license of Attorney Schaller to practice law in Wisconsin shall 
remain suspended until further order of this court.   
No. 
2004AP2991-D   
 
8 
 
¶17 IT IS FURTHER ORDERED that during his time of 
suspension, Attorney Schaller shall attend continuing legal 
education courses approved by the Office of Lawyer Regulation.  
He 
is 
required 
to 
demonstrate 
an 
understanding 
of 
the 
seriousness of his misconduct as a condition for reinstatement.  
If these conditions are not met, the license of Attorney 
Schaller to practice law in Wisconsin shall remain suspended 
until further order of this court. 
No. 
2004AP2991-D   
 
 
 
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