Title: Attorney Grievance v. Herman

State: maryland

Issuer: Maryland Supreme Court

Document:

In the Circuit Court for Baltimore County
Case No. AG 1
IN THE COURT OF APPEALS OF
 MARYLAND
Misc. Docket AG No. 1
September Term, 2003
__________________________________
ATTORNEY GRIEVANCE COMMISSION
OF MARYLAND
v.
STEVEN P. HERMAN
Bell, C.J.
Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
   JJ.
____________________________________
Opinion by Greene, J.
____________________________________
Filed: March 18,  2004
1Rule 1.13 provides:
A lawyer shall act with reasonable diligence and promptness in representing
a client.
2Rule 1.4 provides:
(a) A lawyer shall keep a client reasonably informed about the status of a
matter and promptly comply with reasonable requests for information.
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit
the client to make informed decisions regarding the representation.
3Rule 1.15 provides:
(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.  Funds shall be kept in a separate account maintained pursuant to
Title 16, Chapter 600 of the Maryland Rules.  Other property shall be
identified as such and appropriately safeguarded.  Complete records of such
account funds and of other property shall be kept by the lawyer and shall be
preserved for a period of five years after termination of the representation.
(b)Upon 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.  Except as
stated in this Rule or otherwise permitted by law or by agreement with the
client, a lawyer shall promptly deliver to the client or third person any funds
or other property that the client or third person is entitled to receive and, upon
request by the client or third person, shall promptly render a full accounting
regarding such property.
(c) When in the course of representation a lawyer is in possession of property
in which both the lawyer and another person claim interests, the property shall
be kept separate by the lawyer until there is an accounting and severance of
their interests.  If a dispute arises concerning their respective interests, the
portion in dispute shall be kept separate by the lawyer until the dispute is
resolved.
On March 13, 2003, the Attorney Grievance Commission, acting through Bar
Counsel, filed a petition with this Court for disciplinary or remedial action against
Respondent, Steven P. Herman, charging him with violating Maryland Rules of Professional
Conduct (MRPC) 1.3 (Diligence),1 1.4 (Communication),2 1.15 (Safekeeping Property),3 8.1
4Rule 8.1 provides as follows:
An applicant for admission or reinstatement to the bar, or a lawyer in
connection with a bar admission application or in connection with a
disciplinary matter, shall not:
(a) knowingly make a false statement of material fact; or;
(b) fail to disclose a fact necessary to correct a misapprehension known by the
person to have arisen in the matter, or knowingly fail to respond to a lawful
demand for information from an admissions or disciplinary authority, except
that this Rule does not require disclosure of information otherwise protected
by Rule 1.6.
5Rule 8.4 provides, in pertinent part, as follows:
It 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;
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;
(d) engage in conduct that is prejudicial to the administration of justice;
* * * *
6Md. Code (1989, 2000 Replacement Volume), § 10-306 of the Business Occupations
and Professions Article,  provides:
A lawyer may not use trust money for any purpose other than the purpose for
which the trust money is entrusted to the lawyer.
2
(Bar Admission and Disciplinary Matters),4  8.4 (Misconduct),5  Md. Code (1989, 2000
Replacement Volume),  § 10-306 of the Business Occupations and Professions Article,6  Md.
Code (1989, 2000 Replacement Volume), § 10-606(b) of the Business Occupations and 
7Md. Code (1989, 2000 Replacement Volume), § 10-606(b) of the Business
Occupations and Professions Article, provides:
* * * *
(b) Attorney trust accounts-A person who willfully violates any provision of
Subtitle 3, Part I of this title, except for the requirement that t lawyer deposit
trust moneys in an attorney trust account for charitable purposes under section
10-303 of this title, is guilty of a misdemeanor and on conviction is subject to
a fine not exceeding $5,000 or imprisonment not exceeding 5 years or both.
8Rule 16-607 provides:
a. General prohibition.  An attorney or law firm may deposit in an attorney trust
account only those funds required to be deposited in that account by Rule 16-604 or
permitted to be so deposited by section b. of this Rule.  
b. Exceptions.  1.  An attorney or law firm shall either (A) deposit into an attorney
trust account funds to pay any fees, service charges, or minimum balance required by
the financial institution to open or maintain the account, including those fees that
cannot be charged against interest due to the Maryland Legal Services Corporation
Fund pursuant to Rule 16-610 b 1 (D), or (B) enter into an agreement with the
financial institution to have any fees or charges deducted from an operation account
maintained by the attorney or law firm.  The attorney or law firm may deposit into an
attorney trust account any funds expected to be advanced on behalf of a client and
expected to be reimbursed to the attorney by the client.
2.  An attorney or law firm may deposit into an attorney trust account funds belonging
in part to a client and in part presently or potentially to the attorney or law firm.  The
portion belonging to the attorney or law firm shall be withdrawn promptly when the
attorney or law firm becomes entitled to the funds, but any portion disputed by the
client shall remain in the account until the dispute is resolved.
3.  Funds of a client or beneficial owner may be pooled and commingled in an
attorney trust account with the funds held for other clients or beneficial owners.
 
3
Professions Article,7  Maryland Rule 16-607 (Commingling of funds), 8 and Maryland Rule
9Rule 16-609 provides:
An attorney or law firm may not borrow or pledge any funds required by these Rules
to be deposited in an attorney trust account, obtain any remuneration from the
financial institution for depositing any funds in the account, or use any funds for any
unauthorized purpose.  An instrument drawn on an attorney trust account may not be
drawn payable to cash or to bearer.
4
16-6099 (Prohibited transactions).  Pursuant to Maryland Rules 16-752(a) and 16-757(c), we
referred the matter to Judge Robert N. Dugan, of the  Circuit Court for Baltimore County to
make findings of fact and conclusions of law.  Judge Dugan held an evidentiary hearing on
September 9, 10, and 11, 2003, and concluded that Respondent violated the following Rules
of Professional Conduct: 1.3, 1.4, 1.15, 8.4(b), 8.4(c) and 8.4(d), as well as Maryland Code
(1989, 2000 Replacement Volume), §§ 10-306 and 10-606(b) of the Business Occupations
and Professions Article  and Maryland Rules 16-607 and 16-609.  In addition, employing
the clear and convincing evidence standard, Judge Dugan found no mitigating factors present
in this case to cause Respondent’s misconduct or prevent him from conforming his conduct
to the requirements of law and the MRPC.                 
 Respondent filed exceptions to the factual findings and conclusions of law.  He
recommends that the appropriate sanction for his conduct should be an indefinite suspension
from the practice of law, with the right to apply for reinstatement after thirty (30) days.  The
Petitioner did not file exceptions, but recommends the sanction of disbarment.
I.
Findings of Fact
“Based on the admission of facts filed by the Respondent and the
5
evidentiary hearing on September 9, 10, and 11, 2003, the Court makes the
following findings of fact:
“1.   Respondent was admitted to practice law in New York in 1993 and
worked for six months for a small private practice and then opened his own
firm and practiced as a sole practitioner from 1993 until 2000 where he
handled collections and domestic relations matters.
“2.  In 1996, the Respondent was engaged by Bruce Stone, manager of
collections, to represent Trans Credit America of Westchester, Inc., (hereafter,
“TCA”), a collection agency, to handle small claims. A written contingency
fee agreement dated January 26, 1996, was signed by Respondent and Stone
(Petitioner’s 3, section 6). Under the agreement, Respondent agreed to
represent TCA for payment of fees in the amount of twenty percent (20%) of
the funds collected for TCA. TCA would also be responsible for the costs
involved in the collections.
“3.  During times relevant to this matter, Lynn A. Giordano was the
president of TCA.
“4.  During the period January 1996 through November 1999, the
Respondent was referred approximately four hundred fifty (450) account files
by TCA.
“5.  In the course of representing TCA, the Respondent received
payments from third parties on behalf of TCA.
“6.  Respondent, in his representation of TCA, would contact the
debtors by letter and, if not successful in obtaining payment and, with
agreement of TCA, would file suit against the debtors on behalf of TCA and
its clients.
“7.  Respondent set up a filing system to keep track of his collection
cases. He would place a file folder in the first file drawer when the initial
demand letter was sent. When he filed suit in the case, Respondent would
move the file to the second file drawer. When judgment was entered in the
case, he would move the file to the third drawer.  Respondent would then
move the file to the final drawer when money began to be collected in the case.
This complicated system required continued vigilance by the Respondent.
“8.  When funds were collected, Respondent placed them in a New
York Citibank attorney trust account numbered 43671517.  Every four to six
weeks, Respondent would take the files from the final drawer, make notations
indicating dates and amounts received on the debtor file, and determine what
funds were owed to his clients.  Respondent would verify the accuracy of his
accounting with a computer system before he forwarded funds to clients.
“9.  Respondent was authorized by TCA to deposit funds collected on
behalf of TCA in the trust account and then remit those funds to TCA minus
6
his fee and any court fees or costs advanced by him. Every four to six weeks
during his relationship with TCA, Respondent would make disbursements and
send reports to TCA.
“10.  From 1996 through 1998, TCA was satisfied with Respondent’s
services.
“11.  In the middle of 1999, the relationship between Respondent and
TCA changed. Reports and disbursements to TCA became less frequent.
Respondent would generate reports for TCA that indicated the status of certain
cases but not always the amount of funds collected or breakdown of fees.
“12.  Around this time, Respondent’s computer system failed and as a
result, Respondent collected funds in a number of TCA cases that did not
appear as monies received and were not disbursed to TCA.
“13.  Respondent testified that he continued to make notations on the
debtor files but he couldn’t remember if he made some of the notations
contemporaneously with the collection of funds or if he made them at some
later date when he attempted to reconcile the TCA files.
“14.  Respondent’s secretary left around this time and he began to
perform the routine administrative tasks himself.  As a result, files were not
placed in the right drawers and his office fell into disarray.
“15.  Respondent never informed TCA of the office management
problems he was having in 1999.
“16.  Around that same time, communication between Mr. Stone and
Respondent became strained. Mr. Stone and Respondent argued about the
management of TCA cases for collections under $1,000.00. Respondent
wanted to decrease the number of collection cases under $1,000.00 because
they were cost-prohibitive, while Mr. Stone maintained that Respondent was
obligated to take every case forwarded to him.
“17.  Mr. Stone and Respondent also disagreed about the management
of the Piermantoni file. In 1997, TCA referred a case to Respondent regarding
debt owed by Nelson Piermantoni. When the complaint was filed in this case,
Mr. Stone maintained that he served the debtor with a summons on March 27,
1997 and that Respondent failed to diligently pursue this case. The Court
believes the testimony of Respondent and finds that he was legitimately
concerned about whether or not Mr. Piermantoni had actually been
appropriately served. The Court finds that re-service was proper in order for
this case to proceed. The Court does not believe the testimony of Mr. Stone
that Respondent ever agreed that there was no problem with service.
“18.
In the summer of 1999, Respondent telephoned Mr. Stone and
informed him that he intended to move his family to Maryland in spring of
2000 and therefore TCA should obtain new counsel. The Court believes the
7
testimony of Respondent and finds that Mr. Stone was aware of this pending
move. The Court does not believe the testimony of Mr. Stone that he was
unaware that Respondent was moving until early 2000.
“19. In preparation for his move to Maryland, Respondent wanted to
remove himself as attorney of record from TCA cases. The process in New
York required an attorney to file a Motion to Strike in each case. The
procedure in New York would have required multiple court appearances and
would have been very time consuming. With 200 open cases, and without the
consent of TCA to withdraw his appearance as counsel, Respondent was
placed in a difficult position in order to remove himself as attorney of record.
Because of aforesaid difficulty in striking his appearance, he decided to
continue to handle the cases.
“20. In November of 1999, TCA’s president Lynn Giordano wrote to
Respondent requesting information regarding numerous debtor files including
a list of cases prepared by Stone. (Petitioner’s 3, section 20).
“21. Around December 1999, Respondent wrote a report and sent
payment to TCA. (Petitioner’s 3, section 18).
“22. After 1999, no new accounts were sent to Respondent from
TCA.
“23. In spring of 2000, Respondent moved to Maryland and began to
practice law in this State.  Respondent brought the TCA files to Maryland and
opened on attorney trust account numbered 003931060653 at Bank of
America.
“24. Respondent maintained both the Citibank trust account and the
Bank of America account through August of 2001.
 “25. Respondent made several return trips to New York for court
appearances after his move to Maryland.
 “26.
Respondent continued to have difficulty with his filing system
and did not review and account for all TCA files after he moved to Maryland.
 “27.
No disbursement or report of collections was sent to TCA from
December 1999 through January of 2001.
 “28.
On or about February 14, 2001, the Respondent received a letter
from Petitioner that included a copy of a complaint from Lynn A. Giordano.
(Petitioner’s 3, section 2).
 “29.
On or about March 2, 2001, Respondent wrote to Petitioner and
included a copy of a letter dated January 5, 2001 from Respondent to TCA.
Respondent’s letter of January 5, 2001, stated that payment was enclosed in the
amount of $7,698.46. However, that amount was not received until March of
2001. A check in the amount of $5,698.46 was drawn on the Bank of America
account, and a check in the amount of $2,000.00 was drawn on the Citibank
8
account. (Petitioner’s 3, Section 4). The March 2, 2001 letter also indicated
that Respondent had not turned over the collected funds because he was
waiting for TCA to acknowledge that they had received the files he returned
and provide a status report at which time he would turn over the funds held in
escrow and the matter would be closed. (Petitioner’s 3, Section 3, page 2).
 “30.
On August 20, 2001, Respondent notified Petitioner that a total
of $10,245.82 had not been remitted to TCA. (Petitioner’s 8, page 5).
“31.  The $10,245.82 was owed to TCA as a result of collections made
by Respondent prior to November 1999. (Petitioner’s 8, page 5).
“32. As of August 20, 2001, according to Respondent’s financial
records for both bank accounts that were turned over to Petitioner, Respondent
was not holding in trust the $10,245.82 described in his letter of that date.
 “33.
On or about February 15, 2002, Respondent paid TCA
$10,245.82. (Petitioner’s 8, page 6).  Respondent obtained a home equity loan
in order to pay the funds remitted to TCA.
“34. Respondent continued to receive funds on behalf of TCA after
March 6, 2001 (Petitioner’s 8, page 6).
 “35.
On or about September 4, 2001, Respondent paid TCA
$3,411.22. (Petitioner’s 8, page 6).
“36.  Although Respondent was authorized to take his fee only when
making disbursement to TCA, he sent no funds to TCA from December 1,
1999 until March 2001. During that time, Respondent continued to disburse
funds from the trust account to himself and his wife (Petitioner’s 3, section
51). Petitioner would often use the ATM card, provided to him when he
obtained the Citibank account, to withdraw funds from that account.
“37.  In March of 2001, Respondent deposited a personal check for
$1,000.00 into his attorney trust account with Bank of America in order to
obtain new copying equipment for his Maryland office.  Respondent then
wrote a check from that account to cover the cost because the supplier would
only take an attorney’s trust check.
“38.
All monies due and owing to TCA by Respondent have been
paid.
“39.
In 1999, Respondent was suffering through personal hardship.
Shortly after the birth of their son Max, Respondent’s wife had a sequence of
three miscarriages.  Respondent’s relationship with is wife began to
deteriorate, and he began to heavily consume alcohol.
“40.
In order to spend more time with his family, Respondent began
to go to the office late at night after his wife and son had gone to bed in order
to do filing and other office work. As his drinking worsened and his marital
problems escalated, Respondent began to spend less time at the office at night
9
and fell further behind in his office maintenance.  Respondent also cut back on
his hours during the day, reserving that time for court appearances and
answering telephone calls. As a result, his office was not properly managed
with regard to adequately keeping track of his collection files.
“41.
Respondent offered the testimony of Dr. Mark Lipton, a clinical
psychologist who has been treating Respondent since July 30, 2002. The Court
adopts the findings of Dr. Lipton regarding his discussion of Respondent’s
psychosocial history and psychological makeup. Dr. Christiane Tellefsen, a
forensic psychiatrist, provided similar testimony as a rebuttal witness for the
Petitioner. Both experts testified that Respondent abused alcohol, suffered
from mild depression, and was having marital problems at times relevant to
this proceeding. They disagreed on the issue of intent. However, intent is an
ultimate issue of fact for the trier of fact to determine and is not within the
proper range of opinion to be offered by these experts. The decision of this
Court is not based on the conclusions of either expert witness, but rather
arrived at it [sic] independently based on all of the evidence.
“42.
The Court finds that Respondent cooperated with the
investigation in this matter. He was never directly asked about maintaining
other files and he did not deliberately conceal any files or information from
Petitioner. Respondent may have been negligent and careless in his handling
of files, but he did not interfere with the Petitioner’s investigation. Respondent
has expressed remorse throughout the grievance process and has paid TCA all
funds owed.
Conclusions of Law
“Petitioner alleges that Respondent violated Maryland Rules of
Professional Conduct, (hereinafter MRPC), Rules 1.3, 1.4, 1.15, 8.1, 8.4(b),(c),
& (d). The Petitioner also alleges that the Respondent violated Maryland Code
Annotated, Bus. Occ. & Prof. Art., § 10-306 and 10-606(b) and Maryland
Rules 16-607 and 16-609.
“From 1996 to mid-1999, TCA was satisfied with Respondent’s
representation. During that time, Respondent was referred nearly 450
collection cases by TCA. Respondent created a unique and rather unorthodox
filing system that tracked each case at various points until the case was closed
out and disbursements were made. When he received payments, Respondent
deposited the funds into an attorney trust account, made a notation on the
debtor file, and after verifying the accounting with a computer system, he
would forward the funds to TCA along with reports indicating the status of
various cases.
10
“However, in mid-1999 Respondent’s system of maintaining files
began to fail. His disbursement of funds and status reports became less
frequent even though he continued to receive funds on behalf of TCA. His
office and filing fell into disarray, his computer system failed, and he began to
endure personal problems.
“From December 1999 to March 2001, Respondent did not report and
disburse funds owed to TCA. By doing so, Respondent violated MRPC 1.3 by
failing to keep accurate records relating to the trust accounts and failing to
promptly account for and disburse funds received on behalf of TCA. The
Court believes that Respondent had a difficult and demanding client, but that
was all the more reason for him to accurately account for each file and keep
his client informed.
“Respondent violated MRPC 1.4 by failing to keep his client
reasonably informed about the status of each case and failing to promptly
comply with reasonable requests. In November 1999, the president of TCA
sent Respondent a letter requesting updated information about many TCA
files. Respondent sent a letter and payment in December, but failed to provide
information about all files requested. He continued to receive funds on behalf
of TCA but made no report of funds received for over a year. By not promptly
notifying TCA of funds received on their behalf or providing a full accounting
regarding the funds collected, Respondent violated MRPC 1.15(b).
“Respondent ignored his improper use of the trust funds. Without
accounting for the funds collected on behalf of TCA, he continued to withdraw
money from the attorney trust funds through the use of his ATM card, checks
made out to himself and his wife, and one check drawn on the funds for the
purchase of a copier.  Respondent maintains that some of the money he
withdrew represented his fees and reimbursements. However, TCA was never
provided an accurate accounting that would indicate a severance of TCA’s
interest from Respondent’s fees and reimbursements.  Respondent thereby
violated MRPC 1.15(c). After TCA requested an updated accounting in
November 1999, Respondent should have been aware that he was not entitled
to money that he was spending.
“The Court finds it difficult to accept that Respondent could mistake
$20,000.00. the approximate amount repaid to TCA, for his 20% contingency
fee plus costs. Respondent would have had to collect approximately
$100,000.00 on behalf of TCA to justify such an accounting error. Nothing in
the record indicates that the balance in the attorney trust fund was close to that
amount. This is further evidence of Respondent’s failure to maintain the
attorney trust funds in compliance with the law.
“The record does reflect that at some point, the attorney trust funds fell
11
below the amount owed to TCA. On August 20, 2001, Respondent was aware
that he owed TCA $10,245.82 for collections made prior to November 1999.
However, according to the financial records turned over to Petitioner,
Respondent did not have $10,245.82 in trust. This evidence is supported by
Respondent’s admission that when he realized he did not have sufficient funds
to pay the amount owed to TCA, he borrowed $10,245.00 in the form of a
home equity loan and deposited the money into his trust account. Additionally,
in March of 2001, Respondent deposited a personal check in the amount of
$1,000.00 to cover the cost of a copier for his office. Based on these findings,
there is clear and convincing evidence that Respondent violated MRPC 1.15,
Maryland Rules 16-607 & 16-609.
“The Court finds by clear and convincing evidence that Respondent
intentionally and willfully used funds for a purpose other then the purpose
authorized by the client in violation of Bus. Occ. & Prof. Article §§ 10-306
and 10-606. He intended at some future date to properly account for all the
money owed to TCA, but at some point prior to the move to Maryland, he had
to realize that he was not entitled to be spending some of these collections
funds.  Respondent intended to borrow the money owed to TCA and at some
future date make a full accounting with his client. The November 1999 letter
from TCA should have put him on notice that there may have been errors in
his accounting system. Even if he didn’t have certain files or misplaced them
as a result of his filing system, after [being] given notice by TCA, he should
have made every effort to search for the files and attempt to reconcile the
accounts requested. He also should have ceased spending any funds from his
escrow account.
“Furthermore, the Court does not believe Respondent’s testimony that
he can’t remember if he made entries on the debtor files contemporaneously
when he collected TCA funds or at a later date. The process of reviewing files
after the fact and accounting for every deposit would be such an arduous and
difficult task that he would have had to remember it. The only reasonable
inference is that the Respondent made the entries contemporaneously with the
collection of funds and therefore he knew or should have known that he was
in possession of money owed to TCA.
“Despite being aware that his filing system was less than accurate, and
that TCA was due money collected, Respondent continued to withdraw money
from the trust accounts.  Respondent deposited $1,000.00 of personal funds
into the Bank of America trust account and borrowed $10,582.00 to cover the
deficit in the trust accounts. Respondent’s conduct, which resulted in
insufficient funds to pay client obligations, is a breach of his fiduciary duty and
an invasion of the assets of his client. Although the Court is sympathetic to the
12
fact that Respondent had many small collection cases to account for, the clear
and convincing evidence is that the Respondent intentionally misappropriated
trust funds in violation of Bus. Occ. & Prof. Article  §§ 10-306 and 10-606.
“For the same reasons discussed above, the Court finds that Respondent
had the requisite intent to misappropriate funds which reflects adversely on the
lawyer’s honesty, trustworthiness, and fitness as a lawyer in violation of
MRPC 8.4(b), (c) & (d).  Consistent with the Court’s finding of facts,
Respondent was informed by TCA that his accounting may not be accurate and
requested information about several accounts. The Court finds that Respondent
engaged in conduct prohibited by MRPC 8.4(b), (c) & (d).
“This Court finds by clear and convincing evidence that the
Respondent, Steven P Herman, has violated:
“1. 
MRPC 1.3 by not acting with reasonable diligence and
promptness in representing TCA;
“2.
MRPC 1.4 by not keeping TCA informed about the status of the
collections matters and promptly complying with reasonable
requests for information;
“3.
MRPC 1.15 by failing to hold the property, specifically monies
collected on behalf of TCA, separately from his own property, by failing to
promptly notify TCA of funds received on their behalf and failing to keep the
property of TCA separate from the fees owed to him until there was a proper
accounting and severance of their interests;
“4.  MRPC 8.4(b) by intentionally misappropriating funds which
reflects adversely on the lawyer’s honesty, trustworthiness and fitness as a
lawyer in other respects. No criminal charges have been filed as of this date of
this disciplinary procedure and the Court believes that Respondent’s actions
are proven by clear and convincing evidence but not beyond a reasonable
doubt;
“5.   MRPC 8.4(c) by engaging in conduct involving dishonesty and
misrepresentation;
“6.   MRPC 8.4(d) as implicated by his misappropriation of funds;
“7.   Md. Code Ann., Bus. Occ. & Prof. Art., Sect. 10-306 and 10-
606(b) for willfully using trust money for purposes other than the purpose for
which the trust money was entrusted to him;
“8. Maryland Rule 16-607 by commingling funds in an attorney trust
account; and
“9. Maryland Rule 16-609 by using funds deposited in an attorney trust
account for unauthorized purposes.
“The Court does not believe that Respondent violated MRPC 8.1 For
the reasons set forth in finding of fact 44, Respondent did not knowingly make
13
false statements of material fact or fail to disclose information in this
disciplinary matter. When he discovered the folders that had been misfiled and
that disbursements due TCA had not been forwarded to them, Respondent
informed Petitioner of the error and forwarded the funds due TCA.”
II.
A.  Standard of Review          
This Court has original jurisdiction over attorney disciplinary matters.  See Attorney
Grievance Comm’n v. Harris, 371 Md. 510, 539, 810 A.2d 457, 474-475 (2002).  We accept
the hearing judge’s findings of  fact unless  they are clearly erroneous, and we conduct an
independent review of the record.  Attorney Grievance Comm’n v. Garfield, 369 Md. 85, 97,
797 A.2d 757, 763-64 (2002).  We review the hearing judge’s proposed conclusions of law
de novo.  See  Attorney Grievance Comm’n v. Mclaughlin, 372 Md. 467, 493, 813 A.2d 1145,
1160 (2002).
         B.  Discussion
First, Respondent asserts that the Petition for Disciplinary or Remedial Action should
be dismissed because Bar Counsel failed to comply with the time requirements of  Rule 16-
731.  In addition, Respondent contends Judge Dugan erroneously concluded  that Mr.
Herman’s conduct was either willful or intentional in the use of funds for a purpose other
than authorized by the client.  Moreover, he posits that any such conclusion is unsupported
by the record in this case.  
On May 1, 2003, Respondent formally answered the Petition for Disciplinary or
Remedial  Action and pleaded the affirmative defense that Bar Counsel’s failure to comply
14
with Ruled 16-731 warranted dismissal of the Petition.  Judge Dugan did not specifically
address this issue in his findings of fact.  However, in exercising our own independent review
of the record, we find no support for the proposition that the Petition should be dismissed.
See Attorney Grievance Comm’n v. Garfield, 369 Md. 85, 97, 797 A.2d 757, 763-64 (2002).
Rule 16-731(d) provides: Time for Completing Investigation.
Unless the time is extended by the Commission for good cause, Bar Counsel
shall complete an investigation within 90 days after opening the file on the complaint.
Upon written request by Bar Counsel establishing good cause for an extension for a
specified period, the Commission may grant one or more extensions.  The
Commission may not grant an extension, at any one time, of more than 60 days unless
it finds specific good cause for a longer extension.  If an extension exceeding 60 days
is granted, Bar Counsel shall provide the Commission with a status report at least
every 60 days.  For failure to comply with the time requirements of this section, the
Commission may take any action appropriate under the circumstances, including
dismissal of the complaint and termination of the investigation.(Adopted November
30, 2000, effective July 1, 2001.) 
Respondent asserts that subsection (d) requires that, “Bar Counsel shall complete
an investigation within 90 days after opening the file on the complaint.”  In this case,
however, disciplinary charges were not filed until November 13, 2002, approximately 21
months after the complaint was lodged. Lynn Giordano, President of TCA filed his
complaint with the Commission on February 12, 2001.  By letter dated October 9, 2002,
counsel for Respondent informed the Attorney Grievance Commission (Commission) that
he objected to the delay in the investigation of the complaint.   
The Executive Secretary for the Commission responded to the letter dated October 9,
2002, by a letter dated October 10, 2002.  In her letter of response,  the Executive Secretary
15
stated that “Bar Counsel sought and received extensions of the investigative period from the
Attorney Grievance Commission.  In light of those extensions, the Statement of Charges in
this matter was filed in a timely fashion in accordance with the Maryland Rules and the
Administrative and Procedural Guidelines of the Attorney Grievance Commission.”  The
record is silent as to any further discussion between the Commission and Respondent’s
counsel on this subject.  Likewise, we are uninformed as to any further action taken by
Respondent or his counsel concerning this matter.  
Although Judge Dugan did not make specific factual findings about the timeliness of
the investigatory process, we have said in the past that,  “[o]ur hearing courts’ duties are to
consider all evidence properly submitted in the discipline process.  Absent indications that
such evidence is not considered, we presume it was considered along with all the other
evidence.”  Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376, 385, 773 A.2d 463,
468 (2001) (quoting Attorney Grievance Comm’n v. Miller, 301 Md. 592, 606-07, 483 A.2d
1281, 1289 (1984)).  “Thus, the mere failure to mention a particular fact in its findings,
normally is not the equivalent of failing to consider it.”  Id.
In our review of the matter, we emphasize that one of the objectives of the attorney
grievance process is efficiency in analyzing complaints and processing charges.  The purpose
of the time limits contained in subsection (d) is to discourage Bar Counsel from sitting on a
disciplinary case when there is other collateral litigation pending.  See Judge Wilner’s
comments made at the open meeting held on November 8, 2000, to adopt Rule 16-731.  (If
16
the prosecuting Bar Counsel feels that he or she needs  to delay the investigation, he or she
must go the Attorney Grievance Commission and make a case for it.)
Additionally, subsection (d) grants to the Commission broad discretion to deal  with
any failures by Bar Counsel to comply with the time requirements of Rule 16-731.  In this
case, there is no evidence that Bar Counsel failed to comply with subsection (d).
Respondent’s inquiry concerning the delay was addressed  promptly by the Commission.
Moreover, there is no allegation or factual basis to support a finding that the Commission in
any way abused its discretion in granting  extensions to Bar Counsel to complete its
investigation. Likewise, there is no allegation or evidence to support a finding that
Respondent was prejudiced by the delay.
Furthermore, we have said previously that errors occurring in the preliminary
proceedings do not warrant dismissal of the charges.  First, the hearing judge, in attorney
discipline matters, lacks the authority to dismiss the petition. Attorney Grievance Comm’n
v. Harris, 310 Md. 197, 200 n. 2, 528 A.2d 895, 896 n. 2 (1987).  Second, Rule 16-754(b)
provides that “it is not a defense or ground for objection to a petition that procedural defects
may have occurred during the disciplinary or remedial proceedings prior to filing of the
petition.”  In Attorney Grievance Comm’n v. Braskey, 378 Md. 425, 836 A.2d 605 (2003),
we held that the procedural delays involved in that case did not warrant dismissal of the
petition.  In Braskey, the Inquiry Panel hearing was  held  312 days after the panel chair had
received the file,  and the Attorney Grievance Commission filed its disciplinary petition more
17
than three years after the complaint against Braskey had been filed.  Relying on Harris, 310
Md. at 202, 528 A.2d at 897, we said, “any irregularity in the proceedings before the Inquiry
Panel and the Review Board ordinarily will not amount to a denial of due process, as long
as the lawyer is given notice and an opportunity to defend in a full and fair hearing following
the institution of disciplinary proceedings in this Court.”  Although we did not specifically
comment on the delay of more than three years between the date the Commission received
notice of a complaint filed against Braskey and the Commission’s filing of a disciplinary
petition,  we did state that, “[t]here is no statute of limitations in an attorney disciplinary
proceeding and mere delay does not warrant dismissal.” Braskey, 378 Md. at 442, 836 A.2d
at 616.  “A mere delay in disciplinary proceedings is not a basis for dismissal, absent a
showing of prejudice.”  Id.  See Attorney Grievance Comm’n v. Engerman, 289 Md. 330,
346, 424 A.2d 362, 370 (1981); Attorney Grievance Comm’n v. Kahn, 290 Md. 654, 684, 431
A. 2d 1336, 1352 (1981).  As we stated earlier, there is no claim of  prejudice to Respondent.
Indeed,  his counsel conceded at oral argument of this case that the proceedings conducted
before Judge Dugan were fair.   
Next, although agreeing with Judge Dugan’s factual findings, Respondent  asks that
we interpret those findings to mean that Mr. Herman was “negligent and careless in his
handling of files” and that “there is no clear and convincing evidence on this record to
support a finding of dishonesty, fraud, deceit, or misrepresentation on Respondent’s part.”
Furthermore, Respondent contends, “there is no clear and convincing evidence on this record
18
to support a finding that Mr. Herman intended to misappropriate and misuse TCA funds, this
Court should overrule Judge Dugan’s conclusions of law and hold that Respondent’s
violations resulted from negligent rather than intentional misconduct.”   
Judge Dugan found that around the middle of 1999, Respondent’s computer system
failed and, as a result, Respondent collected funds in a number of TCA cases that were not
recorded  as monies received and were not disbursed to TCA.  In addition, the record shows
that around this time Respondent’s secretary left his employment  and Respondent began to
perform routine administrative tasks, resulting in files being placed in the wrong drawers and
the office falling into disarray.  Respondent never informed TCA of the office management
problems.  Judge Dugan also found that even though Respondent continued to have difficulty
with his filing system, he did not review and account for all TCA files.  In addition,
Respondent neither made disbursements nor reported collections to TCA from December
1999 through January 2001.  
Most revealing is the fact that on August 20, 2001, Respondent informed Petitioner
that the $10,245.82 owed to TCA, as a result of collections made prior to November 1999,
had not been remitted to TCA.  Based upon Respondent’s financial records,  as of August
20, 2001,  the $10, 245.82 belonging to TCA was not in Respondent’s escrow account.  On
February 15, 2002, Respondent used his own funds to reimburse TCA.   In addition, as other
monies belonging to TCA were deposited in escrow, Respondent continued to disburse funds
from the trust account to himself and his wife without making any disbursements to TCA.
19
In our view, these facts clearly support the conclusion that Respondent intentionally
misappropriated funds that were due TCA.  After Respondent’s computer system failed, he
resorted to abusing alcohol and suffered family problems and depression.  These factors,
however, did not cause his intentional disbursement of TCA’s funds to himself and his wife
nor do they mitigate his actions.  In our view,  Judge Dugan’s conclusions of law were
consistent with the facts as he found them to be.  
III.  Sanction
  
The appropriate sanction for a violation of the MRPC depends on the facts and
circumstances of each case, including consideration of any mitigating factors. Attorney
Grievance Comm’n v. Awuah, 374 Md. 505, 526, 823 A.2d 651, 663 (2003).  The principles
we consider in arriving at the appropriate sanction are well established.  Attorney Grievance
Comm’n v. McClain, 373 Md. 196, 211, 817 A.2d 218, 227 (2003).  Primarily, we seek “to
protect the public, to deter other lawyers from engaging in violations of the Maryland Rules
of Professional Conduct, and to maintain the integrity of the legal Profession.” Awuah, 374
Md. at 526, 823 A.2d at 663 (quoting Attorney Grievance Comm’n v. Webster, 348 Md. 662,
678, 705 A. 2d 1135, 1143 (1998)).  To achieve the goal of protecting the public, we impose
a sanction that is “commensurate with the nature and gravity of the violations and the intent
with which they were committed.”  Id.  (quoting Attorney Grievance Comm’n v. Awuah, 346
Md. 420, 435, 697 A.2d 446, 454 (1997)).     
“Absent compelling extenuating circumstances, misappropriation by an attorney is an
20
act infected with deceit and dishonesty and ordinarily will result in disbarment.”  Attorney
Grievance Comm’n v. Vlahos, 369 Md. 183, 186, 798 A. 2d 555, 556 (2002).  In other words,
when intentional misappropriation of funds is found, which is the nature of this case, absent
compelling circumstances, disbarment follows as a matter of course. 
Judge Dugan found that Respondent’s personal problems, administrative difficulties
and his “negligent and careless handling of files” did not cause his misconduct or prevent
him from conforming his conduct to the requirements of law and the MRPC.  Specifically,
the hearing judge found that none of “the mitigating circumstances of this case caused
Respondent not to conform his conduct with the law and the MRPC.”  
Respondent assails Judge Dugan’s conclusions of law and advances indefinite
suspension as the appropriate sanction in this matter on the grounds that: (a) the case against
Mr. Herman rests upon circumstantial evidence; (b) Mr. Herman testified that he did not
intend to steal any client funds; (c) Mr. Herman did not systematically do anything; (d) Mr.
Herman made restitution to TCA; and (e) he is remorseful.  Respondent’s arguments are
unpersuasive.
Here the evidence shows that Respondent intentionally and willfully used funds for
a purpose other than the purpose authorized by the client.  The evidence was clear and
convincing that Respondent intentionally misappropriated the trust funds , and this conduct
reflected on his honesty, trustworthiness, and fitness as a lawyer.   Judge Dugan found that
Respondent, “engaged in criminal conduct adversely reflecting on his honesty,
21
trustworthiness or fitness to practice in other respects, in violation of MRPC; engaged in
conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of MRPC
8.4(c); and engaged in conduct prejudicial to the administration of justice, in violation of
MRPC 8.4(d).  This same conduct violated Md. Code (1989, 2000 Replacement Volume),
§§ 10-306 and 10-606 of the Business Occupations and Professions Article and Maryland
Rules 16-606 and 16-607.”
Furthermore, Judge Dugan found that Respondent possessed the requisite intent to
misappropriate funds from his escrow account.  Mr. Herman knew, or should have known,
that there were errors in his accounting system.  Therefore,  he should have made efforts to
search the files and attempt to reconcile the accounts TCA requested.   At the very least, he
should have ceased spending funds from the trust account.  With knowledge that his filing
system was inaccurate, and that TCA was owed money collected, Respondent continued to
withdraw funds from the trust accounts.  As pointed out by Judge Dugan, “Respondent’s
conduct, which resulted in insufficient funds to pay client obligations, is a breach of his
fiduciary duty and an invasion of the assets of his client.”
On August 21, 2001, Respondent was aware that he owed TCA $10, 245.82 for
collections made prior to November 1999.  He did not have sufficient funds in the trust
account and borrowed $10, 245.00; and, in turn, deposited those borrowed funds into the
trust account.  The commingling of assets is a violation of MRPC 1.15 and of  Maryland
Rules 16-607 & 16-609.  The misappropriation of client assets is a violation of Md. Code
22
(1989, 2000 Replacement Volume), §§ 10-306 and 10-606(b) of the Business Occupations
and Professions Article.  In addition, disbursement of client assets that Respondent knew he
was not entitled to spend, constitutes a misappropriation reflecting adversely on the lawyer’s
honesty, trustworthiness, and fitness in violation of MRPC 8.4(b), (c) and (d).  All of the
wrongdoing  was compounded when TCA asked Respondent for an accounting and no
accounting was forthcoming, supporting further violations of 8.4(b), (c) and (d).
In Attorney Grievance Comm’n.  v. Vlahos, 369 Md. 183, 798 A.2d 555 (2002), we
held that disbarment was the appropriate sanction for an attorney who regularly
misappropriated cash and checks belonging to the law firm by which he was employed.  Id.
When confronted by Bar Counsel, the attorney lied in an attempt to explain his dishonest
conduct, and the attorney did not present any mitigating circumstances to justify a lesser
sanction.  Id.  We pointed out in Vlahos that it was immaterial that the respondent stole from
his employer and not from clients, and because the “misconduct involves misappropriation
of funds, disbarment follows as a matter of course.”  Vlahos, 369 Md. at 187, 798 A.2d at
557. 
In Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376, 773 A. 2d 463 (2001),
we held that disbarment was the appropriate sanction when an attorney, over a period of time,
while working outside of the profession of law, misappropriated  $3,880.67 from her
employer for her own use.  In that case we emphasized that “disbarment ordinarily should
be the sanction for intentional dishonest conduct.”  Vanderlinde, 364 Md. at 418, 773 A.2d
10In Attorney Grievance Comm’n v. Kenney, 339 Md. 578, 664 A.2d 854 (1995), the
hearing judge found as a fact that Kenney’s alcoholism was, “to a substantial extent, ‘the
responsible, the precipitating, the root cause’ of the Respondent’s misappropriation of trust
funds.”  We imposed an indefinite suspension instead of disbarment.  Because of our duty
to protect the public we cautioned members of the bar that absent truly compelling
circumstances, alcoholism should not provide mitigation where an attorney has been found
to have committed a violation which would ordinarily warrant disbarment. 
23
at 488.  Judge Cathell, writing for this Court,  further clarified that this “Court does not
consider the case of Attorney Grievance  v.  Hess, 352 Md. 438, 722 A. 2d 905 (1999)
(involving billing fraud and the hearing judge’s finding  as ‘mitigating factors that Hess had
been under stress from a large workload during the Maryland savings and loan crisis; that his
firm was a ‘tenuous financial situation’; that Hess was in the process of a bitter and
embarrassing divorce; that he had shown remorse, and that there was no suggestion of a
likelihood of previous or similar conduct’)” or the pre-Kenney10 cases to be authority for an
argument for leniency in attorney disciplinary matters involving intentionally dishonest
conduct.  Furthermore, in Vanderlinde, we expounded upon Kenney and held that, “in cases
of intentional dishonesty, misappropriation cases, fraud, stealing, serious criminal conduct
and the like, we will not accept, as ‘compelling extenuating circumstances,’ anything less
than the most serious and utterly debilitating mental or physical health conditions, arising
from any source that is the ‘root cause’ of the misconduct and that also result in an attorney’s
utter inability to conform his or her conduct in accordance with the law and with the MRPC.”
 Vanderlinde, 364 Md. at 413-14, 773 A.2d at 485.   In other words, unless that standard is
met, the impairment alleged is not “the root cause” of the misconduct.  Vanderlinde, 364 Md.
24
at 418-19, 773 A.2d at 488.    With this precedent in mind, we turn to the facts of this case
and Respondent’s plea for a lesser sanction.  
Judge Dugan found, by clear and convincing evidence, that Respondent
misappropriated funds.  He did not find any mitigating factors.  Respondent even concedes
that his “personal crises and professional difficulties are not mitigating circumstances,” but
instead he suggests that they are offered as proof of his lack of intent to steal client funds.
Unfortunately, Respondent overlooks the fact that the hearing judge did not believe
Respondent’s explanation for taking his client’s money and failing to account to the client
the status of the escrow account.  In other words,  Mr. Herman presented no ethical or legal
justification for his conduct.  We have said, however, that “intentional dishonest conduct is
closely entwined with the most important matters of basic character to such a degree as to
make intentional dishonest conduct by a lawyer almost beyond excuse.  Honesty and
dishonesty are, or are not, present in an attorney’s character.”  Id.  We reject Respondent’s
arguments, overrule his exceptions, and finding no extenuating circumstances, impose
disbarment as a matter of course.  
IT IS SO ORDERED; RESPONDENT SHALL
PAY ALL COSTS AS TAXED BY THE
CLERK OF THIS COURT, INCLUDING THE
COSTS OF ALL TRANSCRIPTS, PURSUANT
TO MARYLAND RULE 16-515(C), FOR
WHICH SUM JUDGMENT IS ENTERED IN
FAVOR OF THE ATTORNEY GRIEVANCE
COMMISSION OF MARYLAND AGAINST
STEVEN P. HERMAN.