Title: Office of Lawyer Regulation v. John Hotvedt

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2016 WI 93 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2016AP48-D 
COMPLETE TITLE: 
In the Matter of Disciplinary Proceedings 
Against John Hotvedt, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant-Respondent, 
     v. 
John Hotvedt, 
          Respondent-Appellant. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST HOTVEDT 
 
 
OPINION FILED: 
November 18, 2016 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
 
 
COUNTY: 
 
 
JUDGE: 
      
 
 
 
JUSTICES: 
 
 
CONCURRED: 
      
 
DISSENTED: 
      
 
NOT PARTICIPATING:          
 
 
 
ATTORNEYS: 
 
 
 
 
 
 
 
2016 WI 93
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2016AP48-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against John Hotvedt, Attorney at Law: 
 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
John Hotvedt, 
 
          Respondent. 
 
FILED 
 
NOV 18, 2016 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   We review a report and recommendation of 
Referee Richard C. Ninneman approving a stipulation filed by the 
Office of Lawyer Regulation (OLR) and Attorney John E. Hotvedt.  
In the stipulation, Attorney Hotvedt stipulated to the facts 
underlying the five counts of misconduct alleged in the OLR's 
amended complaint and joined the OLR in jointly recommending an 
18-month suspension of Attorney Hotvedt's Wisconsin law license.  
The referee agreed that an 18-month suspension was appropriate. 
No. 
2016AP48-D   
 
2 
 
¶2 
Upon careful review of this matter, we uphold the 
referee's findings of fact and conclusions of law and agree that 
an 18-month suspension is an appropriate sanction for Attorney 
Hotvedt's misconduct.  We also find it appropriate to impose the 
full costs of this proceeding, which are $6,309.67 as of 
September 19, 2016, on Attorney Hotvedt.  Since Attorney Hotvedt 
has already made restitution to his law firm, the OLR does not 
seek a restitution order. 
¶3 
Attorney Hotvedt was admitted to practice law in 
Wisconsin in 2001 and practices in Kenosha.  He has no prior 
disciplinary history.   
¶4 
On January 7, 2016, the OLR filed a complaint against 
Attorney Hotvedt alleging five counts of misconduct.  Attorney 
Hotvedt filed an answer on February 12, 2016.  The referee was 
appointed on April 5, 2016.  The OLR filed an amended complaint 
on July 11, 2016.  The parties' stipulation and Attorney 
Hotvedt's no contest plea was filed on August 8, 2016. 
¶5 
As part of the stipulation, Attorney Hotvedt agreed 
that the referee could use the factual allegations of the 
amended complaint as an adequate basis in the record for a 
determination of misconduct as to the five counts alleged in the 
amended complaint.   
¶6 
According to the amended complaint, Attorney Hotvedt 
was formerly employed at the Burlington, Wisconsin law firm of 
Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry, S.C.  He was a 
stockholder, director, and officer of the firm and had practiced 
with the firm since he graduated from law school.  By common and 
No. 
2016AP48-D   
 
3 
 
accepted 
practice, 
and 
pursuant 
to 
written 
employment 
agreements, all attorneys at the firm understood and agreed that 
revenues generated by the practice of law belonged to the firm.  
¶7 
In January 2014, Attorney Hotvedt and Attorney Todd 
Terry told firm shareholders that they would be withdrawing from 
the firm and establishing their own law practice in Kenosha.  
The shareholders of the firm agreed to dissolve the corporation 
effective May 31, 2014.  All firm members signed a dissolution 
agreement winding up the corporation. 
¶8 
Subsequent to the dissolution of the firm, and in 
connection with the winding up of the firm, Attorney Dennis 
Lynch, the former President of the firm, noticed billing 
discrepancies 
attributable 
to 
Attorney 
Hotvedt, 
including 
writing off substantial amounts of firm billings in the years 
2011 through 2013.  In many instances, Attorney Hotvedt had 
written off client billings, but clients reported to the firm 
that they had paid legal fees directly to Attorney Hotvedt. 
¶9 
Review of firm accounts showed that Attorney Hotvedt 
had deposited client fee payments directly into his own personal 
bank account rather than depositing the fees into the law firm 
account.  Attorney Hotvedt did not disclose to the firm's 
shareholders that he was depositing firm funds paid by clients 
into his personal bank account.  Attorney Hotvedt continued his 
conduct of depositing client funds belonging to the firm into 
his personal bank account during 2014, after he had announced 
his departure from the firm and after he had executed a 
dissolution agreement. 
No. 
2016AP48-D   
 
4 
 
¶10 As part of its investigation into the grievance filed 
against Attorney Hotvedt, the OLR discovered that in 2014 
Attorney Hotvedt established his own consulting company, JBG 
Consulting Services, during the time period in which he was 
preparing to leave the firm.  Through this consulting company, 
Attorney Hotvedt converted additional attorney's fees belonging 
to the firm.  The OLR's investigation revealed that the total 
amount of identifiable client funds converted by Attorney 
Hotvedt from his former law firm was over $173,000. 
¶11 The OLR's amended complaint alleged the following 
counts of misconduct: 
 Count One:  By converting client funds belonging 
to the firm in an amount in excess of $173,000 
over the years 2011 through 2014, Attorney 
Hotvedt violated SCR 20:8.4(c).1 
 Count Two:  By writing off client fees owed to 
the 
firm, 
Attorney 
Hotvedt 
violated 
SCR 
20:8.4(c). 
 Count Three:  By establishing JBG Consulting 
Services to convert client fees while employed by 
the firm for the purpose of advancing his own 
financial interests, Attorney Hotvedt violated 
SCR 20:8.4(c). 
 Count Four:  By misrepresenting to the firm that 
he would not bill or otherwise recover client 
fees from firm clients; by converting client 
funds owed to his law firm, by writing off client 
billings; by establishing JBG Consulting Services 
for the purpose of converting client fees owed to 
                                                 
1 SCR 20:8.4(c) provides:  "It is professional misconduct 
for a lawyer to:  . . . engage in conduct involving dishonesty, 
fraud, deceit or misrepresentation. 
No. 
2016AP48-D   
 
5 
 
the firm, Attorney Hotvedt breached his fiduciary 
duties owed to his firm and his duty of honesty 
in his professional dealings with the firm, 
thereby violating a standard of conduct set forth 
by the Supreme Court in In re Disciplinary 
Proceedings Against Shea, 190 Wis. 2d 560, 527 
N.W.2d 314 (1995), actionable via SCR 20:8.4(f).2 
 Count Five:  By failing to disclose to the OLR 
the full extent of funds converted from the firm; 
by failing to initially disclose the full amount 
of fees received from JBG Consulting Services, an 
entity that served to convert client funds 
belonging to the firm; by failing to disclose to 
the OLR that he had converted additional firm 
funds through another bank after specifically 
denying to the OLR that there was any other bank 
into which such deposits were made, Attorney 
Hotvedt violated SCR 22.03(2)3 and SCR 22.03(6),4 
enforced through 20:8.4(h).5 
                                                 
2 SCR 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.   
3 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 a 
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. 
No. 
2016AP48-D   
 
6 
 
¶12 In the stipulation, Attorney Hotvedt represented that 
he 
fully 
understands 
the 
misconduct 
allegations; 
fully 
understands his right to contest the matter; fully understands 
the 
ramifications 
of 
his 
entry 
into 
the 
stipulation; 
acknowledges that he has had the representation and advice of 
counsel; and states that the entry into the stipulation is made 
knowingly and voluntarily. 
¶13 As noted above, the parties agreed that an appropriate 
level of discipline for Attorney Hotvedt's misconduct was an 18-
month suspension of his license to practice law in Wisconsin.  
The referee agreed.   
¶14 The 
referee's 
August 
30, 
2016 
report 
and 
recommendation found that the OLR met its burden of proof with 
respect to the five counts of misconduct set forth above.  The 
referee said the amount of firm money misappropriated by 
Attorney 
Hotvedt, 
coupled 
with 
the 
attorney's 
admitted 
allegations of failing to cooperate with the OLR, supported a 
very serious level of discipline.  The referee commented that 
                                                                                                                                                             
4 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." 
5 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)." 
No. 
2016AP48-D   
 
7 
 
deciding on an appropriate level of discipline was made more 
difficult since the parties reached a stipulation and no contest 
agreement without a hearing, which meant the referee had no 
opportunity to meet and observe Attorney Hotvedt's demeanor as 
to his misconduct. 
¶15 The referee went on to say that an 18-month suspension 
for a relatively new attorney who recently started a new firm is 
a 
significant 
discipline, 
particularly 
considering 
the 
additional time it may take for him to be reinstated under the 
reinstatement procedures dictated by SCR 22.28(3).  The referee 
noted that Attorney Hotvedt has no prior disciplinary history; 
he 
reached 
an 
agreement 
with 
his 
former 
firm 
regarding 
restitution; and he ultimately was willing to enter into a 
stipulation and no contest agreement.  Upon consideration of all 
those factors, the referee said he had no difficulty agreeing to 
recommend the 18-month suspension recommended by both the OLR 
and Attorney Hotvedt as part of the stipulation.   
¶16 This court will adopt a referee's findings of fact 
unless they are clearly erroneous.  Conclusions of law are 
reviewed de novo.  See In re Disciplinary Proceedings Against 
Eisenberg, 2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747.  The 
court may impose whatever sanctions it sees fit, regardless of 
the 
referee's 
recommendation. 
 
See 
In 
re 
Disciplinary 
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 
N.W.2d 686. 
¶17 We 
adopt 
the 
referee's 
findings 
of 
fact 
and 
conclusions of law that Attorney Hotvedt violated the supreme 
No. 
2016AP48-D   
 
8 
 
court rules as alleged in the five counts set forth above.  We 
further agree with the referee that an 18-month suspension of 
Attorney Hotvedt's license to practice law in Wisconsin is an 
appropriate level of discipline.  Since no two cases are 
precisely the same, there is no standard sanction for any 
particular misconduct.  We note that in In re Disciplinary 
Proceedings Against Brown, 2005 WI 49, 280 Wis. 2d 44, 695 
N.W.2d 295, this court accepted a stipulation in which an 
attorney agreed to an 18-month suspension for accepting fees 
from clients while informing his law firm he was acting pro 
bono, converting fees belonging to the law firm, and making 
misrepresentations to the OLR as part of its investigation.  We 
find the misconduct at issue in this case to be somewhat 
analogous to the misconduct in Brown, and we find a similar 
suspension to be appropriate.  We also deem it appropriate, as 
is our usual custom, to impose the full costs of this 
disciplinary proceeding on Attorney Hotvedt. 
¶18 IT IS ORDERED that the license of John E. Hotvedt to 
practice law in Wisconsin is suspended for a period of 18 
months, effective December 30, 2016. 
¶19 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, John E. Hotvedt shall pay to the Office of Lawyer 
Regulation the costs of this proceeding, which are $6,309.67. 
¶20 IT IS FURTHER ORDERED that John E. Hotvedt 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.   
No. 
2016AP48-D   
 
9 
 
¶21 IT IS FURTHER ORDERED that compliance with all 
conditions with this order is required for reinstatement.  See 
SCR 22.28(3). 
 
 
No. 
2016AP48-D   
 
 
 
1