Title: Matter of Galbasini
Citation: 163 Ariz. 120, 786 P.2d 971
Docket Number: SB-89-0010-D
State: Arizona
Issuer: Arizona Supreme Court
Date: January 30, 1990

163 Ariz. 120 (1990) 786 P.2d 971 In the Matter of a Member of the State Bar of Arizona, Donald C. GALBASINI, Respondent. No. SB-89-0010-D. Supreme Court of Arizona, In Banc. January 30, 1990. Theodore E. Carver, Tempe, for respondent. State Bar of Arizona by Edward D. Fitzhugh, State Bar Counsel, Phoenix. CAMERON, Justice. I. JURISDICTION The Arizona State Bar Disciplinary Commission of the Supreme Court (Commission) recommends suspension from the State Bar of Arizona (Bar) for Donald C. Galbasini (respondent) for six months and payment of $2,915.25 in costs. Respondent *121 objects. We have jurisdiction pursuant to Rule 53(e), 17A A.R.S. Sup.Ct.Rules. II. CHARGES Respondent was charged by the Bar with five counts of misconduct. Two of the counts (two and five) were dismissed by the Hearing Committee (Committee). The Commission agreed with this dismissal. We also agree and consider only the remaining three counts. III. FACTS In August 1986, respondent entered into an agreement with a company called RMJ, Inc. in connection with RMJ's "credit consulting" business. RMJ was not licensed to operate as a debt collection agency in Arizona and needed an attorney like respondent to provide it with a name and license. The contract provided, in pertinent part: To carry out this contract, RMJ leased an office separate from respondent's law office. A sign with respondent's name and professional title was placed in front of the RMJ office. RMJ employees at this office answered the phone "Law offices of Donald Galbasini" or just "Law offices." The extent of respondent's "management" and "supervision" over the collection agents was minimal at best. In the first month of the relationship, respondent received frequent reports on the financial activity in his trust account from an RMJ principal who was a Certified Public Accountant (CPA). The frequency and quality of those reports declined, however, after the first month because the principal left. Respondent claimed he visited the RMJ offices once or twice a week. When asked if he ever actually instructed the collection agents on practices allowable under state and federal regulations or even spoke to the agents, respondent admitted that he was "not allowed to do that" by the principals of RMJ. An RMJ employee, Donald Kenneth Angle, testified at his deposition: Respondent knew RMJ had prepared a document entitled "Engagement Agreement" that was used as a contract between clients and RMJ but was phrased as though the client was hiring the Law Offices of Donald Galbasini. According to respondent, the agreement was intended only for existing RMJ clients and not for solicitation of new clients. As it turned out, RMJ employees used the agreement to solicit new clients, although no evidence indicated that respondent knew of such use *123 or that any new client executed the agreement. By the end of October, respondent became concerned about his relationship with RMJ and requested an informal ethics opinion from the State Bar Ethics Advisory Committee on the propriety of his actions. Before receiving a reply he terminated the agreement, effective January 1987. Serious problems surfaced after the relationship was terminated. Respondent learned of several "clients" whose accounts were collected by RMJ without remittance of the client's share. For example, the particular client whose complaint initiated this proceeding was Smith Pipe and Steel (Smith). After Smith was informed by the debtor that RMJ was paid $5,627.71, Smith unsuccessfully attempted to collect its share from RMJ. Smith's attorney attempted to contact respondent by telephoning the RMJ office, but was always told that respondent was out or unavailable. Messages were never forwarded to respondent and calls were never returned by anyone from RMJ. Respondent first learned of Smith's problem when the State Bar requested his response to Smith's complaint. The Hearing Committee received evidence on 27 and 28 April 1988, and issued its report on 29 June. The Committee found violations of The Model Rules of Professional Conduct, particularly ER 1.4 (Communication), ER 1.15 (Safekeeping Property), ER 5.3 (Responsibilities Regarding Nonlawyer Assistants) and ER 7.3 (Direct Contact with Prospective Clients). It was also found that respondent violated Rule 44(b) of the Rules of the Supreme Court (Trust Accounts; Duty to Safeguard Client Property). The Committee made extensive findings of facts and recommended public censure as a sanction. Respondent objected to the recommendation of censure, maintaining that an informal reprimand was a more appropriate sanction. The Commission adopted the Committee's findings of facts and conclusions of law. The Commission, however, rejected respondent's suggestion of an informal (private) reprimand, as well as the Committee's recommendation of (public) censure. Instead, it recommended, in a 7-1 vote, that respondent be suspended for six months. The Commission believed that "the respondent knew or should have known of the potential for abuse but did not act quickly to remove himself from the situation." The Commission believed that respondent's conduct was so egregious that a more severe sanction was warranted. Respondent contests the Commission's recommendations. IV. DISCUSSION Count One There appears to be no question that if respondent is responsible for the actions of RMJ's nonlawyer employees, then he violated the Rules of Professional Conduct, particularly ER 1.4 (Communication), ER 1.15 (Safekeeping of Property) and Rule 44(b) (Safeguarding Client's Property). The first question we must answer is whether respondent violated ER 5.3, which states: 17A A.R.S.Sup.Ct.Rules, Rules of Professional Conduct, Rule 42, ER 5.3. Authorities have commented on this rule as follows: G. HAZARD, JR. &amp; W. HODES, THE LAW OF LAWYERING: A Handbook on the Model Rules of Professional Conduct, p. 464 (1989). Respondent contends that, according to ER 5.3, a supervisory attorney of a nonlawyer assistant is not vicariously liable for the misconduct of said associate. Respondent further contends that he acted reasonably under the circumstances and that because he did not know what was going on in the office he should not be held liable according to ER 5.3. Although ER 5.3 may not establish a rule of vicarious or imputed liability, it does mandate an independent duty of supervision. Here, respondent conducted no supervision, reasonable or otherwise. Even in the first weeks of the contract when respondent received information from RMJ's CPA, there was no evidence that he reasonably or adequately supervised the nonattorney assistants. We therefore believe that respondent acted unreasonably under the circumstances and violated ER 5.3. Respondent allowed RMJ to use his name and license to practice law and commit various acts contrary to Rule 42 and 44, Rules of the Supreme Court. The potential for abuse of his name and title should have been apparent to respondent. Having provided no supervision whatsoever to guide the actions of the nonlawyer employees of RMJ, respondent cannot now claim that he should not be held liable for the misconduct of the nonlawyer employees. We believe respondent violated The Rules of Professional Conduct, particularly ER 1.4, ER 1.15, ER 5.3 and Rule 44(b) of the Rules of the Supreme Court. Count Three In Count Three, respondent is accused of failing to communicate with his clients in violation of ER 1.4 which reads: Rules of Professional Conduct, ER 1.4. As noted above, respondent had no idea who his clients were. Respondent did not know, for example, that Smith's lawyer was trying to reach him and that the messages left with RMJ were not forwarded. Respondent did know, however, that RMJ's office was held out as respondent's office from the sign on the door to the way the telephone was answered. Therefore, the public and the clients had every reason to believe they were dealing with respondent. Respondent failed to communicate with clients because his nonlawyer employees failed to communicate with him. We believe respondent violated the Rules of Professional Conduct, particularly ER 1.4. COUNT IV In Count Four respondent is charged with violation of Rule 42, Rules of the *125 Supreme Court and particularly ER 7.3, which provides: Rules of Professional Conduct, ER 7.3 Apparently, two RMJ employees solicited business using respondent's name as an inducement. They had business cards printed that stated above the employee's name: "R.M.J. Management Group, Inc." and "Management for the Law Offices of Donald C. Galbasini." Under the employee's name was the address and telephone number of the RMJ office. There is no question that this was done for RMJ's pecuniary gain. Again, respondent's failure to properly or reasonably supervise nonlawyer employees of RMJ made respondent responsible for the actions of the two salesmen. Respondent violated ER 7.3(a) of the Rules of Professional Conduct. V. SANCTIONS The following factors should be considered in imposing sanctions: American Bar Association Standards for Imposing Lawyer Sanctions, Standard 3.0 (1986). The Standards are understandably strict when the mishandling of client property is involved. Standard 4.1 reads in part: ABA Standards, Standard 4.1. Admittedly, respondent did not know of every incident of improper conduct committed by the unsupervised nonlawyer assistants until after the fact. There are, however, numerous incidents where RMJ employees knowingly converted client property, causing injury to the client. Under ER 5.3 (Responsibilities Regarding Nonlawyer Assistants), a lawyer is responsible for the conduct of nonlawyer assistants because he has a duty to make reasonable efforts to supervise such persons. Therefore, we believe that respondent knew or should have known of RMJ's employee's actions and his case fits within ER 4.12 calling for suspension. We next consider aggravating and mitigating circumstances. A. Aggravation The ABA Standards list aggravating and mitigating circumstances which we take into account when determining what sanction to impose. See ABA Standards, Standard 9.1. Aggravating circumstances are defined as follows: ABA Standards, Standard 9.21. The ABA Standards then list ten aggravating circumstances that may apply. See Standard 9.22. Aggravating circumstances other than those listed may exist because the list is not exhaustive. Although it does not fit exactly into the recommended Standards, we believe the large and potentially larger numbers of clients and members of the public who could have been damaged by respondent's failure to exert control over the nonlawyer employees is and should be an aggravating circumstance, and we so find. B. Mitigation Mitigation is defined: ABA Standards, Standard 9.31. We believe two mitigating factors are present in this case: ABA Standards, Standard 9.3. Respondent made every effort to rectify his errors when he withdrew from the contract in January. Ultimately, he was out of pocket $8,359.53 for purchases made by RMJ and he also repaid $7,757.59 to RMJ clients because of RMJ's dereliction. Respondent tried to make amends and apparently no one except respondent suffered any financial losses. Respondent also made full and free disclosure and cooperated fully with the Bar. We believe under the circumstances that a six month suspension is a proper sanction. Finally, we wish to note that the license to practice law is conferred on a person after rigorous schooling, difficult examinations and proof of good moral character. The license is personal to the lawyer, and not for sale or lease. A lawyer retains the license only so long as he or she upholds the high standards of the legal profession. If a lawyer disregards his or her professional responsibilities by allowing nonlawyers to operate a law office in his or her name, he or she cannot complain when held responsible for the nonlawyer's misdeeds. We affirm the recommendations of the Commission for a six month suspension and costs in the amount of $2,915.25. GORDON, C.J., FELDMAN, V.C.J., and MOELLER and CORCORAN, JJ., concur.