Opinion ID: 2524356
Heading Depth: 1
Heading Rank: 3

Heading: alleged trust account violations

Text: ¶ 7 The following allegations are found in two counts of the amended complaint. [5] Respondent received checks payable to him, to a client, or to both him and a client. The checks made to Respondent for attorney fees were endorsed by him and were not deposited into a trust account, checks made to Respondent and a client were endorsed by Respondent and not deposited into a trust account, and checks made to a client were not deposited into a trust account. Respondent sent postal money orders made payable to his clients. On one occasion, Respondent met a client at her bank, endorsed a check, and the funds were deposited into an account at the bank. On yet another occasion, Respondent met a client at the Oklahoma State Treasurer's office where a check made to him and a client was cashed with the client receiving his portion of the funds and Respondent receiving his attorney fees and expenses. The OBA did not allege that Respondent held a client's funds, commingled a client's funds, or misused a client's funds in any way. The stipulation is simply that Respondent received checks made to him for attorney fees, to a client, or to him and a client and failed to deposit the checks into a trust account and that he purchased postal money orders which he sent to clients. ¶ 8 At the hearing, Respondent testified that when he received funds on behalf of a client, he would give the check to the client, either by mail or in person. If the check was made to Respondent or the Respondent and a client, he would endorse the check and give it to the client. [6] Respondent also testified that he would advance funds to his worker's compensation clients for such things as mileage and prescriptions until a final settlement. On several occasions, Respondent met a client, endorsed and cashed a check and distributed the cash to himself for his attorney fee and the remainder to the client. According to Respondent, when he advanced the funds, he would purchase a postal money order with his own money and send it to the client. He testified that he never endorsed a client's name on a check. We find Respondent's testimony at the hearing is convincing evidence of the actual facts. ¶ 9 In addition to the allegations in paragraph seven, the evidence supports the following facts concerning two temporary total disability (TTD) checks Respondent received on Leroy Sadler's behalf. About May 12, 2004, Sadler terminated Respondent as his attorney. Immediately thereafter, Respondent received two of Sadler's TTD checks totaling $1,261.36. Respondent did not notify Sadler of these checks, and Sadler's new attorney first learned Respondent was retaining these checks during the investigation of the grievance. Sadler's new attorney demanded the checks, an accounting, and Sadler's files. Respondent failed to comply with the demand. Because the two checks expired while in Respondent's custody, the worker's compensation court judge ordered that they be reissued. ¶ 10 The OBA posits that this conduct shows Respondent violated Rule 1.15(a), (b), and (c) [7] of the ORPC and Rule 1.4 [8] of the RGDP. [9] Rule 1.15(a) of the ORPC requires a lawyer who holds funds of a client in connection with representation to keep those funds segregated from the lawyer's own funds in an account known as a trust account. The purpose of Rule 1.15(a) is to require the same care of a lawyer when holding client funds as that of a professional fiduciary. ORPC, R. 1.15 cmt. The germane definition of hold is [t]o keep; to retain; to maintain possession of or authority over. American Heritage Dictionary 657-658 (2nd College ed.1982). Except for the two TTD checks which are discussed later, there is no evidence that Respondent held clients' funds such that he was required to deposit them in a separate trust account. Rather, the evidence is that Respondent received checks from insurers; signed checks made jointly to him; and mailed the checks to the respective client or met with the client, cashed the check, and divided the cash. ¶ 11 Turning to the postal money orders, Respondent testified that these were purchased with his own money as advances for mileage, prescriptions, and similarly related medical expenses for which the client was entitled to reimbursement. We find nothing in the Rule 1.15 of the 2001 ORPC which requires that an attorney deposit his own funds in his trust account before advancing funds, and the OBA fails to explain how Respondent's actions in this regard violate Rule 1.15 of the ORPC. ¶ 12 As to the two TTD checks which Respondent retained and on which he claimed a lien, Respondent retained them until the time had expired for their negotiation. Respondent unquestionably held these checks under Rule 1.15(a) of the 2001 ORPC. Rule 1.15(b) of the 2001 ORPC required that [u]pon receiving funds in which a client ... has an interest, a lawyer shall promptly notify the client.... Respondent admits and the evidence supports a finding that Respondent did not timely notify Sadler when he received the two checks. ¶ 13 Rule 1.15(c) of the 2001 ORPC required: 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. The Workers' Compensation Court found that Respondent had a recognizable lien on the workers' compensation proceeds, that the available funds were insufficient to fully satisfy the competing liens, and that Respondent had advanced claimant sums in the amount of $704.61 for prescription medicine and there [was] no evidence said amount was reimbursed by [Sadler]. The same order also found that Respondent was entitled to $2,529.00 in attorney fees. Under the Worker's Compensation Court's order, the total to which Respondent had a claim from the funds represented by the checks was $3,233.61. Contrary to the Worker's Compensation Court's order, the OBA takes the position in its brief that Respondent had no claim to the funds represented by the two TTD checks. The OBA did not provide clear and convincing evidence that Respondent did not rightly claim an interest in the funds represented by the two TTD checks. ¶ 14 Having found that the OBA did not provide evidence that Respondent did not rightly claim an interest in the funds represented by the two TTD checks, we turn to Rule 1.5(c) to determine if he was required to hold them in a trust account. While Rule 1.15(a) of both the 2001 and the 2008 ORPC requires a lawyer to hold a client's funds in a trust account, there is no such provision in Rule 1.15(c) of the 2001 ORPC, which deals specifically with property in which the lawyer claims an interest. Rather, Rule 1.15(c) of the 2001 ORPC required that client funds be kept separate from the lawyer's. Further, the comments to Rule 1.15 of the 2001 ORPC, in effect at the time of Respondent's alleged misconduct, provided: If there is risk that the client may divert the funds without paying the fee, the lawyer is not required to remit the portion from which the fee is to be paid. Thus, as we construe Rule 1.15 of the 2001 ORPC, Respondent was not specifically required to remit the two TTD checks and was not required to hold them in a trust account. In compliance with Rule 1.15(c) of the 2001 ORPC, Respondent kept the two checks separate from his own property. Thus, we do not find that the OBA proved by clear and convincing evidence that Respondent violated Rule 1.15(c) of the 2001 ORPC. ¶ 15 The OBA also posits that Respondent violated Rule 1.4 of the RGDP [10] by retaining the two TTD checks. [11] Rule 1.4(b) of the 2001 RGDP required a lawyer who has been entrusted with money or other property for a specific purpose apply it to that purpose. Under this rule, a lawyer could not apply his client's money which was designated for a specific purpose to his fees. Under Rule 1.4(b) of the 2001 ORPC, a lawyer had to account for and deliver such money upon demand, and failure to do so would constitute a conversion. This rule provided an exception if the lawyer had a valid lien on the money or property for his services. The OBA fails to address the specific purpose impressed on the funds here or whether Respondent had a valid lien on the funds as found by the Worker's Compensation Court. The funds here were funds in which the lawyer and the client both claimed an interest and were governed by Rule 1.15(c) of the 2001 ORPC as funds in which the lawyer claimed an interest, which we addressed in the previous paragraph. They were not funds governed by Rule 1.4(b) of the 2001 ORPC. ¶ 16 This construction is consistent with the 2008 version of Rule 1.4(b) of the 2001 RGDP. With some changes in language, including the deletion of the language creating a conversion when property impressed with a specific purpose is not used for such purpose, Rule 1.4(b) of the 2001 RGDP was renumbered as Rule 1.15(f) of the 2008 ORPC. [12] Comment 4A to Rule 1.15(f) further clarifies the rule is not meant to govern funds such as the two TTD checks. [13] The comments state Rule 1.15(f) commonly involves funds entrusted to a lawyer by a client or other depositor for payment to a third party on the depositor's behalf. Comment 4A continues that examples of funds are funds for the payment of taxes or litigation expenses, for the down payment on the purchase of property, and for use as an offer of settlement in a pending dispute. The OBA has failed to present clear and convincing evidence that Respondent violated Rule 1.4(b) of the 2001 RGDP in the manner that he handled the two TTD checks.