Opinion ID: 2448503
Heading Depth: 4
Heading Rank: 1

Heading: The ABA Standards for Imposing Lawyer Sanctions support Rice's suspension.

Text: The American Bar Association has developed standards for imposing lawyer sanctions, by which we are guided but not constrained. [16] Under the ABA model, a court imposing sanctions must consider four factors: (1) the duty breached by the attorney; (2) the attorney's mental state; (3) the injury caused by the attorney's actions; and (4) aggravating and mitigating factors. [17] The initial determination of the appropriate sanction is made after the court addresses the first three factors. After its initial sanction determination, the court considers aggravating and mitigating factors to determine whether the sanction should be increased or decreased according to specific circumstances. [18]
Rice's trust accounting violations breached his duty to clients under ABA Standard 4.1, Failure to Preserve the Client's Property. In addition, Rice's trust accounting violations breached his duty to the public under ABA Standard 5.1, Failure to Maintain Personal Integrity. The latter provision covers cases involving commission of a criminal act that reflects adversely on the lawyer's honesty [and] trustworthiness ... or in cases with conduct involving dishonesty, fraud, deceit, or misrepresentation. Rice emphasizes that he was not found by the Area Hearing Committee to have engaged in either felonious or dishonest conduct. But the Hearing Committee's finding that Rice knowingly... misappropriated client funds by making uninvoiced payments to himself implies conduct that violates the duty to maintain personal integrity, even though the Hearing Committee did not find criminal conduct. By failing to produce records in cooperation with the Bar's investigation, Rice violated Alaska Bar Rule 15(a)(4). He breached his duty to the legal system under ABA Standard 6.2, Abuse of the Legal Process, which covers cases involving failure to expedite litigation or bring a meritorious claim, or failure to obey any obligation under the rules of a tribunal.
The ABA Standards model assumes three possible mental states: intent (when the lawyer acts with the conscious objective or purpose to accomplish a particular result), knowledge (when the lawyer acts with conscious awareness of the nature or attendant circumstances of his or her conduct both without the conscious objective or purpose to accomplish a particular result), and negligence (when a lawyer fails to be aware of a substantial risk that circumstances exist or that a result will follow, which failure is a deviation from the standard of care that a reasonable lawyer would exercise in that situation). [19] The Hearing Committee found that Rice acted knowingly (albeit not necessarily with the intent to deprive his clients of property) by commingling and misappropriating client funds and by failing to keep adequate records. The Disciplinary Board implicitly adopted these findings of fact when it adopted the Hearing Committee's recommendations. Rice has not met his burden of demonstrating that the Hearing Committee's findings were incorrect. [20] The Hearing Committee further found that Rice willfully failed to cooperate with the Bar's investigation, thus imputing intent to Rice's behavior. Rice has failed to discredit this finding. As discussed, the primary explanation Rice offered for his failure to submit subpoenaed documents, i.e., that he had pending motions to quash the Bar's subpoena and for a protective order, is unavailing. For several months before Rice filed these motions, he knew of the subpoena and he was aware that the CD had arrived broken at the Bar's office. Yet he still failed to respond to the Bar's request. This ongoing refusal to comply with the Bar's unambiguous request supports the finding that Rice acted with intent when he failed to cooperate.
Under the ABA Standards, [t]he extent of the injury is defined by the type of duty violated and the extent of actual or potential harm. [21] Rice emphasizes repeatedly in his briefing that he was not found to have caused financial loss to any client and that the potential harm to clients posed by his trust accounting practices was limited by his careful safeguarding of funds so that at all times he held the funds necessary to meet all of his fiduciary obligations. But, as the Hearing Committee noted in its findings and conclusions, Rice's ability to cover his obligations relied in part on a mistaken view of trust funds as fungible assets, such that one client's funds could be used to pay another client. Moreover, the Hearing Committee determined that Rice may have simply been very lucky in being able to manipulate account balances to cover his need to provide funds, masking a high potential for harm to his clients. We have held that the public suffers injury whenever a lawyer fails to maintain personal integrity by improperly handling funds held in trust. [22] We agree with Bar Counsel that Rice's violation of Alaska Bar Rule 15(a)(4) delayed an accounting, causing potential harm to clients whose money was exposed to mismanagement for a longer period of time, and harmed the reputation of the legal profession for integrity, competence, and effective self-regulation.
ABA Standard 6.21 provides that disbarment is appropriate when a lawyer knowingly violates a court order or rule with the intent to obtain a benefit for the lawyer or another, and causes serious injury or potentially serious injury to a party or causes serious or potentially serious interference with a legal proceeding. By failing to respond to the Bar's subpoena, Rice intended to obtain the benefit of delaying and impeding the Bar's investigation; his delay which arguably lasted from the time of the Bar's initial records request up through the present, given his continuing failure to produce some of the requested information caused serious interference with the investigation and the formal proceedings that followed from it. Disbarment is therefore a permissible sanction under ABA Standard 6.21. Under ABA Standard 4.12, [s]uspension is generally appropriate when a lawyer knows or should know he is dealing improperly with client property and causes injury or potential injury to a client. Rice's actions caused at least potential injury to his clients. It also appears that, consistent with the Hearing Committee's findings, his misappropriation of client property was knowing; Rice knowingly paid himself out of client trust funds without having properly invoiced clients for services (regardless of whether he believed he had earned the payments), thus violating his fiduciary duties. The initial sanction indicated under ABA Standard 4.12 is suspension.
Rice argues that a number of the issues the Bar considers to be aggravators are actually mitigators. For example, he claims he cooperated with the Bar and that his cooperation in providing the documents used to convict him should actually be a mitigator. He also argues that the Hearing Committee should have considered as a mitigator the fact that none of his clients was harmed or even complained. We do not find these arguments convincing. As noted above, the fact that the documents Rice provided were used to establish the Bar's case against him does not excuse his failure to provide other documents requested by the Bar and to otherwise cooperate with the Bar's investigation. The fact that no client was shown to suffer a financial loss is not a mitigating factor; potential harm is sufficient to trigger even the most severe sanctions under the ABA model. [23] Further, the lack of client complaints only establishes that no client was aware of any misconduct on Rice's part. The Bar, meanwhile, argues that [p]ractically every aggravator listed in ABA Standards... 9.22(a)-(k) applies to Rice. Specifically, the Bar cites what it characterizes as Rice's dishonest and selfish motives, repeat and multiple offenses, bad faith obstruction of the discipline process, false and deceptive conduct, lack of remorse, exploitation of vulnerable clients, substantial legal experience, and potential criminal conduct. The Bar contends that Rice's only mitigating factor is his lack of a prior discipline record. We judge this assessment to be too harsh. Rice engaged in repeat offenses and obstructed the discipline process; he does have substantial legal experience and has exhibited no remorse. But his trust accounting misconduct, although knowing and potentially harmful, does not seem to have had the bad intent which the Bar attributes to it. Nothing in the record indicates that he had dishonest and selfish motives beyond an unwillingness to comply with accounting requirements, or that he engaged in deceptive conduct (except to the extent that taking client payments without proper documentation is intrinsically deceptive). Admittedly, there is also little in the record to definitively exclude less benign interpretations of Rice's behavior, but the Bar has the burden of demonstrating its initial charges against a respondent attorney. Thus, we exclude these factors from the applicable aggravators in evaluating the appropriate sanction for Rice's conduct. The ABA Standards do not provide guidance on how mitigating and aggravating factors are to be weighted in determining sanctions. [24] In the absence of such guidance, we are inclined to place a great deal of weight on the absence of dishonest and selfish motives, which seems to distinguish Rice's conduct from more serious offenses such as the deliberate and calculated theft of client funds. Rice's conduct is more accurately summarized as irresponsible accounting and estimated, uninvoiced (but, in Rice's view, not unearned) payments to himself. The absence of dishonest and selfish motive, combined with the fact that Rice has no prior disciplinary offenses, is sufficient to reduce his punishment from the disbarment indicated under ABA Standard 6.2 to suspension. The appropriate period of suspension is further analyzed below, with reference to our precedent for attorney discipline.