Opinion ID: 1043949
Heading Depth: 3
Heading Rank: 1

Heading: 8(a) stated:

Text: A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless: (1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client; and (2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and (3) the client consents thereto in a writing signed by the client. 4 Effective January 1, 2011, Tennessee Supreme Court Rule 8, Rule of Professional Conduct 1.8(k) provides, “[w]hile lawyers are associated in a firm, a prohibition in the foregoing paragraphs (a) through (i) that applies to any one of them shall apply to all of them.” -7- 2011 amendment to Tennessee Supreme Court Rule 8, Rule of Professional Conduct 1.8 extended the prohibition of engaging in certain business transactions with clients of an attorney to other attorneys in the same firm. Applying the presumption of an intent to change the rule by amendment, we conclude that the pre-amendment version of Tennessee Supreme Court Rule 8, Rule of Professional Conduct 1.8 did not prohibit an attorney from conducting a business transaction prohibited by Rule of Professional Conduct 1.8(a) with the client of another member of his law firm. A hearing panel abuses its discretion “when it causes an injustice by applying an incorrect legal standard, reaching an illogical decision, or by resolving the case ‘on a clearly erroneous assessment of the evidence.’” Henderson v. SAIA, Inc., 318 S.W.3d 328, 335 (Tenn. 2010) (quoting Lee Medical, Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010)). Mr. Graham was not Mr. Lockett’s client, and the rule in place at the time of the loan did not prohibit Mr. Lockett from accepting a loan from Mr. Graham. We therefore conclude that the hearing panel abused its discretion when it determined that Mr. Lockett was subject to discipline for soliciting and accepting the loan from Mr. Graham. Theft and Willful Failure to File Income Tax Returns Although we have determined that Mr. Lockett is not subject to discipline for soliciting and accepting a loan from Mr. Graham, the hearing panel also concluded that Mr. Lockett is subject to discipline for the criminal offenses of theft and willful failure to file income tax returns. Mr. Lockett does not dispute that he should be disciplined for his criminal conduct.5 Instead he urges that the length of the suspension imposed by the hearing panel was excessive. The focus of our review therefore is the hearing panel’s decision to impose a suspension of Mr. Lockett’s law license for a period of four years. 5 Mr. Lockett has not appealed the hearing panel’s conclusion that he violated Tennessee Supreme Court Rule 8, Rule of Professional Conduct 8.4(a), (b), (c), and (d). Rule of Professional Conduct 8.4 provides: It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (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 . . . . -8- Term of Suspension ABA Standards This Court uses the ABA Standards as a guidepost for determining the appropriate level of discipline for attorney misconduct. Tenn. Sup. Ct. R. 9, § 8.4; see also Threadgill, 299 S.W.3d at 809. We consider “the duty violated; . . . the lawyer’s mental state; . . . the potential or actual injury caused by the lawyer’s misconduct; and . . . the existence of aggravating or mitigating factors.” ABA Standard 3.0; see also Sneed v. Bd. of Prof’l Responsibility, 301 S.W.3d 603, 617 (Tenn. 2010). The ABA Standards suggest the appropriate baseline sanction, and aggravating and mitigating factors provide a basis for increasing or reducing the sanction imposed. See Threadgill, 299 S.W.3d at 810; Bd. of Prof’l Responsibility v. Maddux, 148 S.W.3d 37, 40-42 (Tenn. 2004). The portions of the ABA Standards relevant to this case state that [d]isbarment is generally appropriate when: (a) a lawyer engages in serious criminal conduct a necessary element of which includes intentional interference with the administration of justice, false swearing, misrepresentation, fraud, extortion, misappropriation, or theft; or the sale, distribution or importation of controlled substances; or the intentional killing of another; or an attempt or conspiracy or solicitation of another to commit any of these offenses; or (b) a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer’s fitness to practice. ABA Standard 5.11. Suspension is generally appropriate when a lawyer knowingly engages in criminal conduct which does not contain the elements listed in [ABA] Standard 5.11 and that seriously adversely reflects on the lawyer’s fitness to practice. ABA Standard 5.12. In addition to its finding that Mr. Lockett was subject to discipline for the Graham Loan, the hearing panel based Mr. Lockett’s suspension on its determination that Mr. Lockett pleaded guilty to theft, a criminal offense. Mr. Lockett’s theft from his law firm meets the -9- requirements of ABA Standard 5.11, which sets forth the circumstances under which disbarment is the appropriate baseline sanction. Mr. Lockett also pleaded guilty to the willful failure to file federal income tax returns. The hearing panel found that Mr. Lockett failed to file income tax returns because he needed the funds to “offset personal financial problems [he] encountered when his son became ill . . . and [Mr. Lockett] purchased a new family home.” Sanctions imposed on attorneys in other states who willfully fail to file tax returns range from public reprimand to suspension. See Byrd v. Mississippi Bar, 2001-BA-00731-SCT (¶¶ 15-16), 826 So. 2d 1249, 1254-55 (Miss. 2002) (collecting cases). See generally Annotation, Federal Income Tax Conviction as Constituting Nonprofessional Misconduct Warranting Disciplinary Action Against Attorney, 63 A.L.R.3d 512 (1975). Mr. Lockett’s willful failure to file income tax returns meets the requirements of ABA Standard 5.12, which sets forth the circumstances under which suspension is the appropriate baseline sanction. A hearing panel does not abuse its discretion when it makes a choice among several acceptable alternatives. Henderson, 318 S.W.3d at 335. Although the hearing panel could have concluded that Mr. Lockett should be disbarred, the hearing panel’s decision that suspension was the appropriate baseline sanction for Mr. Lockett’s conduct was within the discretion of the hearing panel. We arrive at this conclusion despite our determination that Mr. Lockett is not subject to discipline for the Graham Loan. Aggravating and Mitigating Factors In determining the applicable period of suspension, a hearing panel may also consider any aggravating or mitigating factors that would justify an increase or reduction in the discipline imposed.6 See Threadgill, 299 S.W.3d at 810; Maddux, 148 S.W.3d at 40-42. 6 The ABA Standards recognize the following aggravating factors:

(e) bad faith obstruction of the disciplinary proceeding by intentionally failing to comply with rules or orders of the disciplinary agency; (f) submission of false evidence, false statements, or other deceptive practices during the disciplinary process; (g) refusal to acknowledge wrongful nature of conduct; (h) vulnerability of victim; (i) substantial experience in the practice of law; (continued...) -10- Although we declined to apply factors not listed in the ABA Standards in previous cases, see Threadgill, 299 S.W.3d at 810, we recognize that the purpose of the ABA Standards is to “promote . . . consideration of all factors relevant to imposing the appropriate level of sanction in an individual case.” ABA Standard 1.3 (emphasis added); see also ABA Standard 9.21 (“[A]ggravating circumstances are any considerations or factors that may 6 (...continued) (j) indifference to making restitution; (k) illegal conduct, including that involving the use of controlled substances. ABA Standard 9.22. The ABA Standards recognize the following mitigating factors: (a) absence of a prior disciplinary record; (b) absence of a dishonest or selfish motive; (c) personal or emotional problems; (d) timely good faith effort to make restitution or to rectify consequences of misconduct; (e) full and free disclosure to disciplinary board or cooperative attitude toward proceedings; (f) inexperience in the practice of law; (g) character or reputation; (h) physical disability; (i) mental disability or chemical dependency including alcoholism or drug abuse when: (1) there is medical evidence that the respondent is affected by a chemical dependency or mental disability; (2) the chemical dependency or mental disability caused the misconduct; (3) the respondent’s recovery from the chemical dependency or mental disability is demonstrated by a meaningful and sustained period of successful rehabilitation; and (4) the recovery arrested the misconduct and recurrence of that misconduct is unlikely; (j) delay in disciplinary proceedings; (k) imposition of other penalties or sanctions; (l) remorse; (m) remoteness of prior offenses. ABA Standard 9.32. The ABA Standards provide that the following factors are neither aggravating or mitigating: (a) forced or compelled restitution; (b) agreeing to the client’s demand for certain improper behavior or result; (c) withdrawal of complaint against the lawyer; (d) resignation prior to completion of disciplinary proceedings; (e) complainant’s recommendation as to sanction; (f) failure of injured client to complain. ABA Standard 9.4. -11- justify an increase in the degree of discipline to be imposed.” (emphasis added)); ABA Standard 9.22 (“[M]itigating circumstances are any considerations or factors that may justify a reduction in the degree of discipline to be imposed.” (emphasis added)). To this end, we consider the aggravating and mitigating factors listed in the ABA Standards as illustrative rather than exclusive. To the extent that our decision in Threadgill concluded otherwise, it is overruled. The hearing panel found as aggravating factors Mr. Lockett’s substantial experience in the practice of law, his previous service as a hearing panel member, the number of transgressions and period of time over which the transgressions occurred, and Mr. Lockett’s seeking, acceptance, and retention of an elected public office while the misconduct was occurring. A lawyer in an official or governmental position who engages in conduct prejudicial to the administration of justice breaches a duty to maintain the public trust. See ABA Standard 5.21 (knowing misuse of office); ABA Standard 5.22 (knowing failure to follow proper procedures or rules); ABA Standard 5.23 (negligent failure to follow proper procedures or rules); ABA Standard 5.24 (isolated instance of negligent failure to follow proper procedures or rules). Mr. Lockett’s misconduct, however, was unrelated to his service in public office and occurred before he assumed office. Misconduct while pursuing public office is not a breach of the public trust. The hearing panel therefore abused its discretion in considering as an aggravating factor Mr. Lockett’s pursuit of elected public office while the misconduct was occurring. The hearing panel considered Mr. Lockett’s previous service on hearing panels as an aggravating factor. We view this finding to be more properly considered as reflecting Mr. Lockett’s substantial experience in the practice of law, an aggravating factor found by the hearing panel. See ABA Standard 9.22(i) (recognizing substantial experience in the practice of law as an aggravating factor). We believe that it is inappropriate to consider such service as an independent aggravating factor. Cf. Threadgill, 299 S.W.3d at 810 (declining to consider involvement in professional associations as a relevant mitigating factor). The hearing panel also considered the number of transgressions and period of time over which the transgressions occurred as an aggravating factor. This finding of the hearing panel is consistent with ABA Standards 9.22(b), (c), and (d) in that Mr. Lockett’s conduct represented a pattern of multiple instances of misconduct resulting from Mr. Lockett’s dishonest or selfish motive. As mitigating factors, the hearing panel considered the personal financial difficulties resulting from the illness of Mr. Lockett’s son and Mr. Lockett’s lack of knowledge that Mr. -12- Graham was a client of the firm when the loan from Mr. Graham was made. The ABA Standards recognize “personal or emotional problems” as an appropriate mitigating factor. See ABA Standard 9.32(c). The hearing panel therefore correctly considered Mr. Lockett’s personal difficulties arising from his son’s illness as a mitigating factor. Finally, the hearing panel found that Mr. Lockett violated Tennessee Supreme Court Rule 8, Rules of Professional Conduct 1.4, 1.8(a), and 8.4(a) and (d) by accepting a loan from Mr. Graham but that his lack of knowledge that Mr. Graham was a client of the Firm was a mitigating factor. We have concluded that Mr. Lockett is not subject to discipline for this loan, and this factor is therefore inapplicable. The hearing panel therefore erred in considering as a mitigating factor Mr. Lockett’s lack of knowledge that Mr. Graham was a client of the Firm. Uniformity of Punishment In reviewing the punishment appropriate for an offense, it is also appropriate to consider sanctions imposed in cases with similar facts. Maddux, 148 S.W.3d at 40. The hearing panel imposed a suspension of four years. This Court has previously considered numerous cases in which attorneys have converted funds for their own use. See Threadgill, 299 S.W.3d at 811 (collecting cases). The sanctions imposed are typically lengthy suspensions or disbarment. See Threadgill, 299 S.W.3d at 810-12. Mr. Lockett cites Maddux, in which we suspended an attorney for thirty days for misappropriating funds from his law firm, as a comparable case. Maddux, 148 S.W.3d at 39-42. Maddux is distinguishable from Mr. Lockett’s case. In Maddux, the trial court found that the attorney misappropriated funds from a law firm but did not have a criminal intent to keep the converted funds permanently. Maddux, 148 S.W.3d at 39. In contrast, Mr. Lockett pleaded guilty to having a criminal intent to permanently deprive his law firm of the misappropriated funds. Mr. Lockett’s criminal conduct represents a serious violation of the ethical standards to which we hold attorneys in this state. Despite the hearing panel’s misapplication of aggravating and mitigating factors, the four-year suspension imposed by the hearing panel is consistent with the sanctions imposed on attorneys for similar criminal conduct. We cannot say that Mr. Lockett’s four-year suspension is an abuse of discretion.7 7 Although Mr. Lockett has not appealed its conclusion, we also agree with the hearing panel that Mr. Lockett should be supervised by a practice monitor for one year if he is reinstated. -13-