Opinion ID: 1539762
Heading Depth: 1
Heading Rank: 5

Heading: The Importance Of Negligence For The Underlying Misappropriation

Text: In Nussbaum, Judge Battaglia also explained that we have declined to order disbarment in cases where the misappropriation of funds was due to negligence, rather than intentional misconduct but that indefinite suspension was not the appropriate sanction for Nussbaum because his actions were intentional, not negligent. Id. at 648, 934 A.2d at 22. One such case in which the attorney's actions were negligent was Attorney Grievance Comm'n v. Zuckerman, 386 Md. 341, 872 A.2d 693 (2005). There, we held that an indefinite suspension with the right to reapply after thirty days was the appropriate sanction where there was a misappropriation of trust account funds based upon the lawyer's ineffectual accounting procedures and theft of funds by an employee. Id. at 377, 379, 872 A.2d at 714, 716. Though no employee theft was involved in the instant matter, McLaughlin also presents a case of misappropriation from questionable accounting practices[.] In Zuckerman, we considered the fact that there was no evidence that Mr. Zuckerman acted with an intent to steal money, nor did he benefit personally from the misappropriation of the funds and that none of his clients suffered any financial loss[.] Id. at 379, 872 A.2d at 716. Likewise, in the instant matter, the Circuit Court found that [n]o evidence was presented that the Respondent ever shorted a client a penny. In many instances, the Respondent took out less in fees than called for in his retainer agreements. Once expenses were deducted, a net attorney fee rather than gross attorney fee remained. See also Attorney Grievance Comm'n v. Glenn, 341 Md. 448, 491, 671 A.2d 463, 484 (1996) (citing ABA standard indicating that [s]uspension is generally appropriate when a lawyer ... should know that he is dealing improperly with client property and causes ... potential injury to a client). By relying on our reasoning in Nussbaum, Bar Counsel has actually identified the very exceptions to disbarment that apply to McLaughlin. First, unlike the disbarred attorneys in White, Ellison, and Nussbaum, McLaughlin was found to have acted negligently rather than intentionally. In accord with our discussion in Zuckerman, the fact that McLaughlin was found to have acted with negligence in the misappropriation of client funds is a factor that weighs in favor of suspension, rather than disbarment. With regard to McLaughlin's 8.4(c) violation, the Circuit Court found that McLaughlin credibly testified that his original business operating account was closed because he was in the process of winding down his law practice, and planning shortly to vacate his office. However, that process took much longer than expected. This lends further credence to the notion that McLaughlin's misrepresentations to Bar Counsel were misunderstandings rather than abject lies. In crafting this sanction, we are mindful of the impropriety stemming from McLaughlin's loans to Fitzgerald and her kin. However, our independent examination of the record sheds light on the Circuit Court finding that Fitzgerald was unfairly forced to enter the loan and payback agreement with McLaughlin. During cross-examination before the Circuit Court, Fitzgerald indicated that the loan, its terms, and the pressure she felt in agreeing to them were a function of her dire financial straits at the time: [McLaughlin's Counsel]: When you went to Mr. McLaughlin to borrow money, why did you go to him as opposed to [a] family member? [Fitzgerald]: Because the only closest family members are my mom and my grandmother, which they are not financially stable. And that was my last resort where I would be able to get that amount of money from[.] [McLaughlin's Counsel]: Did you go to Mr. McLaughlin and tell him you needed money? [Fitzgerald]: Yes, I told him I was on the verge of being put out of my apartment. [McLaughlin's Counsel]: What would you have done if Mr. McLaughlin wouldn't loan you money? [Fitzgerald]: Then I would have had to move. Fitzgerald testified that McLaughlin proposed waiting for her settlement rather than loaning her the money, but that her circumstances would not permit her to wait: He explained to me when I was asking for the loan, he was stating, you know, your settlement should be coming to a closure soon. And, you know, I'm stating to him that my rental office is not going to wait. And I had my documents with me being evicted and everything. Fitzgerald also discussed the interests at play that led to her agreement to pay back her mother's loan: [McLaughlin's Counsel]: Well, did you understand you didn't have to agree to pay your mother's money back? You understood that, didn't you? [Fitzgerald]: Yeah, but I also understood that I would be put out if I didn't agree to pay that money back. [McLaughlin's Counsel]: You understood that Mr. McLaughlin would not loan you the money without having some guarantee that he was going to be paid back from your mom, also, who apparently had not honored her agreement, is that correct? [Fitzgerald]: Yes, that's correct. We quote this testimony not to excuse McLaughlin for his inappropriate client dealings and his failure to direct Fitzgerald to independent counsel, but to show that McLaughlin made the loan upon request from Fitzgerald, in light of her pressing circumstances. This is in keeping with the Circuit Court's finding that McLaughlin violated rules related to conflict of interest in the Fitzgerald matter, but that this conduct did not rise to the level of an MRPC 8.4 violation. The nature of this misconduct supports a suspension sanction. See Attorney Grievance Comm'n v. Webster, 348 Md. 662, 679, 705 A.2d 1135, 1143 (1998) (issuing sanction of suspension for trust account violations paired with violation of the rules related to conflict of interest). For the above reasons, we are persuaded that indefinite suspension is the appropriate sanction. We shall so order. IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING COSTS OF ALL TRANSCRIPTS, PURSUANT TO MARYLAND RULE 16-761. JUDGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMMISSION AGAINST DONALD P. MCLAUGHLIN FOR THE SUM OF SUCH COSTS. HARRELL, J., dissents and files opinion in which BATTAGLIA and BARBERA, JJ., join. Dissenting Opinion by HARRELL, Judge, which BATTAGLIA and BARBERA, JJ., join. I dissent from the sanction of indefinite suspension. I would disbar McLaughlin. [1] As regards the Fitzgerald complaint, McLaughlin was found by Judge Rattal apparently to have mis-appropriated intentionally trust monies. He found that McLaughlin violated MRPC 1.15 (Safekeeping Property), Maryland Code (1989, 2004 Repl.Vol.), Business Occupations and Professions Article, § 10-306 (Misuse of Trust Money), and Md. Rule 16-609 (Prohibited Transactions) by (a) making loans from funds in his trust account that belonged to other clients; (b) without the consent of the other clients; and (c) without maintaining complete accounting records of the funds in his trust account. In his analysis of whether violations occurred, Judge Rattal neither found nor concluded that the violations occurred as the consequence of merely negligent conduct. [2] , [3] Compounding the enduring misappropriation scheme presented in this record (taking into account the so-called negligent misappropriation portion reflected in the hearing judge's separate analysis of Bar Counsel's overdraft complaint) is McLaughlin's intentionally false and misleading misrepresentations to Bar Counsel. [4] Considered together, we are confronted with intentional misappropriation, negligent misappropriation, obvious conflict of interest, and intentional misrepresentations to Bar Counsel in the course of an investigation. This array, I think, cuts to the core of what we should expect minimally from a Maryland lawyer. Candor and truthfulness are two of the most important moral character traits of a lawyer. Attorney Grievance Commission v. Myers, 333 Md. 440, 449, 635 A.2d 1315, 1319 (1994). Even where no client suffers actual financial loss, misappropriation is a most egregious violation ... because ... [t]he rule is concerned with the risk of loss, not only the actual loss. Attorney Grievance Commission v. Zdravkovich, 381 Md. 680, 704, 852 A.2d 82, 96 (2004), quoting Attorney Grievance Commission v. Glenn, 341 Md. 448, 489, 671 A.2d 463, 483 (1996). I would disbar. Judges BATTAGLIA and BARBERA join this dissent.