Opinion ID: 1539762
Heading Depth: 1
Heading Rank: 4

Heading: Misrepresentations To Bar Counsel

Text: The chief source of disagreement between McLaughlin and Bar Counsel is the nature of McLaughlin's violation of MRPC 8.4(c) when he made the three misrepresentations to Bar Counsel in his May 15, 2006, letter. Bar counsel characterizes these false statements as lies that warrant disbarment and cites three cases in which attorneys were disbarred for 8.4(c) violations: Attorney Grievance Comm'n v. White, 354 Md. 346, 731 A.2d 447 (1999), Attorney Grievance Comm'n v. Ellison, 384 Md. 688, 867 A.2d 259 (2005), and Attorney Grievance Comm'n v. Nussbaum, 401 Md. 612, 934 A.2d 1 (2007). Each of these cases is distinguishable from the one before us. In White, the respondent was an assistant public defender alleged to have represented clients in private practice after the implementation of a ban on such representations. White originally testified in a postconviction proceeding that her post-ban representations stemmed from client contacts arising from before the ban was initiated, which she thought to be permissible. When it was revealed that White contacted victims of a fire regarding a personal injury matter more than a year after the implementation of the ban, she testified in a deposition that she was not acting as a lawyer in this matter, but as a law clerk. White, 354 Md. at 360, 731 A.2d 447 at 455. We affirmed the following Circuit Court finding: The [r]espondent obviously could not testify that she had been contacted prior to the date of the ban. Therefore, she asks this court to believe that a lawyer with her years of experience, who had tried any number of serious felony cases in Prince George's County, and had done so for a number of years, now considered herself a law clerk for purposes of obtaining this case. She further asked this court to believe that the attorney to whom the case was being referred was going to divide the fee evenly with someone who was acting as a law clerk in the case. This court cannot and does not accept such an explanation. Id. at 361, 731 A.2d at 455. White was found by the Circuit Court to have violated MRPC 8.4(c) in her testimony in both the postconviction proceeding and the deposition. Id. at 361-62, 731 A.2d at 455-56. We confirmed that White clearly violated Rule 8.4(c) because her testimony, made under oath, was, at the very least, dishonest, deceitful, and misrepresented the truth about her involvement in the case. Id. at 363, 731 A.2d at 457. This differs from the instant matter where the Circuit Court found that the misinformation in McLaughlin's letter was not dishonest or deceitful. Indeed, the Circuit Court noted that McLaughlin's testimony about winding down his business as an explanation for the misappropriation was credible. We deduce from the Circuit Court's opinion that its finding that McLaughlin acted negligently applies not just to his misappropriation of client funds, but to his misrepresentations as well. In Ellison, the MRPC 8.4(c) violation arose out of an Assignment and Authorization agreement in which Ellison agreed to pay a physical therapist who had treated Ellison's client in a personal injury matter. Ellison later rescinded the Assignment in a letter which stated that he was no longer representing his client. We held that there was ample evidence to support the Circuit Court's conclusion that the letter misrepresented his ongoing representation of [his client] and that this letter's main purpose was to declare erroneously the Assignment `null and void' and allow Ellison to avoid paying [the physical therapist] under the Assignment in violation of MRPC 8.4(c). Ellison, 384 Md. at 711, 867 A.2d at 272. We also affirmed the Circuit Court's finding that Ellison misrepresented these facts to Bar Counsel's investigator. Id. Our discussion of Ellison's conduct reveals a very different mens rea from the case at hand. The Circuit Court here found that McLaughlin was negligent and did not act with dishonest or selfish motives in connection with his misappropriation and the corresponding misrepresentation, whereas in Ellison, we found: [Ellison's] transgressions include dishonesty with and misrepresentations to Bar Counsel in connection with this disciplinary matter, improper contingency fee arrangements, improper handling of property belonging to a third party assignee, various Maryland Rules violations regarding the handling of funds in attorney trust accounts, and attorney misconduct involving dishonesty and the administration of justice. In reviewing Judge Geter's findings, we find that Ellison acted intentionally, the most culpable mental state, because he acted with a conscious objective or purpose to accomplish a particular result. Attorney Grievance Comm'n v. Glenn, 341 Md. 448, 485, 671 A.2d 463, 481 (1996) (citing Standard 3.0 of the ABA Standards for Imposing Lawyer Sanctions, reprinted in Selected Statutes, Rules and Standards on the Legal Profession, 287, cmt. at 300 (1987)). It is evident from Judge Geter's findings that Ellison acted with intent to deny [the physical therapist] his fees. He further acted with intent to hide from Bar Counsel and [Bar Counsel's investigator] his continuing representation of [his client] and the receipt of a fee for that representation. Ellison knew of the details of his representation of [his client] and his duty to fulfill the Assignment. The hearing judge found that Ellison knew, or should have known, from the plain text of the Assignment that it was still valid. His subsequent conduct during the investigation demonstrated his intent to obscure the facts from the eyes of Bar Counsel. Id. at 715, 867 A.2d at 274-75 (emphasis added, footnote omitted). Ellison's absence of a prior disciplinary record and relative inexperience were the only mitigating factors, and we held that they did not temper sufficiently the intentional dishonesty exhibited by Ellison throughout his interactions with [the physical therapist] over the Assignment and with the Office of Bar Counsel during the investigation. Id. at 716, 867 A.2d at 275. We also held that [i]n the absence of more significant mitigating factors than are present here, intentional dishonesty by a lawyer admitted to the Maryland Bar merits disbarment. Id. This presented a much different factual scenario from the instant matter where the Circuit Court found more than a half dozen mitigating factors that did temper McLaughlin's conduct by suggesting that he did not act intentionally in his misrepresentations to Bar Counsel. In Nussbaum, we considered the following factual scenario, which is very similar to the one before us: Respondent wrote checks from his escrow account and deposited the funds into his operating account in order to cover personal expenses. When it came time for Respondent to disburse funds from the escrow account to proper payees, he would borrow funds from other clients, from personal loans improperly deposited into the escrow account, or from rents received for office space in the building housing his law office. Nussbaum, 401 Md. at 639, 934 A.2d at 16. We agreed with the hearing judge that Respondent's conduct was dishonest and deceitful in violation of Rule 8.4(c) in that he misappropriated client funds and misrepresented to clients that the funds were properly safeguarded. Id. at 642, 934 A.2d at 18. Although the Respondent asked us to consider as mitigating factors that no client was explicitly misled or suffered any financial harm, that all client obligations were timely discharged, and that Respondent never intended to deprive any client of the timely access to escrow funds or to defraud any client[,] we nevertheless found that his actions were dishonest, deceitful, and motivated by his own pecuniary interests. Id. at 644, 934 A.2d at 20. Writing for the Court, Judge Battaglia observed: We have repeatedly stated that the misappropriation of entrusted funds is an act infected with deceit and dishonesty, and, in the absence of compelling extenuating circumstances justifying a lesser sanction, will result in disbarment. Id., 934 A.2d at 19 (citation and international quotation marks omitted). Nussbaum cited a number of cases for the proposition that not all findings of the misuse of client funds have resulted in disbarment. Nonetheless, we recognized that the key to imposing sanctions in misappropriation cases is the attorney's simultaneous violation of Rule 8.4(c). We noted that [i]n every case cited, except [ Attorney Grievance Comm'n v. Calhoun, 391 Md. 532, 575, 894 A.2d 518, 544 (2006)], however, the hearing judge did not find a violation of MRPC 8.4(c). [10] Id. at 646, 934 A.2d at 21. We summarized and distinguished Calhoun as follows: In the singular case in which a violation of 8.4(c) was found and disbarment was not ordered, Calhoun, 391 Md. at 532, 894 A.2d at 518, the respondent was charged with violating multiple rules of professional conduct, including 8.4(c), in connection with her representation of a client in a sexual harassment suit. The hearing court found that Calhoun had commingled trust funds and personal funds by failing to deposit two $5,000.00 payments for fees and an $8,000.00 settlement check into a properly designated attorney trust account. The hearing judge found that Calhoun had misled her client concerning legal fees and costs owed by failing to keep him informed of the accrual of those fees and costs in a timely fashion, as was required by her representation agreement. Specifically, the court found that she mislead by silence and lack of communication, id. at 548, 894 A.2d at 527, and that she violated 8.4(c) by her failure to communicate properly. Id. at 646-47, 934 A.2d at 21. In determining Calhoun's sanction, this Court noted that while the hearing judge did find that respondent violated MRPC 8.4(c), he did not find specifically that respondent engaged in dishonest or fraudulent conduct, and focused on the respondent's treatment of the $8,000.00 in settlement funds. Id. at 647, 934 A.2d at 21 (citation and internal quotation marks omitted). We noted that the hearing court did not find that Calhoun had intentionally misappropriated the settlement funds, but rather that the facts indicated that she may have believed, albeit erroneously, that the settlement funds were owed to her to cover fees and costs associated with representation. Id. at 647, 934 A.2d at 21. We concluded in Nussbaum: The facts of the present case are different from those of Calhoun in two very important respects. First, in the present case the hearing court found by clear and convincing evidence that Respondent engaged in dishonesty and deceit/misrepresentation. Second, there are no factual findings in the present case to support the premise that client funds were unintentionally or accidentally misappropriated. In Calhoun, the attorney had properly incurred fees and costs associated with the representation of her client; her violation of MRPC 8.4(c) was a result of her lack of diligence in communicating these expenses to her client and following appropriate procedures in obtaining payment. The violations in the present case do not result from the Respondent improperly utilizing client funds which he believed he had earned for services rendered; rather, he knowingly and intentionally misused client funds over a period of two years in order to cover personal expenses unrelated to his representation of those clients. Id. at 647, 934 A.2d at 21-22 (emphasis added, italics in original). We consider McLaughlin's conduct closer to the lack of diligence exercised by the attorney in Calhoun than the intentional conduct found in Nussbaum. Nussbaum and Calhoun demonstrate that an attorney's mental state is a significant enough factor in misappropriation cases to merit a sanction less than disbarment, even when there was a corresponding MRPC 8.4(c) violation. The Circuit Court found that McLaughlin did not act with dishonest or selfish motives and appeared to recognize the seriousness of his improper use of his escrow account, and was genuinely remorseful at his hearing.