Opinion ID: 2045446
Heading Depth: 1
Heading Rank: 2

Heading: Handling of Client Funds and Settlement Agreement.

Text: Hansel represented Don Russell (a close personal friend) and Raymond and Suzanne Wilson, who were defendants in a lawsuit brought by Lou Bingley. Attorney Stuart Nielsen represented Bingley. In September 1995, Hansel wrote Nielsen and offered to settle the case for $1000. Nielsen telephoned Hansel and accepted the offer provided the defendants also pay the court costs. Hansel agreed. Bingley had paid $707.35 in court costs. This represented the amount the defendants were to reimburse her pursuant to the settlement. The docket showed other costs: a deposition bill for $372.60 and a service fee of $20.45. The docket also showed that Hansel had paid the deposition bill and his former law partner had paid the service fee. Total costs in the case were therefore $1100.40. To satisfy his portion of the settlement Don Russell purchased a money order from the Community State Bank for $1000. Because the Wilsons had advanced $520 in costs to Hansel, Russell and the Wilsons agreed that Russell would advance the principal settlement amount and that they would settle between themselves later. Russell gave the $1000 money order to Hansel for delivery to Nielsen. Several weeks later Russell asked Hansel if he had sent the money order to Nielsen. Russell testified that Hansel said that he had taken care of it or would soon take care of it. Hansel testified that he told Russell that he would soon take care of it. Hansel also received a check from the Wilsons for $1000. The check was dated September 14, 1995. The check was for Bingley's court costs which, however, were only $707.35. As mentioned, the Wilsons had already advanced Hansel $520 for costs. The $520 was for a deposition the cost of which had only amounted to $372.60. In December Nielsen tried to contact Hansel because Nielsen had not received any settlement payment from him. Nielsen could not reach Hansel so he called the Wilsons. Raymond Wilson told Nielsen he had sent $1000 for the costs to Hansel in September. On December 12 Russell telephoned Nielsen and told him that he had given his $1000 settlement payment to Hansel in September. Following this telephone conversation, Russell immediately stopped payment on the $1000 money order and purchased a second one, which he sent to Nielsen. Later in the month, Nielsen obtained a copy of Russell's first money order. The order was purportedly endorsed by Nielsen and Bingley. The endorsements were forged. The last time Nielsen spoke with Hansel was on September 8, 1995, the day the settlement was reached. Hansel never gave Nielsen any explanation for his failure to forward the payments from Russell and the Wilsons. Nor did Hansel ever contact Russell with an explanation. The evidence shows that the first money order from Russell was deposited in Hansel's personal account at AmerUs Bank. The $1000 money order was deposited with an unrelated check for $500. Hansel testified he had no knowledge of how the forged endorsements appeared on the money order. Hansel, however, admitted the deposit was made at his direction. The deposit ticket had Hansel's initialed instruction that Sandie Cate (a close personal friend of Hansel's) could receive $500 of the $1500 total. Cate apparently took the deposit to the bank and received the $500. The remaining funds were later withdrawn from this account. Hansel testified that an employee made unauthorized withdrawals from the account both before and after he fired her for making the withdrawals. Hansel gave several stories about why he did not forward the settlement checks to Nielsen. In a response to a request for admissions, Hansel gave this explanation: September 1995, after entering into the arrangement with Mr. Nielsen, I pressured Don Russell, who was a close friend of mine, to come up with the money to settle this case.... I was somewhat concerned whether he would go through and settle the case. He has been experiencing financial trouble over a long period of time and I was afraid that he would not have the $1000. Shortly after receiving this check or money order, I had learned from Mr. Russell's bank that he had stopped payment on it. So I kept the check and decided to wait until it was made good. I talked to Mr. Russell on several occasions after this date through the fall of 1995. I had no intention of doing anything regarding this until December of 1995. Russell demolished this explanation when he testified that he had no problem making the check good because it was a cashier's check or money order that he had paid for. The evidence also shows that Russell stopped payment on December 12, several months after he had sent the money to Hansel. This evidence is contrary to Hansel's explanation that Russell had stopped payment in September. Additionally, Russell testified that the only time he talked to Hansel about the money order was when he asked Hansel if he had forwarded the payment to Nielsen. In his testimony, Hansel conceded that he did not see Russell during the fall of 1995. At the disciplinary hearing, Hansel testified that he was not sure why he did not send the money order to Nielsen and that it was negligence on his part. Later, Hansel testified that he did not send the money order to Nielsen immediately [b]ecause at the time I didn't have the releases and whatever prepared. Later still, Hansel testified that at the time I just lost track of everything. I was sick. As to the Wilson's $1000 check, Hansel testified he did not know what happened to the money. At this point Hansel was shown the reverse side of the check, which showed it had been presented at Norwest Bank. He then testified that he had a trust account at Norwest and that the funds may still be in that account. Earlier, however, Hansel had testified that his trust account was closed at the beginning of 1995. Without question, this evidence establishes that Hansel failed to account for clients' funds in his possession, failed to maintain clients' money separately from his own, failed to properly follow through with the settlement, and lied to his client when asked if he had sent the settlement check to Nielsen. We find it intolerable that in response to a request for admission Hansel concocted a story that his client Russell was responsible for Hansel's failure to send the $1000 check to Nielsen. We find it incredible that at this late date Hansel does not know what happened to the Wilsons' $1000. In addition, we are not so naive to believe Hansel has no knowledge about the forged endorsements on the Russell money order. We find this conduct constitutes a violation of the following disciplinary rules: DR 7-101(A)(1) (lawyer shall not intentionally fail to seek client's lawful objectives); DR 7-101(A)(3) (lawyer shall not prejudice client in the course of professional relationship); DR 9-102(A) (lawyer shall deposit client funds paid to lawyer in an identifiable trust account); DR 1-102(A)(3) (lawyer shall not engage in illegal conduct involving moral turpitude); and DR 1-102(A)(4) (lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation). Hansel also failed to respond to board inquiries on two occasions about his handling of the settlement funds and his failure to complete the settlement. Hansel's failure to respond violated DR 1-102(A)(5) (lawyer shall not engage in conduct prejudicial to administration of justice) and DR 1-102(A)(6) (lawyer shall not engage in any other conduct adversely reflecting on lawyer's fitness to practice law).