Opinion ID: 2516942
Heading Depth: 1
Heading Rank: 6

Heading: Presumptive sanction for violations

Text: ¶ 71 To determine the presumptive sanction for a violation, the court must determine the attorney's mental state leading to the violation and level of injury caused by the violation. ABA, Standards for Imposing Lawyer Sanctions std. 3.0 (1991 & Supp. 1992) ( Standards ). Under the Standards a lawyer acts knowingly when he is consciously aware of the nature or attendant circumstances of the conduct and undertakes the conduct notwithstanding its unethical nature. Standards Definitions at 17. By contrast a lawyer acts negligently when he fails to heed a substantial risk that circumstances exist or that a result will follow. Id. ¶ 72 An ethics violation causes injury when it harms a client, the public, the legal system, or the profession. . . . The level of injury can range from `serious' injury to `little or no' injury. Id. Former RPC 1.14(b)(3) violation and presumptive sanction ¶ 73 Trejo admitted he violated former RPC 1.14(b)(3) by failing to keep the required records on his Interest on Lawyer's Trust Account (IOLTA). But the majority improperly asserts Trejo knowingly violated former RPC 1.14(b)(3), apparently because he knew what records were required and he did not maintain them. Majority at 1171. It also holds this violation injured Trejo's clients. Id. at 1171. ¶ 74 The majority's analysis errs because there is no evidence suggesting Trejo knew his trust accounting records were insufficient. The majority relies on Trejo's previous reprimand, for failing to keep records. Id. at 1171. However, following the reprimand Trejo changed his procedures and began keeping some trust accounting records, including a hand written journal. Finding of Fact 12. Although these accounting records were insufficient, there is no evidence Trejo knew this record keeping violated his professional duties. Because he was not aware his procedures were insufficient, he was merely negligent when he violated former RPC 1.14(b)(3). ¶ 75 More importantly, Trejo's lack of trust account records caused `little or no' [5] harm to his clients. Trejo had only one client receiving funds from the trust account, and this client received every penny. There is no evidence the client suffered any deprivation based on the short delay in transmitting these funds. ¶ 76 The majority claims [t]he delay in payments constitutes an injury to a client. Majority at 1171. Although the majority makes this statement unabashedly, it fails to identify any actual harm this short delay caused the client. The only possible harm suffered is the client's loss of interest on the funds, likely measured in pennies. This loss of pennies in interest must be the harm the majority seeks to punish. ¶ 77 That the majority would find the client's loss of interest sufficient to deprive Trejo of his ability to practice law is curious. This court routinely confiscates interest earned by a client from funds held in an IOLTA account, and yet today we punish an attorney for doing that very thing (although much less so). [6] Unlike the harm at issue here, in the aggregate the court's total take is nearly $9 million a year. [7] I find it not only unconscionable but hypocritical for the majority to punish Trejo for depriving a client of pennies in interest, when we deliberately, willfully, and intentionally confiscate millions of dollars in client funds from thousands of clients annually. ¶ 78 Since Trejo violated former RPC 1.14(b)(3) negligently, and caused at most de minimis harm to his clients, the presumptive sanction for this violation is admonishment. [8] Former RPC 1.14(a) violation and presumptive sanction ¶ 79 Trejo violated former RPC 1.14(a) when he deposited earned funds into his IOLTA account thereby commingling personal and client funds. Although Trejo admitted to commingling client funds with his own, [9] there is no evidence he did so knowingly. Nor was any client actually or potentially injured by this commingling. ¶ 80 Trejo did not knowingly commingle client funds with earned fees. As the Board recognized, whether nonrefundable retainers are earned fees or if the fee is unearned until the client consents to representation is unsettled. Assuming arguendo Trejo knew he should not commingle client and personal funds, [10] nothing proves Trejo knew he was improperly commingling the funds he reasonably believed were unearned. ¶ 81 The majority claims Trejo's inadvertent commingling of funds in his IOLTA account was potentially injurious because it could result in a personal creditor satisfying a judgment against Trejo from the client trust account. Majority at 1172. A [p]otential injury is harm that would have resulted from the violation but for some intervening factor or event. Standards Definitions at 17. ¶ 82 However, the majority's identification of this potential injury fails to meet this standard as the identified injury is nothing more than a hypothetical, inchoate risk which was never in danger of coming to fruition. There is no evidence that Trejo had any outstanding debts nor is there any evidence Trejo had creditors seeking to satisfy a judgment from his assets. There was no intervening factor or event that prevented a creditor from attempting to attach the IOLTA account. Thus the potential injury identified by the majority is simply an unsupported hypothetical risk and not an actual potential injury justifying suspension. ¶ 83 Since Trejo's commingling of funds was done negligently, and there was little or no injury caused by the violation, the presumptive sanction for this violation is also admonishment. [11] Former RPC 5.3(b) violation and presumptive sanction ¶ 84 Lastly, Trejo violated former RPC 5.3(b) by failing to adequately supervise Alvarez who embezzled funds from Trejo through his IOLTA account. There is no evidence Trejo knowingly failed to adequately supervise Alvarez, nor is there evidence that his clients were harmed by the lack of supervision. In fact, logic would dictate Trejo did not know his employee was stealing from him because he suffered the greatest harm, direct theft by an employee. ¶ 85 Trejo was negligent in supervising Alvarez. The crux of the majority's assertion is that Trejo knew, and consciously disregarded, he had a duty to implement controls over Alvarez's access to the trust account. However, the evidence does not support this assertion. The evidence supports only the inference that Trejo knew his ethical duties regarding trust accounting could not be delegated to a nonlawyer assistant. Majority at 1172. But this does not mean an attorney cannot put a third party in charge of his trust account. As Trejo points out, most law firms delegate responsibility for trust fund accounting to a separate accounting department. It is not Trejo's delegation of responsibility in this case that was improper, but his dishonest employee. Trejo cannot be punished again for trusting his employee who turned Trejo into a victim by stealing from him. ¶ 86 Again, Trejo's clients received all funds due; there was no harm. The majority fails to address the harm this violation caused, but again the only possible harm is measured in pennies. ¶ 87 Because Trejo's violation of former RPC 5.3(b) was negligent and caused little or no harm, the presumptive sanction is, again, admonition. [12]