Opinion ID: 1287076
Heading Depth: 1
Heading Rank: 2

Heading: Failure to Keep Books and Records

Text: Beal certified in 1979, 1980, and 1981 on his annual attorney registration statements that his trust account records complied with the requirements of DR 1-102(A)(4) and DR 9-103 (now DR 9-104), MCPR. Disciplinary Rule 9-104(A) provides that [e]very lawyer engaged in private practice of law shall maintain or cause to be maintained on a current basis books and records sufficient to demonstrate income derived from, and expenses related to, his private practice of law, and to establish compliance with DR 9-102 and DR 9-103. Beal has admitted that prior to 1983 he was not in technical compliance with the rule. He first began keeping general computer ledgers in response to the LPRB's discovery request. Prior to this, his chief record of trust account disbursements was his checkbook register. He had never done any written reconciliations of his records with bank statements. Lawyers Professional Responsibility Board Amended Opinion No. 9 requires attorneys to keep subsidiary ledgers for each client for whom monies have been received, showing dates of receipts and disbursements. While Beal insisted that he did keep contemporaneous subsidiary ledgers, he was unable to produce any of these at the hearing and ultimately stated that these ledgers were essentially closing statements prepared at the time of the final disbursement of funds to the client. Beal's failure to keep the required trust account and office account books and records violated DR 1-102(A)(4), DR 9-104(A), MCPR, and Opinion No. 9. Beal's actions, however, were not deliberate attempts to file false certifications. The maintenance of proper trust account records is vital to the practice of the legal profession, since it serves to protect the client and avoid even the appearance of professional impropriety. In re Shaw, 298 N.W.2d 133, 135 (Minn.1980). This court has been presented with numerous cases of misconduct involving failure to keep required account books and records. See, e.g., In re Ray, 368 N.W.2d 924 (Minn. 1985); In re Heffernan, 351 N.W.2d 13; In re Lee, 334 N.W.2d 163 (Minn.1983). From these cases, we have become aware that much of this misconduct derives not from the attorney's disregard for his or her clients' interests or for the disciplinary rules, but, rather, from failure to know and understand fundamental principles of accounting and general business practice. As a result, in determining the severity of the sanction to impose, we have often looked to the presence of mitigating circumstances, such as the attorney's cooperation with the board in its investigation, the lack of any attempts on the attorney's part to cover up facts, and the attorney's modification of his or her bookkeeping system so as to have adequate records. See In re Fling, 316 N.W.2d 556. Beal cooperated fully with the LPRB by furnishing such records as existed. He made no attempt to cover up facts. He has attempted to make changes in his recordkeeping methods by hiring an accountant to computerize records and to straighten out previous accounting problems. The accountant testified that he has been running general ledgers on a monthly basis since the summer of 1983.