Opinion ID: 2394650
Heading Depth: 3
Heading Rank: 1

Heading: The Edwards Matter

Text: Judge Jackson concluded that Respondent violated MRPC 1.15(a) by not depositing Ms. Edwards' $3,000 retainer into his escrow account. He also determined that Respondent violated MRPC 1.15(a) by not depositing into his escrow account an additional $630 check from Ms. Edwards which was identified as payment of the filing fees for converting a Chapter 7 to a Chapter 11 bankruptcy, and MRPC 1.16(d) by not promptly returning to Ms. Edwards the $630. The hearing judge also concluded that Respondent violated MRPC 8.4(a), (c) and (d) based upon his previous conclusions of law and especially because Respondent did not deposit Ms. Edwards' $3,000 retainer and $630 check into his escrow account and failed to promptly return the $630. Respondent excepts to Judge Jackson's conclusion that he violated MRPC 1.15(a), arguing that his conduct constituted a technical violation, but not a substantive violation because Ms. Edwards, allegedly, was not harmed as a result. Bar Counsel, conversely, argues that Respondent violated MRPC 1.15(a) because he deposited the $3,000 retainer and the $630 check into his general operating account. MRPC 1.15(a) states in part: A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. With respect to the $3,000 retainer, we recently stated in Attorney Grievance v. Guida, 391 Md. 33, 891 A.2d 1085 (2006): Funds given in anticipation of future legal services qualify as trust money and, accordingly, are to be deposited in trust accounts separate from the attorney's property, to be removed promptly by the attorney as earned. To deposit such trust money into the attorney's personal or operating accounts before the fees are earned constitutes a violation of MRPC 1.15(a). Id. at 53, 891 A.2d at 1097 (emphasis added) (citations omitted). See also Attorney Grievance v. Culver, 381 Md. 241, 279, 849 A.2d 423, 446 (2004) (attorney violated MRPC 1.15(a) when he deposited retainer in operating account); Attorney Grievance v. Blum, 373 Md. 275, 298-99, 818 A.2d 219, 233 (2003) (attorney who deposited funds for the purpose of retaining his future services into his personal and operating accounts violated MRPC 1.15(a)); McLaughlin, 372 Md. at 504, 813 A.2d at 1167 (attorney violated MRPC 1.15(a) when he deposited retainer fees into his operating account). Clearly, Respondent's failure to deposit the $3,000 retainer into his escrow account was a violation of MRPC 1.15(a) and we overrule Respondent's exception. With respect to Respondent's failure to deposit the filing fee of $630 into his escrow account, money linked to a specific purpose qualifies as trust money as well and must be deposited in an escrow account. In Attorney Grievance v. Rose, 391 Md. 101, 111, 892 A.2d 469, 475 (2006), we concluded that Rose violated MRPC 1.15(a) when he failed to deposit $100 from a client for the filing fee in a divorce action into his escrow account. In Attorney Grievance v. Calhoun, 391 Md. 532, 567, 894 A.2d 518, 538-39 (2006), moreover, we determined that Calhoun violated MRPC 1.15(a) by failing to deposit $5,000 received from a client to pay for prospective deposition costs into his escrow account. Clearly, Respondent's failure to deposit the $630 payment for converting the Chapter 7 to a Chapter 11 bankruptcy petition into his escrow account was a violation of MRPC 1.15(a) and we overrule Respondent's exception. Respondent also excepts to Judge Jackson's conclusion that he violated MRPC 1.16(d) regarding the $630, arguing that his conduct constituted a technical violation of that rule, but not a substantive violation because Ms. Edwards, allegedly, was not harmed as a result. Bar Counsel argues, conversely, that Respondent violated MRPC 1.16(d) because he failed to promptly return the $630. MRPC 1.16(d) provides in part: Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as . . . refunding any advance payment of fee or expense that has not been earned or incurred. In Attorney Grievance v. Tinsky, 377 Md. 646, 652-53, 835 A.2d 542, 545-46 (2003), this Court determined that Tinsky violated MRPC 1.16(d) when he failed to return $925 provided by a client for his fees and expenses in connection with a Chapter 7 bankruptcy petition when the client terminated his representation. See also Attorney Grievance v. Duvall, 384 Md. 234, 240, 863 A.2d 291, 294 (2004) (attorney violated MRPC 1.16(d) when she failed to return advance payment of fee and expenses when her client terminated the representation). Respondent did not return the $630 when he determined that a Chapter 11 conversion was not feasible, and thereby violated MRPC 1.16(d); we overrule Respondent's exception. Respondent also excepts to Judge Jackson's conclusion that he violated MRPC 8.4(a), (c) and (d), arguing that he did not act with any wrongful or dishonest intent; did not attempt to violate any rule of professional conduct; did not engage in conduct involving dishonesty, fraud, deceit or misrepresentation; and did not engage in conduct prejudicial to the administration of justice. Respondent contends that he did not violate MRPC 8.4(a), (c) and (d) because his intention was not to cheat Ms. Edwards, nor to enrich himself. Bar Counsel argues in opposition that Respondent violated MRPC 8.4(a), (c) and (d) by intentionally misappropriating Ms. Edwards' funds. Sections (a), (c) and (d) of MRPC 8.4 state in pertinent part: It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Maryland Lawyers' Rules of Professional Conduct . . . ;    (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice. . . . With respect to the $3,000 retainer, we have consistently noted that the failure to deposit client funds into escrow accounts amounts to a violation of MRPC 8.4(c) and (d). In Attorney Grievance v. James, 385 Md. 637, 870 A.2d 229 (2005), James was given a $500 retainer, which he immediately deposited into his operating account. We noted that the gravamen of the issue surrounding the money is that none of Ms. Kazim's retainer ever was placed in a trust account . . ., id. at 661, 870 A.2d at 243, and that this failure constituted misappropriation of client funds in violation of MRPC 8.4(c) and (d): James's failure to deposit Mr. Kazim's retainer and $500 in funds to be paid to an investigator also violated MRPC . . . 8.4(d). . . .    The hearing judge determined that James acted in violation of MRPC 8.4(c) when he dishonestly took trust monies from Mr. Kazim by failing to deposit the $500 retainer and investigative money in the trust account. We have previously held that [i]ntentional misappropriation is also a violation of MRPC Rule . . . 8.4(c). Id. at 663-64, 870 A.2d at 244-45 (citations omitted). See also Attorney Grievance v. McCulloch, 397 Md. 674, 683, 919 A.2d 660, 665 (2007) (attorney violated MRPC 8.4(c) and (d) when she improperly deposited client's retainer into her operating account); Attorney Grievance v. Kapoor, 391 Md. 505, 527-29, 894 A.2d 502, 515-16 (2006) (attorney violated MRPC 8.4(c) and (d) when he deposited partial fee payment into his personal account rather than a trust account for the client). Respondent's failure to deposit the $3,000 retainer into his escrow account was dishonest, deceitful and prejudicial to the administration of justice in violation of MRPC 8.4(c) and (d). We agree with Judge Jackson and overrule Respondent's exception. With respect to the $630 filing fee for converting the Chapter 7 to a Chapter 11 bankruptcy, Respondent's conduct in depositing the filing fee, which was to be held in his escrow account, into his operating account and using the funds for general business purposes also was an act of misappropriation. In a situation comparable to the instant one, Attorney Grievance v. Gallagher, 371 Md. 673, 810 A.2d 996 (2002), a client provided Gallagher $30,000 related to his securing an L-1 visa approval, to be deposited in Gallagher's escrow account; Gallagher, however, deposited the money into his personal account. We concluded that such misconduct violated MRPC 8.4(c) and (d) because Gallagher misappropriated client funds and misrepresented to his client that the funds would be held in his escrow account: This Court has consistently found misappropriation of client funds and deceit to constitute a violation of MRPC 8.4(c). Respondent's conduct was dishonest and deceitful in that he led Mr. Lobo to believe that Mr. Lobo's $30,000 would be held in trust and returned to him in full, subject to their agreement, while he later disbursed that money without Mr. Lobo's knowledge or consent. Respondent also made misrepresentations about his authority to distribute this account's funds to petitioner. Additionally, respondent misled Mr. Damani when respondent indicated that Mr. Damani's money would be held in trust. This Court has also found conduct constituting the misappropriation of client or third party funds to be prejudicial to the administration of justice in violation of Rule 8.4(d). In the case sub judice, we hold that respondent's conduct in the handling of his clients' trust accounts was directly harmful to the legal profession. This Court has said in Attorney Grievance Comm'n v. Clark, 363 Md. 169, 183, 767 A.2d 865, 873 (2001), that [p]ublic confidence in the legal profession is a critical facet to the proper administration of justice. If this Court were not to sanction respondent severely, other lawyers would not receive appropriate guidance regarding the standards to which all should be held and public confidence in the legal profession might be greatly diminished. As such and in line with precedent, we hold that respondent violated MRPC 8.4(d) by engaging in conduct that was prejudicial to the administration of justice. Id. at 712-13, 810 A.2d at 1019-20. Respondent's failure to deposit the $630 into his escrow account and using those funds for general business purposes was a misappropriation of client funds in violation of MRPC 8.4(c) and (d), and we overrule Respondent's exception. Because we have concluded that Respondent has violated various Rules of Professional Conduct, we overrule Respondent's exception that he violated MRPC 8.4(a), which finds professional misconduct where a lawyer violates or attempts to violate the Rules of Professional Conduct. See Attorney Grievance v. Cherry-Mahoi, 388 Md. 124, 159, 879 A.2d 58, 80 (2005); James, 385 Md. at 663, 870 A.2d at 245; Gallagher, 371 Md. at 710-11, 810 A.2d at 1018.