Opinion ID: 2448503
Heading Depth: 4
Heading Rank: 2

Heading: Alaska case law supports the recommended four-year suspension.

Text: We have previously issued holdings in a number of cases dealing with client trust fund misconduct by attorneys. In order to provide context for the unique facts of this case, we focus here on five cases representing the spectrum of offenses and sanctions in the trust fund misconduct category. In In re Mann, an attorney misappropriated $2,001 obtained on a referral collection for the benefit of another law firm and used the money to make mortgage payments on his home. [25] He subsequently turned himself in (resulting in a criminal conviction for misapplication of property), returned the misappropriated funds, and publicly informed the community of his misconduct. [26] We noted that disbarment would typically be the appropriate sanction for Mann's conduct, but held that mitigating factors, chiefly Mann's voluntary disclosure, restoration of the misappropriated funds, and remorse, reduced the appropriate sanction to a three-year suspension. [27] In In re Friedman, an attorney deposited an $81,000 settlement contribution in his client trust account. Without permission from the other plaintiffs' attorneys, he then drew on the account to advance funds to his client and pay himself attorney's fees in the case that were not yet due. He also later drew on the trust account to pay himself fees in the unrelated matters of five other claimants before he had deposited settlement funds in those matters. [28] We held that Friedman had engaged in misconduct including dishonest conduct [29] and illegal conduct involving moral turpitude, [30] violations that called for disbarment, absent mitigating factors. [31] Taking mitigators into account, however, we found that Friedman's misconduct was similar to Mann's and that a similar three-year suspension period was therefore appropriate. We noted that Mann had taken less money than Friedman and had self-reported, but cited several circumstances that convinced us a longer suspension would be too harsh: (1) Friedman's lack of a prior disciplinary record; (2) the absence of loss or injury to his clients; (3) his undisputed dedication to his clients and outstanding commitment to pro bono and public service; and (4) the significant measures that Friedman took to remedy the problems caused by his conduct. [32] In In re Brion, an attorney was charged with misconduct relating to failure to perform client services with reasonable diligence and promptness and failure to communicate with clients regarding legal matters and fees. [33] Bar Counsel also charged him with failing to account properly for client funds; Brion overdrew a trust account on one occasion and misrepresented the source of the money he deposited in the trust account to correct the overdraft. [34] We applied the ABA sanctions standards for cases involving lack of diligence and found that suspension was the appropriate sanction; based on the aggravating factors in the case (including multiple offenses, the vulnerability of Brion's out-of-state clients, and Brion's substantial legal experience), we imposed a three-year suspension, with two of those years stayed. [35] In In re Stepovich, Bar Counsel determined that an attorney had failed to maintain sufficient funds in his operating account to cover shortages in his trust account throughout ... 1996-2003; on one occasion, Stepovich waited five months to disburse settlement monies to a client, then wrote the client a check that was returned for insufficient funds. [36] The Disciplinary Board found that this amounted to misappropriation of client funds. [37] We imposed a three-year suspension, with one year stayed. [38] In In re Buckalew, an attorney embezzled $67,000 from two client trust accounts in order to pay clients in another matter that he falsely claimed to have settled. [39] We held that Buckalew's misconduct included defrauding a client by fabricating a `settlement agreement' and intentionally representing the same as genuine, abuse of the legal process by forging a judge's signature, and the embezzlement of client funds, in violation of state and federal law [40] and that the ABA Standards would generally require disbarment for such misconduct. [41] Although the Disciplinary Board had recommended a five-year suspension based on mitigating factors, we determined that the relevant mitigators (including the fact that Buckalew had no prior record of misconduct and had turned himself in only after his misconduct was discovered by a colleague) were not sufficient to preclude disbarment in light of the severity of Buckalew's misconduct. [42] Both parties devote extensive portions of their briefs to identifying the points of similarity and distinction between these cases and Rice's. Rice argues that Friedman, Stepovich, Mann, and Brion are distinguishable on various grounds: Friedman was found to have engaged in illegal activities, Stepovich was found to have harmed a client, Mann took client trust funds that he had not earned, and Brion (who received a relatively lenient sanction) was cited for lack of diligence and failure to communicate with his clients as well as for trust fund violations. We do not find these points of distinction particularly compelling. It is true that, unlike Friedman, the Hearing Committee in this case did not explicitly find that Rice had engaged in illegal activities, but it did find that Rice had misappropriated client funds. Rice may not have caused actual harm to clients as he argues Stepovich did, but he did cause them potential harm, which is sufficient under the ABA Standards to justify even the harshest sanctions; [43] and he did arguably cause actual harm to public trust in the legal system. Based on the Bar's analysis of Rice's records, the Hearing Committee concluded that Rice, like Mann, appeared to have paid himself funds he had not yet earned; Rice provided no evidence of client invoicing to challenge this conclusion. And although Rice was not cited for lack of diligence as Brion was, his trust account misconduct appears to have been more extensive than Brion's single trust account overdraft. Moreover, unlike Friedman, Mann, or Stepovich, Rice failed to cooperate with the Bar's investigation in addition to his trust accounting misconduct. The Bar emphasizes that there were mitigating factors in the cited cases that are not present in Rice's case. For example, it notes that Mann's misconduct was isolated compared to Rice's and that Mann, unlike Rice, turned himself in. Similarly, the Bar argues that, [u]nlike Friedman, Rice cannot show that he harmed no client ... [,] has no record of dedication to clients or public service... [,] tried to conceal his problems and blamed the Bar, and ... still denies misconduct. The Bar contends that Rice's conduct was closest to Buckalew's insofar as each attorney misappropriated large sums, over a long time, and tried to conceal it, offend[ing] public trust by his misconduct. While we agree that Rice lacked a number of the mitigating factors present in Mann and Friedman, the Bar's comparison to Buckalew is misplaced. Buckalew misapplied a large sum of money as part of a larger scheme to deceive clients into accepting a fabricated settlement agreement. Rice's misappropriations and overdraws appear to have been, at least in part, the result of irresponsible accounting and invoicing practices, and were not accompanied by additional attempts to mislead his clients. Based on our analysis of the relevant case law, we hold that the four-year suspension recommended by the Disciplinary Board is appropriate. Rice's trust accounting misconduct was probably most similar to that of Friedman and Stepovich; in all three cases, attorneys withdrew funds from client trust accounts in advance of having earnedor at least properly invoicedthem, but they do not appear to have intended to permanently deprive clients of money. Friedman received a three-year suspension, while Stepovich received a three-year suspension with one year stayed. Like Friedman, Rice had no record of prior misconduct. But unlike Friedman, who introduced substantial evidence of his public service and the quality of his work, there is no evidence in the record of Rice's prior history of service to clients. More importantly, Rice, unlike either Friedman or Stepovich, was found to have deliberately interfered with the Bar's investigation. This lack of cooperation, constituting an independent violation under the ABA Standards, merits additional disciplinary action. A suspension that is a year longer than the discipline imposed on Friedman is therefore reasonable in Rice's case, particularly given the possibility of a one-year stay should Rice fulfill certain conditions. [44]