Court Opinion

ID: 4018108
Source: CourtListenerOpinion
Date Created: 2016-07-22 13:24:23.385219+00
Date Added: 2024-06-11T12:55:47.448406
License: Public Domain

2016 WI 75

                  SUPREME COURT          OF   WISCONSIN
CASE NO.:               2016AP101-D
COMPLETE TITLE:         In the Matter of Disciplinary Proceedings
                        Against Matthew H. Marx, Attorney at Law:

                        Office of Lawyer Regulation,
                                  Complainant,
                             v.
                        Matthew H. Marx,
                                  Respondent.

                             DISCIPLINARY PROCEEDINGS AGAINST MARX

OPINION FILED:          July 22, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
   COURT:
   COUNTY:
   JUDGE:

JUSTICES:
   CONCURRED:
   DISSENTED:
   NOT PARTICIPATING:

ATTORNEYS:
                                                                             2016 WI 75
                                                                   NOTICE
                                                     This opinion is subject to further
                                                     editing and modification.   The final
                                                     version will appear in the bound
                                                     volume of the official reports.
No.    2016AP101-D

STATE OF WISCONSIN                               :             IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against Matthew H. Marx, Attorney at Law:

Office of Lawyer Regulation,                                            FILED
           Complainant,
                                                                   JUL 22, 2016
      v.
                                                                      Diane M. Fremgen
                                                                   Clerk of Supreme Court
Matthew H. Marx,

           Respondent.

      ATTORNEY     disciplinary      proceeding.            Attorney's            license

suspended.

      ¶1   PER    CURIAM.   We     review    a       stipulation,       as    revised,

filed pursuant to Supreme Court Rule (SCR) 22.12 by the Office

of    Lawyer   Regulation   (OLR)    and     Attorney          Matthew       H.     Marx.

Attorney Marx stipulates to the misconduct alleged by the OLR,

stipulates,      further,   that    he      should        be    ordered        to     pay

restitution to two clients and that his license to practice law
in Wisconsin should be suspended for nine months.
                                                                               No.    2016AP101-D

      ¶2     We adopt the stipulated facts and conclusions of law.

We agree that Attorney Marx's professional misconduct warrants

the suspension of his Wisconsin law license for a period of nine

months.       We    further       agree    that         restitution        is    appropriate.

Because     this        matter     was     resolved           by     stipulation        without

appointment of a referee, we will not impose the costs of this

proceeding upon Attorney Marx.

      ¶3     Attorney Marx was admitted to the practice of law in

Wisconsin     in        1996.     Although         he    has        not    previously         been

disciplined        by     this      court,         Attorney          Marx's      license        is

administratively suspended for failing to pay State Bar dues and

for failing to maintain his CLE requirements. In addition, his

law license has been temporarily suspended since March 18, 2014

for   noncooperation            with     the   OLR's          investigation          into     this

matter.

      ¶4     On     January       13,     2016,         OLR        filed   a     disciplinary

complaint      against          Attorney       Marx       alleging         22        counts     of

misconduct.        The    first    seven       counts         of    the    OLR's      complaint
alleged, and the parties have stipulated, that Attorney Marx

violated various provisions of SCR 20:1.15, the trust account

rule.1     He violated SCR 20:1.15(b)(1)2 and/or SCR 20:1.15(b)(3)3

      1
       Effective July 1, 2016, substantial changes were made to
Supreme Court Rule 20:1.15, the "trust account rule."      See S.
Ct. Order 14-07, (issued Apr. 4, 2016, eff. July 1, 2016).
Because the conduct underlying this case arose prior to July 1,
2016, unless otherwise indicated, all references to the supreme
court rules will be to those in effect prior to July 1, 2016.
      2
          20:1.15(b)(1) provides:
                                                                                     (continued)
                                               2
                                                               No.    2016AP101-D

by   paying    from   his   trust   account   $2,102.03   in    personal     and

business expenses; $215 in filing fees for a client who had no

funds in trust; and at least $301.33 in credit card surcharges.

He violated SCR 20:1.15(b)(3)3 when he deposited and retained

$3,800 in personal funds in his trust account. He violated SCR

20:1.15(f)(1)a., b., and g.4 by failing to maintain a transaction

      A lawyer shall hold in trust, separate from the
      lawyer's own property, that property of clients and
      3rd parties that is in the lawyer's possession in
      connection with a representation. All funds of clients
      and 3rd parties paid to a lawyer or law firm in
      connection with a representation shall be deposited in
      one or more identifiable trust accounts.
      3
       SCR 20:l:15(b)(3) provides: "No funds belonging to the
lawyer or law firm, except funds reasonably sufficient to pay
monthly account service charges may be deposited or retained in
a trust account."
      4
          SCR 20:1.15(f)(l)a., b., and g. provide:

           Complete records of a trust account that is a
      draft account shall include a transaction register;
      individual client ledgers for IOLTA accounts and other
      pooled trust accounts; a ledger for account fees and
      charges, if law firm funds are held in the account
      pursuant to sub. (b)(3); deposit records; disbursement
      records;   monthly   statements;   and   reconciliation
      reports, subject to all of the following:

           a. Transaction register. The transaction register
      shall contain a chronological record of all account
      transactions, and shall include all of the following:

              1. the date, source, and amount of all deposits;

           2. the date, check or transaction number, payee
      and amount of all disbursements, whether by check,
      wire transfer, or other means;

                                                                     (continued)
                                       3
                                                    No.   2016AP101-D

     3. the date and amount of every other deposit or
deduction of whatever nature;

     4. the identity of the client for whom funds were
deposited or disbursed; and

     5. the    balance   in       the   account   after   each
transaction.

     b. Individual client ledgers. A subsidiary ledger
shall be maintained for each client or 3rd party for
whom the lawyer receives trust funds that are
deposited in an IOLTA account or any other pooled
trust account.   The lawyer shall record each receipt
and disbursement of a client's or 3rd party's funds
and the balance following each transaction. A lawyer
shall not disburse funds from an IOLTA account or any
pooled trust account that would create a negative
balance with respect to any individual client or
matter. . . .

     g.    Reconciliation   reports.   For each  trust
account, the lawyer shall prepare and retain a printed
reconciliation report on a regular and periodic basis
not   less   frequently   than   every  30 days.  Each
reconciliation report shall show all of the following
balances and verify that they are identical:

     1. the balance that appears in the transaction
register as of the reporting date;

     2. the total of all subsidiary ledger balances
for IOLTA accounts and other pooled trust accounts,
determined by listing and totaling the balances in the
individual client ledgers and the ledger for account
fees and charges, as of the reporting date; and

     3. the adjusted balance, determined by adding
outstanding deposits and other credits to the balance
in the financial institution's monthly statement and
subtracting outstanding checks and other deductions
from the balance in the monthly statement.

                              4
                                                                       No.   2016AP101-D

register and client ledgers, and violated SCR 20:1.15(e)(7)5 by

failing to produce a transaction register, client ledgers, and a

monthly    reconciliation.           Attorney       Marx        also    violated    SCR

20:1.15(e)(4)e.6 by authorizing credit card and other electronic

payments be deposited into his trust account, and violated SCR

20:1.15(e)(4)c.7 by making internet deposits and disbursements

from his trust account.

    ¶5         Counts 8 and 9 of the complaint allege and the parties

have stipulated that Attorney Marx committed misconduct in his

representation      of   D.A.   in   her       divorce   action.       Attorney     Marx

failed    to    hold   D.A.’s   funds      in    trust     in    violation     of   SCR

20:1.15(b) and then failed to cooperate with the investigation

    5
       SCR 20:1.15(e)(7) provides: "All trust account records
have public aspects related to a lawyer's fitness to practice.
Upon request of the office of lawyer regulation, or upon
direction of the supreme court, the records shall be submitted
to the office of lawyer regulation for its inspection, audit,
use, and evidence under any conditions to protect the privilege
of clients that the court may provide. The records, or an audit
of the records, shall be produced at any disciplinary proceeding
involving the lawyer, whenever material. Failure to produce the
records constitutes unprofessional conduct and grounds for
disciplinary action."
    6
       SCR 20:l.15(e)(4)e provides: "A lawyer shall not authorize
transactions by way of credit card to or from a trust account.
However, earned fees may be deposited by way of credit card to a
lawyer's business account."
    7
       SCR 20:l.15(e)(4)c provides: "A lawyer shall not make
deposits to or disbursements from a trust account by way of an
Internet transaction."

                                           5
                                                    No.    2016AP101-D

of this matter, in violation of SCR 22.03(2)8 and SCR 22.03(6),9

enforced via SCR 20:8.4(h).10

     ¶6      Counts 10-16 of the complaint allege, and the parties

have stipulated, that Attorney Marx also committed misconduct in

his representation of C.W. in a divorce. Attorney Marx violated

SCR 20:1.15(e)(4)h.11 by allowing the deposit of C.W.’s credit

     8
          SCR 22.03(2) provides:

     Upon commencing an investigation, the director shall
     notify the respondent of the matter being investigated
     unless   in   the   opinion   of   the   director   the
     investigation of the matter requires otherwise.     The
     respondent shall fully and fairly disclose all facts
     and circumstances pertaining to the alleged misconduct
     within 20 days after being served by ordinary mail
     request for a written response.      The director may
     allow additional time to respond.     Following receipt
     of the response, the director may conduct further
     investigation and may compel the respondent to answer
     questions,   furnish   documents,   and   present   any
     information deemed relevant to the investigation.
     9
       SCR  22.03(6)   provides:     "In  the   course  of   the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
     10
       SCR 20:8.4(h) provides:   "It is professional misconduct
for a lawyer to: . . . . fail to cooperate in the investigation
of a grievance filed with the office of lawyer regulation as
required by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(6), or SCR
22.04(1)."
     11
          SCR 20:1.15(e)(4)h. provides:

                                                          (continued)
                                   6
                                             No.    2016AP101-D

     Exception: Fee and cost advances by credit card,
debit card or other electronic deposit. A lawyer may
establish a trust account, separate from the lawyer's
IOLTA account, for the purpose of receiving legal fees
and costs by credit card, debit card or other
electronic deposit, provided that the lawyer complies
with all of the following:

     1. the separate trust account shall be entitled:
"Credit Card Trust Account";

     2.      lawyer or law firm funds, reasonably
sufficient to cover all monthly account fees and
charges and, if necessary, any deductions by the
financial institution or card issuer from a client's
payment   by   credit  card, debit   card,  or  other
electronic deposit, shall be maintained in the credit
card trust account, and a ledger for account fees and
charges shall be maintained;

    3.    each payment of legal fees or costs by credit
card,   debit   card   or  other   electronic  deposit,
including, if necessary, a reimbursement by the lawyer
or law firm for any deduction by the financial
institution or card issuer from the gross amount of
each payment, shall be transferred from the credit
card trust account to the IOLTA account immediately
upon becoming available for disbursement subject to
the following requirements.

     a. All advanced costs and advanced fees held in
trust under sub. (b)(4) shall be transferred by check
to the IOLTA account.

     b.     Earned fees, cost reimbursements, and
advanced fees that are subject to the requirements of
sub. (b)(4m) shall be transferred by check into the
business account.

                                                   (continued)
                           7
                                                      No.   2016AP101-D

card payment into his client trust account. He violated SCR

20:1.15(g)(1)12 by failing to provide C.W., in writing, at least

five business days prior to withdrawing his funds for payment of

fees, (a) an itemized bill or other accounting showing services

rendered, (b) notice of the amount owed and anticipated date of

withdrawal, and (c) a statement of the balance of his funds in

         4. within 3 business days of receiving actual
    notice that a chargeback or surcharge has been made
    against the credit card trust account, the lawyer
    shall replace any and all funds that have been
    withdrawn from the credit card trust account by the
    financial institution or card issuer; and shall
    reimburse the account for any shortfall or negative
    balance caused by a chargeback or surcharge.       The
    lawyer shall not accept new payments to the credit
    card trust account until the lawyer has reimbursed the
    credit card trust account for the chargeback or
    surcharge.
    12
         SCR 20:1.15(g)(1) provides:

         Withdrawal    of   non-contingent   fees   from    trust
    account.

         (1) Notice to client.    At least 5 business days
    before the date on which a disbursement is made from a
    trust account for the purpose of paying fees, with the
    exception of contingent fees or fees paid pursuant to
    court order, the lawyer shall transmit to the client
    in writing all of the following:

         a. an itemized bill or other accounting showing
    the services rendered;

         b. notice of the amount owed and the anticipated
    date of the withdrawal; and

          c. a statement of the balance of the client's
    funds   in  the   lawyer trust  account  after  the
    withdrawal.

                                 8
                                                                  No.   2016AP101-D

the   trust    account    following     the   withdrawal.    He    violated     SCR

20:1.4(a)(4)13 by failing to respond to C.W.’s telephone calls

and emails requesting information and violated SCR 22.26(1)(a),14

enforced      via   SCR   20:8.4(f)15    by   failing   to     notify    C.W.    by

certified mail of the suspension of his license to practice law

and   his      consequent     inability       to   represent      him    further.

Additionally, he violated SCR 20:1.16(d)16 by failing to refund

unearned fees to C.W. upon termination of the representation and

      13
       SCR 20:1.4(a)(4) provides in part: "A lawyer shall . . .
promptly comply with reasonable requests by the client for
information . . . .
      14
       SCR 22.26(l)(a) provides: "On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
Notify by certified mail all clients being represented in
pending matters of the suspension or revocation and of the
attorney's consequent inability to act as an attorney following
the effective date of the suspension or revocation."
      15
       20:8.4(f) provides: "It is professional misconduct for a
lawyer to violate a statute, supreme court rule, supreme court
order or supreme court decision regulating the conduct of
lawyers."
      16
           SCR 20:1.16(d) provides:

      Upon termination of representation, a lawyer shall
      take steps to the extent reasonably practicable to
      protect   a  client's   interests,   such  as   giving
      reasonable notice to the client, allowing time for
      employment of other counsel, surrendering papers and
      property to which the client is entitled and refunding
      any advance payment of fee or expense that has not
      been earned or incurred. The lawyer may retain papers
      relating to the client to the extent permitted by
      other law.

                                         9
                                                                No.    2016AP101-D

violated SCR 20:8.4(c)17 by making misrepresentations to the OLR.

He also violated SCR 22.03(2) and SCR 22.03(6), enforced via SCR

20:8.4(h), by failing to respond to OLR's letters regarding C.W.

matter.

       ¶7   Counts 17-22 of the complaint allege, and the parties

have    stipulated,   that   Attorney        Marx   committed   misconduct     by

violating    the   terms     of   his    temporary      license       suspension.

Specifically, he failed to report his license suspension to the

U.S.    District   Court   for    the   Eastern     District    of     Wisconsin,

thereby violating SCR 20:3.4(c)18 and SCR 22.26(1)(c),19 enforced

via SCR 20:8.4(f).

       ¶8   In addition, by failing to notify his client, J.L., of

his suspension and her need to hire successor counsel, Attorney

       17
       SCR 20:8.4(c) provides that it is professional misconduct
for a lawyer to "engage in conduct involving dishonesty, fraud,
deceit or misrepresentation."
       18
       SCR 20:3.4(c) provides:   "A lawyer shall not: . . . .
knowingly disobey an obligation under the rules of a tribunal,
except for an open refusal based on an assertion that no valid
obligation exists."
       19
       SCR 22.26(1)(c) provides:    "On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
. . . . (c) Promptly provide written notification to the court
or administrative agency and the attorney for each party in a
matter pending before a court or administrative agency of the
suspension or revocation and of the attorney's consequent
inability to act as an attorney following the effective date of
the suspension or revocation. The notice shall identify the
successor attorney of the attorney's client or, if there is none
at the time notice is given, shall state the client's place of
residence."

                                        10
                                                                              No.    2016AP101-D

Marx    violated         SCR    22.26(1)(a)         and     (b),20      enforced       via    SCR

20:8.4(f),       and,      by   continuing      to        represent       J.L.      and    filing

numerous documents in support of the U.S. District Court case,

Attorney       Marx       violated       SCR    22.26(2),21           enforced         via    SCR

20:8.4(f).

       ¶9      In addition, by misrepresenting to OLR that he had

notified       all       his    active    clients          of     his     March      18,     2014

suspension, when he continued to represent J.L., Attorney Marx

violated SCR 20:8.4(c).

       ¶10     Finally, in failing to respond to OLR's letters sent

January 23, 2015 and February 18, 2015, requesting a response to

OLR's       inquiry,     Attorney    Marx      violated         SCR     22.03(2)       and   (6),

enforced via SCR 20:8.4(h).

       ¶11     In    late      February    2016,      the       OLR     and    Attorney      Marx

executed a stipulation addressing the complaint. In addition to

stipulating         to    the    facts    as    set       forth       above,     the      parties

       20
       SCR 22.26(l)(b) provides: (1) On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
. . . . (b) Advise the clients to seek legal advice of their
choice elsewhere.
       21
       SCR 22.26(2) provides:     "An attorney whose license to
practice law is suspended or revoked or who is suspended from
the practice of law may not engage in this state in the practice
of law or in any law work activity customarily done by law
students, law clerks, or other paralegal personnel, except that
the attorney may engage in law related work in this state for a
commercial employer itself not engaged in the practice of law.

                                               11
                                                                        No.      2016AP101-D

stipulated to discipline in the form of a nine-month suspension

of   Attorney    Marx's      Wisconsin        law   license.     The     OLR       filed   a

memorandum      in     support     of    the    stipulation.          The        memorandum

discusses      attorney        disciplinary          cases     that      resulted          in

comparable      suspensions      for    professional         misconduct.           The   OLR

deems analogous the matter of Disciplinary Proceedings Against

Maynard, 2014 WI 13, 352 Wis. 2d 629, 845 N.W.2d 648.

       ¶12   Attorney Maynard's law license was suspended for one

year for misconduct consisting of failing to notify his clients

and the courts that his license was suspended, continuing to

practice       law     while      suspended,          engaging     in         dishonesty,

misrepresenting his license status to the court, making false

statements in his affidavit of compliance, continuing to use his

letterhead and making false communications that he was permitted

to practice in Wisconsin, and providing false information to OLR

during   its    investigation.          See    also     Disciplinary          Proceedings

Against Wood, 2013 WI 11, Id., 345 Wis. 2d 279, 825 N.W.2d 473;

Disciplinary         Proceedings    Against         Scanlan,     2006 WI 38,     290
Wis. 2d 30, 712 N.W.2d 877.                   The OLR advises the court that

Attorney Marx's misconduct is much like Attorney Maynard's in

that    Attorney      Marx     failed   to     comply    with     SCR       22.26,       made

misrepresentations regarding his license status,                         and provided

false information to OLR.

       ¶13   This court reviewed the stipulation.                     Noting that the

stipulation did not provide for restitution, the court issued an

order directing the parties to consider specific modifications

                                          12
                                                               No.     2016AP101-D

to the stipulation to address whether the court should order

Attorney Marx to pay restitution to two clients, D.A. and C.W.

    ¶14   On    April     28,    2016,    the   parties     filed     a    revised

stipulation. The revised stipulation reiterated previous terms

and also stipulated that the court should order Attorney Marx to

pay restitution to D.A. in the amount of $994.50, reflecting the

balance that remained in his trust account attributable to D.A.

as of February 25, 2013. The parties further agreed that the

court should order Attorney Marx to pay restitution to C.W. in

the amount of $1,568, the amount that should be returned to C.W.

after Attorney Marx's payment of the $198 filing fee and $500

worth of work that Attorney Marx performed on C.W.'s case.

    ¶15   The stipulation, as revised, provides that it is not

the result of a plea bargain. Attorney Marx verifies that he

fully understands the misconduct allegations, the ramifications

if this court should impose the stipulated level of discipline,

his right to contest the matter, and his right to consult with

counsel. He further verifies that his entry into the stipulation
was made knowingly and voluntarily, and that it represents his

admission of all misconduct and his assent to the level and type

of discipline sought by the OLR.

    ¶16   We     adopt     the    stipulation,       as   revised,        and   the

stipulated     facts     and    conclusions     of   law,   and      impose     the

stipulated discipline. We agree that the seriousness of Attorney

Marx's misconduct warrants the suspension of his Wisconsin law

license for nine months and payment of restitution to D.A. and
C.W. We agree that Attorney Marx's mismanagement of his trust
                                         13
                                                                  No.    2016AP101-D

account     evidences     a      careless      disregard      for       the     basic

requirements of segregating trust funds from personal funds and

record keeping and that his misconduct was exacerbated by his

apparent indifference to making restitution. In light of the

stipulation, the OLR does not seek costs, so we do not impose

costs.

    ¶17     IT IS ORDERED that the license of Matthew H. Marx to

practice law in Wisconsin is suspended for a period of nine

months, effective the date of this order.

    ¶18     IT    IS   FURTHER     ORDERED    that    Matthew    H.     Marx    shall

comply with the provisions of SCR 22.26 concerning the duties of

a person whose license to practice law in Wisconsin has been

suspended.

    ¶19     IT    IS   FURTHER      ORDERED    that     compliance       with        all

conditions of this order is required for reinstatement. See SCR

22.28(2).

    ¶20     IT    IS   FURTHER      ORDERED    that     the     March    18,     2015

temporary suspension of Matthew H. Marx’s license to practice
law in Wisconsin, due to his wilful failure to cooperate with

the OLR's grievance investigation in this matter, is lifted.

    ¶21     IT    IS    FURTHER      ORDERED     that     the     administrative

suspension   of    Matthew    H.    Marx’s    license    to     practice       law    in

Wisconsin, due to his failure to pay mandatory bar dues and

failure to comply with continuing legal education requirements,

will remain in effect until each reason for the administrative

suspension has been rectified, pursuant to SCR 22.28(1).

                                       14
                                                  No.   2016AP101-D

    ¶22   IT IS FURTHER ORDERED that Matthew H. Marx shall pay

restitution to D.A. in the amount of $994.50, and to C.W. in the

amount of $1,568.

    ¶23   IT IS FURTHER ORDERED that no costs are imposed in

this matter.

                               15
    No.   2016AP101-D

1