Court Opinion

ID: 9697935
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:37:27.827336+00
Date Added: 2024-06-11T18:20:36.945133
License: Public Domain

WAGNER, Associate Judge,
concurring:
I concur in the decision of the court. I write separately to address another issue presented in this proceeding. The Board also concluded that respondent’s conduct violated Disciplinary Rule 9-103(A)(2) (commingling). In my view, this important question is squarely presented and should be resolved. It is the history of violations which stands as the prior “record” of a lawyer in subsequent proceedings. See In re Roundtree, 467 A.2d 143, 148 (D.C.1983) (history of prior violations of Code of Professional Responsibility considered in determination of discipline). Therefore, whether the allegation has been proven is important not only to determining the appropriate sanction in the present case, but also to completeness of the record for any future disciplinary proceeding. Moreover, our review and disposition of findings of misconduct found by the Board provide guidance for attorneys’ conduct and can reveal the need, if any, for revision of our rules.
I.
On the same facts recounted in the opinion, the Board concluded that respondent also violated the prohibition against commingling, the subject of Disciplinary Rule 9-103(A)(2). I disagree with the Board’s conclusion on the particular facts of this case. Rule 9-103(A)(2) provides as follows:
(A) All funds of clients paid to a lawyer or law firm other than advances for costs and expenses, shall be deposited in one or more identifiable bank accounts maintained in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein except as follows:
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(2) Funds belonging in part to a client and in part presently or potentially to the lawyer or law firm must be deposited therein, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved.
The Board concludes that a violation of this rule occurs whenever a lawyer, having deposited funds in a trust account consistent with the requirements of Disciplinary Rule 9-103(A)(2), removes the portion to which *438he or she is entitled by writing a cheek for the amount to a creditor rather than by simply withdrawing the fee. There are no prior decisions in this jurisdiction holding that such actions violate the rule against commingling. Typically, our cases have considered the question only where an attorney improperly places a client’s funds with his or her own funds causing the client’s funds to lose their separate identity. See, e.g., In re Hessler, 549 A.2d 700, 701 (D.C.1988). In contrast, believing that only his fees remained in the account, Cho-roszej wrote checks for personal expenses from it. Since he exceeded the client funds for which he was responsible, he clearly violated the rule against misappropriation. Whether he violated the rule against commingling is also the issue raised by the Board’s decision here.
The Board’s position is that the rule covers the situation where an attorney properly deposits a fee in a trust account pursuant to the requirements of Disciplinary Rule 9-103(A)(2) and then writes a check on the account, even if only to the extent of the fee due, to someone other than himself. An interpretation of the rule which would preclude such actions, the Board reasons, furthers the objectives of the rule, i.e., preserving the identity of client funds and preventing lawyers from misusing funds held in a client trust account, whether intentionally or inadvertently. I agree that these are important objectives of the rule against commingling, and we have so indicated in prior decisions.1 However, in my opinion it would be inappropriate to extend the rule to include the situation involved in this case which is not one clearly within its ambit either by virtue of its plain meaning or prior interpretations. Moreover, it is covered adequately by other disciplinary rules. Disciplinary rules provide a guide for professional conduct, and the language of the rule under discussion does not alert members of the bar that earned fees properly on deposit in a trust account must be withdrawn in a particular manner or at a particular time. Violations of the disciplinary rules have serious consequences, and members of the bar are entitled to be forewarned of the type of conduct which will be subject to sanction.
The sole basis for the Board’s conclusion that respondent violated rules against misappropriation and commingling when he spent client funds from the client trust account seems to be that respondent believed the funds expended to be attorney fees to which he was entitled. Respondent’s conduct violates the rule against misappropriation as we have defined it. Misappropriation is- “ ‘any unauthorized use of client's funds entrusted to him, including not only stealing but also unauthorized temporary use for the lawyer’s own purpose, whether or not he derives any personal gain or benefit therefrom.’ ” In re Harrison, 461 A.2d 1034, 1036 (D.C.1983) (quoting In re Wilson, 81 N.J. 451, 455 n. 1, 409 A.2d 1153, 1155 n. 1 (1979)). Respondent’s mistaken belief that the sums expended consisted only of attorney fees then due which had been properly deposited in the account does not convert the conduct to a commingling violation. In my opinion, such a conclusion would strain unnecessarily the definition of commingling to include conduct adequately covered by the rule against misappropriation.
Commingling involves placing client funds with the attorney’s own funds so that the client’s funds become more difficult to trace and are subjected to the risk of taking by the attorney’s creditors. Hessler, supra, 549 A.2d at 702; State v. Barrett, 207 Kan. 178, 182, 483 P.2d 1106, 1110 (1971). The attorney fees placed into respondent’s escrow account were properly placed there under Disciplinary Rule 9-103(A)(2). Therefore, commingling did not occur, in my opinion. Nevertheless, when the attorney expended client funds held in the escrow account, he violated the rule against misappropriation.
In California, where a lawyer can be sanctioned for failure to segregate his fee from a trust account within a reasonable time after becoming entitled to it, Black v. State Bar of California, 57 Cal.2d 219, 225, 18 Cal.Rptr. 518, 522, 368 P.2d 118, *439122 (1962),2 or for writing checks for personal convenience on a trust account to the extent covered by attorney fees properly on deposit, Hamilton v. State Bar of California, 23 Cal.3d 868, 873-75, 153 Cal.Rptr. 602, 604-05, 591 P.2d 1254, 1256-57 (1979), there is in effect a rule which requires that the portion of the trust account belonging to the lawyer “ ‘must be withdrawn at the earliest reasonable time after the member’s interest in that portion becomes fixed.’ ” Arm, supra, note 2, 50 Cal.3d at 768 n. 3, 268 Cal.Rptr. at 742 n. 3, 789 P.2d at 923 n. 3 (quoting from former State Bar Rules of Professional Conduct 8-101(A), which in substance is consistent with its Rule 4-100(A)). This rule serves as notice to members of the profession in California that attorney fees cannot be allowed to remain in the client trust account for future disposition at the convenience of the attorney. Absent a comparable rule, in my opinion, it is inappropriate to extend Rule 9-103(A)(2) to cover the situation involved in this case.
Moreover, I am persuaded that the dangers implicit in the circumstance presented here are addressed adequately through other applicable rules. Preserving the identity of client funds and preventing their misuse when held in a trust account with other funds pursuant to the disciplinary rule can be assured, inter alia, by the lawyer’s adherence to the requirements of Disciplinary Rules 9-103(A) (misappropriation) and 9-103(B)(3) (maintenance of complete records of client funds).3 Had respondent maintained records in compliance with Rule 9-103(B)(3), he would have realized that his expenditures exceeded the fees to which he was entitled, which fees had been deposited properly as a part of the single check payable to the lawyer and client, and that his client’s physician had not been paid. Our rule against misappropriation of client funds serves as a deterrent to a lawyer’s mishandling of client funds on deposit with the lawyer’s funds under Rule 9-103(A)(2). Members of the bar are on notice that the rule against misappropriation of client funds is violated even when funds belonging to the client are expended because of mere negligence. In re Evans, 578 A.2d 1141, 1142 (D.C.1990); Harrison, supra, 461 A.2d at 1036; see also Hessler, supra, 549 A.2d at 700 n. 3. Where as here, the deterrent effect fails to prevent the improper expenditure of client funds on deposit with counsel fees pursuant to Rule 9-103(A)(2), a violation of the rule against misappropriation occurs, as the Board found here, and results in the imposition of a sanction.
Although the foregoing considerations dictate a result contrary to the one reached by the Board on the issue of commingling, I hasten to add that continuous use of a client trust account for personal purposes may result in a loss of the identity of client funds. Our rules require not only that the client funds not be mingled with those of the attorney, but also that their identity be preserved. Use of the trust account for payment of personal expenses, even if covered by attorney fees of the lawyer properly deposited may, under certain circumstances, result in the loss of identity between the funds due lawyer and client. Such circumstances may result in a violation of the rule. Therefore, in my view, members of the bar should remove promptly any fees undisputedly due them which are held in a trust account under Disciplinary Rule 9-103(A). Lawyers who write checks for personal expenses on a client trust account, although covered by fees due them and properly on deposit, do so at *440the risk of violation of local disciplinary rules.

. See, e.g., Hessler, supra, 549 A.2d at 702:

. In Black, the court dismissed the commingling charge because members of the bar had not been notified previously of the interpretation adopted. Black, 57 Cal.2d at 226, 18 Cal.Rptr. at 523, 368 P.2d at 123. The situation has been covered subsequently by an explicit rule. See Arm v. State Bar of California, 50 Cal.3d 763, 768 n. 3, 268 Cal.Rptr. 741, 742 n. 3., 789 P.2d 922, 923 n. 3 (1990).

. See also Disciplinary Rules 9-103(B)(4) (directing a lawyer to pay or deliver promptly funds in the lawyer’s possession to which the client is entitled) and 7-101(A)(l) (requiring a lawyer to seek the client’s lawful objectives).