Hello and welcome to this Ethics Alert blog which will discuss the recent Florida Supreme Court opinion disbarring a lawyer who failed to adequately supervise a bookkeeper who stole from his trust account, continued to practice after being emergency suspended, and failed to appoint a receiver for his separate debt management companies. The case is The Florida Bar v. Clint Johnson , Case Nos. SC11-1136, SC11-1578, and SC11-2343 (September 4, 2013). The Florida Supreme Court’s disciplinary opinion is online here: https://www.floridasupremecourt.org/decisions/2013/sc11-1136.pdf
The Florida Bar began investigating the lawyer when two checks from the lawyer’s law firm trust account were returned for insufficient funds, which caused the financial institution to notify the Bar and triggered a trust account audit. Although the checks were honored when presented the following day, the audit showed substantial trust fund irregularities. The Bar auditor’s report found shortages and that the lawyer had improperly taken fees and other costs from the trust account.
The Bar’s investigation also found the lawyer’s debt management companies were under investigation by state officials in Florida, Georgia, South Carolina, and Colorado for failing to properly register, and three of those states had ordered the companies to refund customers’ money and that the refunds were being sought in the fourth. The Bar filed a Petition for Emergency Suspension, which was granted and a referee was appointed.
After the emergency suspension was imposed, the Bar filed two motions to hold the lawyer in contempt. After a hearing on the first contempt motion, the referee found that the lawyer violated the terms of the emergency suspension order by “(1) holding himself out as an attorney and continuing to represent three clients after the suspension took effect; (2) failing to notify his debt management clients of his suspension and failing to provide those clients with a copy of the suspension order; (3) providing the Bar with an affidavit that falsely stated that he notified all clients of his suspension; and (4) continuing to withdraw and disburse funds from certain trust accounts after the effective date of the emergency suspension.” After the hearing on the second contempt motion, the found that the lawyer “knowingly and willfully violated the order by failing to retain the services of the receiver.” The lawyer’s CPA concluded that the shortages were not as large as those found by the Bar’s auditor and evidence was presented that the lawyer’s long time bookkeeper had embezzled funds from his trust account and had also mismanaged the trust account without the lawyer’s knowledge.
The referee issues a report of referee finding that, although the lawyer was responsible for negligent oversight, he had “not stolen any money”. The referee recommended a six-month suspension for the trust account violations and an additional one (1) year suspension followed by a year’s probation, for contempt by continuing to practice after being suspended, failing to appoint a receiver for his debt management operations, and failing to notify all his debt collection clients of his suspension.
The opinion upheld the referee’s factual findings, recommendation of guilt, and mitigating and aggravating factors; however, it reversed the discipline recommended by the referee. The opinion reiterated that, in cases where a lawyer takes funds from a trust account, disbarment is the presumed penalty; and, when trust account shortages have been caused by the lawyer’s negligence, discipline has ranged from rehabilitative suspensions (91 days to 3 years) to disbarment, depending on the facts of the case.
“In any event, regardless of whether we conclude that a lengthy suspension or disbarment is the appropriate sanction in (the trust account case), when considered together with (the lawyer’s) contempt cases, disbarment is the overall appropriate sanction…(t)he court has consistently disbarred suspended attorneys who are found in contempt for violating this court’s orders.”
Bottom line: According to the opinion, this lawyer engaged in serious misconduct related to his client trust account for which the presumed discipline is disbarment; however, even though the lawyer may have showed significant mitigating circumstances, the fact that he continued to practice law while he was suspended and was held in contempt for the conduct most likely made his disbarment somewhat inevitable. In addition, the lawyer asserted that his bookkeeper stole money from the trust account apparently due to the lawyer’s lack of supervision. Lessons learned: don’t practice law while suspended and closely supervise those who have access to the trust account regardless of how long the individual has been an employee and how trusted the lawyer believes that individual to be.
Let’s be careful out there!
Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.
Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670