Filed May 27, 2010
In re Brian Edward King
Commission No. 07 SH 118
Synopsis of Review Board Report and Recommendation
King was charged with misconduct related to conversion of fees from the law firm where he was employed as an associate. Specifically, the complaint charged that, in 21 separate instances, King appropriated to his own use funds belonging to the firm and thereby engaged in conversion, breached his fiduciary duty to his firm, and engaged in conduct involving fraud, dishonesty, deceit, or misrepresentation and conduct that tends to defeat the administration of justice or bring the courts or legal profession into disrepute. King admitted most of the facts alleged in the complaint. While not admitting the specific misconduct alleged, King admitted that his conduct constituted professional misconduct.
After a hearing, the Hearing Board found that the Administrator proved that King engaged in all the misconduct charged. The Hearing Board recommended that King be suspended for two years, with the suspension stayed after nine (9) months by two years probation, subject to various conditions.
The case was before the Review Board on King's exceptions. King objected to the Hearing Board's sanction recommendation and sought a suspension of less than six (6) months. The Administrator also objected to the Hearing Board's sanction recommendation, but sought a suspension of one (1) year and until King completed making restitution to his former firm and successfully completed the program offered by the Illinois Professional Responsibility Institute.
The Review Board affirmed the Hearing Board's findings of misconduct, but recommended that King be suspended for nine (9) months and until he completed making restitution and successfully completed the program offered by the Illinois Professional Responsibility Institute.
BEFORE THE REVIEW BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
BRIAN EDWARD KING,
Commission No. 07 SH 118
REPORT AND RECOMMENDATION OF THE REVIEW BOARD
This case is before the Review Board on exceptions by Respondent-Appellant, Brian Edward King. The Hearing Board found that, as charged in the Administrator-Appellee's one-count complaint, King converted law firm funds, breached his fiduciary duty to his law firm, and engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (210 Ill. 2d R. 8.4(a)(4), and conduct that tends to defeat the administration of justice or to bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770 (210 Ill. 2d R. 770). The Hearing Board recommended that King be suspended for two (2) years, with the suspension stayed after nine (9) months by two (2) years probation, subject to various conditions.
King objects to the Hearing Board's sanction recommendation and seeks to have the Review Board recommend a suspension of less than six (6) months. The Administrator also objects to the Hearing Board's sanction recommendation and seeks a suspension for one (1) year and until King finishes making restitution to his former firm and successfully completes the program offered by the Illinois Professional Responsibility Institute.
King was licensed to practice law in 2000. He has no prior discipline.
King was 36 years old at the time of the hearing. He is married and the father of one child. His wife's daughter from a prior marriage lives with the family.
King has done some pro bono legal work in the past and some additional volunteer work He was involved in activities with the children.
At the time of the hearing, King had a solo practice in Champaign. His practice primarily involved criminal defense and family law. King's wife worked part-time as his sole support staff member.
King began working at Erwin, Martinkus, & Cole (EMC) as a law clerk. EMC is a firm of 14 lawyers. After receiving his law license, King continued at EMC. He worked there until the incidents leading to these proceedings were discovered.
Initially, King worked at EMC as a salaried employee. This arrangement changed in about May 2002. At that time, King became an independent contractor, like all other associate attorneys at EMC. Under this arrangement, King could not handle outside business, but would split all fees on matters that he brought in 50/50 with the firm. King was to turn over to EMC any fees he received. The firm deposited the funds in its account and paid King, twice a month. Adjustments were made for costs and for referral fees within the firm. King received payments bi-annually as a result of these adjustments.
This arrangement worked well for a while. However, in late 2005 or early 2006, King's income declined, quickly and sharply, as he was not getting new clients and existing clients were not paying their bills. King's bi-monthly law practice income dropped to less than $1,000 per check. As a result, King's family was behind on paying bills, including their home mortgage, and fell into debt.
King's misconduct began at this time and, according to his testimony, resulted solely from the drop in his income. King owed $65,000 in student loans and accumulated $30,000 - 40,000 credit card debt. King testified that he and his family did not have an extravagant lifestyle. His bank records, however, did show payments for various clearly discretionary items.
The Administrator charged, and King admitted, that on twenty-one (21) separate occasions between January 19, 2006 and January 3, 2007, King received fees from clients that should have been turned over to EMC. Individual payments ranged from $270 to $7,500. King received a total of $30,020.00. Rather than turning the funds over to EMC, King took the money, without EMC's knowledge or consent, and used it for his own purposes. Because of King's fee agreement with EMC, his conduct resulted in conversion of approximately $15,010 from EMC. Given adjustments, the parties ultimately agreed that the amount King owed EMC was $12,345.20.
In an additional incident, a client paid King $1,500. This incident, which was not part of the charges, occurred in mid-2006. King deposited that money in his own account, rather than giving it to EMC. King borrowed money from his brother and repaid EMC shortly after diverting the funds. King testified that he thought that, when he repaid that money, he discussed the matter with James Martinkus, an EMC partner and King's mentor and friend. King did not tell Martinkus that there had been other similar incidents.
By late 2006 - early 2007, King's income at EMC increased. He had caught up on bills by taking out a second mortgage and obtaining a credit card advance. Given the change in his financial circumstances, King stopped misappropriating funds.
King testified that he had always intended to pay the firm back for all the money he took. He had not, however, kept any record of what he had taken.
King's misconduct came to light after EMC learned that King's secretary had stolen funds from the firm. In investigating the secretary's misconduct, Martinkus learned that King had written off a series of bills. Essentially, King had attempted to conceal his misconduct by directing EMC's bookkeeper to write off amounts, or not send further bills, on the cases where he had kept the clients' payments. While EMC associates had some limited authority to write off bills, King's write-offs appeared unusual. Therefore, Martinkus investigated, learned that the clients involved had paid the bills, and realized that King had been taking funds.
Martinkus did not understand King's conduct. He testified that, while King never did so, if King had asked for money, Martinkus would have given it to him.
When Martinkus and another EMC partner confronted him, King admitted that he had taken fees. As a result, King's employment at EMC was terminated in May 2007. Consistent with their discussions, King and Martinkus each reported the matter to the ARDC.
Shortly after their initial meeting, King prepared a list of cases and amounts taken and gave the list to Martinkus. Martinkus trusted King to provide him with this information. Martinkus testified that EMC did not have access to King's personal records, did not want to spend inordinate time on the matter, and wanted to reach an agreement and have a separation. Because Martinkus wanted to avoid having the firm look foolish by inquiring of multiple clients who might have paid King, EMC wrote off most of the remaining bills it uncovered.
King prepared the list from memory. King did not refer to his bank records to see if the list was accurate. Nine cases were on King's list. Martinkus testified that he thought that,
in response to his inquiry, King represented that the list was complete. King's letter to the ARDC stated that he received a total of $12,650 on nine cases, of which EMC was due $6,325.
Based on this information, King and EMC worked out a restitution agreement. They determined that King owed $3,660.20, given various adjustments. King paid EMC this amount by credit card on the same day that the agreement was reached.
The Administrator's investigation later uncovered twelve additional cases. Martinkus was not aware of those incidents until he learned of them from the Administrator; King had not told Martinkus of these matters. One of the additional cases involved a payment, in June 2006, of $7,500, which was by far the highest amount King received. King testified that he did not remember that payment when he prepared his list in May 2007, even though he remembered significantly smaller amounts paid longer ago.
On the day of the hearing, King and EMC reached a further agreement, whereby King would pay the amount owed based on the additional cases found by the Administrator. According to that agreement, King received a total of $17,370 on the twelve cases, of which EMC was due $8,685. King and EMC agreed that King would repay EMC $8,685, in monthly installments of at least $500.1
No client lost money as a result of King's misconduct. The funds taken were payments of flat fees and were not funds that should have been placed in a trust account. King's representation of clients was not affected by his misconduct. No one had complained about King's work. But for this misconduct, EMC was satisfied with King's work and had no other problems of any kind with King. However, this information was the only character evidence King presented.
King testified that his misconduct would not recur. He recognized that his conduct was wrong and accepted responsibility for that conduct. King expressed remorse, particularly for the impact of his conduct on Martinkus. King testified that he knew the rules concerning client funds and maintained a trust account. King testified that he had never taken client funds and would never consider doing so. Given the nature of King's current practice, he had limited occasion to handle client funds.
Neither party challenges the Hearing Board's findings of misconduct. The only issues presented concern the Hearing Board's sanction recommendation. King acknowledges that restitution and attendance at the Institute are warranted. The only matters at issue are the recommendation of probation and the length of the suspension.
The Hearing Board's sanction recommendation is advisory and does not bind the Review Board. In re Howard, 188 Ill. 2d 423, 721 N.E.2d 1126, 242 Ill. Dec. 595 (1999). Determining the proper sanction in any given case requires consideration of the individual facts and circumstances of the case before the Board, including aggravating and mitigating factors, as well as the need to impose a sanction consistent with those in other similar cases. In re Timpone, 157 Ill. 2d 178, 197, 623 N.E.2d 300, 191 Ill. Dec. 55 (1993); In re Witt, 145 Ill. 2d 380, 398, 583 N.E.2d 526, 164 Ill. Dec. 610 (1991). The Review Board may consider the deterrent value of a sanction and the preservation of public confidence in the legal profession. In re Discipio, 163 Ill. 2d 515, 528, 645 N.E.2d 906, 206 Ill. Dec. 654 (1994). Consideration is also given to the purpose of discipline, which is not primarily to punish the individual respondent, but to protect the public, maintain the integrity of the profession, and protect the administration of justice from reproach. In re Spak, 188 Ill. 2d 53, 719 N.E.2d 747, 241 Ill. Dec. 618 (1999); Timpone, 157 Ill. 2d at 197, 623 N.E.2d 300, 191 Ill. Dec. 55.
The Hearing Board recommended that part of King's suspension be stayed by probation, under In re Jordan, 157 Ill. 2d 266, 623 N.E.2d 1372, 191 Ill. Dec. 486 (1993). The Administrator objects to probation. King neither objects to nor seeks probation.
Jordan probation is intended for attorneys who have engaged in misconduct, but whose right to practice law needs to be monitored or limited, rather than suspended or revoked. Jordan, 157 Ill. 2d at 276, 623 N.E.2d 1372, 191 Ill. Dec. 486.
King engaged in a pattern of numerous repeated acts of intentional dishonesty. He acted solely for personal gain. There was, and could be, no mistake about the nature of his conduct. King clearly knew that his conduct was wrong and that he had no right to take the fees at issue. Therefore, and because there is nothing to monitor or to correct, probation is not warranted in this case. See In re Tyler, 98 CH 74 (Review Board May 17, 2000), petition for leave to file exceptions denied, M.R. 16873 (Sept. 22, 2000); In re Harris, 97 SH 88 (Review Board Oct. 13, 1999), petition for leave to appeal allowed, sanction modified, M.R. 16300 (Jan. 24, 2000); In re Passman, 93 CH 573 (Dec. 27, 1995), approved and confirmed, M.R. 12249 (Mar. 26, 1996).2
The cases on which the Hearing Board relied in recommending probation all involve factors that support probation, but are not present here. For example, in In re Williams, 03 CH 124 (Hearing Board Oct. 19, 2004), approved and confirmed, as modified, M.R. 19903 (Jan. 14, 2005), the respondent was suffering from health problems that affected her practice. In addition, poor bookkeeping practices contributed to Williams's misconduct. Both In re Robertson, 07 CH 3, M.R. 22326 (May 19, 2008) and In re Bleiman, 05 CH 84, M.R. 20977 (Sept. 20, 2006) involved misconduct related to poor bookkeeping practices. Here, there are no
contributing health problems and King's misconduct was the result of repeated, intentional conversions, not inadequate bookkeeping.
We recognize the Hearing Board's concern that, absent a period of probation, King would simply resume practice without any oversight of his handling of funds. However, there is clear precedent indicating that probation is not warranted in cases such as this one. In this case at least, the concern that King would resume practice without oversight does not, in and of itself, warrant departing from that precedent. This is true particularly as King did not convert client funds.
The cases on which King relies do not persuade us that a suspension shorter than six months is warranted, as King contends. In those cases, all of which involved consent orders, the misconduct was limited to a single incident. All the respondents had made full restitution. In two of the cases, full restitution was made upon discovery of the wrongful acts. In re Hilliard, 04 CH 58, M.R. 19967 (Mar. 18, 2005); In re Morse, 99 CH 82, M.R. 17319 (March 22, 2001); In re Kleinmuntz, 98 CH 30, M.R. 15045 (Sept. 28, 1998). These cases also involved mitigating factors not present here. In Hilliard, the misconduct occurred as a result of financial problems caused by a gambling addiction for which Hilliard was receiving treatment. Morse may have misunderstood his duty to turn over the funds to the firm. He also responded with immediate and total candor when questioned by a partner about the fee. Kleinmuntz had a longer period of unblemished legal practice and significant civic, charitable, and pro bono activities.
In contrast, the cases cited by the Administrator to support his request for a one-year suspension involve more serious misconduct or additional aggravating factors and do not indicate that King should be suspended for one year. The misconduct in In re Breaux, 98 CH 110, M.R. 15973 (Sept. 29, 1999), in which the respondent was suspended for one year, was not
limited to conversion of law firm funds. Breuax also misstated facts on his application for admission to the Wisconsin bar. In In re Alpert, 01 CH 13, M.R. 17749 (Nov. 28, 2001) and In re Solomon, 92 CH 159 (Hearing Board Feb. 26, 1993), approved and confirmed, M.R. 9073 (May 21, 1993), where the respondents were suspended for one year, the respondents obtained significantly more money from their firms than did respondent. Solomon's misconduct also continued over a far longer period of time. The scope of their misconduct warranted harsher discipline than is warranted in this case.
In re Holcomb, 03 CH 75, M.R. 19443 (Oct. 12, 2004) and In re Bertrand, 06 SH 22, M.R. 21281 (Jan. 12, 2007), cited by King, also indicate that a suspension shorter than that sought by the Administrator is warranted here. Holcomb and Bertrand each engaged in serious misconduct in addition to conversion of law firm funds. Holcomb and Bertrand also neglected clients' cases and made misrepresentations to clients. Holcomb, who had psychological problems that contributed to his misconduct, was suspended for two years and until further order of the Court (UFO), but stayed after one year by probation, on conditions designed to insure that continued treatment. Bertrand was suspended for nine months and ordered to make restitution. While Bertrand converted an amount comparable to that taken by King, his misconduct extended over a longer period of time and Bertrand had not made restitution at the time of the disciplinary proceedings. In addition, as noted above, Bertrand engaged in additional misconduct.
Given all the circumstances of this case and given the precedent discussed above, we conclude that King should be suspended for nine (9) months. In our opinion, a suspension of this length strikes a proper balance between the seriousness of King's misconduct, and the aggravating and mitigating factors present here. The aggravating factors include the intentional and repeated nature of King's misconduct, the amount taken, and the fact that King did not
promptly make full disclosure; he really would have had no way of doing so as he did not keep any records of the amount he had converted. In mitigation, King did not engage in additional misconduct. No clients were harmed by King's misconduct. King is in the process of making restitution satisfactory to EMC. He has expressed remorse and recognizes the wrongfulness of his conduct.
We also recommend that the suspension continue until King completes restitution to EMC and successfully completes the program offered by the Illinois Professional Responsibility Institute. Both conditions are appropriate under the circumstances of this case and King does not object to either condition.
For these reasons we affirm the Hearing Board's findings of misconduct and recommend that Respondent-Appellant, Brian Edward King, be suspended for nine (9) months and until he completes restitution to EMC and successfully completes the program offered by the Illinois Professional Responsibility Institute.
Date Entered: 27 May 2010
Stuart R. Lefstein
1When asked why he had not reached a repayment agreement concerning these matters sooner, King testified that he first learned of the additional twelve cases in November 2007, when he gave a sworn statement to counsel for the Administrator. King testified that he then notified Martinkus of the additional amount due. The restitution agreement was finalized about a year later, although it appears that at least some of that gap was related to King's change of counsel.
2We are aware of the Court's recent order in In re Vano, M.R. 23410 (Jan. 21, 2010), imposing a suspension for one year, stayed after six months by probation on conditions, on a respondent who also converted law firm funds. We do not read Vano as requiring a different disposition in this case. Vano was a partner in a law firm who received referral fees, outside of his employment with the firm and without disclosure to the firm, from other attorneys to which Vano had referred cases that he and his firm could not handle. In Vano, there were
circumstances present that could have raised ambiguity as to the firm's right to the funds and that suggested that the case primarily involved a dispute between partners over money. In contrast, this case involves an associate who was clearly required to turn over all funds received to his firm and, in over twenty separate instances, intentionally chose not to do so, instead keeping the money himself.
3Consistent with the Review Board's March 4, 2010 orders, following the death of Review Board member John W. Rapp, Jr., Review Board member Stuart R. Lefstein was assigned to this case and has reviewed the briefs of the parties and the tape of the oral argument and has participated in the decision in this case.