Filed November 2, 2010

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

JAMES BERTIN ZACZEK,

Attorney-Respondent,

No. 6217079.

Commission No. 09 CH 81

REPORT AND RECOMMENDATION OF THE HEARING BOARD

INTRODUCTION

The hearing in this matter was held on April 26, 2010, at the Chicago offices of the Attorney Registration and Disciplinary Commission, before a Hearing Board Panel consisting of John B. Whiton, Chair, Henry P. Wolff, lawyer member, and Eddie Sanders, Jr., public member. The Administrator was represented by Scott A. Kozlov. The Respondent appeared and was represented by George B. Collins.

PLEADINGS

On August 20, 2009, the Administrator filed a one-count Complaint against the Respondent. The Complaint alleged that between August 22 and September 11, 2003, the Respondent received $8,590.51 form a client, Romana Shableau, in regard to a case pending in Cook County (Motnyk v. Shableau, No. 99 CH 11234) and deposited the funds into his trust account. On January 7, 2004, a judge ordered the Respondent to deposit the $8,590.51 with the Clerk of Circuit Court of Cook County. However, on June 30, 2007, prior to depositing any of the funds with the Clerk of the Circuit Court, the balance in the Respondent's trust account dropped to $186.19. Thus, the Respondent, without authority to do so, used $8,404.32 of the

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$8,590.51 for his own purposes. The Respondent did not deposit the funds with the Clerk of Circuit Court of Cook County until August 8, 2008.

Based upon the above, the Respondent was charged with committing conversion; failing to promptly deliver funds to a client or third party; engaging in conduct that is prejudicial to the administration of justice; and engaging in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.

The Respondent filed an Answer to Complaint on September 2, 2009. He admitted some of the factual allegations, denied other, and denied all of the charges of misconduct.

THE EVIDENCE

The Administrator presented the testimony of the Respondent as an adverse witness. The Administrator's Exhibits 1 through 8 were admitted into evidence without objection. (Tr. 5-6). The Respondent testified in his own behalf, and presented the testimony of five character witnesses. The Respondent's Exhibits 1 and 2 were admitted without objection. (Tr. 5-6).

Respondent

The Respondent testified that he is 43 years of age and has been licensed to practice law since 1993. He worked at a small law firm in Olympia Fields for about six month, and then at a law firm in Wheaton for two years. Thereafter, he became an associate at the law firm of Schwartz and Freeman in Chicago until he opened his own practice in 2000. Most of his practice is in the areas of business litigation and real estate. He said he currently has about 60 cases pending. (Tr. 15-18, 96-97, 116).

When the Respondent started his solo practice in 2000 he opened a client trust account and an operating account. (Tr. 17-18, 100). He has had sole responsibility for the accounts. (Tr. 20-21). He noted that he did not have experience with trust accounts at the law firms where he

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previously worked. (Tr. 99). He also said that, until recently, he did not read any books, attend any seminars, or receive any other type of training in regard to the handling of a client trust account. Earlier this year he took a course at the ARDC. (Tr. 99, 112).

Respondent acknowledged that he did not reconcile his trust account until after he learned of the ARDC investigation in this matter in July 2008. He received monthly bank statements for the trust account, but he did not review them. Also, he had no ledger for the trust account. (Tr. 19-22, 62-63. 113). He said he deposited checks into the trust account, waited for the checks to clear, and then made distributions. He explained that it did not seem confusing or require "any kind of separate bookkeeping" because there were usually, only "two, three, [or] four things that would come in." (Tr. 19-20, 22). His "system" for keeping track of the funds in his trust account was in his head, his memory, and a "note or something." However, he had no records that would allow him to later looked back and determine what cases transfers from the trust account were attributable. (Tr. 55-56, 63, 111-12).

On March 2, 2001, the Respondent began representing Ramona Shableau in the case of Motnyk v. Shableau, No. 99 CH 11234, in the Circuit Court of Cook County. Motnyk, who is Ms. Shableau's brother, filed the lawsuit to obtain control of an apartment building that had been owned by a trust in which their deceased father had been the beneficiary. Ms. Shableau filed a counterclaim. On March 19, 2001, a summary judgment was entered in favor of Ms. Shableau, in the amount of $76,000. (Tr. 23-25, 101-02). Collection proceedings were commenced against Motnyk, and Ms. Shableau began receiving funds by way of garnishment checks that were sent to the Respondent. (Tr. 25-26, 104).

Motynk retained counsel and filed a motion to vacate the summary judgment, contending that he was entitled to a setoff of about $25,000. The setoff was based upon payments Motynk

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had made for real estate taxes and to maintain the apartment building. The Respondent thought that Motynk was entitled to a setoff, but Ms. Shableau disagreed. Because of their disagreement, the Respondent decided to withdraw as her attorney. (Tr. 26-27, 105). On March 26, 2003, an order was entered allowing the Respondent to withdraw. In the same order (Adm. Ex. 1), the judge directed the Respondent to deposit with the Clerk of the Circuit Court the funds Respondent was holding on behalf of Ms. Shableau in his trust account. (Tr. 27-29). From March to August 2003, the Respondent did not attempt to deposit any of Shableau's funds he was holding with the Circuit Clerk. He explained that he was still receiving garnishment checks and was waiting until he no longer received such checks, so that he could make a single deposit to the Circuit Clerk. (Tr. 32-33)

In August 2003, Shableau's new attorney, Phillip McGuire, sent a letter requesting the Respondent to turn over all of Shableau's funds to McGuire. (Tr. 34; Adm. Ex. 2). The Respondent complied with McGuire's request. On August 21, 2003, the Respondent sent to McGuire a check in the amount of $7,820.32, drawn on Respondent's trust account, and two garnishment checks that totaled $770.19. (Tr. 35, 37, 40-41; Adm. Exs. 2, 3). On September 11, 2003, McGuire notified the Respondent that McGuire had been discharged by Shableau, and McGuire returned the three checks to the Respondent. (Tr. 41-42, 121; Adm. Ex. 4) The Respondent deposited the two garnishment checks, totaling $770.19, into his trust account. He put the other check in the amount of $7.820.32, which had been drawn on his trust account and made payable to McGuire, into a file. The Respondent acknowledged that he was then holding $8,590.51 on behalf of Ms. Shableau. (Tr. 42-43, 51).

In early November 2003, the Respondent prepared a check drawn on his trust account in the amount of $8,590.51 made payable to the Clerk of the Circuit Court. (Tr. 43; Adm. Ex. 6).

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The Respondent took the check and the court order of March 26, 2003, to the Clerk's office. However, he was informed that the Clerk could not accept the deposit because the court order did not specify an exact amount to be deposited. (Tr. 44-45). In December 2003, the Respondent filed a motion requesting the court to amend its previous order and direct the Respondent to deposit the exact amount of $8.590.51 with the Clerk of the Circuit Court. The motion was granted in an order entered on January 7, 2004. (Tr. 45-46; Adm. Ex. 7).

Late in January 2004, the Respondent went to the Clerk's office to deposit Shableau's funds. He said that the line at the Clerk's office was "tremendously long and it was moving so slow." After waiting for about twenty minutes, he left for an appointment. He intended to return on the following day. When he returned to his office suite, which he shared with three or four other attorneys, he placed the Shableau file on the reception counter near a "tickler file" and a basket that was used for outgoing materials. However, someone apparently removed the Shableau file from the counter and put it away. The Respondent said that he had no "back-up tickler system or calendar system in place" to remind him to deposit Shableau's funds, and the matter "just slipped off of my radar." (Tr. 38-39, 47-48, 106-08).

In July 2008, the Respondent received a letter from Ms. Shableau. In the letter, she said she learned from the Clerk's office that none of her funds had been deposited. A few days later, he received a letter from the ARDC in regard to Shableau's funds. (Tr. 50, 117). The Respondent said that, at the time, he thought he had deposited Shableau's funds at the Clerk's office. Nevertheless, he retrieved Shableau's file from storage and reviewed his bank statements. He then realized he had not deposited the $8,590.51. He used a portion of a fee he had just earned to deposit the $8,590.51 with the Clerk of the Circuit Court on August 8, 2008. (Tr. 49-51, 66-67, 109-10, 117-20; Adm. Ex. 8).

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The Respondent admitted that, between September 2003 and August 2008, his trust account "repeatedly" had a balance of less than $8,590.51. (Tr. 51, 114). He noted, for example, that on March 17, 2006, the balance in his trust account was $4,870.64. During the same month, he transferred the amounts of $4,000, $2,000, and $1,500 from his trust account to his operating account. (Tr. 52-53; Adm. Ex. 5 at 25). He used the funds transferred into his operating account for his business purposes. (Tr. 52-54). The Respondent said that, at the time, he knew the purpose for each transfer of funds by "a note or something." (Tr. 55) However, he has no records that would now "allow me to go back and determine what it was for." (Tr. 55, 65). He also noted that on June 18, 2007, the balance in his trust account was $186.19. (Tr. 56; Adm. Ex. 5 at 50).

The Respondent acknowledged that he had no authority to use any portion of the $8,590.51 he was holding on behalf of Ms. Shableau, and that he misappropriated and spent all but $186.19 of Ms. Shableau's money. (Tr. 51, 53, 56, 122).

The Respondent said that the balance in his trust account became low for the first time in February 2006. At that time, he deposited a settlement check for $10,000 into his trust account. He said he made distributions after he called the bank and was informed the check had cleared. However, the check was later returned and the $10,000 was taken out of his trust account by the bank. The settlement check was not made good for about a year. At about the time the settlement check bounced, he had settled another "very large case" and deposited funds from that case to cover the distributions he had made. However, he did not reconcile his trust account and did not recall that he was holding funds for Ms. Shableau. (Tr. 58-63).

The Respondent presented an exhibit showing that his investments with Franklin Templeton Investments had a value that exceeded the amount he was holding for Ms. Shableau.

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He also testified that he had $50,000 in other accounts at the time he was holding Ms. Shableau's funds. (Tr. 114-15)

The Respondent explained that he took a course pertaining to trust accounts at the ARDC earlier this year (Tr. 112), and has changed his procedures for handling client funds and his trust account. (Tr. 20). He said he created a "multi-page ledger" that shows "everything that goes in and everything that goes out" of his trust account, and "all the money for each individual client that's in there." He also said he reconciles the trust account every month when he receives the bank statement. (Tr. 126-27). He has not yet implemented a computer program for his trust account, but is still looking for a appropriate computer program. (Tr. 132-34). He has not yet had an accountant or another professional review his client trust account. (Tr. 134).

Finally, the Respondent testified that he has provided pro bono services. (Tr. 122-25; Resp. Ex.2). He also said he is active in the LaGrange community. He has been involved with the pet Parade Committee and the Fellowship Group in LaGrange that raise money for charity each year. (Tr. 127-28, 137-38).

Allen S. Goldberg

Judge Goldberg testified that he has been a Circuit Court Judge in Cook County since 1992. During the past ten years he has been in the Law Division handling commercial litigation. The Respondent has appeared before him in several cases. They do not have any social relationship. (Tr. 71-72).

Judge Goldberg said that other lawyers appearing against the Respondent think well of him. On one occasion, Judge Goldberg complimented the Respondent in open court for his civility to other lawyers and for his preparedness when he came to court. (Tr. 73-74).

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On cross-examination, Judge Goldberg said that he has not had any conversations with other judges or attorneys about the Respondent's reputation in the legal community. (Tr. 75).

Lewis Greenblatt

Mr. Greenblatt testified that he is an attorney and a partner at the law firm of Reed Smith. He has known the Respondent since they worked together at the law firm of Schwartz and Freeman.. (Tr. 77-78). Mr. Greenblatt said that the Respondent has a great reputation for honesty and integrity. (Tr. 79).

Thomas Mandler

Mr. Mandler testified that he is an attorney and a partner at the law firm of Hinshaw and Culbertson. About ten years ago, he and the Respondent worked together at the law firm of Schwartz and Freeman. Mr. Mandler was a partner at that firm, and the Respondent was an associate. They have kept up acquaintances since then. Mr. Mandler hired the Respondent to represent him in a trademark case. (Tr. 80-83).

Mr. Mandler said that the Respondent's reputation for honesty and integrity is of the highest level. (Tr. 84).

Donald F. Engel

Mr. Engel testified that he is an attorney, and has offices in the Chicago Loop and in Highwood. He first met the Respondent when they were both associates at the law firm of Schwartz and Freeman. Since then Mr. Engel has sent business to the Respondent, and they have occasionally shared clients. (Tr. 88-89).

Mr. Engel said that the Respondent has a reputation for being smart, honest, and hard-working. He also said he has heard nothing but good remarks about the Respondent from the clients they have represented together. (Tr. 89).

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Maureen Guilfoile

Ms. Guilfoile testified that she has been an attorney since 1991. She is currently a counsel for Merrill Lynch Pierce Fenner and Smith. She has known the Respondent since 1981, when they were in high school together. They have a social relationship and she is one of his clients. She has referred numerous people to the Respondent for legal services. (Tr. 90-92).

Ms. Guilfoile said that the Respondent has a reputation for being a person who can help people with their problems and resolve matters for them. None of the people she referred to the Respondent has complained about him. (Tr. 93-94).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In attorney disciplinary proceedings, the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Winthrop, 219 Ill. 2d 526, 542, 848 N.E.2d 961, 972 (2006). This standard of proof requires a high level of certainty, which is greater than a preponderance of the evidence (i.e. more probably true than not true) but not as great as proof beyond a reasonable doubt. Bazydlo v. Volant, 164 Ill. 2d 207, 213, 647 N.E.2d 273, 276 (1995); In re Kakac 07 SH 86, M.R. 23785 (May 18, 2010) (Review Bd. at 9). In determining whether the burden of proof has been satisfied, the Hearing Panel is to assess the credibility and believability of the witnesses, weigh conflicting testimony, draw reasonable inferences from the evidence, and make factual findings based upon all of the evidence. In re Howard, 188 Ill. 2d 423, at 435, 721 N.E.2d 1126, 1133 (1999); In re Ring, 141 Ill. 2d 128, 138-39, 565 N.E.2d 983, 987 (1991).

With the above principles in mind we make the findings set out below.

We find that the Administrator proved by clear and convincing evidence that the Respondent committed conversion. The evidence showed that in September 2003 the

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Respondent received the amount of $8,590.51 belonging to his client Ramona Shableau and deposited those funds into his trust account. At various times between September 2003 and August 2008 the balance in the Respondent's trust account fell below $8,590.51. For example, bank records showed that the balance in the Respondent's trust account was less than $8,590.51 in March 2006, January 2007, February 2007, March 2007, June 2007, July 2007, September 2007, and June 2008. On June 18, 2007, the balance in the Respondent's trust account reached its lowest level, $186.19.

A "conversion occurs any time an account holding funds on behalf of a client drops below the sums due the client, even if the drop in the balance happens inadvertently." In re Timpone, 208 Ill. 2d 371, 377, 804 N.E.2d 560, 564 (2004). See also In re Holz, 125 Ill. 2d 546, 555-56, 533 N.E.2d 818, 821-22 (1989). Thus, a conversion may be committed in the absence of a dishonest or fraudulent intent. See In re Spak, 188 Ill. 2d 53, 54-55, 66, 719 N.E.2d 747, 748-49, 754 (1999); In re Lewis, 118 Ill. 2d 357, 362, 364, 515 N.E.2d 96, 98-99 (1987). Although the lack of a dishonest motive is not a defense to the conversion of client funds, it is a mitigating factor to be considered in regard to the appropriate sanction. See In re Timpone, 157 Ill. 2d 178, 194-95, 623 N.E.2d 300, 307 (1993); In re Merriwether, 138 Ill. 2d 191, 201, 561 N.E.2d 662, 666 (1990); In re Cheronis, 114 Ill. 2d 527, 535, 537, 502 N.E.2d 722, 726-27 (1986).

Based upon the above, it is clear that the Respondent committed conversion on various occasions between September 2003 and August 2008 when the balance in his trust account fell below $8,590.51, the amount he was holding on behalf of Ms. Shableau. When the balance in his trust account dropped to $186.19 on June 18, 2007, the Respondent had converted $8,404.32 of Ms. Shableau's funds.

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We also find that the Administrator proved that the Respondent failed to promptly deposit funds with the Clerk of the Circuit Court in Cook County, as he was ordered to do by the Circuit Court.

The Respondent represented Ramona Shableau in the case of Motnyk v. Shableau (Cook County, No. 99 CH 11234), and had received garnishment funds on behalf of Ms. Shableau. In an order entered on March 26, 2003, the court allowed the Respondent to withdraw as counsel for Ms. Shableau and directed him to deposit with the Clerk of the Circuit Court of Cook County all funds he received through garnishment on behalf of Ms. Shableau. The Respondent explained that he did not attempt to deposit the above funds immediately because he continued to receive garnishment checks after the date of the court's order, and he wanted to make a single deposit with the Clerk of the Circuit Court.

On August 26, 2003, the Respondent received a letter from Ms. Shableau's newly retained counsel, Mr. McGuire, requesting the Respondent to turn over to McGuire the funds being held on behalf of Ms. Shableau. The Respondent complied with Mr. McGuire's request on August 21, 2003, by sending McGuire checks totaling $8,590.51. However, Mr. McGuire was discharged by Ms. Shableau before he deposited the checks. Mr. McGuire than returned the checks to the Respondent on September 11, 2003. According to the Respondent, he went to the office of the Clerk of the Circuit Court in early November 2003 to deposit the $8,590.51. He said an employee of the Clerk's office informed him that the Clerk could not accept a deposit without a court order setting out a specific amount to be deposited. Sometime in December 2003, the Respondent filed a motion, in the case of Motnyk v. Shableau, requesting the court to enter an order directing the Respondent to deposit with the Clerk the specific amount of $8,590.51. The Court entered such an order on January 7, 2004. The Respondent testified that he went to the

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office of the Clerk later in January 2004 to deposit the funds. He explained that, because the line at that office was "tremendously long," he left without making the deposit. He intended to return the following day. However, he did not do so.

The Respondent explained that when he returned to his office suite after going to the Clerk's office in January 2004, he placed the Shableau file on a counter to remind him to return to the Clerk's office and make the deposit. However, a staff person for the office, which he shared with other attorneys, apparently put the file away. The Respondent then forgot to make the deposit of Ms. Shableau's funds. He said "it was one of those things that without having a tickler system, physical document, physical file there, it just slipped off of my radar." (Tr. 48). Over four years later, in July 2008, Ms. Shableau found out from the Clerk's office that the Respondent had not deposited her funds, and she sent him a letter about the matter. Finally, on August 8, 2008, the Respondent deposited the $8,590.51 with the Clerk of the Circuit Court

There was no justification for the Respondent's delay in depositing Ms. Shableau's funds with the Clerk of the Circuit Court from January 2004 to August 2008. The Respondent's own testimony showed that the lengthy delay was the direct result of his failure to maintain adequate records or to otherwise keep track of client matters. Clearly, the Respondent failed to promptly deposit the funds with the Clerk of the Circuit Court, as he was directed to do in the court's order of January 7, 2004.

We further find that the Respondent's misconduct of conversion and failure to promptly comply with the circuit court's order of January 7, 2004, were prejudicial to the administration of justice. It has been held that an attorney's conversion is prejudicial to the administration of justice. See Merriwether, 138 Ill. 2d at 198; In re Kaplan, 03 CH 84, M.R. 20441 (Nov. 22, 2005) (Review Bd. at 9); In re Mayster, 99 CH 59, M.R. 18008 (May 24, 2002) (Review Bd. at

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4, 6). Also, an attorney's misconduct is prejudicial to the administration of justice when it has an adverse impact on a judicial proceeding, such as by causing delay or additional work for others. See In re Gerstein, 99 SH 1, M.R. 18377 (Nov. 26, 2002) (Review Bd. at 4-5); In re McAvoy, 03 CH 8, M.R. 20463 (Jan. 13, 2006) (Review Bd. at 15); In re Verett, 07 SH 105, M.R. 22567 (Sept.17, 2008) (Hearing Bd. at 34). Additionally, the Supreme Court has made it clear that attorneys have a duty to assist the courts in the expeditious handling of cases and that dilatory practices bring the administration of justice into disrepute. See In re Smith, 168 Ill. 2d 269, 284, 287, 659 N.E.2d 896, 903, 904 (1995). As a result of the Respondent's inaction, Ms. Shableau's subsequent attorney found it necessary to file a motion to compel in August 2003 and to send letters to the Respondent. Also, because of the Respondent's needless delay in depositing Ms. Shableau's funds, she found it necessary to make inquiries about her funds, contact the Clerk's office, and send a letter to the Respondent in July 2008.

Therefore, we find the Administrator proved by clear and convincing evidence that the Respondent committed the following misconduct: (a) conversion; (b) failed to promptly deliver to a client or third person any funds or other property that the client or third person is entitled to receive, in violation of Rule 1.15(b) of the Illinois Rules of Professional Conduct; (c) engaged in conduct that is prejudicial to the administration of justice, in violation of Rule 8.45(a)(5); and engaged in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 770.

RECOMMENDATION

The purpose of the disciplinary system is not to punish an attorney for his or her misconduct, but "to protect the public, maintain the integrity of the legal profession, system, and safeguard the administration of justice from reproach." Winthrop, 219 Ill. 2d at 559. In

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determining the appropriate sanction, the nature of the misconduct, along with the aggravating and mitigating circumstances shown by the evidence must be considered. See In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194, 1200 (2003). In addition, we may consider the deterrent value of a sanction. See In re Twohey, 191 Ill. 2d 75, 85 727 N.E.2d 1028, 1034 (2000).

Although each disciplinary case "is unique and must be resolved in light of its own facts and circumstances," the sanction imposed should be "consistent with those imposed in other cases involving comparable misconduct." Howard, 188 Ill. 2d at 440; In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473, 479 (1994).

In this case, the Administrator requested a suspension of at least six-months and a probationary period during which the Respondent would be required to submit to certain reconciliation procedures for his trust account. The Respondent urged that a suspension stayed in its entirety for a six-month period of probation would be an adequate sanction.

The Respondent's misconduct included the conversion of client funds and the failure to promptly turn over funds as he was ordered to do by a court. The Supreme Court has indicated that conversion, even in the absence of a dishonest intent as in this case, is serious misconduct. For example, in Lewis, 118 Ill. 2d at 363, the Court stated:

"We have repeatedly stressed the importance of an attorney trust account and the gravity of converting client funds, even if done without an invidious motive. Commingling or converting a client's funds is a matter of tremendous concern as it puts the client's money at risk of depletion or loss to creditors of the attorney entrusted with its safekeeping. Violating that trust is disreputable not only for the attorney involved, but for the entire legal profession." (citations omitted).

The failure to promptly comply with a court order is also a serious matter. In In re Yamaguchi, 118 Ill. 2d 417, 426, 515 N.E.2d 1235, 1238 (1987), the Court pointed out that the tribunals of this State rely not only on the honesty of attorneys who appear before them, but also on their

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diligence, "attributes to which attorneys are by oath committed." See also Smith, 168 Ill. 2d at 282-84.

There is considerable mitigation in this case. The fact that the Respondent did not act with a dishonest intent or invidious motive is a significant mitigating factor. Also, the Respondent admitted the facts underlying his misconduct, acknowledged he misappropriated Ms. Shableau's funds, and accepted responsibility for the misconduct. His misconduct occurred in regard to only one client matter. The Respondent has been licensed to practice law since 1993 and has not been previously disciplined. Additionally, a judge and four attorneys gave favorable character testimony on behalf of the Respondent. The misconduct was not committed at a time when the Respondent was having financial difficulties. Instead, the Respondent showed that he had adequate funds in other accounts to repay the amount converted. See Mayster, 99 CH 59 (Review Bd. at 9-10). Finally, the Respondent attended a course presented by the ARDC, and he testified that he has implemented record keeping procedures in his office.

Although the Respondent acted without a dishonest intent, it is apparent that his misconduct was the direct result of his continuing failure to maintain adequate records for his trust account and for his client matters. The Respondent became a solo practitioner and opened a client trust account in the year 2000. However, he never reconciled his trust account for more than eight years. He began reconciling the account only after he became aware of the ARDC investigation of him in July 2008. Even though he received monthly bank statements for his trust account, he did not review them. He kept no ledger for his trust account. Rather, the Respondent testified that his "system" for keeping track of the funds in his trust account was "in [his] head," his "memory" or a "note or something."(Tr. 55-56, 63). He had no records that would enable him to subsequently determine to which case or client transfers from his trust account were

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attributable. The Respondent did not attend any course or obtain any information in regard to properly maintaining trust account records until after the Complaint was filed in this matter. Furthermore, the Respondent did not have adequate records of client matters, as shown by the fact that Ms. Shableau's case, including the court order to deposit her funds with the Circuit Clerk, "just slipped off [his] radar." (Tr. 48).

In In re Solomon, 118 Ill. 2d 286, 515 N.E.2d 52 (1987), the Supreme Court stated that the circumstances in the case before it were not analogous to cases in which a censure had been imposed. The Court pointed out that Solomon's "own testimony established a conscious disregard of his obligations [to maintain complete records of his trust account], obligations which this court has held apply to each member of the bar without exception." Solomon, 118 Ill. 2d at 296. At the time of the Solomon case, Rule 9-102 of the Code of Professional Responsibility was in effect and required lawyers to "maintain complete records" of all client funds coming into the lawyer's possession. Rule 1.15(a) of the Rules of Professional Conduct became effective in August 1990, and was in effect at all times pertinent to this case. Rule 1.15(a) requires all lawyers to keep "complete records" of his or her trust account. In In re Grant, 89 Ill. 2d 247, 252-53, 433 N.E.2d 259, 262 (1982), the Court stated that the respondent's "oversights" were "an established standard of practice," and that:

"The loose, careless and dilatory practices followed by the Respondent in the handling of an accounting for, or more accurately, the failure to account for funds entrusted to him is clearly an abuse of the privilege secured to him by his license."

In In re McBride, 95 SH 877, M.R. 14540 (June 30, 1998), the Review Board stated that the respondent "knew or should have known that her banking practices could lead to insufficient funds to cover the amount owed to a client" and that "[e]xcuses such as mistakes and poor bookkeeping are unacceptable where an attorney jeopardizes client funds as a matter of established practice." McBride, 95 SH 877 (Review Bd. at 15). In this case, the evidence

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showed that the Respondent failed to maintain adequate records for his trust account or to reconcile the account for more than eight years. While we do not find that the Respondent engaged in reckless conduct, his conduct was clearly careless and negligent, and put the funds of his clients at risk.

After considering the nature of the Respondent's misconduct, along with the mitigating and aggravating factors, we do not believe a censure is the appropriate sanction in this case. Rather we believe that a suspension, stayed by a term of probation, will adequately protect the public and the administration of justice, serve as a deterrent, and ensure that the Respondent maintains complete records and otherwise properly manages his client trust account.

While recognizing that each disciplinary case is unique, we find the following cases instructive as to the appropriate sanction in this case.

In In re Kaplan, 03 CH 84, the attorney converted funds of two clients when the balance of his trust account became less than the amounts he was holding their behalf. The attorney did not act with a dishonest intent, but was careless in not following "proper bookkeeping practices." For example, he failed to review bank statements for his trust account and failed to keep a ledger for client funds. Kaplan, 03 CH 84 (Review Bd. at 4-5, 8-9). Character witnesses testified as to the attorney's good reputation for honesty and integrity, and there was evidence of the attorney's significant charitable and volunteer activities. While the attorney had been previously disciplined, the Review Board did not give this much weight because "the misconduct at issue in the earlier proceeding occurred over fifteen years ago and did not involve dishonest motives." Kaplan, 03 CH 84 (Review Bd. at 9). Both the Review Board and the Hearing Board recommended a 30-day suspension. However, the Supreme Court imposed a one-year suspension, with the last three months stayed for a one-year term of probation. The conditions of

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the probation required the attorney to establish and utilize an appropriate system for handling client and third party funds, and for the maintenance of records.

In In re Stalker, 96 SH 534, M.R. 12743 (Sept. 24, 1996), the attorney converted client funds when, on various occasions over a 3-year period, the balance in his trust account fell below the amount he was holding on behalf of a client. The misconduct was the "result of carelessness rather than a dishonest intent." The attorney was unaware that his client's funds had not been paid out of his trust account because of his "failure to timely review and reconcile his client trust account or contemporaneously discuss the matter with his secretary." (Petition to Impose Discipline on Consent at 3). The attorney was suspended for one year, stayed after the first thirty days by probation. The conditions of the probation required the Respondent to submit to an audit of his client trust account prior to the termination of probation.

In In re Glover, 05 CH 58, M.R. 20856 (May 16, 2008), the attorney converted about $700 she had received for filing fees and costs from two clients. The attorney had no dishonest motive, but rather the misconduct was the result of deficient bookkeeping and accounting practices, the failure to have a trust account, and inadequate "support personnel or systems." The attorney opened a trust account, enrolled in an office management program, and employed a part-time assistant. (Petition to Impose Discipline on Consent at 5). The attorney was suspended for six months, with the suspension stayed in its entirety by an 18-month term of probation. The conditions of the probation required the attorney to establish and utilize an appropriate system for handling client and third party funds, and for the maintenance of records.

In In re Grant, 03 CH 11, M.R. 19410 (May 18, 2004), the attorney converted about $7,600 he was holding in escrow. The conversion was the result of "poor record keeping and poor supervision of his [bookkeeper]." The attorney was not having financial difficulties, and

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"maintained adequate personal funds to cover all shortfalls in his client fund account." The attorney "agreed to take measures . . . to ensure that similar mistakes do not occur in the future." (Petition to Impose Discipline on Consent at 3). The attorney was suspended for six months, with the suspension stayed after 60 days by a 1-year period of probation. The conditions of the probation required the attorney to establish and utilize an appropriate system for handling client and third party funds, and for the maintenance of records.

In In re Brejcha, 97 CH 108, M.R. 15004 (Sept. 25, 1998), the attorney converted about $45,000 in clients' funds when the balance in his trust account fell below the amount he was holding for the clients during a one and one-half year period. The conversion was not the result of a dishonest motive, but was the result of the attorney's failure to keep appropriate financial records and to reconcile the account. The attorney had funds in other accounts that exceeded the amounts due to his clients. The attorney changed his procedures relating to client funds, in that he computerized his financial records, began reconciling the account on a monthly basis, and used ledgers to detail deposits and disbursements for clients. Further, the attorney attended the program of the Illinois Professional Responsibility Institute. (Petition to Impose Discipline on Consent at 1, 3). The attorney was suspended for three months, with the suspension stayed in its entirety by a one-year term of probation. The conditions of probation required the attorney to "submit copies of his monthly statements, checks and computerized quarterly reconciliation reports" to the Administrator.

In In re Augustyn, 05 CH 12, M.R. 20583 (Jan. 13, 2006), the attorney converted about $2,269 of earnest money he was holding in one matter and about $252 he was holding in another matter. His "bookkeeping and accounting practices were deficient." He "did not maintain a ledger or check register in connection with his client trust account" and he "kept monies in the

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trust] account that he received as fees." He took some steps to correct his deficient practices, in that he "no longer holds fees in the account, and before issuing checks he confirms that the corresponding deposits have cleared his account." (Petition to Impose Discipline on Consent at 2-4). The attorney was suspended for 60 days, with the suspension stayed entirely by a 1-year period of probation. The conditions of the probation required the attorney to establish and utilize an appropriate system for handling client and third party funds, and for the maintenance of records.

In the case before us, the Respondent has implemented new procedures to maintain proper records for his trust account. He has taken a course offered by the ARDC, has a ledger for his trust account, and reconciles his trust on a monthly basis. He is still looking for an appropriate computer bookkeeping program, and he has not had an audit of his trust account. Based upon the Respondent having initiated corrective measures, we believe his suspension should be stayed in its entirety, as in the cases of Brejcha, Glover, and Augustyn, discussed above.

Therefore, we recommend that the Respondent, James Bertin Zaczek, be suspended from the practice of law for a period of six (6) months, the suspension stayed in its entirety, and the Respondent placed on probation for a period of one (1) year subject to the following conditions:

  1. Respondent shall establish and utilize a system for handling of funds belonging to clients and third parties and the maintenance of records that conforms to the requirements of Rule 1.15 of the Illinois Rules of Professional Conduct and instructions provided to Respondent by the Administrator, including:

Trust Account Procedures

Basis Accounting records that must be maintained daily and accurately:

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Account Check Register- List sequentially all trust account deposits and trust account checks and maintain a current and accurate daily balance on the trust account.

Account Receipts Journal- List chronologically all deposits into the trust account. Each deposit will list the date of the deposit, the source of each deposit, the client matter, the deposit number and the amount of the deposit. Maintain a copy of each item deposited.

Account Disbursement Journal- list chronologically all trust account disbursements. Identify each disbursement with the date of the disbursement check, the trust account check number, the payee, the purpose of the disbursement, the client matter and the amount of the disbursement check.

Client Ledger Journal- list chronologically for each client matter all receipts, disbursements and remaining balances. Prepare a separate page for each client matter and list chronologically all receipts and disbursements and remaining balances for each client matter.

Source Documents, which must be preserved for seven (7) years:

Bank Statements

Deposit slips

Cancelled checks - all trust account checks must have a named payee (no checks written to "cash") and the memo portion of the check must contain a reference to a client matter.

Time and Billing Records

Copies of records from client files that are necessary for a full understanding of the lawyer's financial transactions with the client: e.g., retainer and engagement agreements.

Settlement statements to client showing the disbursement of the settlement proceeds; bills sent to clients and records of payment to other lawyers or non-employees for services rendered.

Reconciliation

There must be a running balance maintained for all ledger and account books. The balances in the client ledger journal

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must be reconciled each month with the balances in the trust receipts and disbursement journals, the account checkbook register and the bank statements. Records of each reconciliation must be maintained for seven (7) years.

  1. During the period of probation, Respondent shall meet with the Administrator's representative on at least a quarterly basis and shall provide the Administrator with any and all documentation and records requested in order to verify his compliance with Condition (c);

  2. Respondent shall notify the Administrator within fourteen (14) days of any change of address;

  3. Respondent shall comply with the Illinois Rules of Professional Conduct and shall timely cooperate with the Administrator in providing information regarding any investigation relating to his conduct;

  4. Respondent shall reimburse the Commission for the costs of this proceeding as defined in Supreme Court Rule 773 and shall reimburse the Commission for any further costs incurred during the period of probation;

  5. Probation shall be revoked if Respondent is found to have violated any of the terms of probation. The remaining period of suspension shall commence on the date of the determination that any term of probation has been violated.

Date Entered: November 2, 2010

John B. Whiton, Chair, with Henry P. Wolff and Eddie Sanders, Jr. Hearing Panel Members.