Filed July 28, 2011
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
In the Matter of:
Commission No. 2010PR00071
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on May 17, 2011, at the Chicago, Illinois offices of the Attorney Registration and Disciplinary Commission ("ARDC" or "Commission"), before a Hearing Board Panel of James B. Pritikin, Chair, Rebecca J. McDade, and Cheryl M. Kneubuehl. The Administrator was represented by Alicia Duncan. Respondent did not appear at the hearing and counsel did not appear on his behalf.
PLEADINGS AND PRE-HEARING PROCEEDINGS
On May 26, 2010, the Administrator filed a two-count Complaint against Respondent pursuant to Illinois Supreme Court Rule 753(b) charging him with violating various Rules of Professional Conduct and certain Supreme Court Rules. The charges in Count I stem from Respondent's alleged participation in a working arrangement with a disbarred attorney by which he assisted that individual in the unauthorized practice of law. The charges in Count II are based on allegations that Respondent's improperly shared legal fees with the disbarred attorney in the course of this same working arrangement.
On July 9, 2010, Respondent was personally served with a copy of the Complaint, Notice of Complaint, Order assigning Chairperson of Hearing Panel, Rules of the Supreme Court of Illinois, and Pre-hearing Conference Procedures Memorandum. On August 17, 2010, after Respondent failed to answer or otherwise plead to the Complaint within the 21-day time period set forth in Commission Rule 231, the Administrator filed a motion pursuant to Commission Rule 236 to deem the allegations of the Complaint admitted ("Administrator's Rule 236 Motion").
The Administrator's Rule 236 Motion was served on Respondent by mail at his registered business address on file with the Commission at 7366 North Lincoln Avenue, Suite #404, Lincolnwood, Illinois ("the Lincolnwood address"). All notices, motions, and other materials filed with the Clerk's Office by the Administrator as well as all orders entered by the Chair during the course of these proceedings were also served on Respondent by mail at the Lincolnwood address. There is no indication in the record that any materials were ever returned to the Administrator, the Clerk's office, or the ARDC.
On September 29, 2010, an initial telephonic pre-hearing conference was held. Respondent participated pro se and the parties advised the Chair regarding the status of the matter. On September 30, 2010, the Chair entered an order continuing the Administrator's Rule 236 Motion and requiring the Respondent to answer or otherwise plead to the Complaint by November 1, 2010.
On November 1, 2010, Respondent filed his first Answer to the Complaint. Respondent disputed and/or denied many of the Complaint's factual allegations and denied that he had engaged in any misconduct. He also set forth various "Affirmative Statements In His Defense" to the charges.
On November 2, 2010, a second telephonic pre-hearing conference was held. The Clerk of the Commission attempted to contact Respondent but was unsuccessful and the Respondent did not participate. On November 3, 2010, the Chair entered an order again continuing the Administrator's Rule 236 Motion and scheduling a further pre-hearing for December 7, 2010.
On November 3, 2010, the Administrator filed a Motion to Strike Respondent's Answer and "Affirmative Statements" on the basis that they failed to comply with Commission Rule 233 and the Illinois Code of Civil Procedure, 735 ILCS 5/2-610. On November 17, 2010, the Chair entered an order granting the Administrator's Motion to Strike and directing the Respondent to file an amended answer on or before December 1, 2010.
On December 7, 2010, a further telephonic pre-hearing conference was held. Respondent participated pro se and the parties advised the Chair regarding the status of the matter. On that same date, the Chair entered an order directing that Respondent file an amended answer to the Complaint on or before December 15, 2010 and scheduling a further pre-hearing in the case for December 22, 2010.
On December 15, 2010, Respondent filed an amended Answer to the Complaint ("Amended Answer"). Respondent admitted some of the factual allegations, denied many others, and denied that he had engaged in any misconduct.
On December 22, 2010, a telephonic pre-hearing conference was held. Respondent participated pro se and the parties advised the Chair regarding the status of the matter. The Chair entered an order directing Respondent to file a Rule 253 report on or before January 10, 2011 and continuing the matter for a further pre-hearing on March 8, 2010.
On January 31, 2011, the Administrator filed and served on Respondent the Administrator's Request to Produce and Notice to Appear at Deposition. Respondent's response
to the Request to Produce was due in 28 days and his deposition was scheduled for March 2, 2011.
On March 8, 2011, a telephonic pre-hearing conference was held. The Clerk of the Commission attempted to contact Respondent but he was unavailable and did not participate. On March 9, 2011, the Chair entered an order scheduling the matter for hearing on May 17, 2011.
On April 12, 2011, the Administrator filed a Motion to Bar Respondent From Offering Testimony and Exhibits at the Hearing ("Administrator's Motion to Bar"). Counsel for the Administrator reported that Respondent had failed to respond to the Request to Produce by the due date of February 28, 2011, and had failed to appear for his deposition on March 2, 2011. She further stated that she had a telephone conversation with Respondent on March 7, 2011 pursuant to Supreme Court Rule 201(k) during which Respondent agreed to file his response to the Request to Produce on or before March 16, 2011 and to appear for his deposition on April 12, 2011. Counsel for the Administrator confirmed this conversation in writing by a letter to Respondent which set forth these new dates. As of the date of the Administrator's Motion to Bar, Respondent had failed to respond to the Request to Produce, to appear at his deposition, or to contact counsel for the Administrator regarding any of the foregoing.
On April 15, 2011, the Chair entered an order granting Respondent an additional ten days to respond to the Request to Produce and to appear for his deposition. The order further stated that failure to comply would result in an order barring Respondent from offering testimony and exhibits into evidence at the hearing. On April 26, 2011, the Chair entered an order granting the Administrator's Motion to Bar.
On April 28, 2011, the Administrator filed and served on Responde nt his Motion to Strike Respondent's Amended Answer ("Motion to Strike"). Counsel for the Administrator
reported that on April 12, 2011, after she had filed her Motion to Bar, she received a voicemail message from Respondent in which he indicated that he had "mis-diaried" the date of his deposition and would call back on April 13, 2011 to reschedule. She further stated that, as of the date of the Motion to Strike, Respondent had not communicated further with her regarding any discovery issues or any other matter. The Administrator argued that Respondent's lack of cooperation in the proceedings prevented its counsel from properly preparing for the hearing and should result in the imposition of sanctions pursuant to Supreme Court Rule 219(c) and Commission Rule 260(f). The Administrator sought an order striking Respondent's Amended Answer and deeming the allegations of the Complaint admitted.
On May 2, 2011, the Chair entered an order granting the Administrator's Motion To Strike. Pursuant to that order, Respondent's Amended Answer to the Complaint was stricken, the allegations of the Complaint were deemed admitted, and Respondent was barred from presenting any evidence at the hearing.
Respondent did not appear at the hearing on May 17, 2011, and did not seek a continuance or otherwise communicate with the ARDC or Hearing Board regarding the matter. Counsel for the Administrator reported that her last conversation with Respondent took place on March 7, 2011, when they discussed the outstanding discovery matters. She further reported that none of the mail sent to Respondent at the Lincolnwood address had been returned. (Tr. 3-7, 29).
The evidence in this matter consisted of the Administrator's Exhibits 1 through 6 which were admitted into evidence. The Complaint allegations, which were deemed admitted, along with the evidence establishes the following facts.
On November 17, 2006, the Illinois Supreme Court issued its mandate suspending attorney Carl Richard Mattes ("Mattes") from the practice of law for three years, with all but the first five months of the suspension stayed by a two-year period of probation, subject to certain conditions. In re Mattes, 04 CH 56, M.R. 21193 (Nov. 17, 2006). Pursuant to the Court's mandate, the period of Mattes' five-month suspension was effective December 8, 2006, and was scheduled to conclude on May 8, 2007. (Adm. Ex. 1).
In or about the middle of April 2007, while Mattes was still suspended pursuant to the Court's mandate, Respondent accepted a position from Mattes to work for him as an associate in his law office, Carl Mattes & Associates, at an annual salary of $40,000. Carl Mattes & Associates was located in a building owned by Mattes. At the time Respondent accepted the employment from Mattes, Respondent knew or should have known that Mattes had been suspended from the practice of law in the State of Illinois and that he was not eligible to resume practicing until May 8, 2007.
Between mid-April 2007 and May 8, 2007, Respondent accepted work assignments from Mattes, such as handling closings that were outside the office and litigation work, and consulted with Mattes regarding areas of law with which Respondent was not familiar. During that period of time, Respondent and Mattes met with clients both individually and together.
Between May 8, 2007 and March 17, 2008, Respondent remained employed by Mattes and continued to receive assignments from him. On October 1, 2007, Respondent opened an IOLTA bank account at National City Bank entitled the "Michael S. McDonald, Attorney at Law IOLTA Account" ("McDonald IOLTA account"). From November 1, 2007 through November
28, 2008, National City mailed monthly statements for the account to "Carl Mattes and Associates c/o Michael S. McDonald, IOLTA." (Adm. Ex. 2).
On March 17, 2008, the Illinois Supreme Court granted Mattes' motion to strike his name from the roll of attorneys licensed to practice law in the State of Illinois pursuant to Illinois Supreme Court Rule 762(a). In re Mattes, 07 CH 70, M.R. 22231 (Mar. 17, 2008). At all times thereafter, Mattes remained stricken from the roll and he was ineligible to practice law. (Adm. Ex. 3).
After March 17, 2008, as a result of the Court's order and pursuant to Supreme Court Rule 764, Mattes was prohibited from engaging in the practice of law, from holding himself out as an attorney authorized to practice law in Illinois, or from maintaining a presence in an office where the practice of law was conducted. At all times alleged in the Complaint, Supreme Court Rule 764(b) provided that, with regard to a disbarred attorney, that "[u]pon entry of the final order of discipline, the disciplined attorney shall not maintain a presence or occupy an office where the practice of law is conducted." After March 17, 2008, notwithstanding his disbarment, Mattes continued to maintain a presence at the offices he and Respondent shared, continued to hold himself out as an attorney to clients, and continued to send letters using the same letterhead he used prior to his disbarment which said, "Carl Mattes & Associates."
Shortly after March 17, 2008, Respondent knew that Mattes had been disbarred pursuant to Illinois Supreme Court Rule 762(a) and that he was not authorized to hold himself out as an attorney or to practice law in Illinois. Thereafter, Respondent had a duty pursuant to Illinois Supreme Court Rule 764, as an attorney affiliated with a disciplined attorney, to take reasonable action necessary to ensure that Mattes complied with the provisions of Supreme Court Rule 764(a)-(e). At no time after March 17, 2008, did Respondent take reasonable steps to ensure that
Mattes complied with the provisions of Rule 764(a)-(e) or leave Mattes' office or employment. At no time did Respondent file with the Clerk of the Supreme Court and serve upon the Administrator a certification setting forth in detail the actions taken to ensure compliance with Rule 764(a)-(e) as required by that rule.
After March 17, 2008, Respondent remained at the same location where Mattes maintained a presence. Between March 17, 2008 and October 2008, Respondent continued to represent clients and conduct legal work from that same location and to receive introductions to potential clients from Mattes. Through August 15, 2008, Respondent also continued to receive bi-monthly salary payments from Mattes. During the course of his employment during this period of time, Respondent spoke with clients of Mattes who would call the office. At no time did Respondent advise those clients that Mattes had been disbarred or that Mattes was not authorized to hold himself out as an attorney or to practice law in Illinois. (Adm. Ex. 4).
Between March 17, 2008 and August 15, 2008, Respondent received bi-monthly salary payments from Mattes which totaled $13,356.53. At no time did Respondent receive approval from the Illinois Supreme Court to receive any compensation related to any agreement, sale, assignment, or transfer of any aspect of his law office as required by Illinois Supreme Court Rule 764(h). Illinois Supreme Court Rule 764(h) provides that a "disciplined attorney may not receive any compensation related to the referral of a legal matter to an attorney or attributed to the ‘good will' of his former law office."
Between April 1, 2008 and July 11, 2008, Respondent received fees from clients and title companies and deposited those funds into the McDonald IOLTA account. Respondent then simultaneously issued checks payable to Mattes which were drawn upon that account which
were in the same amount as those checks that were deposited. Specifically, on five different dates during June of 2008, Respondent deposited checks received from six different clients in the total amount of $4,866.85 into the McDonald IOLTA and then issued checks to Mattes in the identical amounts on those same dates. In addition, between April 1, 2008 and September 5, 2008, Respondent paid $15,451.10 to Mattes by issuing twelve checks made payable to Mattes drawn upon the McDonald IOLTA account. (Adm. Exs. 5, 6).
Each of the Respondent's checks referred to in the foregoing paragraph which were made payable to Mattes were designated as "rent" or "rent & back rent" in the memorandum portion of the check. Respondent's designation of each of the checks was false and Respondent knew it was false and was intended to conceal the true nature of the payments to Mattes, which was to share legal fees with Mattes and/or to compensate Mattes for the referral of legal matters and the "good will" associated with his law practice. (Adm. Ex. 6).
The Administrator reported that Respondent has not been previously disciplined. (Tr. 30).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary matters, the Administrator must establish charges of misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390, 393 (1999). Clear and convincing evidence constitutes a high level of certainty, which is greater than a preponderance of the evidence but less than proof beyond a reasonable doubt. People v. Williams, 143 Ill. 2d 477, 484-85, 577 N.E.2d 762 (1991).
We note initially that the pre-hearing record in this case reflects that although Respondent answered the Complaint and participated in these proceedings for a period of time, he
subsequently ceased cooperating with the Administrator and apparently abandoned the case. Specifically, Respondent failed to comply with the Administrator's request for written discovery and twice failed to appear for his scheduled deposition. Then, after leaving a voicemail message indicating that he would call back the next day to reschedule his deposition, Respondent subsequently made no attempt to communicate further with counsel for the Administrator regarding these or any other matters. In addition, Respondent did not make himself available for the final pre-hearing conference, did not respond to several motions filed by the Administrator, and did not otherwise participate any further in the case. As a result, pursuant to the Administrator's motions, Respondent's Amended Answer was stricken, the allegations of the Complaint were deemed admitted, and Respondent was barred from presenting testimony or other evidence at the hearing. See In re Spiezer, 00 SH 49, M.R. 18161 (Sept. 19, 2002).
The record further reflects that Respondent was provided with notice of this hearing which was set by an order entered by the Chair on March 9, 2011. That order was served on Respondent by mail at his registered business address on file with the Commission. Respondent failed to appear at the hearing, failed to seek a continuance, and failed to otherwise communicate with counsel for the Administrator, the Clerk's office, or the Hearing Board. Accordingly, the hearing proceeded in Respondent's absence as a default matter.
Based upon the admitted Complaint allegations and the additional documentary evidence introduced by the Administrator at the hearing, we find by clear and convincing evidence that Respondent engaged in the following misconduct:
assisting a person who is not a member of the bar in the performance of an activity that constitutes the unauthorized practice of law in violation of Rule 5.5(b) of the Illinois Rules of Professional Conduct ("Rules") (Counts I and II);
giving assistance to another's conduct when the lawyer knows that the conduct will violate the Rules of Professional conduct in violation of Rule 8.4(a)(2) of the Rules (Counts I and II);
sharing legal fees with a non-lawyer in violation of Rule 5.4(a) of the Rules (Count II);
conduct involving dishonesty, fraud, deceit and misrepresentation in violation of Rule 8.4(a)(4) of the Rules (Count II);
conduct that is prejudicial to the administration of justice in violation of Rule 8.4(a)(5) of the Rules (Counts I and II);
conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute in violation of Illinois Supreme Court Rule 770 (Counts I and II); and
violating Supreme Court Rule 764 with regard to the duties of attorneys affiliated with a disciplined attorney (Counts I and II).
Having found that Respondent engaged in misconduct, we must determine appropriate discipline. In making this recommendation, we take into account that the goal of the disciplinary process is not to punish the Respondent, but to safeguard the public, maintain the integrity of the profession, and protect the administration of justice. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993). We also consider the nature of the misconduct, the aggravating and mitigating factors, the deterrent value of the sanction, and whether the sanction will help preserve public confidence in the legal profession. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194 (2003). Although each case is unique and must be resolved in light of its own facts and circumstances, predictability and fairness require that we recommend sanctions that are consistent with those imposed in cases involving comparable misconduct. In re Howard, 188 Ill. 2d 423, 440, 721 N.E.2d 1126 (1999); In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473 (1994).
The admitted facts and additional evidence presented in this case demonstrate that Respondent engaged in serious misconduct. Respondent entered into a working relationship with an attorney who was suspended from the practice of law and then continued that relationship after the attorney was subsequently disbarred. The facts indicate that the disbarred lawyer, Mr. Mattes, continued to hold himself out as an attorney notwithstanding his disbarment and continued to engage in activities that constituted the practice of law. They also show that, for a period of about six months, Respondent continued to work out of the same offices as Mr. Mattes, to draw his salary from Mr. Mattes, and to receive client referrals from Mr. Mattes. Respondent's conduct was clearly improper and violated well-established ethical prohibitions on assisting a disciplined attorney in the unauthorized practice of law. See In re Kuta, 86 Ill. 2d 154, 161-62, 427 N.E.2d 136 (1981); In re Discipio, 163 Ill. 2d 515, 525-26, 645 N.E.2d 906, 911 (1994).
The facts also show that Respondent improperly shared fees with Mr. Mattes during the course of this arrangement by making various payments to him. The Court has harshly condemned such working arrangements, especially where they include improper fee sharing, noting that "[i]mproper fee-splitting is a serious transgression that harms both the public and the legal profession." Discipio, 163 Ill. 2d at 529. Respondent's activities not only violated the Rules of Professional Conduct, but also the specific provisions of Supreme Court Rule 764 which sets forth in detail the "Duties of Disciplined Attorneys and Attorneys Affiliated with Disciplined Attorneys."
There are also several factors in this case that add to the seriousness of Respondent's misconduct. First, the admitted facts show that Respondent continued to participate in this working arrangement after he clearly knew or should have known that it was improper. While it
is possible that Respondent was not aware of Mr. Mattes' disciplinary status when he was initially hired, the facts indicate that he learned about his subsequent disbarment shortly after it became effective. Nonetheless, he continued the improper working arrangement for another six to eight months. Second, the admitted facts demonstrate that Respondent attempted to disguise his improper fee sharing by falsely designating payments that he made to Mr. Mattes as "rent" or "back rent." As a result, his misconduct also included an element of dishonesty and deceit in violation of Rule 8.4(a)(4).
In aggravation, we note Respondent's lack of participation in his own disciplinary proceeding. As indicated, although Respondent initially participated in this matter by appearing at several pre-hearing conferences and filing an Answer and an Amended Answer, he later ceased to cooperate with the Administrator and apparently abandoned his own case. Furthermore, he did not attend the hearing and made no attempt to contact the Administrator, the Clerk of the Commission, or the Hearing Board regarding the matter. Respondent's failure to cooperate with the discovery and to further participate in these disciplinary proceedings is a serious factor in aggravation. The Court has made it clear that attorneys have a duty to cooperate with the Administrator in disciplinary matters. See In re Smith, 168 Ill. 2d 269, 296, 659 N.E. 896 (1995). An attorney's failure to participate in his or her own disciplinary proceeding is indicative of a lack of respect for the process and demonstrates a complete want of professional responsibility. See In re Brody, 65 Ill. 2d 152, 156, 357 N.E.2d 498 (1976).
With regard to mitigation, the Administrator reported that Respondent has not been previously disciplined. This is a mitigating factor. In re Demuth, 126 Ill. 2d 1, 14, 533 N.E.2d 867 (1988). We also note that while Respondent's actions were clearly improper, there was no evidence that any client suffered any actual harm as a result of his actions. See In re Towles, 98
Ill. 2d 179, 185-86, 456 N.E.2d 127 (1983). Since Respondent did not appear at the hearing, however, there is no additional mitigation to take into account.
With regard to sanction, the Administrator suggests that Respondent should be suspended for one year and until further order of Court. In support, the Administrator cites a series of cases where attorneys have received suspensions ranging from 90 days to one year based on their involvement in working arrangements with suspended or disbarred attorneys.
In In re Gaffen, 01 CH 98, M.R. 18285 (Sept. 20, 2002), the respondent was suspended for one year for forming a partnership with a disbarred attorney for the purpose of handling property tax appeals. The relationship lasted for six years and also included improper fee sharing. The respondent had not been previously disciplined and acknowledged her misconduct. There were also various other mitigating factors present.
In In re Wright, 02 CH 91, M.R. 18833 (Sept. 19, 2003), the Court suspended an attorney for six months for allowing a disbarred attorney to use his law office and to assist in the representation of clients for a period of about one year. Although there was no fee sharing, the respondent accepted referrals from the disciplined attorney, consulted with him regarding the representation of clients, and assigned him tasks to complete in connection with his cases. In addition, the respondent took no steps to ensure that the disciplined attorney was not continuing to hold himself out as a lawyer during this period of time. The respondent had not been previously disciplined and regularly engaged in pro bono legal and other charitable work. He had also since closed his practice and was no longer practicing law.
In In re Banks, 07 CH 78, M.R.23379 (Nov. 17, 2009), the Court suspended an attorney for ninety days for employing a disbarred attorney as a paralegal for a period of nearly two years. Although the disbarred attorney did not maintain a presence in the respondent's office, he
performed a variety of tasks including drafting pleadings, conducting legal research, and meeting with clients. The respondent was unaware that the arrangement was prohibited and terminated it within hours of learning that it was improper. There were also various other mitigating factors present, including the lack of prior discipline, cooperation in the disciplinary proceeding, and evidence of good character.
We have reviewed the precedent and we agree with the Administrator that a one-year suspension is appropriate for the misconduct in this case. As the cited cases indicate, sanctions for assisting suspended or disbarred attorneys in the unauthorized practice of law have generally ranged from a short period of suspension to a lengthier one, depending upon the particular facts and circumstances involved. In addition to the normal aggravating and mitigating factors, other considerations that have affected the severity of the sanction in these cases include the duration of the arrangement and whether improper fee sharing was involved. See also Discipio, 163 Ill. 2d at 515 (1994) (two-year suspension for lengthy arrangement with a disbarred attorney that included the referral of cases and improper fee sharing).
Although none of these cases is identical, we believe that this case is most comparable to Gaffen where a one-year suspension was imposed. Like this matter, the arrangement in Gaffen included improper fee sharing which was not present in either Wright or Banks. Although the arrangement in Gaffen went on for a much longer period of time than the one at issue here, there was no finding of dishonesty in that matter. Moreover, unlike here, the respondent in Gaffen participated in the disciplinary proceeding and acknowledged her wrongdoing. There was also some additional mitigation in that case this is not present here. Overall, we believe that the cases are sufficiently similar to warrant comparable discipline.
We also agree with the Administrator that the suspension should continue until further order of the Court. A respondent's disregard for the disciplinary process suggests a lack of professionalism and level of irresponsibility that casts serious doubt on the respondent's ability to represent clients and to meet professional standards of conduct in the future. See In re Levinson, 71 Ill. 2d 486, 492-93, 376 N.E.2d 998 (1978); In re Houdek, 113 Ill. 2d 323, 326, 497 N.E.2d 1169 (1986). A suspension until further order of court is warranted under such circumstances in order to ensure that respondent will have to demonstrate his or her fitness to resume practicing law before being permitted to do so. See Levinson, 71 Ill. 2d at 492-93; Houdek, 113 Ill. 2d at 326.
For the foregoing reasons, we recommend that Respondent, Michael Scott McDonald, be suspended for a period of one year and until further order of Court.
Date Entered: July 28, 2011
|James B. Pritikin, Chair, with Rebecca J.
and Cheryl M. Kneubuehl, Hearing Panel Members.