Summary
The Massachusetts Supreme Judicial Court reviewed attorney disciplinary proceedings arising from an attorney’s handling of approximately $11,000 to $12,000 in cash belonging to an elderly client. The court held that, prospectively, proof that an attorney received client cash, failed to deposit it in a trust account, and failed to account for it creates a rebuttable presumption of misuse and permanent deprivation, shifting the burden of explanation to the attorney. Applying the prior standard to this case, the court imposed a six-month suspension and required additional education concerning client-fund accounting and record-keeping.
Topics
Practice areas
Questions Presented
- Whether substantial evidence supported findings that the respondent violated the Massachusetts Rules of Professional Conduct by failing to safeguard, deposit, record, account for, and timely deliver the client's funds.
- Whether the existing record supported findings that the respondent intentionally misused or converted the client's funds, or deprived the client of those funds.
- Whether the respondent's delay in reporting and turning over the later-discovered $2,040 violated Mass. R. Prof. C. 8.4(c).
- Whether the Board of Bar Overseers' recommended two-month suspension was adequate.
- For future disciplinary cases involving client cash, whether proof that an attorney received cash, failed to deposit it in a bank account, and failed to account for it creates a rebuttable presumption of commingling and permanent deprivation that shifts the burden to the attorney to explain the funds.
Holdings
- Substantial evidence supported findings that the respondent failed to deposit the client's cash in a client trust account, failed to keep proper records and provide a complete accounting, and failed timely to safeguard and turn over client funds, violating Mass. R. Prof. C. 1.15(a), (b), (d), and (e), as well as the related competence, objectives, and diligence rules.
- The existing record supported the finding that the respondent did not intentionally misuse or convert the client's funds and did not deprive the client of them.
- The respondent's delay in reporting or turning over the later-discovered $2,040 did not establish a violation of Mass. R. Prof. C. 8.4(c) because the hearing committee found that he lacked the required intent to mislead or deceive.
- A six-month suspension, rather than the board's recommended two-month suspension, was appropriate, together with a continuing legal education course on accounting and management of client funds.
- For misconduct occurring after issuance of the opinion's rescript, once bar counsel proves that an attorney received client cash, failed to deposit it in a bank account, and failed to account for it, a rebuttable presumption arises that the attorney commingled the cash in violation of Mass. R. Prof. C. 1.15 and that the client was permanently deprived of it. The burden then shifts to the attorney to explain what happened to the funds and whether the conduct was negligent or intentional and whether deprivation occurred.
Key quotations
“With these facts established, we state, for prospective application only, that, in such circumstances, a rebuttable presumption is created that the attorney misused client funds and that the client was deprived of the funds permanently.” (873)
“It is thus not unfair to rely on a presumption, one that can be rebutted, that unaccounted-for cash received from or on behalf of a client is deemed to have been commingled in violation of Mass. R. Prof. C. 1.15 and that the client has been permanently deprived of the money.” (887)
“Should an attorney fail to convince that funds are missing by virtue of negligence rather than purpose, deprivation will be presumed, and a sanction of disbarment or indefinite suspension will be imposed.” (888)
Factual background
The respondent attorney received approximately $11,000 to $12,000 in cash belonging to an eighty-three-year-old client after a housecleaner found packets of money in the client's home. He took the cash without counting it in the housecleaner's presence, made no record of the amount, and stored it in an office safe rather than depositing it in a client trust account. He used $6,723.76 for the client's benefit, later discovered $2,040 that had slipped behind a drawer, and ultimately paid the guardian an equivalent amount with interest, but never accounted for all of the cash. The client was elderly, had been hospitalized, and was later placed under guardianship.
Procedural history
The Board of Bar Overseers adopted findings that the respondent failed to deposit client cash in a trust account, failed to maintain adequate records, failed to provide a complete accounting, and negligently failed to safeguard and timely turn over client funds. The board recommended a two-month suspension. The single justice reserved and reported the case without decision, and the Supreme Judicial Court independently reviewed the board's findings and sanction.