Two-year suspension is not excessive punishment for attorney that committed multiple ethical violations over many years.
Cite as
2000 DJDAR 4321Published
Apr. 25, 2000Filing Date
Apr. 23, 2000Summary
State Bar Court
Thomas Lantz entered the practice of law in 1981. In four separate matters, Lantz was found guilty of numerous ethical violations. In one matter, Lantz willfully failed to promptly refund to a client unearned attorney fees. In the second matter, Lantz charged a client an illegal fee. In the third matter, Lantz failed to render an accurate accounting of his trust fund account. In the last matter, Lantz recklessly failed to return a settlement draft to the client's substituted counsel. A hearing judge suspended Lantz from the practice of law for two years. Lantz contended that the mitigating evidence in his favor did not support his discipline.
Affirmed. Although Lantz presented positive character evidence and apparently served many clients satisfactorily, he committed a variety of ethical violations over the years, covering many law practice areas. These offenses involved misappropriation of funds through gross negligence, withholding an illegal fee, recklessly incompetent performance of services, failure to return promptly unearned fees and failure to render an appropriate accounting. Accordingly, the suspension recommended by the hearing judge was appropriate.
— Brian Cardile
In the Matter of
THOMAS E. LANTZ,
A Member of the State Bar.
Nos.90-O-17749
93-O-18591
93-O-11806
93-O-14407
92-O-15576
Review Department of the
State Bar Court
Filed April 24, 2000
We review this attorney discipline case at the request of Respondent Thomas E. Lantz. A hearing judge found respondent culpable of professional misconduct in four matters and recommended that he be suspended for two years and until he proves rehabilitation, that this suspension be stayed and that he be placed on two years probation on conditions including actual suspension for one year and until respondent makes restitution of $8,000 to one client.
Respondent urges that the findings of his culpability are procedurally flawed, not established and, in any case, a private reproval is adequate discipline. Although the State Bar's Office of Chief Trial Counsel (State Bar) did not seek review, it urges in its reply brief, as it did below, that respondent be disbarred.
Independently reviewing the record (In re Morse (1995) 11 Cal.4th 184, 207), we uphold the hearing judge's culpability findings. We have also concluded that the judge appropriately weighed and balanced mitigating and aggravating circumstances. We shall adopt her disciplinary recommendation after modifying two of her recommended conditions of probation.
The record shows that although respondent presented positive character evidence and apparently served many clients satisfactorily, he committed a variety of ethical violations over several years, covering many law practice areas. These offenses involved misappropriation of funds through gross neglect, withholding an illegal fee, recklessly incompetent performance of services, failure to return promptly unearned fees and failure to render an appropriate accounting. Accordingly, the suspension recommended by the hearing judge is appropriate.
I. Statement of the Case. Most of the background facts and many of the key facts were established by the parties' stipulation or are otherwise not disputed. On review, the State Bar accepts the hearing judge's conclusions. Although we shall summarize the findings in the order contained in the decision below, we limit our discussion to those ultimate findings or conclusions which respondent disputes.
Respondent was admitted to practice law in California in December 1981 and has no prior discipline.
A. The Black Matter.
Richard Black had been convicted of two felonies and sentenced to prison. In February 1990, Black's father and sister hired respondent to represent Black in appealing the convictions. They paid respondent half of his $13,000 fee in February and completed payments by September 1990. It is undisputed that respondent never filed an opening brief and that Black's appeal was dismissed in May 1990 pursuant to rule 17(a) of the California Rules of Court.
According to respondent, he prepared a draft of the appellate brief and gave it to Black's sister, but Black denied ever seeing it. Respondent advised Black that the appeal was unlikely to succeed, that a writ of habeas corpus might be a better remedy and that respondent would refund the fees should Black not wish to pursue the appeal. Respondent testified that Black could not decide what to do and that, in an October 1990 meeting with Black at Soledad prison, Black could not provide respondent with evidence respondent needed to proceed. Respondent never filed a habeas petition for Black.
In January 1991, Black's father told respondent that Black wished to terminate his employment and recover his files and unearned fees. It is undisputed that in May 1991, respondent offered to refund the entire $13,000 and tendered a $500 check on account. Black did not cash that check as he wanted the entire refund in one check. Respondent informed Black of his right to arbitrate this fee dispute (Bus. & Prof. Code, § 6200 et seq.) 1 and Black pursued this remedy. In November 1991 respondent offered to stipulate to an arbitration award against him of $13,000. The resulting award called for monthly installments of $1,000 to start on June 21, 1992, until the $13,000 plus interest was paid in full. Respondent did not make any payments until December 30, 1992, when he paid this full amount to his former counsel, Tom Low, with directions to pay it to Black. However, Black never received any of the award from either Low or respondent, but did receive it from the State Bar's Client Security Fund. (See § 6140.5.) The record shows no refund by Low or respondent to the Client Security Fund.
From the foregoing findings, the hearing judge found no clear and convincing evidence that respondent failed to respond promptly to Black's reasonable status inquiries (§ 6068, subd. (m)), that respondent engaged in any acts of moral turpitude (§ 6106), or that respondent failed to participate or cooperate in the State Bar investigation of Black's complaint (§ 6068, subd. (i)). Nor did the hearing judge find that respondent wilfully failed to return Black's transcripts or other papers after he was discharged. The State Bar does not take issue with these findings. On review we uphold them.
The hearing judge concluded that respondent wilfully violated rule 3-110 (A), Rules of Professional Conduct of the State Bar 2 by recklessly failing to either file an appellant's opening brief for Black or take any significant step for him. Finally, the hearing judge concluded that respondent wilfully violated rule 3-700 (D) by failing to promptly refund to Black unearned fees. Respondent disputes these two conclusions of his culpability and we shall discuss them post.
B. The Arenas/Waxman Matter.
In October 1989, Maria Arenas suffered injuries in an auto accident. She had a workers' compensation case as well as a personal injury claim arising out of the same incident. She retained respondent in November 1989. To pursue the personal injury action, respondent filed a civil action for Arenas in San Francisco Superior Court. Respondent did not have experience in workers' compensation cases, and in March 1991, he asked Joseph Waxman, a State Bar certified specialist in those matters, to associate with him to pursue Arenas's workers' compensation claim. Waxman filed the necessary application to protect that claim.
In June 1992, without contacting Waxman, respondent settled both of Arenas's claims for over $400,000 and for an agreement from the workers' compensation carrier to waive significant sums it had advanced Arenas for medical payments and disability. Respondent failed to inform Waxman about the settlement negotiations and Waxman later learned that the Arenas personal injury case had been settled. Moreover, respondent never presented the compromise and release to the California Workers' Compensation Appeals Board (Board) as required by the Labor Code.
Respondent promptly deposited the settlement funds in his trust account and disbursed to Arenas $196,342 as her share of the personal injury claim. He kept $162,626 as his fees in the personal injury claim and kept in trust an additional $29,466 as fees in the workers' compensation claim. Although respondent was inexperienced in workers' compensation matters, he had received some general advice from an attorney other than Waxman who regularly practiced in that area, and respondent learned that workers' compensation fees were generally 12 percent of the recovery.
In late 1992 and early 1993, Waxman tried without success to learn from respondent the status of the workers' compensation matter. Arenas went to Waxman in early 1993 to find out the status of her workers' compensation matter. When it appeared that respondent had withheld attorney fees for the workers' compensation matter, Waxman filed an action before the Board to resolve the attorney fee issues. The Board investigated, and in June 1993, the Board directed respondent to keep the $29,466 amount in trust pending further order.
In February and March 1994, a workers' compensation judge requested information from respondent regarding his fee but respondent did not reply. In 1994, the Board ordered that respondent was not entitled to any fees in the workers' compensation matter and directed him to refund the $29,466 to the insurance carrier. The carrier was ordered to disburse $8,000 of the $29,466 to Waxman as his fee and the rest to Arenas. This resulted in a loss to Arenas as the $8,000 payment to Waxman should have come from the attorney fee respondent collected in the personal injury matter. The Board was aware of this, but since respondent had filed a bankruptcy petition, the Board apparently considered it futile to seek to make respondent pay the $8,000 to Waxman.
Respondent did not promptly refund the $29,466, and starting in May 1994, Waxman again resorted to the Board. In November 1994, respondent sent the $29,466 to the Board's Deputy Commissioner, ascribing the delay to a misplaced check.
The hearing judge concluded that respondent committed moral turpitude proscribed by section 6106 by failing to get Board approval prior to executing the compromise and release and withholding for over two years the $29,466 fee in the workers' compensation matter. The judge also concluded that respondent's actions in failing to get the statutorily required approval for the $29,466 fee made it an illegal fee, proscribed by rule 4-200 (A). Finally, the hearing judge concluded that respondent violated section 6103 by failing to promptly comply with the Board's order to return the $29,466. The hearing judge did not find clear and convincing evidence that respondent wilfully violated rule 3-110(A) in dealing with Waxman nor that respondent violated section 6103 in failing to reply to the workers' compensation judge's requests in early 1994 for information since no court order was violated. The State Bar does not take issue with these latter two conclusions in respondent's favor and we uphold them. Respondent disputes the conclusions of his culpability, and we discuss them post.
C. The Rodrigues Matter.
In July 1985, David Rodrigues hired respondent to represent him in a personal injury case. The hearing judge found that respondent's attorney fee was one-third of the recovery. Between November 1986 and sometime in 1993, Rodrigues was jailed for a felony conviction. Shortly after he was jailed, in December 1986, his personal injury case settled for $80,000. Respondent's fee was $26,667 and Rodrigues was entitled to $53,333 less costs and sums advanced earlier. Rodrigues instructed respondent to hold his recovery in trust, but to disburse sums from time to time to his mother and girlfriend. Respondent and the State Bar stipulated that the payments respondent made to or on behalf of Rodrigues totaled at least $49,430.56.
Respondent testified that he overpaid Rodrigues, but the only evidence deemed credible by the hearing judge showed that respondent failed to remit the remaining balance of $3,903 to Rodrigues. On February 23, 1989, respondent's trust account balance fell below that sum. One week later, that balance was only $614.45, and by February 13, 1990, the account was overdrawn.
The hearing judge also found that respondent did not maintain or give Rodrigues an adequate accounting of disbursements at the time that they were made. Although respondent testified that a bookkeeper reconstructed check and register records, he could not offer evidence to show how the bookkeeper did this.
From these findings, the hearing judge concluded that respondent misappropriated $3,903 from Rodrigues's trust funds and wilfully committed moral turpitude proscribed by section 6106. The hearing judge also concluded that respondent wilfully violated rule 4-100(B)(3) and its predecessor rule, 8-101 (B)(3), by failing to provide complete records and disbursements of trust funds and by failing to render an appropriate accounting. Respondent disputes these conclusions and we shall discuss them post.
D. The Thomas Matter.
Although this matter is referred to in the record as the Maidenberg matter, we find it more appropriate to refer to it as the Thomas matter.
In June 1991, Bryant Thomas hired respondent to represent him in a personal injury matter. That same month, respondent filed a civil action on behalf of Thomas. In December 1991, Thomas retained new counsel, Ronald Maidenberg, to represent him. A substitution of attorney was filed in the suit at the end of March 1992.
In May 1993, respondent filed a notice of lien, claiming $3,844 as fees and costs.
In August 1993, the Thomas case settled for $10,000. On August 27, 1993, Maidenberg sent respondent the insurance company's draft for endorsement and return but Maidenberg never received it back from respondent despite sending a follow-up letter. Respondent testified that he endorsed the draft, but was extremely displeased because Maidenberg wanted respondent to reduce his fee to 25% of the total amount of attorney fees. According to respondent, he forwarded the endorsed draft to his counsel, Tom Low.
Thomas died in November 1993 and although his case had been settled two months earlier, because of respondent's delay in handling the matter and Low's apparent failure to return the draft to Maidenberg, the settlement could not be paid to Thomas or his heirs.
When Maidenberg failed to receive the 1993 draft, he had to undertake a lengthy effort with the insurer to issue a new draft. The insurer sent a new draft to Maidenberg in May 1995. On June 28, 1995, Maidenberg sent this draft to respondent but respondent did not return it until nearly a month later. At that time, he demanded to share equally in the attorney fees with Maidenberg. To resolve the dispute, Maidenberg asked respondent to account for his services and cost expenditures. Respondent failed to provide this information. Maidenberg then resorted to a declaratory relief action on behalf of Thomas's beneficiary against respondent to try to settle the matter. On January 2, 1996, a default judgment was entered in the declaratory relief action against respondent that he receive nothing.
The hearing judge found that respondent had wilfully violated rule 3-110 (A) by recklessly failing to return the 1993 settlement draft to Maidenberg. Respondent disputes this finding and we shall discuss it post.
II. Discussion. A. Procedural claims.
At the outset, respondent urges that we must reverse the findings of culpability based on his claim of conflict of interest. He asserts that the State Bar started disciplinary proceedings against the attorney who represented him in the early stage of these proceedings and that the State Bar assigned the prosecution of that attorney to an attorney outside the Office of Trial Counsel. He contends that the State Bar is disqualified from prosecuting the case against respondent and that it "bears the appearance of impropriety." Assuming for discussion that respondent's chronology is correct, his claim is without any merit. Respondent utterly fails to demonstrate how the investigation and prosecution of his former counsel demonstrated any conflict of interest or unfairness toward him. At trial, respondent was represented by other counsel who advanced his interests vigorously. Moreover, respondent fails to support his claim by any citation of legal authority.
Respondent also argues that he was deprived of adequate notice in the Black matter concerning the charge that he wilfully violated rule 3-110. Respondent's sole argument of this point is a quotation from our decision in In the Matter of Glasser (Review Dept. 1990) 1 Cal. State Bar Ct. Rptr. 163, 171, in which we stated the general charging requirements for alleging a violation of the predecessor to rule 3-110. Although the notice did not comply literally with our Glasser decision, it put respondent on notice that he was charged with a competency violation and alleged specific services which respondent did not perform. On our independent review of the record, we conclude that respondent was given adequate notice of this charged rule violation.
B. Culpability.
1. Black Matter.
In the Black matter, respondent stresses the efforts he claims he expended for Black; attacks Black's credibility; asserts he earned his full fee, but as a pro bono gesture, agreed to and did give a refund to respondent's former counsel, Low, to give to Black. Respondent concludes that he cannot be culpable of the rule 3-110 (A) and rule 3-700 (D)(2) charges. We disagree with respondent and adopt the hearing judge's findings of these violations.
Respondent knew that, when he accepted Black's criminal appeal, Black's previous counsel was under a time deadline under rule 17 (a) of the California Rules of Court. Yet the record is undisputed that respondent failed to file an opening brief. Moreover, the record contains no drafts of any briefs. If, as respondent claims, Black agreed that habeas corpus was a better remedy than appeal, the record does not show that nor does it show any writ petition filed by respondent. All the record shows on this point is that respondent accepted $13,000 from Black's family, respondent agreed to adequately represent Black, respondent failed to perfect any remedy for Black and that Black only received a refund from the Client Security Fund.
Even if Black could not decide, as respondent contends, which remedy to pursue or if Black was unable to provide respondent with needed information, respondent could not simply let the months pass with no action. Respondent's choice was to either pursue remedies warranted by the facts and law based on effective investigation and research or to withdraw from Black's employment if and as appropriate under rule 3-700(C). (In the Matter of Myrdall (Review Dept. 1995) 3 Cal. State Bar Ct. Rptr. 363, 379, citing Fitzpatrick v. State Bar (1977) 20 Cal.3d 73, 85.)
Respondent's prompt promise to Black's relative of a full return of fees if Black chose not to pursue an appeal, followed by his agreement in November 1991 to refund all fees, followed by his later stipulation to a $13,000 arbitration award against him belie his claim of having earned the full fees.
The essence of respondent's argument is that we should reweigh the evidence and prefer his version of the facts. Although we review the record independently (see ante), we must give great weight to the findings of the hearing judge which resolve witness credibility. (Rule 305(a), Rules Proc. State Bar, title II, State Bar Court Proceedings; see e.g., In the Matter of Fandey (Review Dept. 1994) 2 Cal. State Bar Ct. Rptr. 767, 774.) The hearing judge's findings are appropriate and we adopt them.
2. Arenas/Waxman Matter.
In this matter, respondent argues that he is innocent of the conclusions that he engaged in moral turpitude, violated the Rules of Professional Conduct by charging and withholding an attorney fee for a workers' compensation claim without Board approval, and that he violated section 6103 by disobeying the workers' compensation judge's order. We agree with the hearing judge's culpability conclusions.
As in the Black matter, the undisputed facts aid the hearing judge's conclusions. It is undisputed that respondent failed to seek Board approval for the fees he withheld from Arenas's settlement as required under the Labor Code. Even assuming that respondent was inexperienced in workers' compensation matters, the evidence shows that he charged an illegal fee in violation of rule 4-200 (A) and withheld it for a two-year period. Respondent had ample expertise available to him to learn the requirements of workers' compensation fee approval. His associated counsel, Waxman, was a certified specialist in workers' compensation and the evidence is undisputed that, while representing Arenas, respondent consulted informally another attorney experienced in these matters about the general nature of workers' compensation cases. The record shows that, had respondent communicated adequately with Waxman, he might have avoided some of the misconduct found. Given the length of the rule 4-200(A) violation, we also agree with the hearing judge that it involved moral turpitude. We need not decide whether or not respondent's conduct in charging and withholding the $29,466 workers' compensation fee was deliberate as it was at the least grossly negligent. Gross negligence in discharge of fiduciary duties is sufficient to sustain a conclusion of moral turpitude. (In the Matter of Rubens (Review Dept. 1995) 3 Cal. State Bar Ct. Rptr. 468, 478, and cases there cited.)
Turning to the charge that respondent violated section 6103 by disobeying the workers' compensation judge's order, we must decide at the outset whether the workers' compensation judge's order was "an order of the court" within section 6103, for that section makes it a disciplinable offense to disobey or violate "an order of the court." (Cf. In the Matter of Respondent P (Review Dept. 1993) 2 Cal. State Bar Ct. Rptr. 622, 632.) 3
The workers' compensation provision of the California Constitution expressly vests the Legislature with plenary power to create and enforce a complete system of workers' compensation. (Cal. Const., art. XIV, § 4 (formerly art. XX, § 21).) That authority includes the power (1) to create tribunals to resolve workers' compensation disputes and (2) to fix and control the mode of trial of those disputes, the rules of evidence, and manner of review of the tribunals' decisions, provided that all such decisions are reviewable in the appellate courts of the state. (Ibid.) California courts have termed the Workers' Compensation Appeals Board a "constitutional court and its decisions have res judicata effect. [Citations.]" (Hand Rehabilitation Center v. Workers' Comp. Appeals Board (1995) 34 Cal.App.4th 1204, 1214.) Courts have also stated that the Board exercises some of the judicial powers of the state and "in legal effect is a court". (Bankers Indem. Ins. Co. v. Industrial Acc. Com. (1935) 4 Cal.2d 89, 97; Fremont Indemnity Co. v. Workers' Comp. Appeals Board (1984) 153 Cal.App.3d 965, 974.) Accordingly, we hold that the order of the workers' compensation judge is an order of a court within the meaning of section 6103. By disregarding the workers' compensation judge's order, respondent violated section 6103.
3. Rodrigues Matter.
Respondent first contends that the offense that he misappropriated the $3,903 of Rodrigues' funds under section 6106 was not properly charged because there was no indication of moral turpitude or corruption. Respondent errs. So long as he was given reasonable notice of the charge (see § 6085), the State Bar was entitled to charge this matter as a violation under section 6106. Here, respondent had ample notice of the misappropriation charge. Moreover, the State Bar also charged respondent with violating two provisions of the trust account rules.
Our review of the hearing judge's decision shows that she applied the correct law to this transaction and discussed it appropriately on pages 15 through 17 of her decision. We need not repeat that discussion of misappropriation except to conclude that is the correct legal result applicable to this record. Respondent may have indeed been influenced by a motive of friendship and service to Rodrigues whose incarceration prevented his access to his personal injury recovery. Yet respondent's failure to keep proper records of the receipt and numerous disbursements of funds led to the conclusion that, rather than overpaying Rodrigues, as respondent maintains, he misappropriated $3,903 of his funds. Although respondent's actions were grossly neglectful by repeatedly failing to properly record and account for the many disbursements he made on behalf of Rodrigues, they still violated section 6106. (In the Matter of Rubens, supra, 3 Cal. State Bar Ct. Rptr. at p. 478 and cases there cited.)
Respondent asserts that he offered appropriate accountings to Rodrigues and therefore he did not violate rule 4-100 (B)(3) or its predecessor rule 8-101 (B)(3). We disagree and agree with the hearing judge who concluded that respondent did commit a wilful violation. Since it was clear that respondent did not keep complete records of Rodrigues' funds (see, e.g., Dixon v. State Bar (1985) 39 Cal.3d 335, 344) and only performed a limited reconciliation of check disbursements long after requested, his culpability is established by clear and convincing evidence.
4. Thomas Matter.
Although respondent takes issue with the hearing judge's conclusion that he wilfully violated rule 3-110 (A) in the Thomas matter, his attack is limited to defending his failure to promptly turn over to attorney Maidenberg the first insurance draft. Respondent contends that since he gave it to his former counsel, Low, respondent should not be held culpable. We disagree, noting that, even if respondent's defense is credited, it does not excuse his delay after the insurer reissued the draft in 1995.
The record shows that respondent's dispute with attorney Maidenberg over their relative shares of the attorney fees of this case unduly delayed the distribution of Thomas's funds until long after his death. It also put Thomas's subsequent counsel to considerable extra effort, including resort to litigation to recover the funds Thomas's estate was due. There was never a dispute between either attorney and Thomas at the time of the settlement as to Thomas's share of proceeds. The record shows respondent's repeated failure to reply to Maidenberg's communications, even two years after Thomas's death.. When Maidenberg saw the need to resort to litigation to finally settle this protracted fee dispute, respondent defaulted. Reviewing the evidence in the record as to the entire unfortunate history of this case, we readily agree with the hearing judge that respondent recklessly failed to act competently in violation of rule 3-110 (A), even if he had entrusted Low with the first settlement draft.
C. Discipline.
1. Mitigation.
We agree with the type and weight of mitigating evidence considered by the hearing judge. (See Rules of Procedure of the State Bar, title IV, Standards for Attorney Sanctions for Professional Misconduct (standards), standard 1.2(e).) She took into account the testimony of many witnesses who were attorneys, judges or clients. Although few could show that they were reasonably aware of the full extent of the tentative findings against respondent, they held strong beliefs about respondent's most favorable character, his positive reputation in the legal community and willingness to help his clients. This evidence was properly given positive weight by the hearing judge in mitigation.
We also agree with the hearing judge's very limited weight to respondent's lack of prior discipline over a relatively short period of time, seven years, prior to the onset of his misconduct. (See, e.g., Kelly v. State Bar (1988) 45 Cal.3d 649, 658.)
Finally, we adopt the view of the hearing judge which gave mitigating weight to respondent's unintentional misappropriation in the Rodrigues matter, ascribing it more to gross carelessness in accounting for the funds rather than to intentional dishonesty.
Although not found by the hearing judge, we also consider mitigating, some evidence that respondent has engaged in pro bono work during his practice.
2. Aggravation.
The hearing judge correctly assigned a number of aggravating factors surrounding respondent's misconduct. They consisted of multiple acts of misconduct, they significantly harmed his clients, his misconduct in the Arenas/Waxman matter was surrounded by overreaching and bad faith when he failed to promptly honor his promises in three of the matters, he demonstrated indifference to rectifying or atoning for the consequences of his misconduct and displayed a lack of candor in testimony that was nonresponsive and argumentative. (See Std. 1.2 (b).)
3. The Appropriate Degree of Discipline.
Below, the State Bar recommended disbarment. Although it did not seek review, it repeated its disbarment position in its brief on review. Respondent believes a private reproval would suffice if he is found culpable of any misconduct. The hearing judge carefully considered the lengthy trial record and guiding decisions and recommended suspension.
Respondent would have us give increased weight to his good faith to clients, to his favorable character evidence and to pressures caused by two of his clients who filed civil actions against him and another who threatened him. We decline to do so. Respondent's good faith claims were countered by his failure to establish that he had performed any services for Black and his extreme carelessness and delay in allowing the Arenas/Waxman, Rodrigues and Thomas matters to go unresolved for such a long time. Especially unfortunate was respondent's intransigence in the Thomas matter which put Maidenberg to considerable effort to resolve a fee dispute solely among two attorneys. Had respondent resolved the matters more timely, civil suits against him might have been unnecessary. Moreover, Arenas is still owed $8,000.
Some of respondent's misconduct may not have been deliberate but a result of gross carelessness as in the Rodrigues matter. Yet his misconduct spanned several years and covered many aspects of law practice, involving misappropriation of funds, withholding an illegal fee, recklessly incompetent performance of services, failure to return promptly unearned fees and failure to render an appropriate accounting. We agree with the hearing judge that respondent did not demonstrate sufficient regret or adequate insight into his responsibility for the misconduct to justify lesser discipline.
Although acknowledging factual differences, the State Bar cites Warner v. State Bar (1983) 34 Cal.3d 36 as influential in support of disbarment. We disagree that Warner supports its recommendation. Warner involved more serious misconduct: intentional deceit, dishonest misappropriation and charging of an unconscionable fee. None of those violations are involved here. As the Supreme Court observed in Warner, that attorney had shown a "persistent inability" to adhere to the duties of an attorney. (Id., at p. 48.)
We agree with the calibration performed by the hearing judge. She deemed this case less serious than the misconduct found in Lawhorn v. State Bar (1987) 43 Cal.3d 1357 (two year actual suspension for wilful misappropriation of funds), but more serious than that found in Waysman v. State Bar (1986) 41 Cal.3d 452 (no actual suspension for single incident of commingling and misappropriation of $24,000 arising largely from neglect). She found it comparable to the misconduct and mitigating and aggravating factors found in Murray v. State Bar (1985) 40 Cal.3d 575 (one-year actual suspension). For the reasons given by the hearing judge, we also find Murray guiding. Although all of Murray's misconduct was committed while performing legal services in one estate matter, it was of a type comparable to some in the present record. Murray had no prior record of discipline and had not made restitution in one count, factors similar to those in this record. In addition, the balance of mitigating and aggravating circumstances are somewhat comparable in the two cases.
Our own research reveals Kelly v. State Bar (1991) 53 Cal.3d 509, which supports the hearing judge's suspension recommendation. In that case only two instances of misconduct were involved. The first was Kelly's failure to deposit trust funds into the proper account, commingling those funds with personal funds and failure to promptly pay the funds. In the second matter, Kelly wilfully misappropriated $750 of trust funds and also failed to pay them for two years. The Supreme Court decided that a one-year actual suspension recommendation was excessive for several reasons including the lack of clear evidence of either serious injury to Kelly's clients or wrongful intent and Kelly's 13 years of practice without prior discipline. An actual suspension of four months was deemed appropriate in Kelly. In this record, we have additional matters of misconduct, greater harm to clients and only about half the discipline-free practice as in Kelly.
III. Recommendation. For the foregoing reasons, we adopt the recommendation of the hearing judge, and recommend that respondent Thomas E. Lantz be suspended for a period of two years and until respondent shows proof satisfactory to the State Bar Court of his rehabilitation, present fitness to practice and present learning and ability in the general law in accordance with standard 1.4 (c)(ii) of the Standards for Attorney Sanctions for Professional Misconduct; that execution of the two-year period of suspension be stayed and that respondent be placed on probation for a period of two years on conditions one through ten contained in the hearing judge's decision filed on August 8, 1997, except that we modify conditions one and six to provide as follows:
1. Respondent shall be actually suspended from the practice of law during the first year of his probation and until he (1) makes restitution to Maria Arenas or the Client Security Fund if it has paid, in the sum of $8,000 plus interest thereon at the rate of 10% per annum from July 31, 1992, until paid; (2) provides satisfactory proof of such restitution to the State Bar's Probation Unit in Los Angeles; and (3) if the period of respondent's actual suspension extends for two or more years, shows proof satisfactory to the State Bar Court of his rehabilitation, present fitness to practice and present learning and ability in the general law in accordance with standard 1.4 (c)(ii) of the Standards for Attorney Sanctions for Professional Misconduct.
6. During each calendar quarter in which respondent receives, possesses, or otherwise handles client funds or property in any manner, respondent must submit, with the probation report for that quarter to the State Bar's Probation Unit in Los Angeles, a certificate from a Certified Public Accountant certifying:
We further recommend that respondent be required to comply with the provisions of rule 955 of the California Rules of Court and to perform the acts specified in subdivisions (a) and (c) of that rule within 30 and 40 days, respectively, after the effective date of the Supreme Court's order in this matter.
We also recommend that respondent be required to take and pass the Multistate Professional Responsibility Examination given by the National Conference of Bar Examiners within one year of the effective date of the Supreme Court's order or during the period of his actual suspension, whichever is longer, and to furnish satisfactory proof of passage to the State Bar's Probation Unit in Los Angeles.
Finally, we recommend to the Supreme Court that costs be awarded to the State Bar pursuant to Business and Professions Code section 6086.10 and that those costs be payable in accordance with section 6140.7 of that Code.
OBRIEN, P.J.
NORIAN, J.
In the Matter of Thomas E. Lantz 90-O-17749, 93-O-18591, 93-O-11806, 93-O-14407, 92-O-15576
Hearing Judge:
Hon. Nancy Roberts Lonsdale.
For Respondent:
Thomas E. Lantz
345 Franklin Street
San Francisco, CA 94102
For the State Bar:
Andrea Wachter
Office of the Chief Trial Counsel
180 Howard Street, 7th Floor
San Francisco, CA 94105
1 Unless noted otherwise, all references to sections are to the provisions of the Business and Professions Code.
2 Unless noted otherwise, all references to rules are to the provisions of the Rules of Professional Conduct of the State Bar.
3 Prior to oral argument before us, we notified the parties that we were considering this issue, neither side having briefed it. We invited both parties to submit post-argument briefs on the question.
We review this attorney discipline case at the request of Respondent Thomas E. Lantz. A hearing judge found respondent culpable of professional misconduct in four matters and recommended that he be suspended for two years and until he proves rehabilitation, that this suspension be stayed and that he be placed on two years probation on conditions including actual suspension for one year and until respondent makes restitution of $8,000 to one client.
Respondent urges that the findings of his culpability are procedurally flawed, not established and, in any case, a private reproval is adequate discipline. Although the State Bar's Office of Chief Trial Counsel (State Bar) did not seek review, it urges in its reply brief, as it did below, that respondent be disbarred.
Independently reviewing the record (In re Morse (1995) 11 Cal.4th 184, 207), we uphold the hearing judge's culpability findings. We have also concluded that the judge appropriately weighed and balanced mitigating and aggravating circumstances. We shall adopt her disciplinary recommendation after modifying two of her recommended conditions of probation.
The record shows that although respondent presented positive character evidence and apparently served many clients satisfactorily, he committed a variety of ethical violations over several years, covering many law practice areas. These offenses involved misappropriation of funds through gross neglect, withholding an illegal fee, recklessly incompetent performance of services, failure to return promptly unearned fees and failure to render an appropriate accounting. Accordingly, the suspension recommended by the hearing judge is appropriate.
I. Statement of the Case. Most of the background facts and many of the key facts were established by the parties' stipulation or are otherwise not disputed. On review, the State Bar accepts the hearing judge's conclusions. Although we shall summarize the findings in the order contained in the decision below, we limit our discussion to those ultimate findings or conclusions which respondent disputes.
Respondent was admitted to practice law in California in December 1981 and has no prior discipline.
A. The Black Matter.
Richard Black had been convicted of two felonies and sentenced to prison. In February 1990, Black's father and sister hired respondent to represent Black in appealing the convictions. They paid respondent half of his $13,000 fee in February and completed payments by September 1990. It is undisputed that respondent never filed an opening brief and that Black's appeal was dismissed in May 1990 pursuant to rule 17(a) of the California Rules of Court.
According to respondent, he prepared a draft of the appellate brief and gave it to Black's sister, but Black denied ever seeing it. Respondent advised Black that the appeal was unlikely to succeed, that a writ of habeas corpus might be a better remedy and that respondent would refund the fees should Black not wish to pursue the appeal. Respondent testified that Black could not decide what to do and that, in an October 1990 meeting with Black at Soledad prison, Black could not provide respondent with evidence respondent needed to proceed. Respondent never filed a habeas petition for Black.
In January 1991, Black's father told respondent that Black wished to terminate his employment and recover his files and unearned fees. It is undisputed that in May 1991, respondent offered to refund the entire $13,000 and tendered a $500 check on account. Black did not cash that check as he wanted the entire refund in one check. Respondent informed Black of his right to arbitrate this fee dispute (Bus. & Prof. Code, § 6200 et seq.) 1 and Black pursued this remedy. In November 1991 respondent offered to stipulate to an arbitration award against him of $13,000. The resulting award called for monthly installments of $1,000 to start on June 21, 1992, until the $13,000 plus interest was paid in full. Respondent did not make any payments until December 30, 1992, when he paid this full amount to his former counsel, Tom Low, with directions to pay it to Black. However, Black never received any of the award from either Low or respondent, but did receive it from the State Bar's Client Security Fund. (See § 6140.5.) The record shows no refund by Low or respondent to the Client Security Fund.
From the foregoing findings, the hearing judge found no clear and convincing evidence that respondent failed to respond promptly to Black's reasonable status inquiries (§ 6068, subd. (m)), that respondent engaged in any acts of moral turpitude (§ 6106), or that respondent failed to participate or cooperate in the State Bar investigation of Black's complaint (§ 6068, subd. (i)). Nor did the hearing judge find that respondent wilfully failed to return Black's transcripts or other papers after he was discharged. The State Bar does not take issue with these findings. On review we uphold them.
The hearing judge concluded that respondent wilfully violated rule 3-110 (A), Rules of Professional Conduct of the State Bar 2 by recklessly failing to either file an appellant's opening brief for Black or take any significant step for him. Finally, the hearing judge concluded that respondent wilfully violated rule 3-700 (D) by failing to promptly refund to Black unearned fees. Respondent disputes these two conclusions of his culpability and we shall discuss them post.
B. The Arenas/Waxman Matter.
In October 1989, Maria Arenas suffered injuries in an auto accident. She had a workers' compensation case as well as a personal injury claim arising out of the same incident. She retained respondent in November 1989. To pursue the personal injury action, respondent filed a civil action for Arenas in San Francisco Superior Court. Respondent did not have experience in workers' compensation cases, and in March 1991, he asked Joseph Waxman, a State Bar certified specialist in those matters, to associate with him to pursue Arenas's workers' compensation claim. Waxman filed the necessary application to protect that claim.
In June 1992, without contacting Waxman, respondent settled both of Arenas's claims for over $400,000 and for an agreement from the workers' compensation carrier to waive significant sums it had advanced Arenas for medical payments and disability. Respondent failed to inform Waxman about the settlement negotiations and Waxman later learned that the Arenas personal injury case had been settled. Moreover, respondent never presented the compromise and release to the California Workers' Compensation Appeals Board (Board) as required by the Labor Code.
Respondent promptly deposited the settlement funds in his trust account and disbursed to Arenas $196,342 as her share of the personal injury claim. He kept $162,626 as his fees in the personal injury claim and kept in trust an additional $29,466 as fees in the workers' compensation claim. Although respondent was inexperienced in workers' compensation matters, he had received some general advice from an attorney other than Waxman who regularly practiced in that area, and respondent learned that workers' compensation fees were generally 12 percent of the recovery.
In late 1992 and early 1993, Waxman tried without success to learn from respondent the status of the workers' compensation matter. Arenas went to Waxman in early 1993 to find out the status of her workers' compensation matter. When it appeared that respondent had withheld attorney fees for the workers' compensation matter, Waxman filed an action before the Board to resolve the attorney fee issues. The Board investigated, and in June 1993, the Board directed respondent to keep the $29,466 amount in trust pending further order.
In February and March 1994, a workers' compensation judge requested information from respondent regarding his fee but respondent did not reply. In 1994, the Board ordered that respondent was not entitled to any fees in the workers' compensation matter and directed him to refund the $29,466 to the insurance carrier. The carrier was ordered to disburse $8,000 of the $29,466 to Waxman as his fee and the rest to Arenas. This resulted in a loss to Arenas as the $8,000 payment to Waxman should have come from the attorney fee respondent collected in the personal injury matter. The Board was aware of this, but since respondent had filed a bankruptcy petition, the Board apparently considered it futile to seek to make respondent pay the $8,000 to Waxman.
Respondent did not promptly refund the $29,466, and starting in May 1994, Waxman again resorted to the Board. In November 1994, respondent sent the $29,466 to the Board's Deputy Commissioner, ascribing the delay to a misplaced check.
The hearing judge concluded that respondent committed moral turpitude proscribed by section 6106 by failing to get Board approval prior to executing the compromise and release and withholding for over two years the $29,466 fee in the workers' compensation matter. The judge also concluded that respondent's actions in failing to get the statutorily required approval for the $29,466 fee made it an illegal fee, proscribed by rule 4-200 (A). Finally, the hearing judge concluded that respondent violated section 6103 by failing to promptly comply with the Board's order to return the $29,466. The hearing judge did not find clear and convincing evidence that respondent wilfully violated rule 3-110(A) in dealing with Waxman nor that respondent violated section 6103 in failing to reply to the workers' compensation judge's requests in early 1994 for information since no court order was violated. The State Bar does not take issue with these latter two conclusions in respondent's favor and we uphold them. Respondent disputes the conclusions of his culpability, and we discuss them post.
C. The Rodrigues Matter.
In July 1985, David Rodrigues hired respondent to represent him in a personal injury case. The hearing judge found that respondent's attorney fee was one-third of the recovery. Between November 1986 and sometime in 1993, Rodrigues was jailed for a felony conviction. Shortly after he was jailed, in December 1986, his personal injury case settled for $80,000. Respondent's fee was $26,667 and Rodrigues was entitled to $53,333 less costs and sums advanced earlier. Rodrigues instructed respondent to hold his recovery in trust, but to disburse sums from time to time to his mother and girlfriend. Respondent and the State Bar stipulated that the payments respondent made to or on behalf of Rodrigues totaled at least $49,430.56.
Respondent testified that he overpaid Rodrigues, but the only evidence deemed credible by the hearing judge showed that respondent failed to remit the remaining balance of $3,903 to Rodrigues. On February 23, 1989, respondent's trust account balance fell below that sum. One week later, that balance was only $614.45, and by February 13, 1990, the account was overdrawn.
The hearing judge also found that respondent did not maintain or give Rodrigues an adequate accounting of disbursements at the time that they were made. Although respondent testified that a bookkeeper reconstructed check and register records, he could not offer evidence to show how the bookkeeper did this.
From these findings, the hearing judge concluded that respondent misappropriated $3,903 from Rodrigues's trust funds and wilfully committed moral turpitude proscribed by section 6106. The hearing judge also concluded that respondent wilfully violated rule 4-100(B)(3) and its predecessor rule, 8-101 (B)(3), by failing to provide complete records and disbursements of trust funds and by failing to render an appropriate accounting. Respondent disputes these conclusions and we shall discuss them post.
D. The Thomas Matter.
Although this matter is referred to in the record as the Maidenberg matter, we find it more appropriate to refer to it as the Thomas matter.
In June 1991, Bryant Thomas hired respondent to represent him in a personal injury matter. That same month, respondent filed a civil action on behalf of Thomas. In December 1991, Thomas retained new counsel, Ronald Maidenberg, to represent him. A substitution of attorney was filed in the suit at the end of March 1992.
In May 1993, respondent filed a notice of lien, claiming $3,844 as fees and costs.
In August 1993, the Thomas case settled for $10,000. On August 27, 1993, Maidenberg sent respondent the insurance company's draft for endorsement and return but Maidenberg never received it back from respondent despite sending a follow-up letter. Respondent testified that he endorsed the draft, but was extremely displeased because Maidenberg wanted respondent to reduce his fee to 25% of the total amount of attorney fees. According to respondent, he forwarded the endorsed draft to his counsel, Tom Low.
Thomas died in November 1993 and although his case had been settled two months earlier, because of respondent's delay in handling the matter and Low's apparent failure to return the draft to Maidenberg, the settlement could not be paid to Thomas or his heirs.
When Maidenberg failed to receive the 1993 draft, he had to undertake a lengthy effort with the insurer to issue a new draft. The insurer sent a new draft to Maidenberg in May 1995. On June 28, 1995, Maidenberg sent this draft to respondent but respondent did not return it until nearly a month later. At that time, he demanded to share equally in the attorney fees with Maidenberg. To resolve the dispute, Maidenberg asked respondent to account for his services and cost expenditures. Respondent failed to provide this information. Maidenberg then resorted to a declaratory relief action on behalf of Thomas's beneficiary against respondent to try to settle the matter. On January 2, 1996, a default judgment was entered in the declaratory relief action against respondent that he receive nothing.
The hearing judge found that respondent had wilfully violated rule 3-110 (A) by recklessly failing to return the 1993 settlement draft to Maidenberg. Respondent disputes this finding and we shall discuss it post.
II. Discussion. A. Procedural claims.
At the outset, respondent urges that we must reverse the findings of culpability based on his claim of conflict of interest. He asserts that the State Bar started disciplinary proceedings against the attorney who represented him in the early stage of these proceedings and that the State Bar assigned the prosecution of that attorney to an attorney outside the Office of Trial Counsel. He contends that the State Bar is disqualified from prosecuting the case against respondent and that it "bears the appearance of impropriety." Assuming for discussion that respondent's chronology is correct, his claim is without any merit. Respondent utterly fails to demonstrate how the investigation and prosecution of his former counsel demonstrated any conflict of interest or unfairness toward him. At trial, respondent was represented by other counsel who advanced his interests vigorously. Moreover, respondent fails to support his claim by any citation of legal authority.
Respondent also argues that he was deprived of adequate notice in the Black matter concerning the charge that he wilfully violated rule 3-110. Respondent's sole argument of this point is a quotation from our decision in In the Matter of Glasser (Review Dept. 1990) 1 Cal. State Bar Ct. Rptr. 163, 171, in which we stated the general charging requirements for alleging a violation of the predecessor to rule 3-110. Although the notice did not comply literally with our Glasser decision, it put respondent on notice that he was charged with a competency violation and alleged specific services which respondent did not perform. On our independent review of the record, we conclude that respondent was given adequate notice of this charged rule violation.
B. Culpability.
1. Black Matter.
In the Black matter, respondent stresses the efforts he claims he expended for Black; attacks Black's credibility; asserts he earned his full fee, but as a pro bono gesture, agreed to and did give a refund to respondent's former counsel, Low, to give to Black. Respondent concludes that he cannot be culpable of the rule 3-110 (A) and rule 3-700 (D)(2) charges. We disagree with respondent and adopt the hearing judge's findings of these violations.
Respondent knew that, when he accepted Black's criminal appeal, Black's previous counsel was under a time deadline under rule 17 (a) of the California Rules of Court. Yet the record is undisputed that respondent failed to file an opening brief. Moreover, the record contains no drafts of any briefs. If, as respondent claims, Black agreed that habeas corpus was a better remedy than appeal, the record does not show that nor does it show any writ petition filed by respondent. All the record shows on this point is that respondent accepted $13,000 from Black's family, respondent agreed to adequately represent Black, respondent failed to perfect any remedy for Black and that Black only received a refund from the Client Security Fund.
Even if Black could not decide, as respondent contends, which remedy to pursue or if Black was unable to provide respondent with needed information, respondent could not simply let the months pass with no action. Respondent's choice was to either pursue remedies warranted by the facts and law based on effective investigation and research or to withdraw from Black's employment if and as appropriate under rule 3-700(C). (In the Matter of Myrdall (Review Dept. 1995) 3 Cal. State Bar Ct. Rptr. 363, 379, citing Fitzpatrick v. State Bar (1977) 20 Cal.3d 73, 85.)
Respondent's prompt promise to Black's relative of a full return of fees if Black chose not to pursue an appeal, followed by his agreement in November 1991 to refund all fees, followed by his later stipulation to a $13,000 arbitration award against him belie his claim of having earned the full fees.
The essence of respondent's argument is that we should reweigh the evidence and prefer his version of the facts. Although we review the record independently (see ante), we must give great weight to the findings of the hearing judge which resolve witness credibility. (Rule 305(a), Rules Proc. State Bar, title II, State Bar Court Proceedings; see e.g., In the Matter of Fandey (Review Dept. 1994) 2 Cal. State Bar Ct. Rptr. 767, 774.) The hearing judge's findings are appropriate and we adopt them.
2. Arenas/Waxman Matter.
In this matter, respondent argues that he is innocent of the conclusions that he engaged in moral turpitude, violated the Rules of Professional Conduct by charging and withholding an attorney fee for a workers' compensation claim without Board approval, and that he violated section 6103 by disobeying the workers' compensation judge's order. We agree with the hearing judge's culpability conclusions.
As in the Black matter, the undisputed facts aid the hearing judge's conclusions. It is undisputed that respondent failed to seek Board approval for the fees he withheld from Arenas's settlement as required under the Labor Code. Even assuming that respondent was inexperienced in workers' compensation matters, the evidence shows that he charged an illegal fee in violation of rule 4-200 (A) and withheld it for a two-year period. Respondent had ample expertise available to him to learn the requirements of workers' compensation fee approval. His associated counsel, Waxman, was a certified specialist in workers' compensation and the evidence is undisputed that, while representing Arenas, respondent consulted informally another attorney experienced in these matters about the general nature of workers' compensation cases. The record shows that, had respondent communicated adequately with Waxman, he might have avoided some of the misconduct found. Given the length of the rule 4-200(A) violation, we also agree with the hearing judge that it involved moral turpitude. We need not decide whether or not respondent's conduct in charging and withholding the $29,466 workers' compensation fee was deliberate as it was at the least grossly negligent. Gross negligence in discharge of fiduciary duties is sufficient to sustain a conclusion of moral turpitude. (In the Matter of Rubens (Review Dept. 1995) 3 Cal. State Bar Ct. Rptr. 468, 478, and cases there cited.)
Turning to the charge that respondent violated section 6103 by disobeying the workers' compensation judge's order, we must decide at the outset whether the workers' compensation judge's order was "an order of the court" within section 6103, for that section makes it a disciplinable offense to disobey or violate "an order of the court." (Cf. In the Matter of Respondent P (Review Dept. 1993) 2 Cal. State Bar Ct. Rptr. 622, 632.) 3
The workers' compensation provision of the California Constitution expressly vests the Legislature with plenary power to create and enforce a complete system of workers' compensation. (Cal. Const., art. XIV, § 4 (formerly art. XX, § 21).) That authority includes the power (1) to create tribunals to resolve workers' compensation disputes and (2) to fix and control the mode of trial of those disputes, the rules of evidence, and manner of review of the tribunals' decisions, provided that all such decisions are reviewable in the appellate courts of the state. (Ibid.) California courts have termed the Workers' Compensation Appeals Board a "constitutional court and its decisions have res judicata effect. [Citations.]" (Hand Rehabilitation Center v. Workers' Comp. Appeals Board (1995) 34 Cal.App.4th 1204, 1214.) Courts have also stated that the Board exercises some of the judicial powers of the state and "in legal effect is a court". (Bankers Indem. Ins. Co. v. Industrial Acc. Com. (1935) 4 Cal.2d 89, 97; Fremont Indemnity Co. v. Workers' Comp. Appeals Board (1984) 153 Cal.App.3d 965, 974.) Accordingly, we hold that the order of the workers' compensation judge is an order of a court within the meaning of section 6103. By disregarding the workers' compensation judge's order, respondent violated section 6103.
3. Rodrigues Matter.
Respondent first contends that the offense that he misappropriated the $3,903 of Rodrigues' funds under section 6106 was not properly charged because there was no indication of moral turpitude or corruption. Respondent errs. So long as he was given reasonable notice of the charge (see § 6085), the State Bar was entitled to charge this matter as a violation under section 6106. Here, respondent had ample notice of the misappropriation charge. Moreover, the State Bar also charged respondent with violating two provisions of the trust account rules.
Our review of the hearing judge's decision shows that she applied the correct law to this transaction and discussed it appropriately on pages 15 through 17 of her decision. We need not repeat that discussion of misappropriation except to conclude that is the correct legal result applicable to this record. Respondent may have indeed been influenced by a motive of friendship and service to Rodrigues whose incarceration prevented his access to his personal injury recovery. Yet respondent's failure to keep proper records of the receipt and numerous disbursements of funds led to the conclusion that, rather than overpaying Rodrigues, as respondent maintains, he misappropriated $3,903 of his funds. Although respondent's actions were grossly neglectful by repeatedly failing to properly record and account for the many disbursements he made on behalf of Rodrigues, they still violated section 6106. (In the Matter of Rubens, supra, 3 Cal. State Bar Ct. Rptr. at p. 478 and cases there cited.)
Respondent asserts that he offered appropriate accountings to Rodrigues and therefore he did not violate rule 4-100 (B)(3) or its predecessor rule 8-101 (B)(3). We disagree and agree with the hearing judge who concluded that respondent did commit a wilful violation. Since it was clear that respondent did not keep complete records of Rodrigues' funds (see, e.g., Dixon v. State Bar (1985) 39 Cal.3d 335, 344) and only performed a limited reconciliation of check disbursements long after requested, his culpability is established by clear and convincing evidence.
4. Thomas Matter.
Although respondent takes issue with the hearing judge's conclusion that he wilfully violated rule 3-110 (A) in the Thomas matter, his attack is limited to defending his failure to promptly turn over to attorney Maidenberg the first insurance draft. Respondent contends that since he gave it to his former counsel, Low, respondent should not be held culpable. We disagree, noting that, even if respondent's defense is credited, it does not excuse his delay after the insurer reissued the draft in 1995.
The record shows that respondent's dispute with attorney Maidenberg over their relative shares of the attorney fees of this case unduly delayed the distribution of Thomas's funds until long after his death. It also put Thomas's subsequent counsel to considerable extra effort, including resort to litigation to recover the funds Thomas's estate was due. There was never a dispute between either attorney and Thomas at the time of the settlement as to Thomas's share of proceeds. The record shows respondent's repeated failure to reply to Maidenberg's communications, even two years after Thomas's death.. When Maidenberg saw the need to resort to litigation to finally settle this protracted fee dispute, respondent defaulted. Reviewing the evidence in the record as to the entire unfortunate history of this case, we readily agree with the hearing judge that respondent recklessly failed to act competently in violation of rule 3-110 (A), even if he had entrusted Low with the first settlement draft.
C. Discipline.
1. Mitigation.
We agree with the type and weight of mitigating evidence considered by the hearing judge. (See Rules of Procedure of the State Bar, title IV, Standards for Attorney Sanctions for Professional Misconduct (standards), standard 1.2(e).) She took into account the testimony of many witnesses who were attorneys, judges or clients. Although few could show that they were reasonably aware of the full extent of the tentative findings against respondent, they held strong beliefs about respondent's most favorable character, his positive reputation in the legal community and willingness to help his clients. This evidence was properly given positive weight by the hearing judge in mitigation.
We also agree with the hearing judge's very limited weight to respondent's lack of prior discipline over a relatively short period of time, seven years, prior to the onset of his misconduct. (See, e.g., Kelly v. State Bar (1988) 45 Cal.3d 649, 658.)
Finally, we adopt the view of the hearing judge which gave mitigating weight to respondent's unintentional misappropriation in the Rodrigues matter, ascribing it more to gross carelessness in accounting for the funds rather than to intentional dishonesty.
Although not found by the hearing judge, we also consider mitigating, some evidence that respondent has engaged in pro bono work during his practice.
2. Aggravation.
The hearing judge correctly assigned a number of aggravating factors surrounding respondent's misconduct. They consisted of multiple acts of misconduct, they significantly harmed his clients, his misconduct in the Arenas/Waxman matter was surrounded by overreaching and bad faith when he failed to promptly honor his promises in three of the matters, he demonstrated indifference to rectifying or atoning for the consequences of his misconduct and displayed a lack of candor in testimony that was nonresponsive and argumentative. (See Std. 1.2 (b).)
3. The Appropriate Degree of Discipline.
Below, the State Bar recommended disbarment. Although it did not seek review, it repeated its disbarment position in its brief on review. Respondent believes a private reproval would suffice if he is found culpable of any misconduct. The hearing judge carefully considered the lengthy trial record and guiding decisions and recommended suspension.
Respondent would have us give increased weight to his good faith to clients, to his favorable character evidence and to pressures caused by two of his clients who filed civil actions against him and another who threatened him. We decline to do so. Respondent's good faith claims were countered by his failure to establish that he had performed any services for Black and his extreme carelessness and delay in allowing the Arenas/Waxman, Rodrigues and Thomas matters to go unresolved for such a long time. Especially unfortunate was respondent's intransigence in the Thomas matter which put Maidenberg to considerable effort to resolve a fee dispute solely among two attorneys. Had respondent resolved the matters more timely, civil suits against him might have been unnecessary. Moreover, Arenas is still owed $8,000.
Some of respondent's misconduct may not have been deliberate but a result of gross carelessness as in the Rodrigues matter. Yet his misconduct spanned several years and covered many aspects of law practice, involving misappropriation of funds, withholding an illegal fee, recklessly incompetent performance of services, failure to return promptly unearned fees and failure to render an appropriate accounting. We agree with the hearing judge that respondent did not demonstrate sufficient regret or adequate insight into his responsibility for the misconduct to justify lesser discipline.
Although acknowledging factual differences, the State Bar cites Warner v. State Bar (1983) 34 Cal.3d 36 as influential in support of disbarment. We disagree that Warner supports its recommendation. Warner involved more serious misconduct: intentional deceit, dishonest misappropriation and charging of an unconscionable fee. None of those violations are involved here. As the Supreme Court observed in Warner, that attorney had shown a "persistent inability" to adhere to the duties of an attorney. (Id., at p. 48.)
We agree with the calibration performed by the hearing judge. She deemed this case less serious than the misconduct found in Lawhorn v. State Bar (1987) 43 Cal.3d 1357 (two year actual suspension for wilful misappropriation of funds), but more serious than that found in Waysman v. State Bar (1986) 41 Cal.3d 452 (no actual suspension for single incident of commingling and misappropriation of $24,000 arising largely from neglect). She found it comparable to the misconduct and mitigating and aggravating factors found in Murray v. State Bar (1985) 40 Cal.3d 575 (one-year actual suspension). For the reasons given by the hearing judge, we also find Murray guiding. Although all of Murray's misconduct was committed while performing legal services in one estate matter, it was of a type comparable to some in the present record. Murray had no prior record of discipline and had not made restitution in one count, factors similar to those in this record. In addition, the balance of mitigating and aggravating circumstances are somewhat comparable in the two cases.
Our own research reveals Kelly v. State Bar (1991) 53 Cal.3d 509, which supports the hearing judge's suspension recommendation. In that case only two instances of misconduct were involved. The first was Kelly's failure to deposit trust funds into the proper account, commingling those funds with personal funds and failure to promptly pay the funds. In the second matter, Kelly wilfully misappropriated $750 of trust funds and also failed to pay them for two years. The Supreme Court decided that a one-year actual suspension recommendation was excessive for several reasons including the lack of clear evidence of either serious injury to Kelly's clients or wrongful intent and Kelly's 13 years of practice without prior discipline. An actual suspension of four months was deemed appropriate in Kelly. In this record, we have additional matters of misconduct, greater harm to clients and only about half the discipline-free practice as in Kelly.
III. Recommendation. For the foregoing reasons, we adopt the recommendation of the hearing judge, and recommend that respondent Thomas E. Lantz be suspended for a period of two years and until respondent shows proof satisfactory to the State Bar Court of his rehabilitation, present fitness to practice and present learning and ability in the general law in accordance with standard 1.4 (c)(ii) of the Standards for Attorney Sanctions for Professional Misconduct; that execution of the two-year period of suspension be stayed and that respondent be placed on probation for a period of two years on conditions one through ten contained in the hearing judge's decision filed on August 8, 1997, except that we modify conditions one and six to provide as follows:
1. Respondent shall be actually suspended from the practice of law during the first year of his probation and until he (1) makes restitution to Maria Arenas or the Client Security Fund if it has paid, in the sum of $8,000 plus interest thereon at the rate of 10% per annum from July 31, 1992, until paid; (2) provides satisfactory proof of such restitution to the State Bar's Probation Unit in Los Angeles; and (3) if the period of respondent's actual suspension extends for two or more years, shows proof satisfactory to the State Bar Court of his rehabilitation, present fitness to practice and present learning and ability in the general law in accordance with standard 1.4 (c)(ii) of the Standards for Attorney Sanctions for Professional Misconduct.
6. During each calendar quarter in which respondent receives, possesses, or otherwise handles client funds or property in any manner, respondent must submit, with the probation report for that quarter to the State Bar's Probation Unit in Los Angeles, a certificate from a Certified Public Accountant certifying:
(a) whether respondent has maintained a bank account that is designated as a "Trust Account," "Clients' Funds Account," or words of similar import in a bank in the State of California or, with the written consent of the client, in any other jurisidiction where there is a substantial relationship between the client or the client's business and the other jurisdiction;
(b) whether respondent has, from the date of receipt of client funds through the period ending five years from the date of appropriate disbursement of such funds, maintained:
(1) a written ledger for each client on whose behalf funds are held that sets forth:
(a) the name of such client,
(b) the date, amount, and source of all funds received on behalf of such client,
(c) the date, amount, payee, and purpose of each disbursement made on behalf of such client, and
(d) the current balance for such client;
(2) a written journal for each bank account that sets forth:
(a) the name of such account,
(b) the date, amount, and client affected by each debit and credit, and
(c) the current balance in such account;
(3) all bank statements and cancelled checks for each bank account, and
(4) each monthly reconciliation (balancing) of (1), (2), and (3); and
(c) whether respondent has, from the date of receipt of all securities and other properties held for the benefit of client through the period ending five years from the date of appropriate disbursement of such securities and other properties, maintained a written journal that specifies:
(1) each item of security and property held,
(2) the person on whose behalf the security or property is held,
(3) the date of receipt of the security or property,
(4) the date of distribution of the security or property, and
(5) person to whom the security or property was distributed.
We further recommend that respondent be required to comply with the provisions of rule 955 of the California Rules of Court and to perform the acts specified in subdivisions (a) and (c) of that rule within 30 and 40 days, respectively, after the effective date of the Supreme Court's order in this matter.
We also recommend that respondent be required to take and pass the Multistate Professional Responsibility Examination given by the National Conference of Bar Examiners within one year of the effective date of the Supreme Court's order or during the period of his actual suspension, whichever is longer, and to furnish satisfactory proof of passage to the State Bar's Probation Unit in Los Angeles.
Finally, we recommend to the Supreme Court that costs be awarded to the State Bar pursuant to Business and Professions Code section 6086.10 and that those costs be payable in accordance with section 6140.7 of that Code.
STOVITZ, J.
We concur:OBRIEN, P.J.
NORIAN, J.
In the Matter of Thomas E. Lantz 90-O-17749, 93-O-18591, 93-O-11806, 93-O-14407, 92-O-15576
Hearing Judge:
Hon. Nancy Roberts Lonsdale.
For Respondent:
Thomas E. Lantz
345 Franklin Street
San Francisco, CA 94102
For the State Bar:
Andrea Wachter
Office of the Chief Trial Counsel
180 Howard Street, 7th Floor
San Francisco, CA 94105
1 Unless noted otherwise, all references to sections are to the provisions of the Business and Professions Code.
2 Unless noted otherwise, all references to rules are to the provisions of the Rules of Professional Conduct of the State Bar.
3 Prior to oral argument before us, we notified the parties that we were considering this issue, neither side having briefed it. We invited both parties to submit post-argument briefs on the question.
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