2016 WI 75
SUPREME COURT OF WISCONSIN
CASE NO.: 2016AP101-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Matthew H. Marx, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Matthew H. Marx,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST MARX
OPINION FILED: July 22, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2016 WI 75
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2016AP101-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Matthew H. Marx, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant,
JUL 22, 2016
v.
Diane M. Fremgen
Clerk of Supreme Court
Matthew H. Marx,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. We review a stipulation, as revised,
filed pursuant to Supreme Court Rule (SCR) 22.12 by the Office
of Lawyer Regulation (OLR) and Attorney Matthew H. Marx.
Attorney Marx stipulates to the misconduct alleged by the OLR,
stipulates, further, that he should be ordered to pay
restitution to two clients and that his license to practice law
in Wisconsin should be suspended for nine months.
No. 2016AP101-D
¶2 We adopt the stipulated facts and conclusions of law.
We agree that Attorney Marx's professional misconduct warrants
the suspension of his Wisconsin law license for a period of nine
months. We further agree that restitution is appropriate.
Because this matter was resolved by stipulation without
appointment of a referee, we will not impose the costs of this
proceeding upon Attorney Marx.
¶3 Attorney Marx was admitted to the practice of law in
Wisconsin in 1996. Although he has not previously been
disciplined by this court, Attorney Marx's license is
administratively suspended for failing to pay State Bar dues and
for failing to maintain his CLE requirements. In addition, his
law license has been temporarily suspended since March 18, 2014
for noncooperation with the OLR's investigation into this
matter.
¶4 On January 13, 2016, OLR filed a disciplinary
complaint against Attorney Marx alleging 22 counts of
misconduct. The first seven counts of the OLR's complaint
alleged, and the parties have stipulated, that Attorney Marx
violated various provisions of SCR 20:1.15, the trust account
rule.1 He violated SCR 20:1.15(b)(1)2 and/or SCR 20:1.15(b)(3)3
1
Effective July 1, 2016, substantial changes were made to
Supreme Court Rule 20:1.15, the "trust account rule." See S.
Ct. Order 14-07, (issued Apr. 4, 2016, eff. July 1, 2016).
Because the conduct underlying this case arose prior to July 1,
2016, unless otherwise indicated, all references to the supreme
court rules will be to those in effect prior to July 1, 2016.
2
20:1.15(b)(1) provides:
(continued)
2
No. 2016AP101-D
by paying from his trust account $2,102.03 in personal and
business expenses; $215 in filing fees for a client who had no
funds in trust; and at least $301.33 in credit card surcharges.
He violated SCR 20:1.15(b)(3)3 when he deposited and retained
$3,800 in personal funds in his trust account. He violated SCR
20:1.15(f)(1)a., b., and g.4 by failing to maintain a transaction
A lawyer shall hold in trust, separate from the
lawyer's own property, that property of clients and
3rd parties that is in the lawyer's possession in
connection with a representation. All funds of clients
and 3rd parties paid to a lawyer or law firm in
connection with a representation shall be deposited in
one or more identifiable trust accounts.
3
SCR 20:l:15(b)(3) provides: "No funds belonging to the
lawyer or law firm, except funds reasonably sufficient to pay
monthly account service charges may be deposited or retained in
a trust account."
4
SCR 20:1.15(f)(l)a., b., and g. provide:
Complete records of a trust account that is a
draft account shall include a transaction register;
individual client ledgers for IOLTA accounts and other
pooled trust accounts; a ledger for account fees and
charges, if law firm funds are held in the account
pursuant to sub. (b)(3); deposit records; disbursement
records; monthly statements; and reconciliation
reports, subject to all of the following:
a. Transaction register. The transaction register
shall contain a chronological record of all account
transactions, and shall include all of the following:
1. the date, source, and amount of all deposits;
2. the date, check or transaction number, payee
and amount of all disbursements, whether by check,
wire transfer, or other means;
(continued)
3
No. 2016AP101-D
3. the date and amount of every other deposit or
deduction of whatever nature;
4. the identity of the client for whom funds were
deposited or disbursed; and
5. the balance in the account after each
transaction.
b. Individual client ledgers. A subsidiary ledger
shall be maintained for each client or 3rd party for
whom the lawyer receives trust funds that are
deposited in an IOLTA account or any other pooled
trust account. The lawyer shall record each receipt
and disbursement of a client's or 3rd party's funds
and the balance following each transaction. A lawyer
shall not disburse funds from an IOLTA account or any
pooled trust account that would create a negative
balance with respect to any individual client or
matter. . . .
g. Reconciliation reports. For each trust
account, the lawyer shall prepare and retain a printed
reconciliation report on a regular and periodic basis
not less frequently than every 30 days. Each
reconciliation report shall show all of the following
balances and verify that they are identical:
1. the balance that appears in the transaction
register as of the reporting date;
2. the total of all subsidiary ledger balances
for IOLTA accounts and other pooled trust accounts,
determined by listing and totaling the balances in the
individual client ledgers and the ledger for account
fees and charges, as of the reporting date; and
3. the adjusted balance, determined by adding
outstanding deposits and other credits to the balance
in the financial institution's monthly statement and
subtracting outstanding checks and other deductions
from the balance in the monthly statement.
4
No. 2016AP101-D
register and client ledgers, and violated SCR 20:1.15(e)(7)5 by
failing to produce a transaction register, client ledgers, and a
monthly reconciliation. Attorney Marx also violated SCR
20:1.15(e)(4)e.6 by authorizing credit card and other electronic
payments be deposited into his trust account, and violated SCR
20:1.15(e)(4)c.7 by making internet deposits and disbursements
from his trust account.
¶5 Counts 8 and 9 of the complaint allege and the parties
have stipulated that Attorney Marx committed misconduct in his
representation of D.A. in her divorce action. Attorney Marx
failed to hold D.A.’s funds in trust in violation of SCR
20:1.15(b) and then failed to cooperate with the investigation
5
SCR 20:1.15(e)(7) provides: "All trust account records
have public aspects related to a lawyer's fitness to practice.
Upon request of the office of lawyer regulation, or upon
direction of the supreme court, the records shall be submitted
to the office of lawyer regulation for its inspection, audit,
use, and evidence under any conditions to protect the privilege
of clients that the court may provide. The records, or an audit
of the records, shall be produced at any disciplinary proceeding
involving the lawyer, whenever material. Failure to produce the
records constitutes unprofessional conduct and grounds for
disciplinary action."
6
SCR 20:l.15(e)(4)e provides: "A lawyer shall not authorize
transactions by way of credit card to or from a trust account.
However, earned fees may be deposited by way of credit card to a
lawyer's business account."
7
SCR 20:l.15(e)(4)c provides: "A lawyer shall not make
deposits to or disbursements from a trust account by way of an
Internet transaction."
5
No. 2016AP101-D
of this matter, in violation of SCR 22.03(2)8 and SCR 22.03(6),9
enforced via SCR 20:8.4(h).10
¶6 Counts 10-16 of the complaint allege, and the parties
have stipulated, that Attorney Marx also committed misconduct in
his representation of C.W. in a divorce. Attorney Marx violated
SCR 20:1.15(e)(4)h.11 by allowing the deposit of C.W.’s credit
8
SCR 22.03(2) provides:
Upon commencing an investigation, the director shall
notify the respondent of the matter being investigated
unless in the opinion of the director the
investigation of the matter requires otherwise. The
respondent shall fully and fairly disclose all facts
and circumstances pertaining to the alleged misconduct
within 20 days after being served by ordinary mail
request for a written response. The director may
allow additional time to respond. Following receipt
of the response, the director may conduct further
investigation and may compel the respondent to answer
questions, furnish documents, and present any
information deemed relevant to the investigation.
9
SCR 22.03(6) provides: "In the course of the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
10
SCR 20:8.4(h) provides: "It is professional misconduct
for a lawyer to: . . . . fail to cooperate in the investigation
of a grievance filed with the office of lawyer regulation as
required by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(6), or SCR
22.04(1)."
11
SCR 20:1.15(e)(4)h. provides:
(continued)
6
No. 2016AP101-D
Exception: Fee and cost advances by credit card,
debit card or other electronic deposit. A lawyer may
establish a trust account, separate from the lawyer's
IOLTA account, for the purpose of receiving legal fees
and costs by credit card, debit card or other
electronic deposit, provided that the lawyer complies
with all of the following:
1. the separate trust account shall be entitled:
"Credit Card Trust Account";
2. lawyer or law firm funds, reasonably
sufficient to cover all monthly account fees and
charges and, if necessary, any deductions by the
financial institution or card issuer from a client's
payment by credit card, debit card, or other
electronic deposit, shall be maintained in the credit
card trust account, and a ledger for account fees and
charges shall be maintained;
3. each payment of legal fees or costs by credit
card, debit card or other electronic deposit,
including, if necessary, a reimbursement by the lawyer
or law firm for any deduction by the financial
institution or card issuer from the gross amount of
each payment, shall be transferred from the credit
card trust account to the IOLTA account immediately
upon becoming available for disbursement subject to
the following requirements.
a. All advanced costs and advanced fees held in
trust under sub. (b)(4) shall be transferred by check
to the IOLTA account.
b. Earned fees, cost reimbursements, and
advanced fees that are subject to the requirements of
sub. (b)(4m) shall be transferred by check into the
business account.
(continued)
7
No. 2016AP101-D
card payment into his client trust account. He violated SCR
20:1.15(g)(1)12 by failing to provide C.W., in writing, at least
five business days prior to withdrawing his funds for payment of
fees, (a) an itemized bill or other accounting showing services
rendered, (b) notice of the amount owed and anticipated date of
withdrawal, and (c) a statement of the balance of his funds in
4. within 3 business days of receiving actual
notice that a chargeback or surcharge has been made
against the credit card trust account, the lawyer
shall replace any and all funds that have been
withdrawn from the credit card trust account by the
financial institution or card issuer; and shall
reimburse the account for any shortfall or negative
balance caused by a chargeback or surcharge. The
lawyer shall not accept new payments to the credit
card trust account until the lawyer has reimbursed the
credit card trust account for the chargeback or
surcharge.
12
SCR 20:1.15(g)(1) provides:
Withdrawal of non-contingent fees from trust
account.
(1) Notice to client. At least 5 business days
before the date on which a disbursement is made from a
trust account for the purpose of paying fees, with the
exception of contingent fees or fees paid pursuant to
court order, the lawyer shall transmit to the client
in writing all of the following:
a. an itemized bill or other accounting showing
the services rendered;
b. notice of the amount owed and the anticipated
date of the withdrawal; and
c. a statement of the balance of the client's
funds in the lawyer trust account after the
withdrawal.
8
No. 2016AP101-D
the trust account following the withdrawal. He violated SCR
20:1.4(a)(4)13 by failing to respond to C.W.’s telephone calls
and emails requesting information and violated SCR 22.26(1)(a),14
enforced via SCR 20:8.4(f)15 by failing to notify C.W. by
certified mail of the suspension of his license to practice law
and his consequent inability to represent him further.
Additionally, he violated SCR 20:1.16(d)16 by failing to refund
unearned fees to C.W. upon termination of the representation and
13
SCR 20:1.4(a)(4) provides in part: "A lawyer shall . . .
promptly comply with reasonable requests by the client for
information . . . .
14
SCR 22.26(l)(a) provides: "On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
Notify by certified mail all clients being represented in
pending matters of the suspension or revocation and of the
attorney's consequent inability to act as an attorney following
the effective date of the suspension or revocation."
15
20:8.4(f) provides: "It is professional misconduct for a
lawyer to violate a statute, supreme court rule, supreme court
order or supreme court decision regulating the conduct of
lawyers."
16
SCR 20:1.16(d) provides:
Upon termination of representation, a lawyer shall
take steps to the extent reasonably practicable to
protect a client's interests, such as giving
reasonable notice to the client, allowing time for
employment of other counsel, surrendering papers and
property to which the client is entitled and refunding
any advance payment of fee or expense that has not
been earned or incurred. The lawyer may retain papers
relating to the client to the extent permitted by
other law.
9
No. 2016AP101-D
violated SCR 20:8.4(c)17 by making misrepresentations to the OLR.
He also violated SCR 22.03(2) and SCR 22.03(6), enforced via SCR
20:8.4(h), by failing to respond to OLR's letters regarding C.W.
matter.
¶7 Counts 17-22 of the complaint allege, and the parties
have stipulated, that Attorney Marx committed misconduct by
violating the terms of his temporary license suspension.
Specifically, he failed to report his license suspension to the
U.S. District Court for the Eastern District of Wisconsin,
thereby violating SCR 20:3.4(c)18 and SCR 22.26(1)(c),19 enforced
via SCR 20:8.4(f).
¶8 In addition, by failing to notify his client, J.L., of
his suspension and her need to hire successor counsel, Attorney
17
SCR 20:8.4(c) provides that it is professional misconduct
for a lawyer to "engage in conduct involving dishonesty, fraud,
deceit or misrepresentation."
18
SCR 20:3.4(c) provides: "A lawyer shall not: . . . .
knowingly disobey an obligation under the rules of a tribunal,
except for an open refusal based on an assertion that no valid
obligation exists."
19
SCR 22.26(1)(c) provides: "On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
. . . . (c) Promptly provide written notification to the court
or administrative agency and the attorney for each party in a
matter pending before a court or administrative agency of the
suspension or revocation and of the attorney's consequent
inability to act as an attorney following the effective date of
the suspension or revocation. The notice shall identify the
successor attorney of the attorney's client or, if there is none
at the time notice is given, shall state the client's place of
residence."
10
No. 2016AP101-D
Marx violated SCR 22.26(1)(a) and (b),20 enforced via SCR
20:8.4(f), and, by continuing to represent J.L. and filing
numerous documents in support of the U.S. District Court case,
Attorney Marx violated SCR 22.26(2),21 enforced via SCR
20:8.4(f).
¶9 In addition, by misrepresenting to OLR that he had
notified all his active clients of his March 18, 2014
suspension, when he continued to represent J.L., Attorney Marx
violated SCR 20:8.4(c).
¶10 Finally, in failing to respond to OLR's letters sent
January 23, 2015 and February 18, 2015, requesting a response to
OLR's inquiry, Attorney Marx violated SCR 22.03(2) and (6),
enforced via SCR 20:8.4(h).
¶11 In late February 2016, the OLR and Attorney Marx
executed a stipulation addressing the complaint. In addition to
stipulating to the facts as set forth above, the parties
20
SCR 22.26(l)(b) provides: (1) On or before the effective
date of license suspension or revocation, an attorney whose
license is suspended or revoked shall do all of the following:
. . . . (b) Advise the clients to seek legal advice of their
choice elsewhere.
21
SCR 22.26(2) provides: "An attorney whose license to
practice law is suspended or revoked or who is suspended from
the practice of law may not engage in this state in the practice
of law or in any law work activity customarily done by law
students, law clerks, or other paralegal personnel, except that
the attorney may engage in law related work in this state for a
commercial employer itself not engaged in the practice of law.
11
No. 2016AP101-D
stipulated to discipline in the form of a nine-month suspension
of Attorney Marx's Wisconsin law license. The OLR filed a
memorandum in support of the stipulation. The memorandum
discusses attorney disciplinary cases that resulted in
comparable suspensions for professional misconduct. The OLR
deems analogous the matter of Disciplinary Proceedings Against
Maynard, 2014 WI 13, 352 Wis. 2d 629, 845 N.W.2d 648.
¶12 Attorney Maynard's law license was suspended for one
year for misconduct consisting of failing to notify his clients
and the courts that his license was suspended, continuing to
practice law while suspended, engaging in dishonesty,
misrepresenting his license status to the court, making false
statements in his affidavit of compliance, continuing to use his
letterhead and making false communications that he was permitted
to practice in Wisconsin, and providing false information to OLR
during its investigation. See also Disciplinary Proceedings
Against Wood, 2013 WI 11, Id., 345 Wis. 2d 279, 825 N.W.2d 473;
Disciplinary Proceedings Against Scanlan, 2006 WI 38, 290
Wis. 2d 30, 712 N.W.2d 877. The OLR advises the court that
Attorney Marx's misconduct is much like Attorney Maynard's in
that Attorney Marx failed to comply with SCR 22.26, made
misrepresentations regarding his license status, and provided
false information to OLR.
¶13 This court reviewed the stipulation. Noting that the
stipulation did not provide for restitution, the court issued an
order directing the parties to consider specific modifications
12
No. 2016AP101-D
to the stipulation to address whether the court should order
Attorney Marx to pay restitution to two clients, D.A. and C.W.
¶14 On April 28, 2016, the parties filed a revised
stipulation. The revised stipulation reiterated previous terms
and also stipulated that the court should order Attorney Marx to
pay restitution to D.A. in the amount of $994.50, reflecting the
balance that remained in his trust account attributable to D.A.
as of February 25, 2013. The parties further agreed that the
court should order Attorney Marx to pay restitution to C.W. in
the amount of $1,568, the amount that should be returned to C.W.
after Attorney Marx's payment of the $198 filing fee and $500
worth of work that Attorney Marx performed on C.W.'s case.
¶15 The stipulation, as revised, provides that it is not
the result of a plea bargain. Attorney Marx verifies that he
fully understands the misconduct allegations, the ramifications
if this court should impose the stipulated level of discipline,
his right to contest the matter, and his right to consult with
counsel. He further verifies that his entry into the stipulation
was made knowingly and voluntarily, and that it represents his
admission of all misconduct and his assent to the level and type
of discipline sought by the OLR.
¶16 We adopt the stipulation, as revised, and the
stipulated facts and conclusions of law, and impose the
stipulated discipline. We agree that the seriousness of Attorney
Marx's misconduct warrants the suspension of his Wisconsin law
license for nine months and payment of restitution to D.A. and
C.W. We agree that Attorney Marx's mismanagement of his trust
13
No. 2016AP101-D
account evidences a careless disregard for the basic
requirements of segregating trust funds from personal funds and
record keeping and that his misconduct was exacerbated by his
apparent indifference to making restitution. In light of the
stipulation, the OLR does not seek costs, so we do not impose
costs.
¶17 IT IS ORDERED that the license of Matthew H. Marx to
practice law in Wisconsin is suspended for a period of nine
months, effective the date of this order.
¶18 IT IS FURTHER ORDERED that Matthew H. Marx shall
comply with the provisions of SCR 22.26 concerning the duties of
a person whose license to practice law in Wisconsin has been
suspended.
¶19 IT IS FURTHER ORDERED that compliance with all
conditions of this order is required for reinstatement. See SCR
22.28(2).
¶20 IT IS FURTHER ORDERED that the March 18, 2014
temporary suspension of Matthew H. Marx’s license to practice
law in Wisconsin, due to his wilful failure to cooperate with
the OLR's grievance investigation in this matter, is lifted.
¶21 IT IS FURTHER ORDERED that the administrative
suspension of Matthew H. Marx’s license to practice law in
Wisconsin, due to his failure to pay mandatory bar dues and
failure to comply with continuing legal education requirements,
will remain in effect until each reason for the administrative
suspension has been rectified, pursuant to SCR 22.28(1).
14
No. 2016AP101-D
¶22 IT IS FURTHER ORDERED that Matthew H. Marx shall pay
restitution to D.A. in the amount of $994.50, and to C.W. in the
amount of $1,568.
¶23 IT IS FURTHER ORDERED that no costs are imposed in
this matter.
15
No. 2016AP101-D
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