Office of Lawyer Regulation v. Wagner (In Re Disciplinary Proceedings Against Kathleen Anna Wagner)

2019 WI 81

SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP2528-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Kathleen Anna Wagner, Attorney at Law:

Office of Lawyer Regulation,
Complainant-Respondent,
v.
Kathleen Anna Wagner,
Respondent-Appellant.

DISCIPLINARY PROCEEDINGS AGAINST WAGNER

OPINION FILED: July 3, 2019
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: February 21, 2019

SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:

JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING: ABRAHAMSON, J. withdrew from participation.

ATTORNEYS:

For the respondent-appellant, there was a brief filed by
Kathleen A. Wagner, Madison. There was an oral argument by
Kathleen A. Wagner.

For the complainant-respondent, there was a brief filed by
William J. Weigel and Office of Lawyer Regulation, Madison.
There was an oral argument by William J. Weigel.
 2019 WI 81
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP2528-D

STATE OF WISCONSIN : IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against Kathleen Anna Wagner, Attorney at Law:

Office of Lawyer Regulation, FILED
Complainant-Respondent,
JUL 3, 2019
v.
Sheila T. Reiff
Clerk of Supreme Court
Kathleen Anna Wagner,

Respondent-Appellant.

ATTORNEY disciplinary proceeding. Professional misconduct
found; no discipline imposed.

¶1 PER CURIAM. Attorney Kathleen Anna Wagner has
appealed a report filed by Referee James C. Boll, concluding
that Attorney Wagner committed two counts of professional
misconduct and recommending that she be privately reprimanded.
The Office of Lawyer Regulation (OLR) has now that asked one of
those counts be dismissed. Thus, what is before the court is
Attorney Wagner's challenge to the referee's conclusion that she
violated Supreme Court Rule (SCR) 20:1.5(b)(3). Attorney Wagner
 No. 2014AP2528-D

has also challenged the referee's recommendation that she be
assessed the full costs of this proceeding.
¶2 Upon careful review of this matter, we conclude that
although Attorney Wagner did violate SCR 20:1.5(b)(3), the
violation does not warrant the imposition of any discipline. In
addition, we find it appropriate, under the unique facts of this
case, to depart from our normal custom of imposing full costs,
which are $40,639.72 as of March 4, 2019. Instead, we deem it
appropriate to require Attorney Wagner to pay $4,500 in costs.
¶3 Attorney Wagner was admitted to practice law in
Wisconsin in 1983. She practices in Madison. She has no prior
disciplinary history.

¶4 On October 31, 2014, the OLR filed a complaint
alleging three counts of misconduct with respect to Attorney
Wagner's trust, estate, and tax work for the G. family. W.G.,
the matriarch of the family, first met with Attorney Wagner on
April 10, 2008 and asked Attorney Wagner to provide legal
services regarding completing her late husband's estate, funding

a living trust of which W.G. was the trustee, and completing her
tax return.
¶5 During this initial meeting, W.G. executed a written
representation agreement. The agreement called for Attorney
Wagner to bill W.G. on an hourly basis at a rate of $250 per
hour. The agreement also stated that it was Attorney Wagner's
practice to bill for services "upon completion" of the matter,
although she retained discretion to bill on a more frequent
basis when the fees exceeded the amount of the initial payment.
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In addition to signing the representation agreement, W.G. also
gave Attorney Wagner a check for $500.
¶6 After meeting with W.G. for an hour on April 10, 2008,
Attorney Wagner had a 90-minute conversation with W.G.'s prior
attorney a few days later. During that conversation, Attorney
Wagner learned that numerous marital property assets had not
been transferred into the living trust; no one completed the
process of transferring those assets into the living trust prior
to the death of W.G.'s husband in November 2006; and a number of
sub-trusts needed to be created and funded.
¶7 Attorney Wagner contends that, based on her
conversations with predecessor counsel, she learned that W.G.

was attempting to transfer into the living trust two parcels of
waterfront land in Adams county for which she did not have good
title because of violations of the Statute of Frauds. In
addition, Attorney Wagner claims she learned that W.G. had not
properly segregated income between herself and the living trust,
nor had she filed proper tax returns. As a result of these

discoveries, Attorney Wagner claims that, at a July 30, 2008
meeting, she offered to return to W.G. the uncashed $500 check
and the files she had obtained from predecessor counsel. W.G.
refused to accept the check, and Attorney Wagner retained it.
Attorney Wagner again met with W.G. on September 19, 2008, at
which time Attorney Wagner submitted correspondence to W.G.
laying out her proposed plan for the estate and trusts.
Attorney Wagner deposited the $500 check into her client trust
account on October 10, 2008.
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¶8 According to Attorney Wagner, in late 2008 and early
2009, while W.G. was experiencing health issues and learned that
she had a short period of time left to live, W.G. was being
pressured about who would be in control of the family assets and
handle their disposition after her death. Attorney Wagner
states that W.G.'s third eldest child, T.G., a Virginia lawyer
who practiced family law, was seeking to take over control of
the family's finances. W.G. resisted the pressure and obtained
agreements from her four children that W.G. would remain in
control of the finances.
¶9 On January 17, 2009, W.G. signed a new representation
agreement. W.G. authorized Attorney Wagner to transfer assets

from the living trust to a family trust and a marital survivor's
trust. Attorney Wagner asserts there was a rush to transfer
into the living trust the remaining marital assets that should
have been transferred long before. Attorney Wagner said she
worked nights and weekends, including 16-hour or more days, to
accomplish those transfers.

¶10 W.G. passed away in February 2009. Her son, J.G.
became the successor trustee of the W.G. marital survivor's
trust and the G. family trust. At or after W.G.'s death,
certain beneficiary trusts came into existence for W.G.'s
children.
¶11 At some point in 2009, J.G. and T.G. began to ask
Attorney Wagner about her fees and the preparation of invoices.
In November 2009, J.G. sent Attorney Wagner an email expressly
requesting her to provide him with an invoice for her services.
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On January 15, 2010, Attorney Wagner and J.G. entered into a
"Fee Dispute Procedure" agreement. On that same date, as part
of the agreement, J.G. gave Attorney Wagner two checks. The
first check, for $113,000, was made payable to Wagner Law
Offices S.C. and was apparently intended to be applied by
Attorney Wagner toward her fees. The second check, in the
amount of $47,000, was made payable to Attorney Wagner's client
trust account and carried the notation "disputed fee for court
to decide." Under the agreement, Attorney Wagner was to provide
a detailed billing to J.G. by February 15, 2010.
¶12 Attorney Wagner claims that during late 2009 and early
2010, T.G. began to cause problems and interfere with her

working relationship with J.G. On January 5, 2010, T.G. sent
Attorney Wagner an email saying he would be in Madison on
January 16-18 and that he wanted her to provide an invoice and
back-up receipts to J.G. by that date. On January 8, 2010, T.G.
filed a demand for fee arbitration with the State Bar of
Wisconsin.

¶13 In April 2010, T.G. filed a grievance against Attorney
Wagner with the OLR. In July 2010, T.G. filed a lawsuit in Dane
County Circuit Court against Attorney Wagner and her law firm on
behalf of himself, J.G., and his two other siblings. The
complaint asked for a declaratory judgment as to the amount of
fees that Attorney Wagner was owed.
¶14 In April 2011, in the course of the lawsuit, the G.
siblings served a request asking Attorney Wagner to produce any
documents identifying any compensable legal services provided to
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W.G., her agent, or her successor-death trustee, J.G. The
circuit court issued an order requiring Attorney Wagner to
prepare and send her invoices to the plaintiffs by June 14,
2011. On June 6, 2011, Attorney Wagner filed a request for an
extension of time, which the court denied. Attorney Wagner did
not submit the invoices by June 14, 2011. Attorney Wagner later
renewed her motion for an extension of time, this time including
a supporting affidavit from her doctor. The circuit court
granted a stay of all discovery in the case from June 22, 2011
to October 4, 2011, due to Attorney Wagner's health.
¶15 When the stay expired, the circuit court issued an
order scheduling Attorney Wagner's deposition for November 14,

2011 and requiring her to submit to J.G. "an annotated bill for
services provided by Wagner Law Offices, S.C." Attorney Wagner
did not provide the invoices by November 1, 2011. The circuit
court held another scheduling conference on November 30, 2011,
and established a new deadline of January 3, 2012 for Attorney
Wagner to provide her legal invoices. Attorney Wagner met that

deadline when she submitted her invoices on January 3, 2012.
This was approximately 25 months after J.G. had made his initial
written request, via email, for the invoices.
¶16 The OLR acknowledged at oral argument that on April
24, 2013, the circuit court found that Attorney Wagner did not
overcharge the G. siblings for her legal services and in fact
she had under billed. Following the circuit court's ruling, the
parties reached a settlement as to fees and the plaintiffs
voluntarily dismissed their lawsuit.
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¶17 The OLR's complaint alleged the following counts of
misconduct:

Count 1: By failing to deposit W.G.'s $500 check for
advanced fees into her IOLTA trust account for six
months, Attorney Wagner violated SCR 20:1.15(b)(4).1

Count 2: By failing to respond to her client's
request for her billing invoice for at least 25
months, Attorney Wagner violated former
SCR 20:1.5(b)(3).2

Count 3: By initially asserting that she was entitled
to legal fees of $167,000 for her services without
providing any invoice, then by billing $85,575 for her
services, all at $350 per hour despite a fee agreement
to the contrary, when the reasonable fee for her
services was $64,927.50 plus $102.30 for mileage,
Attorney Wagner charged an excessive fee in violation
of SCR 20:1.5(a).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, 2016 WI 21 (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.

Former SCR 20:1.15(b)(4) provided:

Except as provided in par. (4m) unearned fees and
advanced payments of fees shall be held in trust until
earned by the lawyer, and withdrawn pursuant to sub.
(g). Funds advanced by a client or 3rd party for
payment of costs shall be held in trust until the
costs are incurred.
2 SCR 20:1.5(b)(3) provides: "A lawyer shall promptly
respond to a client's request for information concerning fees
and expenses.
3 SCR 20:1.5(a) provides:

A lawyer shall not make an agreement for, charge
or collect an unreasonable fee or an unreasonable
(continued)
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 No. 2014AP2528-D

¶18 Attorney Wagner filed an answer to the complaint on
December 8, 2014. The referee was appointed on January 22,
2015.
¶19 After extensive litigation, both the OLR and Attorney
Wagner moved for summary judgment. On May 17, 2017, the referee
issued his report granting summary judgment in favor of the OLR
as to Counts 1 and 2 of the complaint.4 With respect to Count 1,

amount for expenses. The factors to be considered in
determining the reasonableness of a fee include the
following:

(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client,
that the acceptance of the particular employment will
preclude other employment by the lawyer;

(3) the fee customarily charged in the locality
for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or
by the circumstances;

(6) the nature and length of the professional
relationship with the client;

(7) the experience, reputation, and ability of
the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.
4 On August 16, 2016, the OLR voluntarily dismissed Count 3,
saying its decision was based on the OLR's receipt of additional
information from witnesses during litigation, a thorough review
of the underlying Dane county proceeding, and consultation with
its expert on the fee issue.

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 No. 2014AP2528-D

the referee found that by failing to deposit W.G.'s $500 check
into her trust account for six months Attorney Wagner violated
SCR 20:1.15(b)(1), which states:

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.5
¶20 With respect to Count 2, the referee noted that
Attorney Wagner indicated she was unable to prepare an invoice
for legal services because T.G. failed to provide her with
certain documents. The referee stated he did not find that
argument to be credible since an attorney does not need

ancillary documents in order to create legal invoices. The
referee also pointed out that Attorney Wagner did eventually
produce legal invoices without the documents she claimed she
needed.
¶21 The referee noted that between August 2009 and January
3, 2012, both T.G. and J.G. sought to obtain legal invoices from

Attorney Wagner on numerous occasions, and they also sought to
enter into a fee dispute procedure with the State Bar of
Wisconsin. In addition, the referee said the Dane County
Circuit Court ordered Attorney Wagner to produce legal invoices,

5Count 1 of the OLR's complaint alleged that Attorney
Wagner's failure to deposit W.G.'s $500 check for advanced fees
into her IOLTA trust account for six months constituted a
violation of SCR 20:1.15(b)(4), a different subsection of the
rule than appeared in the summary judgment material.

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 No. 2014AP2528-D

but Attorney Wagner failed to comply with those court orders.
The referee said the record was clear, and there was no material
issue of fact that Attorney Wagner failed to provide invoices
for legal services for 25 months, despite requests from her
client and his family and despite multiple court orders.
¶22 The referee noted that Attorney Wagner offered a
number of mitigating factors as to why she did not timely
produce the invoices: her hard drive crashed; she was unable to
provide invoices because the G. family did not produce documents
necessary to complete the invoices; and her failure to produce
the invoices was due to ongoing serious medical issues. The
referee said if those statements were true, those reasons would

go toward mitigation of discipline, not to whether a violation
of a supreme court rule occurred.
¶23 As to the appropriate sanction for the two counts of
misconduct, the referee found that Attorney Wagner's violation
of SCR 20:1.15(b)(1) was de minimis and that discipline was not

appropriate. As to Attorney Wagner's failure to respond to
numerous requests to provide legal invoices, the referee took
into account Attorney Wagner's medical condition and with that
mitigating factor the referee concluded that a private reprimand
was an appropriate sanction.
¶24 In her appeal, Attorney Wagner argues that the referee
wrongly concluded that she violated SCR 20:1.5(b)(3) because she
was "blocked" by her client from access to the records she
needed to finalize invoices for work she performed. Attorney
Wagner appears to argue that she would have been able to produce
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 No. 2014AP2528-D

the invoices much sooner if T.G. had not interfered. She also
seems to assert that since she did not keep contemporaneous time
records she needed all of the documents she prepared for W.G. in
order to recreate accurate bills. She also apparently believes
she was not obligated to provide invoices for her services until
those services were completed and there had been a court
decision on how the advanced fees were to be allocated.
¶25 As to Count 1 of the OLR's complaint concerning the
failure to deposit the $500 check for six months, Attorney
Wagner contends that she exercised her right to rescind the
April 2008 representation agreement because she learned W.G. had
withheld material information during their initial April 10,

2008 meeting. Attorney Wagner seems to imply that because she
rescinded the representation agreement, she did not have an
attorney-client relationship with W.G. during the period of
April to October 2008 and, as a result, she had no obligation to
deposit the $500 check into her client trust account. She does
not explain, however, why, if she rescinded the representation

agreement, she was not immediately obligated to return the check
to W.G. Attorney Wagner also seems to advance the contradictory
argument that because she "earned" the $500 fee by her
"exploratory work," she did not have to place the $500 check
into her client trust account. She fails to explain why she had
"earned" the fee if in fact she had rescinded the representation
agreement, nor does she explain why she ultimately placed the
$500 into her client trust account in October 2008 if she had
already "earned" it.
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 No. 2014AP2528-D

¶26 The OLR has asked this court to dismiss Count 1 of the
complaint because the violation found by the referee, as
requested by the OLR in its summary judgment motion, does not
match the violation alleged in the complaint. Count 1 of the
complaint alleged that Attorney Wagner's failure to deposit the
$500 check from W.G. for several months constituted a violation
of SCR 20:1.15(b)(4), which requires that "unearned fees and
advanced payments of fees shall be held in trust until earned by
the lawyer, and withdrawn pursuant to sub. (g)." The OLR's
summary judgment motion asked the referee to find that the
failure to deposit the check constituted a violation of
SCR 20:1.15(b)(1), which provides that "a lawyer shall hold in

trust, separate from the lawyer's own property, that property of
clients and 3rd parties in the lawyer's possession in connection
with a representation." It was this rule that the referee found
had been violated. The OLR says the summary judgment motion
inadvertently misstated which rule had been violated and while
it continues to believe that Attorney Wagner violated both

subsections of SCR 20:1.15, it suggests that the most fair
result for Attorney Wagner is that Count 1 be dismissed.
¶27 As to Count 2 of the complaint, the OLR says this is a
straightforward matter of Attorney Wagner taking over two years
to produce invoices after J.G. first asked for the preparation
of final bills. The OLR says during that two-year time frame, a
circuit court issued multiple orders requiring Attorney Wagner
to provide invoices for her work, but she failed to comply with
those orders. While Attorney Wagner said she was prevented from
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 No. 2014AP2528-D

producing the invoices because T.G. would not produce certain
documents to her, the OLR points out that Attorney Wagner was
ultimately able to produce invoices without those requested
documents. Thus, the OLR argues it was not the lack of
documents that delayed the production of the invoices. The OLR
says the undisputed facts as found by the referee support the
conclusion that Attorney Wagner failed to promptly respond to
her client's request for fee information, in violation of
SCR 20:1.5(b)(3).
¶28 Attorney Wagner does not specifically address the
issue of the appropriate sanction in her brief. Instead, she
argues that both Counts 1 and 2 should be dismissed so no

discipline should be imposed.
¶29 The OLR argues that, even with the dismissal of Count
1, the proper level of discipline for Count 2 would be a private
reprimand.
¶30 A referee's findings of fact are affirmed unless
clearly erroneous. Conclusions of law are reviewed de novo.

See In re Disciplinary Proceedings Against Eisenberg, 2004 WI
14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747. The court may impose
whatever sanction it sees fit, regardless of the referee's
recommendation. See In re Disciplinary Proceedings Against
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686.
¶31 As an initial matter, we accede to the OLR's request
to dismiss Count 1.
¶32 Turning to Count 2, after careful review of the
matter, we conclude there has been no showing that any of the
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 No. 2014AP2528-D

referee's findings of fact are clearly erroneous. Accordingly,
we adopt them. We further agree with the referee's conclusion
of law that Attorney Wagner violated SCR 20:1.5(b)(3) by
failing, for more than two years, to prepare and submit invoices
for legal work she performed on behalf of the G. family. While
T.G.'s actions no doubt irritated Attorney Wagner and some of
his actions may have been without merit or justification,
Attorney Wagner nonetheless had an obligation to promptly
respond to requests for billing information. In addition,
Attorney Wagner failed to keep contemporaneous time records as
she went along that would have enabled her to prepare an invoice
in a timely fashion. Although the referee concluded that

Attorney Wagner's health problems were a mitigating factor, she
has failed to present evidence to show that her health problems
prevented her from preparing the invoices for the entire 25
month period of the delay. Accordingly, we agree with the
referee that Attorney Wagner violated SCR 20:1.5(b)(3).
¶33 In spite of the fact that we agree that the OLR met

its burden of proof as to Count 2, we decline to impose any
discipline. Although there was an unacceptable delay in
Attorney Wagner's producing the invoices, this case appears to
present a unique set of circumstances that are unlikely to be
repeated in Attorney Wagner's future practice of law. For that
reason, even though we agree that there was a violation of a
supreme court rule, we opt not to impose any sanction.
¶34 The OLR advises that it is not seeking a restitution
award, and we do not order restitution. The remaining issue to
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 No. 2014AP2528-D

be resolved in this matter is the issue of costs. The referee
recommends that Attorney Wagner bear the full costs of the
proceeding. The OLR agrees. Attorney Wagner believes no costs
should be imposed. Assessment of costs in OLR matters is
governed by SCR 22.24.
¶35 Our general policy is that upon a finding of
misconduct it is appropriate to impose all costs upon the
respondent. In some cases the court may, in the exercise of its
discretion, reduce the amount of costs imposed upon a
respondent. In exercising our discretion regarding the
assessment of costs, we consider the statement of costs, any
objection and reply, the recommendation of the referee, and all

of the following factors:

(a) The number of counts charged, contested, and
proven.

(b) The nature of the misconduct.

(c) The level of discipline sought by the parties and
recommended by the referee.

(d) The respondent's cooperation with the
disciplinary process.

(e) Prior discipline, if any.

(f) Other relevant circumstances.

See SCR 22.24(1m)
¶36 The complaint in this matter alleged three counts of
misconduct and originally sought a 60-day suspension of Attorney

Wagner's license. Although the Dane County Circuit Court issued
a decision in April of 2013 concluding that Attorney Wagner may

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 No. 2014AP2528-D

well have undercharged for the work she performed, in its
October 31, 2014 complaint the OLR nevertheless alleged that
Attorney Wagner had charged an excessive fee. The OLR dismissed
Count 3 of the complaint and changed the sanction it was seeking
to a reprimand in August 2016. After the referee issued his
report, the OLR agreed to dismiss Count 1, leaving only Count 2,
which arose out of Attorney Wagner's lengthy delay in submitting
invoices for the legal work she performed.
¶37 Count 3 of the complaint, which alleged that Attorney
Wagner charged an excessive fee for her services, was
undisputedly the most serious charge lodged by the OLR. We
conclude that if Count 3 had not been charged, the costs in this

matter would have been far less. We conclude that absent Count
3 the costs would have been approximately $4,500. Thus, under
the extraordinary circumstances of this case, we deem it
appropriate to assess $4,500 in costs.
¶38 IT IS ORDERED that Count 1 of the OLR's complaint is
hereby dismissed.

¶39 IT IS FURTHER ORDERED that we find Kathleen Anna
Wagner violated SCR 20:1.5(b)(3); however we impose no
discipline.
¶40 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Kathleen Anna Wagner shall pay to the Office of
Lawyer Regulation costs in the amount of $4,500.
¶41 SHIRLEY S. ABRAHAMSON, J., withdrew from participation
prior to oral argument.

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