Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
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THE SUPREME COURT OF THE STATE OF ALASKA
In the Disciplinary Matter Involving )
) Supreme Court No. S-18006
WARD M. MERDES, Attorney. ) ABA File No. 2015D084
)
) OPINION
)
) No. 7627 – October 14, 2022
Appeal from the Alaska Bar Association Disciplinary Board.
Appearances: Mark Choate, Choate Law Firm LLC, Juneau,
for Ward Merdes. Louise R. Driscoll, Assistant Bar Counsel,
Anchorage, for Alaska Bar Association.
Before: Winfree, Chief Justice, Maassen, Carney,
Borghesan, and Henderson, Justices.
CARNEY, Justice.
I. INTRODUCTION
The same day an attorney’s long-existing law firm was ordered to return
over $643,000 to a former client, the attorney closed that firm and began transferring its
assets to a recently formed law firm and to himself. The attorney then told the former
client that the old law firm did not have sufficient assets to return the funds. In
subsequent civil litigation between the attorney and the former client, the superior court
found the attorney and both law firms liable under a consumer protection statute for
nearly $2 million in damages.
The Alaska Bar Association initiated disciplinary proceedings against the
attorney. After a four-day hearing, an area hearing committee found that the attorney
had intended to defraud his former client by transferring the old firm’s assets to the new
firm and to himself and had misrepresented his old firm’s ability to pay in violation of
professional conduct rules. The Bar Association’s Disciplinary Board adopted the
hearing committee’s findings and conclusions and recommended that we suspend the
attorney from the practice of law for one year and order him to pay $3,000 in fees and
costs. The attorney appeals, arguing that there is insufficient evidence to support the area
hearing committee’s (and therefore the Board’s) finding, by clear and convincing
evidence, that he intended to defraud the former client.
We agree that the attorney’s conduct violated professional conduct rules,
but we conclude that the Board’s recommended sanction is too lenient. We therefore
suspend the attorney from the practice of law for four years and order him to pay $3,000
in fees and costs to the Bar.
II. FACTS AND PROCEEDINGS
The events leading up to this disciplinary action against Ward Merdes took
place over the course of more than three decades. We have considered the underlying
facts in two previous cases: Leisnoi, Inc. v. Merdes & Merdes, P.C. (Leisnoi I)1 and
Merdes & Merdes, P.C. v. Leisnoi, Inc. (Leisnoi II).2 Because disciplinary matters are
“fact-specific” we state the facts of this matter “in detail.”3
A. 1988 through January 31, 2013
In 1988 attorney Ed Merdes began representing Leisnoi, Inc., an Alaska
Native corporation, in a dispute with Omar Stratman over title to lands on Kodiak
1
307 P.3d 879 (Alaska 2013).
2
410 P.3d 398 (Alaska 2017).
3
In re Disciplinary Matter of Miles, 339 P.3d 1009, 1010 (Alaska 2014).
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Island.4 Leisnoi and Ed Merdes entered into a contingency fee agreement that entitled
Ed Merdes to an undivided 30% interest in the disputed lands or any settlement that
Leisnoi obtained or retained as a result of the litigation.5
Ed Merdes and his son Ward Merdes formed the law firm Merdes &
Merdes, P.C. in 1990. Ed Merdes died in 1991.6 Merdes & Merdes continued to
represent Leisnoi in the title dispute against Stratman.7 The litigation resolved in
Leisnoi’s favor in 1992, although appeals continued until 2008.8
Following the favorable judgment, Leisnoi challenged the validity of its
contingency fee agreement.9 The dispute was resolved by arbitration through the Alaska
Bar Association in 1994.10 The arbitration panel awarded Merdes & Merdes a $721,000
contingent fee based on 30% of Leisnoi’s land value, plus interest, and $55,000 in court-
awarded prevailing party attorney’s fees.11 In 1995 the superior court affirmed the
arbitration award and entered a judgment in favor of Merdes & Merdes.12 However,
during the fee dispute and ensuing litigation, the relationship between Merdes & Merdes
and Leisnoi soured; Leisnoi’s vice president alleged that Ed Merdes had lied and cheated
4
Leisnoi I, 307 P.3d at 882.
5
Id.
6
Leisnoi II, 410 P.3d at 401.
7
Id. at 401-02.
8
Leisnoi I, 307 P.3d at 882-83.
9
Id. at 883.
10
Id.
11
Leisnoi II, 410 P.3d at 402.
12
Id.
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Leisnoi, and stated that “th[e] whole [arbitration] process smack[ed] of racism.”
Leisnoi made annual payments, totaling $800,000,13 to Merdes & Merdes
until 2002.14 In 2009 Merdes & Merdes sought a writ of execution for the remainder of
the arbitration award — $643,760 — which the superior court granted in 2010.15 Leisnoi
paid the $643,760 to Merdes & Merdes, but immediately appealed the superior court’s
ruling.16 While the appeal was pending, Ward Merdes incorporated a new law firm,
Merdes Law Office, P.C. on January 17, 2013.
B. February 1, 2013 through 2017
On February 1, 2013 we reversed the superior court’s writ of execution and
held that “Leisnoi’s contingency fee agreement with [Merdes & Merdes] violated [the
Alaska Native Claims Settlement Act’s] prohibition against contingency fee agreements,
as did the Arbitration Panel’s fee award, the superior court’s 1995 entry of judgment, and
the 2010 writ of execution.”17 We held that Leisnoi was therefore entitled to recover the
$643,760 plus interest paid as a result of the writ.18 But we also held that Leisnoi “could
not recover the $800,000 it paid before 2010.”19 And we observed that “[Merdes &
Merdes] may seek to recover any fees it believes are owed under a theory of quantum
13
Id. at 407 n.57 (noting that the court a previously “described [the] payments
as totaling $700,000” but that “both parties describe the amount paid as ‘roughly
$800,000’ or simply ‘$800,000.’ ”).
14
Id. at 402.
15
Id.
16
Id.
17
Leisnoi I, 307 P.3d at 894.
18
Id.; Leisnoi II, 410 P.3d at 402.
19
Leisnoi II, 410 P.3d at 402.
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meruit.”20 On rehearing we “express[ed] no opinion whether [Merdes & Merdes] is
entitled to the remedy of quantum meruit” or on the merits of Leisnoi’s potential
defenses because “[t]hese and related issues are matters for the superior court to
address.”21
Merdes Law Office began operating the same day our opinion was released.
Merdes & Merdes’s clients signed agreements transferring client representation to
Merdes Law Office. The case and client transfer agreements stated that “as of
01/31/2013 Merdes & Merdes, P.C. closed its doors. Effective 02/01/2013, Merdes Law
Office, P.C. opened its doors.” The agreements provided that any money to which
Merdes & Merdes might be entitled or that was owed by the client would be paid to
Merdes Law Office. Merdes & Merdes’s remaining assets were transferred to Merdes
Law Office and to Ward Merdes, except for approximately $80,000 which was deposited
in the court registry, and the debt to Leisnoi remained on Merdes & Merdes’s books.
When Leisnoi’s general counsel contacted Ward Merdes days later, Ward Merdes told
him that Merdes & Merdes did not have the assets to repay Leisnoi.
In response to Leisnoi’s demand for payment, Merdes & Merdes sought a
stay of execution in March 2013 “until its ‘competing claim’ for quantum meruit could
be resolved.”22 Ward Merdes submitted an affidavit in which he attested “that Merdes
& Merdes ‘does not have anywhere near enough money to return $643,760 to Leisnoi
pursuant to [the] Supreme Court Order. It doesn’t have 1/5th of that amount.’ ”23 The
superior court denied Merdes & Merdes’s motion to stay. It noted the contention that
20
Leisnoi I, 307 P.3d at 894.
21
Id.
22
Leisnoi II, 410 P.3d at 403.
23
Id.
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Merdes & Merdes had an “unqualified quantum meruit claim” was an inaccurate
characterization of our equivocal statements that Merdes & Merdes “may file an action”
and “may seek to recover” under a theory of quantum meruit24 which did not indicate
whether the claim had merit.
In May Leisnoi brought a separate action against Merdes & Merdes, Merdes
Law Office, and Ward Merdes in which it alleged, among other things, violations of the
Unfair Trade Practices Act (UTPA)25 and unjust enrichment.26 The defendants denied
Leisnoi’s allegations and Merdes & Merdes filed a counterclaim seeking “attorney’s fees
framed as a claim for quantum meruit.”27 In November the superior court concluded that
Merdes & Merdes’s attempt to recover its fees in quantum meruit was barred by res
judicata and the statute of limitations and granted Leisnoi’s motion for summary
judgment on the counterclaim.28 The court also granted summary judgment on Leisnoi’s
breach of contract claim and ordered Merdes & Merdes to repay Leisnoi $643,760 plus
interest to comply with the mandate in our decision.29
The superior court held a bench trial on the remaining claims.30 The court
found that the transfer of assets from Merdes & Merdes to Merdes Law Office and Ward
24
Leisnoi I, 307 P.3d at 882, 894.
25
See AS 45.50.471-.561 (regulating commercial trade practices, providing
consumer protections, and imposing treble damages for violations).
26
See Leisnoi II, 410 P.3d at 403.
27
Id.
28
Id.
29
Id.
30
Id.
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Merdes was “simply not defensible” and was fraudulent.31 It highlighted that “[t]he
quantum mer[ui]t claim, on February 1, 2013, had little or no value” and that Merdes had
“produced no credible testimony that supported the notion that a willing buyer existed
to prosecute the claim.” The court concluded that “if Ward Merdes was truly moving his
business and shutting down [Merdes & Merdes], [Merdes Law Office] should have
purchased the quantum mer[ui]t claim and [Merdes & Merdes] could have remained
sufficiently liquid to honor its debts.”
The superior court also found that seven of eight badges of fraud32 were
present which “weigh[ed] strongly in favor of finding that the capitalization of [Merdes
Law Office] with the assets of [Merdes & Merdes] was done with the intent to defraud
Leisnoi and prevent payment of the debt owed to Leisnoi.”33 The court also found that
all three defendants — Merdes & Merdes, Merdes Law Office, and Ward Merdes —
violated the UTPA by participating in the fraudulent transfer of assets.34 The court
therefore voided the transfers from Merdes & Merdes and found all three defendants
31
Id.
32
See Shaffer v. Bellows, 260 P.3d 1064, 1068-69 (Alaska 2011) (“ ‘Many
circumstantial factors can indicate the existence of fraud’ . . . . Typical badges of fraud
include: ‘(1) inadequate consideration, (2) transfer in anticipation of a pending suit,
(3) insolvency of the transferor, (4) failure to record, (5) transfer encompasses
substantially all the transferor’s property, (6) transferor retains possession of the
transferred premises, (7) transfer completely depletes transferor’s assets, and
(8) relationship of the parties.’ ” (first quoting Nerox Power Systems, Inc. v. M–B
Contracting Co., 54 P.3d 791, 796 (Alaska 2002); and then quoting Gabaig v. Gabaig,
717 P.2d 835, 839 n.6 (Alaska 1986))).
33
Leisnoi II, 410 P.3d at 403 (alterations in original).
34
Id.
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jointly and severally liable for Leisnoi’s compensatory damages.35 The court trebled this
amount to $1,931,280 based upon the UTPA.36
The defendants appealed, asking us to reverse “(1) [the] summary judgment
against Merdes & Merdes on its quantum meruit claim; (2) the finding of liability and
award of damages for fraudulent conveyance; (3) the award of damages for violation of
the UTPA; and (4) the award of prejudgment interest.”37 In 2017 we affirmed the
superior court “except for the application of prejudgment interest to the various
defendants.”38
C. Bar Proceedings
In January 2019 Bar Counsel petitioned for a formal disciplinary hearing
against Ward Merdes (hereafter Merdes) before an area hearing committee.39 The
petition alleged that Merdes had violated the Alaska Rules of Professional Conduct and
it listed four counts of misconduct during the fee dispute between Merdes & Merdes and
Leisnoi.
The first three counts alleged that Merdes violated sections of Professional
Conduct Rule 1.15 regarding the safekeeping of property. Count 1 alleged that Merdes
violated Professional Conduct Rule 1.15(a) by failing to hold Leisnoi’s monies separate
35
Id.
36
Id.
37
Id. at 404.
38
Id. at 415.
39
See Alaska Bar R. 25(d) (“A decision by Bar Counsel to initiate formal
proceedings before a Hearing Committee will be reviewed by the Board Discipline
Liaison prior to the filing of a formal petition.”).
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from his own property.40 Count 2 alleged that he violated Professional Conduct Rule
1.15(d) by failing to promptly deliver Leisnoi funds to which it was entitled.41 And
Count 3 alleged that after learning of Leisnoi’s appeal of the writ of execution, Merdes
violated Professional Conduct Rule 1.15(e) by failing to safeguard the disputed funds
and by failing to set aside monies that would be available if the court ordered him to
return funds to Leisnoi.42
The petition’s fourth allegation claimed Merdes engaged in professional
misconduct by “engag[ing] in conduct involving dishonesty, fraud, deceit, or
misrepresentation,” in violation of Professional Conduct Rule 8.4(c). The petition
specifically charged that Merdes had transferred Merdes & Merdes’s assets to Merdes
40
Alaska Rule of Professional Conduct 1.15(a) states in pertinent part that
“[a] lawyer shall hold property of clients or third persons that is in a lawyer’s possession
in connection with a representation separate from the lawyer’s own property.”
41
Alaska Rule of Professional Conduct 1.15(d) states:
Upon receiving funds or other property in which a client or
third person has an interest, a lawyer shall promptly notify
the client or third person. Except as stated in this rule or
otherwise permitted by law or by agreement with the client,
a lawyer shall promptly deliver to the client or third person
any funds or other property that the client or third person is
entitled to receive and, upon request by the client or third
person, shall promptly render a full accounting regarding the
funds or property.
42
Alaska Rule of Professional Conduct 1.15(e) states:
When in the course of representation a lawyer is in
possession of property in which two or more persons (one of
whom may be the lawyer) claim conflicting interests, the
property shall be kept separate by the lawyer until the dispute
is resolved. The lawyer shall promptly distribute all portions
of the property as to which the interests are not in dispute.
-9- 7627
Law Office “to avoid repaying attorney’s fees to Leisnoi in violation of the Unfair Trade
Practices Act [and t]he true and primary intention of the transfers was to keep $643,760
out of the reach of Leisnoi.”
As provided by Alaska Bar Rule 22,43 a three-member area hearing
committee held a formal hearing over the course of four days in November 2019. The
committee heard testimony from nine witnesses, seven of whom were members of the
Alaska Bar Association.
Bar Counsel began the hearing by calling Jana Turvey, Leisnoi’s president
and chief executive officer. She testified that, although Leisnoi won the initial litigation
against Stratman, the lawsuit had put a large financial strain on the corporation and
caused it to go into debt. She stated that although Leisnoi paid Merdes & Merdes the
outstanding $643,760 pursuant to the superior court’s order, the corporation had made
it clear that it did so under protest. Turvey explained that Leisnoi could not begin
developing and leasing lands until the litigation was fully resolved and Leisnoi held clear
title to its lands. Because the corporation was in a dire financial condition, Leisnoi had
secured a loan and paid Merdes & Merdes directly — instead of placing the disputed
funds in the court registry — or posting a bond so that it could begin to generate revenue
through its lands. She said Leisnoi then immediately filed an appeal to resolve its
protest. Turvey testified that after our 2013 opinion,44 Merdes told Leisnoi’s counsel that
“Merdes & Merdes law firm did not have the assets available to it . . . to pay the claim[;]
. . . in essence, all the assets were gone.”
Next, Bar Counsel called Ronald Greisen, a certified public accountant and
43
See Alaska Bar R. 22 (e)-(f) (providing petition will be assigned to area
hearing committee for hearing).
44
Leisnoi I, 307 P.3d 879, 894 (Alaska 2013) (holding that Leisnoi was
entitled to recover the $643,760 it had paid to Merdes & Merdes).
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financial forensic examiner, as an expert witness regarding the asset transfers from
Merdes & Merdes to Merdes Law Office and Merdes. After Leisnoi made its $643,760
payment, it commissioned Greisen to examine asset transfers from Merdes & Merdes to
Merdes Law Office and Merdes beginning in 2010 when Leisnoi paid the $643,760 to
Merdes & Merdes. He documented his findings in a final report in 2014. Greisen
testified that his analysis of the transfers led him to conclude that there were “badges of
fraud in conveyances from Merdes & Merdes to both Merdes Law Office and Ward
Merdes.” He testified that beginning on July 30, 2010 – when Leisnoi filed its appeal
— to February 2013, transfers for inadequate consideration in the amount of $3,099,910
were made from Merdes & Merdes to Merdes Law Office and Merdes. Of that sum, the
total amount transferred to Merdes Law Office was $1,043,598 and to Merdes personally
was $2,056,312. Greisen stated: “[M]y opinion is the fact that everything transferred
over except the debt owed to Leisnoi and [$]80,000 deposited with the court is a strong
indication that the transfer was done to avoid paying the debt to Leisnoi.” Greisen also
testified that Merdes & Merdes had sufficient contingent assets — such as settlements
due from clients’ cases — to pay Leisnoi when Leisnoi demanded payment immediately
following our 2013 decision. Greisen also noted that Merdes & Merdes had borrowing
power and that Merdes, as the sole shareholder, could have paid Leisnoi on behalf of the
firm.
Bar Counsel called Merdes as its third witness. Merdes testified that his
father had handled the majority of Leisnoi’s litigation against Stratman and that it was
“[a]n insane amount of work” requiring “thousands of hours.” Merdes testified that
when Leisnoi stopped making payments to Merdes & Merdes, he reduced the arbitration
award to a judgment and sought a writ of execution to enforce the judgment. Merdes
acknowledged that he was motivated in part by his desire to protect his father’s legacy,
“[b]ut not so much that I was looking to jerk Leisnoi around. I wanted [the judgment]
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paid.” He also acknowledged that Leisnoi’s chief executive officer at the time, Frank
Pagano, had filed an affidavit implying Merdes’s father was a “liar and a cheat” and
accusing him of forging Leisnoi’s president’s signature on the disputed contingency fee
agreement. Merdes testified that he thought the accusations were “beyond wrong” and
that he had sued Pagano, alleging negligent infliction of emotional distress. He testified
that Pagano’s affidavit had so affected him that his marriage suffered, he experienced
physical distress, and — at his wife and a friend’s suggestion — he sought psychiatric
treatment to address his anger and frustration.
Merdes acknowledged that he told Leisnoi’s counsel that Merdes & Merdes
did not have the assets to pay Leisnoi as early as February 1, 2013. He testified that he
told Leisnoi that Merdes & Merdes would not pay anything until its quantum meruit
claim was liquidated and the offset was appropriately calculated. On cross-examination
Merdes stated that it had never occurred to him that an attorney was duty bound to
preserve funds paid on a judgment when the judgment debtor had filed an appeal. He
testified that he “legitimately and genuinely [had] thought there wasn’t a snowball’s
chance in heck” Leisnoi’s appeal would prevail. But he also testified that shortly after
Leisnoi I45 was published he had called former Bar Counsel Stephen Van Goor for advice
about whether moving assets from Merdes & Merdes could be considered a fraudulent
conveyance.
Bar counsel called Merdes’s wife as a witness. She stated that she had been
responsible for the firm’s bookkeeping and accounting since 2005. She testified that
Merdes had been planning to bring their nephew into the practice after he finished law
school and that they had created the new firm for this purpose. She stated that they filed
articles of incorporation for Merdes Law Office in October 2012, and the State accepted
45
Id. at 879 (published Feb. 1, 2013).
-12- 7627
them in January 2013. She confirmed that client transfer agreements were executed
shortly after our 2013 opinion and that all of Merdes & Merdes’s clients transferred to
Merdes Law Office. She acknowledged that the new firm used the same phone number
and address as well as the same vendors, insurance, office equipment, and desks as
Merdes & Merdes. Merdes’s wife testified that Merdes Law Office took over the lease
from Merdes & Merdes, and that all of the employees from the old firm were given new
employment agreements and transferred to the new firm. She testified that she had set
up an operating account for Merdes Law Office in February 2013 and that the new firm
deposited its first settlement check on February 15, 2013 in the amount of $115,500.
The Bar’s final witness was Van Goor, who was qualified as an expert in
the field of legal ethics including Alaska’s ethics opinions and the Alaska Rules of
Professional Conduct. Van Goor testified about a conversation he had with Merdes in
mid-February 2013 regarding starting a new law office and transferring clients from
Merdes & Merdes to the new office. Van Goor stated that Merdes was concerned about
taking money from an old firm that was subject to execution. Van Goor testified that he
told Merdes he would need to consult with an expert and could not give him an
immediate response. Van Goor consulted with an attorney specializing in bankruptcy.
When Van Goor later reached Merdes, he relayed the expert’s assessment that “any
transfer of assets in light of the judgment would likely be considered fraudulent.” Van
Goor testified that he had been aware of the anger the fee dispute with Leisnoi had
caused Merdes and that Merdes’s “concern and his anger . . . may have affected” his
judgment. But Van Goor also stated that his impression of Merdes was that “he wanted
to stay within the lines [of the law] and get a resolution to what he thought was an unfair
situation.”
Merdes recalled his wife as his first witness. She testified that Merdes
began thinking about starting a new firm in 2008, when their nephew was considering
-13- 7627
going to law school, and that by late 2009 they had ordered shirts and letterhead printed
with the new firm name. She testified that after he graduated in May 2013, their nephew
began working as a law clerk at Merdes Law Office.
Merdes next called Michael Schneider, an attorney, as a witness. Schneider
testified that he was acquainted with Merdes through various professional conventions
and activities, and that they had maintained a long professional relationship working
together and across from one another. Schneider characterized Merdes as “meticulous[,]
. . . honest[,] and demanding.” Schneider testified that he did not think Merdes had
engaged in fraud by transferring cases from Merdes & Merdes to Merdes Law Office.
Schneider testified that he had once represented Stratman and was aware that Stratman
had offered to buy the quantum meruit claim from Merdes in exchange for the Lathrop
Building, a large office building in Fairbanks, in 2013, but Merdes rejected the offer. He
recalled being told that the Fairbanks property was worth about two and a half to three
million dollars.
Another attorney, Douglas Johnson, testified next. He stated that he knew
Merdes as “a fellow plaintiff’s attorney” and a friend, and his daughter had once worked
for Merdes. He described Merdes as “totally honest” and a “stand up, straight shooter
guy.”
Alicemary Rasley, an attorney and former magistrate judge, testified after
Johnson. She testified that she knew Merdes professionally and that he had occasionally
tried cases before her when she served as a magistrate. She characterized Merdes as a
“rule follower” and “incredibly fair.”
Next, Merdes called Brad Kane to testify. Kane, an attorney, was a “close
friend” of Merdes and represented him in both trial court and appellate proceedings
against Leisnoi. Kane stated that he had also worked with Merdes in other professional
capacities on a number of occasions. Kane testified that he had advised Merdes to
-14- 7627
pursue his quantum meruit claim and that Merdes had said he believed the claim was
“worth about 30 million.” Kane also testified that Stratman had offered to purchase
Merdes’s quantum meruit claim in exchange for the Fairbanks property, but that Merdes
had rejected the offer. Kane testified that Merdes believed the Lathrop Building had
been worth more than one million dollars.
Lastly, Merdes testified on his own behalf. He testified that he had not
intended to fraudulently transfer assets and believed he was leaving Merdes & Merdes
with a valuable quantum meruit claim. Merdes stated he believed Leisnoi I awarded him
a quantum meruit claim “instead of the . . . arbitration award.” He testified that “within
a couple weeks” of the decision, Stratman offered to purchase his quantum meruit claim
in exchange for the Lathrop Building, but that he rejected the offer because he believed
Leisnoi was going to pay a large sum to Merdes & Merdes. He stated that he understood
Stratman wanted the “claim against Leisnoi so that he could bring Leisnoi to the table
. . . [to] negotiate . . . and take some of the land that he ha[d] been fighting with Leisnoi
over for the last two decades.” Merdes testified that he closed Merdes & Merdes and
started Merdes Law Office to have his nephew join the practice.
The area hearing committee issued its findings of fact and conclusions of
law in May 2020. It unanimously found that Merdes had not committed any of the first
three alleged violations of Professional Conduct Rule 1.15. But two of the three
committee members found that Merdes had violated Professional Conduct Rule 8.4(c).
The committee specifically rejected Merdes’s explanation that he had formed Merdes
Law Office to welcome his nephew into the practice. The committee concluded that
moving all assets of Merdes & Merdes into the new firm . . .
and leaving only Leisnoi as the only unpaid creditor is clear
and convincing evidence of intent to hinder or delay
Leisnoi’s recovery. This analysis is supported by the timing
of the transfers immediately after the Supreme Court’s
-15- 7627
decision on February 1, 2013. It is also bolstered by Mr.
Merdes’[s] misrepresentation to Leisnoi’s counsel that
Merdes & Merdes no longer had assets to pay Leisnoi.
The committee therefore found that the Bar had proven Merdes violated Professional
Conduct Rule 8.4(c).46
The committee then analyzed the appropriate sanction according to the
American Bar Association’s Standards For Imposing Lawyer Sanctions (ABA
Standards) by considering the duties Merdes violated, his mental state, the injury his
conduct caused, and potential aggravating and mitigating circumstances.47 It determined
that Merdes had violated his duty of candor48 and his duty to the public49 by fraudulently
conveying assets from Merdes & Merdes to Merdes Law Office without consideration
in an effort to hinder and delay payment to Leisnoi. It also determined that Merdes
violated his duty of candor when he told Leisnoi that his former firm did not have the
assets to pay Leisnoi after deliberately transferring them in an effort to keep them from
Leisnoi’s successful collection.
46
In dissent, the third member of the committee found that, while the asset
transfers were “clearly wrong,” there was not “clear and convincing evidence” of
“fraudulent intent.” However, the dissenting member did agree with the majority’s
conclusion that Merdes’s representation to Leisnoi “that [Merdes & Merdes] had no
funds available to pay the judgment” was “both false and made with the intent to deceive
Leisnoi.”
47
STANDARDS FOR IMPOSING LAWYER SANCTIONS (1986) (AM. BAR ASS’N
amended 1992).
48
See id. § 4.6 (describing lack of candor as “cases where the lawyer engages
in fraud, deceit, or misrepresentation directed toward a client”).
49
See id. § 5.1 (describing failure to maintain personal integrity as “cases
involving commission of a criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness, or fitness as a lawyer in other respects, or in cases with conduct
involving dishonesty, fraud, deceit, or misrepresentation”).
-16- 7627
The committee found by clear and convincing evidence that Merdes’s
mental state was “intent,” evidenced by his “obsess[ion] with the goal” of exacting
revenge on Leisnoi, the timing of the transfers from his former firm to his new firm, and
the fact that Leisnoi was the sole creditor left on Merdes & Merdes’s books. The
committee was not convinced that he had opened a new law firm to welcome his nephew,
and concluded that his true intent was “to strip Merdes & Merdes of recoverable assets
and to thwart Leisnoi.”50 The committee majority found by clear and convincing
evidence that Merdes’s actions had caused Leisnoi actual injury by depriving it of a
substantial sum of money over a period of years and by causing Leisnoi to engage in
prolonged litigation.
The committee majority first found that disbarment was the appropriate
sanction for Merdes’s violation of his duties of candor and to the public under the ABA
Standards.51 The committee then analyzed the aggravating and mitigating circumstances
enumerated in section 9 of the ABA Standards.52 The committee concluded that
50
The committee majority noted that Merdes Law Office was opened well in
advance of the earliest time Merdes’s nephew could have joined the firm as an attorney.
His nephew graduated from law school in May 2013, and could not have been admitted
to the bar earlier than late October or November 2013. Merdes’s nephew never actually
joined the practice as an attorney. Although he began working as a law clerk at Merdes
Law Office in the summer of 2013, he left in February 2016 without having passed the
bar.
51
See ABA STANDARDS § 4.61 (providing that “[d]isbarment is generally
appropriate when a lawyer knowingly deceives a client with the intent to benefit the
lawyer”); id. § 5.11(b) (providing that “disbarment is generally appropriate when . . . a
lawyer engages in . . . intentional conduct involving dishonesty, fraud, deceit, or
misrepresentation that seriously adversely reflects on the lawyer’s fitness to practice”).
52
See id. § 9.1 (providing that “[a]fter misconduct has been established,
aggravating and mitigating circumstances may be considered in deciding what sanction
(continued...)
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Merdes’s misconduct was aggravated by his substantial experience in the law53 and by
the fact that his actions showed a dishonest or selfish motive.54 But the committee found
five mitigating factors that justified reducing the level of discipline that should be
imposed.55 First, the committee found that Merdes did not have a prior disciplinary
record.56 Second, the committee found that Merdes had self-reported the trial court
findings and our opinions to the Bar.57 Third, the committee found “that for most of his
practice. . . Merdes has been a conscientious and careful practitioner” with a “good
reputation.”58 Fourth, it found that because the superior court had ordered Merdes to pay
treble damages, the “imposition of other penalties or sanctions” was a mitigating factor.59
And finally, the committee concluded that because Merdes paid the entire judgment to
(...continued)
to impose.”); see also id. § 9.21 (“Aggravation or aggravating circumstances are any
considerations or factors that may justify an increase in the degree of discipline to be
imposed.”).
53
Id. § 9.22(i) (providing that “substantial experience in the practice of law”
is an aggravating factor). Merdes had been a member of the Alaska Bar since 1989.
54
Id. § 9.22(b) (providing that “dishonest or selfish motive” is an aggravating
factor).
55
Id. § 9.31 (“Mitigation or mitigating circumstances are any considerations
or factors that may justify a reduction in the degree of discipline to be imposed.”).
56
Id. § 9.32(a) (stating that “absence of a prior disciplinary record” may be
considered as mitigating factor).
57
Id. § 9.32(e) (stating that “full and free disclosure to disciplinary board or
cooperative attitude toward proceedings” may be considered as mitigating factor).
58
Id. § 9.32(g) (stating that “character or reputation” may be considered as
mitigating factor).
59
Id. § 9.32(k).
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Leisnoi after our 2017 opinion,60 the mitigating factor of “timely good faith effort to
make restitution or to rectify consequences of misconduct applie[d].”61
After weighing both the aggravating factors and mitigating factors, the
committee determined that “[a]lthough disbarment is an appropriate sanction under ABA
Standards” the balance weighed in favor of a lighter sanction. The committee majority
recommended that the Board issue “a public reprimand and/or suspension.”62 The
dissenting member concluded that “the appropriate sanction would be a public
reprimand.”
Merdes appealed the committee’s findings of fact and conclusions of law
to the Board.63 The Board held oral argument over two days in early 2021 and
subsequently adopted the committee’s findings of fact and conclusions of law including
its analysis of the applicable aggravating and mitigating factors. But the Board
concluded that the committee’s recommended sanction was too lenient, and instead
recommended that we suspend Merdes from the practice of law for one year and require
60
See Leisnoi II, 410 P.3d 398, 413-14 (Alaska 2017) (affirming the superior
court’s award of treble damages to Leisnoi).
61
ABA STANDARDS § 9.32(d).
62
“The Board of Governors of the Bar, when meeting to consider grievance
and disability matters, [is] known as the Disciplinary Board of the Alaska Bar
Association (hereinafter the ‘Board’).” Alaska Bar R. 10(a). Area hearing committees
submit written reports containing findings of fact, conclusions of law, and
recommendations to the Board. See Alaska Bar R. 12(i)(4). The Board may accept those
reports or adopt its own, and may impose reprimands or forward its own findings of fact,
conclusions of law, and recommendations to this court for more serious discipline. See
Alaska Bar R. 10(c)(5)-(8).
63
Parties may appeal the area hearing committee’s findings of fact,
conclusions of law and recommended sanction to the Board. See Alaska Bar R. 25(f).
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him to pay $3,000 in costs and attorney’s fees.64 Merdes appeals the Bar’s
recommendation.
III. STANDARD OF REVIEW
“We independently review the entire record in attorney disciplinary
proceedings, though findings of fact made by the Board are entitled to great weight.
When the Board’s findings of fact are appealed, the respondent attorney bears the burden
of proof in demonstrating that such findings are erroneous.”65 “In determining the
appropriate sanctions, we apply our independent judgment.”66
IV. DISCUSSION
A. Merdes Failed To Demonstrate That The Board’s Findings Of Fact
Were Erroneous.
Merdes challenges the factual findings made by the area hearing committee
and adopted by the Board. He specifically challenges the Board’s findings that there was
clear and convincing evidence that he “intended to hinder or delay repayment to Leisnoi”
and that he misrepresented his firm’s ability to pay Leisnoi. He contends that his belief
that he had left Merdes & Merdes with a valid quantum meruit claim, evidenced by his
rejection of Stratman’s offer to buy the claim, showed that he had not intended to defraud
Leisnoi. He further asserts that his representation to Leisnoi that Merdes & Merdes did
not have the funds available to pay Leisnoi was accurate.
64
Alaska Bar Rule 16(c)(3) provides in pertinent part “[w]hen a finding of
misconduct is made, in addition to any discipline listed . . . the Court or the Board may
impose. . . payment of a costs and fees assessment.”
65
In re Disciplinary Matter of Ivy, 350 P.3d 758, 761 (Alaska 2015) (quoting
In re Disciplinary Matter of Miles, 339 P.3d 1009, 1018 (Alaska 2014)).
66
In re Disciplinary Matter of Stepovich, 386 P.3d 1205, 1208 (Alaska 2016);
see also Alaska Bar R. 22(r) (“The Court will decide . . . the type of discipline to be
imposed . . . .”).
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The record supports the Board’s conclusions that the transfers from Merdes
& Merdes were fraudulent. Observing that AS 34.40.010 states that “a conveyance . . .
made with the intent to hinder, delay, or defraud creditors . . . is void,” the Board
concluded that there was clear and convincing evidence that Merdes had intended to
hinder or delay Leisnoi’s recovery.67 When analyzing fraudulent conveyance claims, we
have stated:
“The intent to defraud through a conveyance is a question of
fact usually to be proved by circumstantial evidence. Many
circumstantial factors can indicate the existence of fraud.
Badges of fraud must be viewed within the context of each
particular case.” Typical badges of fraud include:
“(1) inadequate consideration, (2) transfer in anticipation of
a pending suit, (3) insolvency of the transferor, (4) failure to
record, (5) transfer encompasses substantially all the
transferor’s property, (6) transferor retains possession of the
transferred premises, (7) transfer completely depletes
transferor’s assets, and (8) relationship of the parties.”[68]
As the superior court concluded in 2015, the record shows multiple badges of fraud.
Greisen testified that $3,099,910 was transferred from Merdes & Merdes to Merdes
personally and Merdes Law Office with inadequate consideration. The transfer of assets
from Merdes & Merdes to Merdes Law Office began almost immediately after Leisnoi
filed its appeal in 2010. Merdes’s wife testified that all clients transferred to Merdes Law
Office effective February 1, 2013 — the same day we ordered Merdes & Merdes to
67
See also Alaska R. Prof. Conduct 9.1(f) (defining “fraud” as “conduct
(including acts of omission) performed with a purpose to deceive”).
68
Shaffer v. Bellows, 260 P.3d 1064, 1068-69 (Alaska 2011) (first quoting
Nerox Power Sys., Inc. v. M-B Contracting Co., 54 P.3d 791, 796 (Alaska 2002)
(footnote omitted); and then quoting Gabaig v. Gabaig, 717 P.2d 835, 839 n.6 (Alaska
1986)).
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return $643,760 to Leisnoi.69 The transfers encompassed nearly all of Merdes &
Merdes’s property and depleted its assets, eventually leaving Merdes & Merdes
insolvent. She also testified that Merdes Law Office retained the same insurance, office
equipment, vendor contracts, employees, address, and phone number as Merdes &
Merdes. Lastly, Merdes himself agreed that the relationship between Leisnoi and Merdes
had become personal and caused Merdes a great deal of stress and anger. The Board’s
finding of fraud is well supported by the record.70
The record supports the Board’s conclusions that Merdes & Merdes could
have paid Leisnoi and that Merdes misrepresented the firm’s ability to pay Leisnoi.
Merdes testified that he told Leisnoi on February 1, 2013 that Merdes & Merdes did not
have sufficient assets to pay Leisnoi. Greisen testified that Merdes & Merdes had
sufficient contingent assets which could have been used to pay Leisnoi on February 1,
2013. Merdes’s wife acknowledged that all of Merdes & Merdes’s clients transferred
after February 1, and on February 15, 2013 Merdes Law Office deposited a check of
$115,500 into its accounts as settlement from one of the transferred cases.
An attorney appealing the Board’s findings of fact “bears the burden of
proof in demonstrating that such findings are erroneous.”71 Merdes argues that the
evidence of his belief in the quantum meruit claim outweighs the evidence of fraud and
misrepresentation. We disagree. Evidence of a single offer from Stratman, a longtime
69
Leisnoi I, 307 P.3d 879, 894 (Alaska 2013) (holding that Leisnoi was
entitled to recover the $643,760 it had paid to Merdes & Merdes).
70
See Gabaig, 717 P.2d at 839 (“The weight accorded the badges depends on
the facts of each case; the badges are merely evidentiary facts tending to prove or
disprove the ultimate fact — whether fraud was intended.”).
71
In re Disciplinary Matter of Miles, 339 P.3d 1009, 1018 (Alaska 2014)
(quoting In re Disciplinary Matter of Rice, 260 P.3d 1020, 1027 (Alaska 2011)).
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adversary of Leisnoi with a desire to continue litigating against Leisnoi, is not
persuasive. Merdes acknowledged that Stratman had a vendetta against Leisnoi, and he
understood the offer as Stratman’s attempt to try to relitigate his case against Leisnoi.
This sole offer is the only support Merdes offered to show that his claim had value. If
Merdes had truly believed in the value of his quantum meruit claim, he could have
offered to post a bond to be repaid upon the settlement of that claim. But he did no such
thing. “[W]e ordinarily will not disturb findings of fact made upon conflicting
evidence.”72 Merdes has failed to carry his burden of proving the Board’s findings to be
erroneous. We agree with the Board that Merdes violated Professional Conduct Rule
8.4(c) by “engag[ing] in conduct involving dishonesty, fraud, deceit, or
misrepresentation.”
B. The Sanctions Recommended By The Board Are Too Lenient.
The Board recommends a one-year suspension from the practice of law and
payment of $3,000 in costs and fees. We use our independent judgment in applying the
three-step analysis to determine the correct sanction.73 We first consider “(1) the duty
or duties violated; (2) the attorney’s mental state regarding these violations; and (3) the
‘extent of the actual or potential injury’ involved.”74 Next, “we determine what sanctions
the American Bar Association’s Standards for Imposing Lawyer Sanctions
recommend[s]” for the misconduct.75 Lastly, we consider whether the “aggravating or
72
Id. (quoting In re Rice, 260 P.3d at 1027) (alteration in original).
73
See id. at 1019.
74
Id. at 1020 (quoting In re Disciplinary Matter of Shea, 273 P.3d 612, 622
(Alaska 2012)).
75
Id.
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mitigating factors affect the recommended sanctions.”76
1. Ethical duties violated, attorney’s mental state, and the extent
of the injury involved
a. Ethical duties violated
We first consider the ethical duties Merdes violated.77 The Board found
Merdes breached his duty of candor to his client under ABA Standards § 4.6. The duty
of candor is breached when the “lawyer engages in fraud, deceit, or misrepresentation
directed toward a client.”78 The Board also found that Merdes breached his duty to the
public under ABA Standards § 5.1. The duty to the public is breached when the lawyer
is “involv[ed in the] commission of a criminal act that reflects adversely on the lawyer’s
honesty, trustworthiness, or fitness as a lawyer in other respects, or in cases with conduct
involving dishonesty, fraud, deceit, or misrepresentation.”79
The Board found that Merdes “breached his duties to his former client,
Leisnoi, when he transferred funds from Merdes & Merdes to Merdes Law Office
without consideration and to hinder or delay Leisnoi’s collection.” The Board further
found that “[h]e breached a duty to [both] his former client and to the public when he
told Leisnoi[] that Merdes & Merdes no longer had assets to pay Leisnoi after he
deliberately transferred assets from [the firm] to keep them from Leisnoi.” And it found
that Merdes “violated duties owed to the public when he fraudulently conveyed assets
and failed to maintain the standards of personal integrity upon which the community
relies.”
76
Id. (quoting In re Shea, 273 P.3d at 622).
77
Id. at 1019-20.
78
ABA STANDARDS § 4.6.
79
Id. § 5.1.
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We give great weight to the Board’s factual findings.80 Here, the Board
found that Merdes fraudulently transferred money from his old firm to avoid paying his
former client and misrepresented that firm’s ability to pay the client; it then correctly
determined that Merdes breached his duty to his client under ABA Standards § 4.6 and
his duty to the public under § 5.1.
b. Attorney’s mental state
The Board concluded that Merdes had acted with “intent.” “Intent” is the
most culpable mental state under the ABA Standards and is defined as “the conscious
objective or purpose to accomplish a particular result.”81 In other disciplinary actions we
have found it “permissible to infer that an accused intends the natural and probable
consequences of his or her knowing actions.”82 Merdes acknowledged that the
accusations Leisnoi made about his father made him very angry and caused him
significant distress. When Leisnoi appealed the superior court’s writ of execution,
Merdes began transferring funds from Merdes & Merdes to himself and Merdes Law
Office. All of Merdes & Merdes’s clients were transferred immediately after our 2013
opinion and after Merdes told Leisnoi that Merdes & Merdes did not have the ability to
pay.83 The Board correctly found that Merdes’s mental state was “that of intent” and his
“true intent was to strip Merdes & Merdes of recoverable assets and to thwart Leisnoi.”
80
See In re Disciplinary Matter of Rice, 260 P.3d 1020, 1027 (Alaska 2011)
(“Though this court has the authority, if not the obligation, to independently review the
entire record in disciplinary proceedings, findings of fact made by the Board are
nonetheless entitled to great weight.” (quoting In re Disciplinary Matter of West, 805
P.2d 351, 353 n.3 (Alaska 1991))).
81
ABA STANDARDS § III, Definitions.
82
In re Disciplinary Matter of Triem, 929 P.2d 634, 648 (Alaska 1996).
83
Leisnoi I, 307 P.3d 879 (Alaska 2013) (published Feb. 1, 2013).
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c. Actual and potential injury
The actual injury that resulted from Merdes’s ethical violations was
considerable.84 As the Board observed, Leisnoi sustained actual serious injury: it “was
deprived of a substantial sum of money for a period of years” and “had to engage in
prolonged litigation before it could recoup its monies.” And it was deprived of the
significant sum at a time when the corporation was attempting to recover from serious
financial difficulty. If Leisnoi had relied on Merdes’s misrepresentation, it may never
have recovered its money.
In addition to causing Leisnoi injury, Merdes’s actions damaged the legal
profession. We have previously observed that “duplicitous act[s] by a member of the Bar
. . . damage[] the reputation of the legal profession and the legal system at large.”85
2. ABA recommended sanctions
The ABA Standards provide that when an attorney “engages in . . .
intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that
seriously adversely reflects on the lawyer’s fitness to practice,” then disbarment is
appropriate.86 Moreover, when an attorney lacks candor and “knowingly deceives a
client with the intent to benefit the lawyer or another, and causes serious injury or
84
We have previously observed that whether the injury was “actual or
potential” is of no particular consequence under the ABA Standards. In re Disciplinary
Matter of Stepovich, 386 P.3d 1205, 1211 (Alaska 2016); see also ABA STANDARDS
§ 4.61 (stating that “disbarment is generally appropriate when a lawyer” violates duty of
candor and “causes serious injury or potential serious injury”); ABA STANDARDS § 5.11
(stating that “disbarment is generally appropriate when a lawyer” violates duty to public
regardless of any actual or potential injury).
85
In re Disciplinary Matter of Miles, 339 P.3d 1009, 1020 (Alaska 2014).
86
ABA STANDARDS § 5.11(b).
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potential serious injury to a client,” then disbarment is the appropriate sanction.87 The
Board properly determined that Merdes’s misconduct warranted disbarment under the
ABA Standards.
3. Aggravating and mitigating factors
The next step under the ABA Standards is to determine whether disbarment
is appropriate by considering aggravating and mitigating factors.88 The ABA Standards
lists 11 aggravating factors89 and 13 mitigating factors.90 We have previously observed
that “we are ‘guided but not constrained by the [ABA Standards] and by the sanctions
imposed in comparable disciplinary proceedings.’ ”91 And “[t]here is no ‘magic formula’
for determining how aggravating and mitigating circumstances affect an otherwise
appropriate sanction. ‘Each case presents different circumstances which must be
87
Id. § 4.61.
88
Id. § 9.1.
89
Id. § 9.22 (listing the following aggravators: (a) prior disciplinary offense;
(b) dishonest or selfish motive; (c) pattern of misconduct; (d) multiple offenses; (e) bad
faith obstruction of disciplinary proceedings; (f) submission of false evidence; (g) refusal
to acknowledge wrongful nature of conduct; (h) vulnerability of victim; (i) substantial
legal experience; (j) indifference to making restitution; and (k) illegal conduct).
90
Id. §9.32 (listing the following mitigators: (a) absence of prior disciplinary
record; (b) absence of dishonest or selfish motive; (c) personal or emotional issues;
(d) good faith effort to make restitution; (e) full disclosure to the Board; (f) inexperience
in practice of law; (g) character or reputation; (h) physical disability; (i) mental disability
including chemical dependency; (j) delay in disciplinary proceedings; (k) imposition of
other penalties; (l) remorse; and (m) remoteness of prior offenses).
91
In re Disciplinary Matter of Ford, 128 P.3d 178, 184 (Alaska 2006)
(alteration in original) (quoting In re Disciplinary Matter of Friedman, 23 P.3d 620, 625
(Alaska 2001)).
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weighed against the nature and gravity of the lawyer’s misconduct.’ ”92
The Board concluded that two aggravating factors applied: Merdes acted
with a selfish or dishonest motive93 and he had substantial experience in the law.94 And
the Board concluded that five mitigating factors applied: his absence of a disciplinary
record,95 his full and free disclosure to the disciplinary board,96 his character and
reputation,97 the imposition of other penalties,98 and his timely good faith effort to make
restitution or to rectify the consequences of his misconduct.99 We will first consider each
of the aggravators and then we will consider the mitigators.
a. The “selfish or dishonest motive” aggravator
The Board did not specify the reasons it concluded that the “selfish or
dishonest motive”100 aggravator applied. But the record shows that Merdes fraudulently
conveyed more than a million dollars from Merdes & Merdes to his new firm and over
two million dollars to himself to keep the money his old firm owed to Leisnoi. His
reasons for doing so were his belief that his father had earned the money and his anger
92
In re Disciplinary Matter of Stepovich, 386 P.3d 1205, 1211 (Alaska 2006)
(quoting In re Friedman, 23 P.3d at 633).
93
ABA STANDARDS § 9.22(b).
94
Id. § 9.22(i).
95
Id. § 9.32(a).
96
Id. § 9.32(e).
97
Id. § 9.32(g).
98
Id. § 9.32(k).
99
Id. § 9.32(d).
100
Id. § 9.22(b).
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over the insults Leisnoi had levied against his father. We conclude that the Board
properly found “selfish and dishonest motive” as an aggravating factor.
b. The “substantial experience in the law” aggravator
Merdes’s substantial experience in the law also aggravates his
misconduct.101 As the Board noted, Merdes has been a practicing member of the Alaska
Bar since 1989. In 2013, Merdes had practiced for roughly 24 years. An attorney with
such significant legal experience should have recognized the ethical issues raised by
transferring funds from Merdes & Merdes to Merdes Law Office, particularly after being
advised by Bar Counsel that it “would likely be considered fraudulent.” There is no
dispute that Merdes had “substantial experience in the law”; the Board properly applied
this aggravating factor.
c. The “refusal to acknowledge wrongful conduct”
aggravator
After independently reviewing the facts,102 we conclude that a third factor
also aggravates Merdes’s misconduct. ABA Standards § 9.22(g) provides that “refusal
to acknowledge wrongful nature of conduct” is an aggravating factor. The superior court
found that Merdes fraudulently conveyed Merdes & Merdes’s assets to prevent Leisnoi
from successfully collecting the money it was owed. We affirmed the superior court’s
finding in 2017.103 After four days of hearings, the area hearing committee also
concluded that Merdes had deceptively and unfairly “capitaliz[ed] . . . Merdes Law
Office with the assets of Merdes & Merdes to prevent or delay payment of the debt owed
101
See id. § 9.22(i).
102
In re Disciplinary Matter of Rice, 260 P.3d 1020, 1030 (Alaska 2011) (“We
apply our independent judgment when determining appropriate attorney sanctions.”).
103
Leisnoi II, 410 P.3d 398 (Alaska 2017).
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to Leisnoi” and that the transfer of assets amounted to a fraudulent conveyance. After
review of the record and oral argument, the Board adopted the committee’s conclusion.
Yet, in his brief to this court, Merdes maintains that he believed he had left his old firm
with a valuable quantum meruit claim. Although Merdes paid the damages ordered by
the superior court, he has never acknowledged — not at any point during or following
the litigation with Leisnoi or during the disciplinary proceedings at issue here — the
wrongful or harmful nature of his misconduct. Throughout the proceedings Merdes
continued to assert that the judicial decisions adverse to his position were “dead wrong.”
Therefore we conclude that this aggravator applies.
d. The “absence of a prior disciplinary record” mitigator
The Board properly found the “absence of a prior disciplinary record” as
a mitigating factor.104 Merdes has practiced law since 1989 and has not previously been
the subject of Bar discipline. Although Merdes’s misconduct in this instance was
egregious, it was not part of a pattern.
e. The “character and reputation” mitigator
Several attorneys testified that they knew Merdes to be fair and honest.
Van Goor testified that his impression was that Merdes “wanted to do the right thing.”
Based upon their testimony, the Board appropriately concluded that Merdes’s “character
or reputation”105 was a mitigating factor.
f. The “imposition of other penalties” mitigator
The Board found that the superior court’s award of treble damages to
104
See ABA STANDARDS § 9.32(a).
105
See id. § 9.32(g).
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Leisnoi was an “imposition of other penalties or sanctions.”106 The superior court
ordered Merdes and his firms to pay Leisnoi a final award of $1,931,280.107 We agree
with the Board that imposing additional damages over the $643,760 plus interest Merdes
& Merdes was ordered to return to Leisnoi in 2013108 was an additional penalty.109
g. The “good faith effort to make restitution” mitigator
The Board concluded that Merdes’s timely payment of the treble damages
showed a “timely good faith effort to make restitution.”110 At oral argument, Bar
Counsel stated that Merdes had paid $2,500,000 in restitution to Leisnoi. We agree that
Merdes’s payment of such a substantial sum of money on April 23, 2018, approximately
six months after the publication of our 2017 opinion, was a timely good faith payment
of restitution. The Board properly applied this mitigator.111
h. The “full and free disclosure” mitigator
The Board found that Merdes’s “[f]ull and free disclosure to [the]
disciplinary board” was a mitigating factor.112 The Board credited Merdes for reporting
to the area hearing committee the trial court’s findings and conclusions which ordered
106
See id. § 9.32(k).
107
Leisnoi II, 410 P.3d at 403.
108
See Leisnoi I, 307 P.3d 879, 894 (Alaska 2013).
109
But see In re Disciplinary Matter of Stockler, 457 P.3d 551, 553, 558
(Alaska 2020) (approving parties’ stipulation to discipline that did not apply “imposition
of other penalties” mitigator despite respondent’s serving prison time and paying fine).
110
ABA STANDARDS § 9.32(d); but see id. § 9.4(a) (stating that “forced or
compelled restitution” is neither an aggravating or mitigating factor).
111
Leisnoi II, 410 P.3d at 398 (published Nov. 2017).
112
See id. § 9.32(e).
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him to pay Leisnoi treble damages and our published 2017 opinion affirming the trial
court.113 But the Board also found some of Merdes’s statements and representations not
credible. The Board did not find credible Merdes’s claim that he started Merdes Law
Office to welcome his nephew as an attorney. Nor did it find credible Merdes’s claim
that he transferred assets to the new office with the belief that he was leaving Merdes &
Merdes with a valuable quantum meruit claim. And although Merdes provided the area
hearing committee with the superior court decision and orders and our published opinion,
these documents were public and easily obtainable. In light of the Board’s conclusion
that much of Merdes’s evidence was not credible, and the limited weight we give to his
provision of public court decisions to the Bar, we conclude that this mitigator does not
apply to Merdes’s case.
4. Appropriate sanction — four year suspension and payment of
$3,000 in costs and fees
The Board assigned great weight to the mitigating factors and
recommended that we suspend Merdes for one year and order him to pay $3,000 in costs
and fees. But the Board’s recommended sanction is too lenient. Merdes transferred
millions of dollars from his old firm for the sole purpose of defrauding a former client
and a legitimate creditor. He did so intentionally — the most blameworthy mental state
under the ABA Standards — as the culmination of a years-long personal feud with
Leisnoi. He deceitfully misrepresented Merdes & Merdes’s ability to pay Leisnoi at a
time when the firm had sufficient assets to do so. Merdes’s misconduct demonstrates a
lack of integrity and a complete disregard for the standards and duties required by the
legal profession.
113
See Leisnoi II, 410 P.3d at 413-14 (affirming superior court’s award of
treble damages to Leisnoi).
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Lawyers must act with integrity.114 We have previously emphasized that
because “[s]ociety allows the legal profession the privilege of self-regulation . . . . it is
of the utmost importance that the public have confidence in the profession’s ability to
discipline itself.”115 Therefore “our paramount duty[] ‘lies in the assurance that the
public will be protected in the performance of the high duties of . . . attorney[s].’ ”116 Yet
Merdes’s conduct in this case “contributes to the perpetuation of the stereotype of
lawyers as unscrupulous and unprincipled.”117 At oral argument Bar Counsel
acknowledged that the Board struggled to recommend a sanction in this case and
ultimately determined that Merdes’s actions represented a “one-off situation” that was
the result of “family pride [and] hostility towards his . . . former client.” That may be so,
but “[o]ur primary concern must be the fulfillment of proper professional standards,
whatever the unfortunate cause, emotional or otherwise for the attorney’s failure to do
so.”118 Merdes’s conduct warrants a four-year suspension and $3,000 payment of costs
and fees pursuant to Alaska Bar Rule 16(c)(3).
V. CONCLUSION
Ward Merdes is suspended from the practice of law for four years, to take
effect 30 days from the date of this opinion. Merdes is also required to pay the
applicable $3,000 costs and fees assessment pursuant to Alaska Bar Rules 16(c)(3).
114
See In re Disciplinary Matter of Ivy, 374 P.3d 374, 388 (Alaska 2016).
115
In re Disciplinary Matter of Buckalew, 731 P.2d 48, 55 (Alaska 1986).
116
Id. at 54 (last two alterations in original) (quoting In re Possino, 689 P.2d
115, 120 (Cal.1984)).
117
In re Disciplinary Matter of Triem, 929 P.2d 634, 649 (Alaska 1996).
118
In re Buckalew, 731 P.2d at 54 (quoting In re Possino, 689 P.2d at 120).
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