|Attorney for Respondent |Attorney for the Indiana Supreme Court|
|Derek M. Cassady, pro se. |Disciplinary Commission |
| |Donald R. Lundberg, Executive |
| |Secretary |
| |Dennis K. McKinney, Staff Attorney |
| |Indianapolis, Indiana |
| | |
| | |
In the
Indiana Supreme Court
_________________________________
No. 49S00-0405-DI-211
In The Matter Of
Derek M. Cassady,
Respondent.
________________________________
Disciplinary Action
________________________________
August 30, 2004
Per Curiam.
By failing to hold settlement proceeds in trust for a third-party
medical provider entitled to a portion of the proceeds, and instead by
disbursing those earmarked funds to himself and his client, Indianapolis
attorney Derek M. Cassady violated the Rules of Professional Conduct.
By agreed resolution with the Disciplinary Commission, the respondent
today asks us to approve a 30-day suspension for his attorney misconduct,
with the entire period of suspension stayed so long as the respondent
complies with certain probationary terms. Pursuant to Ind.Admission and
Discipline Rule 23(11)(c), we approve the parties’ tendered resolution, and
herein recount the facts and circumstances of this case.
The respondent’s admission to the Bar of this state in 1994 confers
disciplinary jurisdiction of this matter.
The parties stipulate that the respondent settled a personal injury
claim on behalf of a client for $15,000 and placed the proceeds in his
attorney trust account. The respondent had signed an agreement with a third
party medical provider to the client that the respondent would withhold
funds from any settlement to pay the provider’s bill. That provider
eventually amassed charges totaling $3,809.30 with regard to the client’s
injuries. Due to the relatively small settlement amount, the respondent and
the provider agreed that the provider would accept a reduced fee; however,
they could not agree on the specific amount of the reduced fee. The
provider claimed it was owed $2,250 pursuant to the agreed reduction; the
respondent claimed they had agreed to settle the provider’s claim for
$1,000. The respondent ultimately forwarded to the provider a check for
$1,000, with the memo proclaiming, “payment in full.” The provider
returned the check uncashed to the respondent and demanded the $2,250.
Rather than attempt further negotiation to settle the dispute as to
the amount of the proceeds to which the third party was entitled, the
respondent simply divided the $1,000 he had earmarked for the third party
between himself and his client, paying his client $730 and keeping $270.
Further, from his attorney trust account, the respondent withdrew $10,000
in cash to pay the client her share of the settlement proceeds, and took
his own fee in cash without using a check made payable to a named payee.
The respondent then advised the provider that he was no longer holding any
funds from the settlement.
While responding to the Commission’s demand for response to the
provider’s subsequent grievance, the respondent admitted that his lawyer
trust account ledger was “sloppy, incomplete, and often nearly
illegible.”[1] The respondent also admitted that he failed to comply with
Admis.Disc.R. 23(29)(a)(2) and (3), which establish procedures for
maintenance of records of attorney trust accounts and ledgers for such
accounts.[2]
Indiana Professional Conduct Rule 1.15(b) provides, in relevant part,
that a lawyer shall promptly deliver to a 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 such property. Implicit in that obligation is
that a lawyer hold disputed funds in trust until the dispute is resolved so
that the lawyer can effect accurate disbursement. Matter of Young and
Allen, 802 N.E.2d 922 (Ind. 2004). We find that the respondent violated
Ind.Professional Conduct Rule 1.15(b) by failing to hold in trust a portion
of the settlement proceeds to pay the outstanding bill of the third-party
provider, and instead by disbursing those disputed funds to himself and his
client. He also failed to comply with the requirements of Admis.Disc.R.
23(29)(a)(2) and (3) as already described above, and Admis.Disc.R.
23(29)(a)(5) by making a cash withdrawal from his attorney trust account
rather than a withdrawal by check to a named payee.[3]
The parties agree to a stayed 30-day period of suspension, with a one-
year period of probation (subject to terms) underlying the stay. The
probationary terms are geared toward ensuring that the respondent learns to
manage an attorney trust account, that he pays the provider its claim of
$2,250, and that a CPA oversees his trust account. The agreed sanction
calls for automatic reinstatement should the respondent successfully comply
with the terms of his probation. In light of the respondent’s obvious (and
self-professed) shortcomings with regard to recognition of and adherence to
required attorney trust account procedures, we find that the probationary
terms are a sufficient method of protecting the public and the profession
from future similar transgressions by the respondent.
Accordingly, the respondent, Derek M. Cassady, is hereby suspended
from the practice of law in this state for a period of not fewer than
thirty (30) days, effective immediately, with the entire thirty days of
said suspension to be stayed, and the respondent placed on probation for
one year, subject to the following terms and conditions of probation:
• The respondent will pay the medical provider the $2,250 it agreed to
accept as a reduction of his client’s medical expenses.
• The respondent will attend an ethics seminar with a trust account
management section of at least one hour in length.
• The respondent will have his trust account monitored by a CPA who will
then report quarterly to the Commission on the respondent’s compliance
with the Rules of Professional Conduct and the Admission and
Discipline Rules for lawyer trust accounts.
• The respondent will comply in all respects with his obligations,
duties and responsibilities under the Indiana Rules of Professional
Conduct.
• The respondent will report to the Disciplinary Commission any changes
in his business or home address or employment within fourteen (14)
days of such change.
• The respondent will be responsible for any other costs arising from
his probation.
• In the event it is established pursuant to Ind.Admission and
Discipline Rule 23(17.2) that the respondent has violated the terms of
his probation, then the stay of his thirty-day suspension will be
vacated and the respondent will be suspended from the practice of law
in Indiana for thirty days, with automatic reinstatement to the
practice of law thereafter.
• The respondent will immediately report to the Disciplinary Commission
any failure by him to comply with the terms of his probation. Such
report is to be made in writing within fourteen days of the compliance
failure and must specifically identify the type and circumstance of
his failure to comply with the terms of his probation.
The Clerk of this Court is directed to provide notice of this order
in accordance with Admis.Disc.R. 23(3)(d), to the hearing officer, and to
the clerk of the United States Court of Appeals for the Seventh Circuit,
the clerk of each of the United States District Courts in this state, and
the clerks of the United States Bankruptcy Courts in this state.
Costs of this proceeding are assessed against the respondent.
-----------------------
[1] In his response to the Commission, the respondent also stated:
“There are scratch-outs [in my attorney trust account ledger], I have
written counter-checks and not properly reflected them, there are
mathematical errors and parties are not identified with the specificity
needed. The ledger does not add back the check [the provider] never
accepted. I have no excuse or defense, and looking back through it, I am
at once ashamed of it. There is no way I could go back and amend it to
bring it into compliance; it is too late.”
[2] Specifically, Admis.Disc.R. 23(29)(a)(2) and (3) provide:
(2) Every attorney shall maintain and preserve for a period of at least
five (5) years, after final disposition of the underlying matter, the
records of trust accounts, including checkbooks, canceled checks, check
stubs, written withdrawal authorizations, vouchers, ledgers, journals,
closing statements, accounting or other statements of disbursements
rendered to clients or other parties with regard to trust funds or similar
equivalent records clearly and expressly reflecting the date, amount,
source, and explanation for all receipts, withdrawals, deliveries and
disbursements of the funds or other property held in trust.
(3) The "ledger" required by this rule shall set forth a separate record of
each trust, client or beneficiary, the source of all funds deposited in
that account, the names of all persons for whom the funds are, or were,
held, the amount of such funds, the description and the amounts of charges
or withdrawals, and the names of all persons to whom such funds were
disbursed.
[3] Admission and Discipline Rule 23(29)(a)(5) provides:
Withdrawals shall be based upon a written withdrawal authorization stating
the amount of the withdrawal, the purpose of the withdrawal, and the payee.
The authorization shall contain the signed approval of an attorney.
Withdrawals shall be made only by check payable to a named payee and not to
"cash", or by wire transfer. Wire transfers shall be authorized by written
withdrawal authorization and evidence by a document from the financial
institution indicating the date of the transfer, the payee and the amount.