FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
DISCIPLINARY COMMISSION
Bruce A. Kotzan Donald R. Lundberg, Executive Secretary
131 East Ohio St. D.J. Mote, Staff Attorney
Indianapolis, IN 46204 115 West Washington Street, Ste.
1060
Indianapolis, IN 46204
_________________________________________________________________
IN THE
SUPREME COURT OF INDIANA
IN THE MATTER OF )
) Case No. 49S00-9902-DI-129
JAMES P. QUINN )
____________________________________________________________________
DISCIPLINARY ACTION
_____________________________________________________________________
November 27, 2000
Per Curiam
Today we find that the respondent, James P. Quinn, should be
suspended from the practice of law for commingling his personal funds with
those of his clients and allowing the balance in his client trust account
to fall below an amount sufficient to satisfy outstanding obligations of
his clients.
This attorney disciplinary matter has come before this Court for final
resolution upon the hearing officer’s findings of fact and conclusions of
law. The hearing officer concluded that the respondent engaged in
misconduct as charged. The respondent, pursuant to Ind.Admission and
Discipline Rule 23(15), has petitioned this Court for review of the hearing
officer’s findings and conclusions. Where the hearing officer’s report is
challenged, our review of the case is de novo in nature, and involves a
review of the entire record presented. Matter of McCord, 722 N.E.2d 820
(Ind. 2000).
Within the review framework described above, we now find that the
respondent collected a $25,000 settlement on behalf of a client. Pursuant
to a written contingency fee agreement with his client, the respondent was
entitled to a $10,000 fee. The final settlement statement reflected that
another $12,371 was to go to pay medical providers, $20 was to go to the
respondent for expenses, and the remaining $2,609 to the client. On
October 25, 1996, the respondent deposited the $25,000 check into his
client trust account, then issued to his client a check drawn on the
account for $2,609. Thereafter, the respondent failed to issue a check
payable to himself for his fee.
Between October 1996 and March 1997, the respondent wrote several
checks on the account for personal and business obligations unrelated to
the client’s case, including a check for $1,915.69 to American Express and
a check for $14,100 to a local automobile dealership. By February 24,
1997, the balance had fallen below $12,371—the amount needed to satisfy
obligations to the client’s medical creditors. By March 24, 1997, it had
fallen to $265.79.
By August 1997, the client, receiving inquiries from his medical
providers about the unpaid medical bills, attempted unsuccessfully to
contact the respondent to learn the status of the situation. When he did
finally speak to the respondent, the respondent failed to provide
meaningful information.
During this time, the respondent maintained a second trust account at
another bank. At hearing of this disciplinary complaint, the respondent
testified that he had sufficient funds in that account to cover the
obligations attendant to his client whenever the first trust account
contained insufficient funds. However, hearing officer concluded and we so
find that the respondent failed to present any evidence that the funds held
in the second account were in any way connected with his client’s
settlement and, therefore, that any funds contained in the second account
on or before March 24, 1997, could not be considered when examining his
safekeeping of his client’s settlement proceeds. The respondent contends
that he ceased using the first account as a trust account in February of
1997, and instead thereafter established the second account as his attorney
trust account. The record supports this assertion. However, the record
also reveals that the respondent never directly transferred the $12,371 he
was holding for the client and the medical providers from the first to the
second account. He claimed that he effectively accomplished this transfer
by leaving earned attorney fees in the first account instead of withdrawing
them, but never produced an accounting to support that assertion.
It is clear that by June 12, 1997, the respondent had established the
second account as his sole attorney trust account. Between June 12 and
August 20, 1997, the second account contained less than $12,371 (an amount
necessary to satisfy obligations to the client, the client’s medical
providers, and obligations to certain other clients) on 68 of the 70 days
during this period. Additionally, the combined balance of the accounts was
insufficient to cover obligations to the clients and the medical providers
on 29 of those 70 days. The respondent also drew a check for a personal
obligation on the second account during this period.
On October 27, 1997, the respondent provided a response to the
client’s grievance to the Disciplinary Commission, stating therein that,
“[t]here is still held in escrow the amount of $9,836 that was withheld for
the [medical providers], according to their bills . . .” (Emphasis
supplied). The respondent paid outstanding bills of the medical providers
on September 9 and November 21, 1997.
In his petition for review of the hearing office’s report, the
respondent asserts that he believed that as long as he retained money in
his trust accounts sufficient to pay client and third party obligations, he
was permitted to use his portion of the recovery in the trust accounts
directly to meet personal and business obligations. The respondent
contends that he maintained a general idea of what money out of the trust
accounts was owed, but did not keep a specific or daily record, and that he
always believed he had sufficient funds to cover client and third party
obligations. In early 1997, the respondent learned of this Court’s
standards for trust account management and at that time progressively and
gradually used the second account as a client trust depository and began
using the first account as an operating account. The respondent asserts:
“Gradually, by not withdrawing his fee portion from recovery amounts
deposited in [the first account], and employing the money in the [first
account] for personal and business expenses, the Respondent, in effect,
transferred obligated trust funds from the [first account] to the [second
account].” Although the respondent’s statements may explain why his
unauthorized use of client funds occurred, they do nothing to dissuade us
from finding that the violations took place. The fact remains that while
the first account was the respondent’s client trust account, the balance in
that account, during relevant times, was consistently below an amount
necessary to satisfy the obligations of his client’s third party medical
providers. After the second account became his sole trust account, on
numerous occasions it also contained insufficient funds to satisfy those
obligations, and, in fact, the accounts’ combined balances on several
occasions contained insufficient funds. Checks for the respondent’s
personal obligations were drawn on each account during the times the
respondent claimed each was his sole trust account. The fact that, in the
end, no client or third party was permanently deprived of funds is good
fortune, but not controlling as to whether the respondent engaged in
misconduct.
In Indiana, conversion consists of the knowing or intentional exertion
of unauthorized control over the property of another. IC 35-43-4-3.[1]
The respondent’s bank statements reflecting account balances for the end of
June 1997 showed that each account’s balance (as well as the accounts’
combined balances) was insufficient to cover obligations to clients and
third parties. The respondent testified that he audited the sufficiency of
his bank accounts by examining the monthly account statements.
Accordingly, we find that he knowingly exerted unauthorized control over
client and third party funds held in trust by knowingly allowing the
account balances to fall below an amount sufficient to satisfy their
obligations (in part by drawing checks on the trust accounts for personal
expenditures), and that by so doing he violated Ind.Professional Conduct
Rule 8.4(b) by committing a criminal act, conversion, which reflects
adversely on his fitness as an attorney.
Indiana Professional Conduct Rule 1.15(a) requires lawyers to keep the
property of clients and third parties held in trust separate from their
own. The respondent failed promptly to withdraw his $10,000 fee from the
first account, then drew checks for various personal obligations on the
account. A lawyer may deposit his or her own funds into a client trust
account only in an amount reasonably sufficient to maintain a nominal
balance. See Prof.Cond.R. 1.15(a). The respondent permitted his $10,000
fee to remain in the account, and by so doing, he violated Prof.Cond.R.
1.15(a).
Professional Conduct Rule 1.4(a) provides that a lawyer shall keep a
client reasonably informed about the status of a matter and promptly comply
with reasonable requests for information. The hearing officer found that
the respondent violated this rule by failing to provide the client with
information regarding payment to third party medical providers.
Specifically, the hearing officer found that the respondent failed to
respond to his client’s telephone calls after medical providers began
contacting the client about unpaid bills.
The respondent argues that the fact that he failed to return phone
calls does not by itself establish a violation of Prof.Cond.R. 1.4(a).
Instead, he argues that it must be demonstrated that the client’s inability
to contact him divested the client of the ability intelligently to
participate in the case, citing the comment to Prof.Cond.R. 1.4:
The client should have sufficient information to participate
intelligently in decisions concerning the objectives of the
representation and the means by which they are to be pursued, to the
extent the client is willing and able to do so. . .
The guiding principal is that the lawyer should fulfill reasonable
expectations for information consistent with the duty to act in the
client’s best interests, and the client’s overall requirements as to
the character of the representation.
The respondent asserts that the Commission failed to demonstrate that
the client had insufficient information to make decisions concerning his
case.
The record indicates, however, that medical creditors began contacting
the client about unpaid medical bills prior to August 1997. At about that
time, the client began trying to contract the respondent for an
explanation. The respondent states that, given the chance that the
client’s insurer might also provide partial settlement, he wanted to
“preserve the level of specials” by delaying payment until any such
settlement materialized. However, had this tactic been shared with the
client, the client may have not been concerned by the creditor contacts.
In the absence of a full explanation, the client attempted repeatedly to
contact the respondent about the unpaid medical bills, but never received a
satisfactory answer.[2] Accordingly, we find that the respondent violated
Prof.Cond.R. 1.4(a).
A lawyer violates Prof.Cond.R. 8.1(a) by knowingly making a false
statement of material fact in connection with a disciplinary matter. The
balances in the respondent’s trust accounts dropped below $9,836 (an amount
necessary to satisfy the outstanding obligations owed to the client’s
medical creditors) on numerous days between June 13 and August 20, 1997.
However, in his written response he provided to the Commission regarding
the grievance, the respondent stated that there was “still held” in escrow
an amount sufficient to satisfy those obligations. The import of that
statement was that the funds held in trust for the creditors had, since the
settlement was deposited in October 1996, remained in the account. The
respondent made the statement knowing it was false, since his monthly
examination of his account statements would have put him on notice of the
consistent deficiencies. Accordingly, we find that he violated
Prof.Cond.R 8.1(a). In that his conduct involved dishonesty, fraud,
deceit, and misrepresentation, we find also that it violated Prof.Cond.R.
8.4(c).
Having found misconduct, we must now assess an appropriate discipline
for it. Among the factors we examine in this analysis are aggravating and
mitigating factors. In aggravation, we note that the respondent has twice
before been the subject of a disciplinary inquiry by this Court. In 1985,
he received a private reprimand. In 1998, he was suspended for 90 days
after being criminally convicted of operating a motor vehicle while
intoxicated, gambling, public intoxication, and client neglect. Matter of
Quinn, 696 N.E.2d 863 (Ind. 1998). In mitigation, we note the
respondent’s extensive arguments to the effect that any trust account
shortcomings were the result of poor business practices and bookkeeping
rather than any intent permanently to deprive clients or third parties of
their rightful property. In determining the proper discipline where a
lawyer mishandles client funds, we examine the circumstances underlying the
events:
It is true that outright theft of client funds generally warrants
severe sanction, up to and including disbarment. See, e.g, Matter of
Good, 632 N.E.2d 719 (Ind.1994); Matter of Shumate, 647 N.E.2d 321
(Ind.1995). Those cases demonstrate that where a lawyer knowingly or
intentionally steals client or third party funds held in trust for the
lawyer's own selfish benefit, that lawyer is viewed as being unfit to
continue in the profession absent extremely compelling mitigating or
extenuating factors. Here, respondent . . . clearly engaged in
serious client and third-party fund mismanagement. However, we are
convinced that the respondent's mission was not theft of client money.
As the respondent explained it, from his "pooled" trust account he
unwittingly permitted one client's funds to be used for other,
unrelated obligations of other clients and/or third parties in an
apparent good faith belief that other client funds would soon arrive
to cover the expenditures. We, of course, are not persuaded that the
respondent's actions were totally inadvertent or unwitting; however,
we are convinced that he did not intend to deprive his . . .client of
the value or use of his funds sufficient to find theft of the funds.
. . [T]he respondent's acts indicate no selfish motive in his
inappropriate use of his client's funds. As such, we view his acts as
somewhat less culpable than outright theft. However, even in the
absence of a finding that the respondent stole his client's money, his
gross mishandling of funds held in trust for others nonetheless
indicates serious professional shortcomings deserving of significant
sanction, primarily for the protection of other clients.
Matter of Towell, 699 N.E.2d 1138, 1142 (Ind. 1998). See also Matter of
Kouros, 735 N.E.2d 202 (Ind. 2000) (suspension for not fewer than 12 months
for conversion of client funds in trust account, citing Towell). We find
that the analysis in Towell is appropriate for the trust fund misconduct at
issue in this case. The respondent’s misconduct was serious and breached
the fundamentals of the lawyer-client fiduciary relationship, but
nonetheless represents something less than outright theft. Considering also
his purposeful misleading of the Commission and poor communication with his
client, we conclude that his actions warrant a significant period of
suspension with the requirement that he demonstrate his fitness before
again being allowed to represent the interests of others.
It is, therefore, ordered that the respondent, James P. Quinn, be
suspended from the practice of law for a period of not fewer than twelve
(12) months, beginning January 1, 2001. At the conclusion of that period
of suspension, the respondent may petition this Court for reinstatement to
the bar of this state under the provisions of Ind.Admission and Discipline
Rule 23(4).
The Clerk of this Court is directed to provide notice of this order in
accordance with Admis.Disc. R. 23(3)(d) and to provide the clerk of the
United States Court of Appeals for the Seventh Circuit, the clerk of each
of the Federal District Courts in this state, and the clerk of the United
States Bankruptcy Court in this state with the last known address of
respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against respondent.
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[1] It is useful here to note that Indiana criminal law defines theft as
knowing and intentionally exert[ing] unauthorized control over the property
of another person, with the intent to deprive the other person of its value
or use. See IC 35-43-4-2.
[2] Testimony at hearing illustrates this fact:
Commission: At some point you tried to contact your attorney about these
billings. Why is that?
Client: The billings had not been paid. The main reason for my
contacting Mr. Quinn was to find out why.
. . .
Commission: Describe for the hearing officer what efforts you made to
get in touch with Mr. Quinn.
Client: A number of phone call to his office. Basically just negative
results
. . .
Commission: How many times, approximately, would you say you phoned
his office?
Client: At least once a week.
Commission: How long did this go on?
Client: I would say at least six, seven months.