SUPREME COURT OF ARIZONA
In Division
In the Matter of a Member of the ) Arizona Supreme Court
State Bar of Arizona, ) No. SB-08-0119-D
)
JANET L. WHITE-STEINER, ) Disciplinary Commission
Attorney No. 14295 ) No. 06-0796
)
)
)
Respondent. )
)
) O P I N I O N
__________________________________)
Review from the Disciplinary Commission
No. 06-0796 (Filed May 19, 2008)
VACATED IN PART; DISCIPLINE IMPOSED
________________________________________________________________
JENNINGS, STROUSS & SALMON, P.L.C. Phoenix
By J. Scott Rhodes
Attorneys for Janet L. White-Steiner
STATE BAR OF ARIZONA Phoenix
By Patricia J. Ramirez
Attorney for the State Bar of Arizona
________________________________________________________________
B A L E S, Justice
¶ 1 In reviewing attorney discipline cases, the
Disciplinary Commission must accept a hearing officer’s factual
findings if they have any reasonable basis. Because the
Commission here did not defer to the Hearing Officer’s finding
that the attorney acted negligently, we decline to impose the
Commission's recommended sanction of suspension, and instead
order censure and two years probation on the terms recommended
by the Hearing Officer.
I. FACTS AND PROCEDURAL BACKGROUND
¶ 2 Respondent Janet White-Steiner was admitted to
practice law in Arizona in 1992. She and her husband, Richard
Steiner, are the sole partners in Steiner & Steiner, P.C., a law
firm that also employs an associate and a paralegal. Mr.
Steiner spends half or more of his time in Colorado, where he is
also licensed to practice law. When he is in Colorado, White-
Steiner oversees the firm’s Arizona office.
¶ 3 In May 2006, the State Bar learned that the firm’s
trust account had been overdrawn by $44.27. The State Bar asked
White-Steiner, the only lawyer registered on the account, to
explain this event. The State Bar made several follow-up
inquiries and, over the next several months, received responses
in letters signed by White-Steiner, in a letter from Mr.
Steiner, and at a meeting with Mr. Steiner and the firm’s
paralegal.
¶ 4 The State Bar’s investigation revealed deficiencies in
the firm’s trust accounting practices. The firm used a credit
card account, which was not a trust account, to receive both
client funds and earned fees. The firm would transfer the
entire amount of certain client credit card payments to a
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separate trust account for later disbursement. The firm
overlooked, however, that the bank was deducting administrative
fees from the credit card receipts. By not depositing personal
funds into the credit card account to pay these fees and
inaccurately reflecting amounts held in the trust account, as
well as disbursing amounts from the trust account that were not
collected funds, the firm co-mingled and converted client funds.
The State Bar’s investigation further established that the law
firm had not completed monthly three-way reconciliations of the
trust account, properly accounted for credit card transaction
fees charged on retainers, maintained accurate client ledgers,
or deposited sufficient personal funds in the trust account to
pay bank fees and charges.
¶ 5 The State Bar filed a formal complaint against White-
Steiner, who responded by admitting all but three of the State
Bar’s allegations. At the disciplinary hearing, the State Bar
learned that Mr. Steiner had drafted all the written responses
to its inquiries. Mr. Steiner also had prepared the answer to
the complaint for White-Steiner. At the hearing, White-Steiner
asserted for the first time that Mr. Steiner, and not she, was
responsible for maintaining the law firm’s trust account.
¶ 6 The Hearing Officer found that White-Steiner was a
party responsible for the maintenance of the law firm’s trust
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account even though she had relied on Mr. Steiner to oversee the
account, to ensure its procedures complied with applicable
rules, and to respond to the State Bar’s investigation. The
Hearing Officer further concluded that White-Steiner had
violated ERs 1.15(a), 5.1, and 5.3, and Supreme Court Rules 43
and 44 by improperly dealing with client trust accounts and
failing to supervise those responsible for maintaining the
firm’s trust accounts.1 The Hearing Officer did not find,
however, that White-Steiner had violated ER 8.1 and Arizona
Supreme Court Rule 53(f) by failing to disclose earlier to the
State Bar that Mr. Steiner was the responsible party or that he
had prepared the responses to the State Bar inquiries and the
answer to the formal complaint.
¶ 7 As a sanction, the Hearing Officer recommended censure
and two years probation, including participation in the State
Bar’s Law Office Management Assistance Program (LOMAP) and trust
account programs, because he found that White-Steiner acted
negligently, was not motivated by dishonesty or selfishness, and
had a strong character and reputation in the legal community.
The State Bar appealed to the Disciplinary Commission, which
1
Both the Hearing Officer's Report, In re White-Steiner, No.
06-0796 (Mar. 3, 2008), and the Disciplinary Commission's
Report, In re White-Steiner, No. 06-0796 (May 19, 2008), are
available at http://supreme.state.az.us/dc/matrix.htm.
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agreed with the Hearing Officer's findings with respect to
White-Steiner’s ethical violations and the aggravating and
mitigating circumstances, but rejected the Hearing Officer’s
finding that White-Steiner had acted negligently. The
Disciplinary Commission instead determined that White-Steiner
knew or should have known that her conduct was improper, and
therefore recommended suspension for six months and one day as
the appropriate sanction.
¶ 8 White-Steiner petitioned this Court for review of the
Commission's recommended sanction. We have jurisdiction
pursuant to Article 6, Section 5(3) of the Arizona Constitution
and Arizona Supreme Court Rule 59(a).
II. DISCUSSION
¶ 9 Attorney discipline serves to protect the public, the
legal profession, and the legal system, and to deter other
attorneys from engaging in unprofessional conduct. In re
Scholl, 200 Ariz. 222, 227 ¶ 29, 25 P.3d 710, 715 (2001).
Punishing the offending attorney is not the intended purpose,
but may be the incidental effect, of such discipline. Id. at
224 ¶ 8, 25 P.3d at 712.
¶ 10 White-Steiner does not challenge the conclusion that
she violated ERs 1.15(a), 5.1, and 5.3, and Supreme Court Rules
43 and 44. The issue before us is the appropriate sanction.
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A. Sanctions
¶ 11 We consider the following factors in determining
appropriate sanctions: (1) the duty violated, (2) the lawyer’s
mental state, (3) the potential or actual injury caused by the
lawyer’s conduct, and (4) the existence of aggravating or
mitigating factors. See American Bar Association Standards for
Imposing Lawyer Discipline 3.0 (1992) (“ABA Standards”); In re
Peasley, 208 Ariz. 27, 32-33 ¶¶ 19, 23, 90 P.3d 764, 769-70
(2004). We address each factor in turn.
1. Duty Violated
¶ 12 The Hearing Officer and the Commission found that
White-Steiner improperly dealt with client funds and improperly
managed her client trust account, in violation of ER 1.15(a) and
Arizona Supreme Court Rules 43 and 44, and that she failed to
make reasonable efforts to ensure that the firm had in effect
measures giving reasonable assurance that all lawyers in the
firm conformed to the Rules of Professional Conduct and that all
non-lawyer assistants’ conduct was compatible with White-
Steiner’s professional obligations, in violation of ERs 5.1 and
5.3. These conclusions are not disputed before this Court.
Thus, White-Steiner breached duties owed to her clients to
maintain and safeguard their property. See ABA Standard 4.1.
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2. Mental State
¶ 13 A lawyer’s mental state affects the sanction imposed
for ethical violations. Because intentional or knowing conduct
threatens more harm than does negligent conduct, it is
sanctioned more severely. The Hearing Officer found White-
Steiner negligent in dealing with client property. The
Disciplinary Commission disagreed, concluding that White-Steiner
knew or should have known that her conduct was improper because
she was “on notice” due to prior disciplinary actions involving
“similar misconduct.”
¶ 14 A lawyer’s mental state is a fact question. In re Van
Dox, 214 Ariz. 300, 304 ¶ 14, 152 P.3d 1183, 1187 (2007). In
disciplinary proceedings, the Commission must give “great
deference” to a hearing officer’s factual findings and may not
reject them unless they are clearly erroneous. Id. ¶ 15. “To
be clearly erroneous, a finding must be unsupported by any
reasonable evidence.” Id. The Commission may not simply
substitute its judgment for the hearing officer’s or
independently make additional fact findings. Ariz. R. Sup. Ct.
58(b); see also In re Tocco, 194 Ariz. 453, 456 ¶ 9, 984 P.2d
539, 542 (1999).
¶ 15 We must therefore consider whether reasonable evidence
supported the Hearing Officer’s finding that White-Steiner acted
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negligently. See Van Dox, 214 Ariz. at 304 ¶ 16, 152 P.3d at
1187. A lawyer is “negligent” when she fails “‘to heed a
substantial risk that circumstances exist or that a result will
follow, which failure is a deviation from the standard of care
that a reasonable lawyer would exercise in the situation.’” Id.
¶ 17 (quoting ABA Standards at 12). In contrast, “knowledge”
requires “‘the conscious awareness of the nature or attendant
circumstances of the conduct.’” Id. at 305 ¶ 21, 152 P.3d at
1188 (quoting ABA Standards at 12). Thus, for a lawyer’s
conduct to be knowing with regard to improperly handling client
property, she must be consciously aware that her conduct does
not conform to the requirements of ERs 1.15(a), 5.1, 5.3 and
Arizona Supreme Court Rules 43 and 44. Between “knowing” and
mere negligence, the ABA Standards identify another possible
mental state: that the lawyer should know that her conduct is
improper. ABA Standard 4.12.
¶ 16 There is a reasonable basis for the Hearing Officer’s
finding that White-Steiner’s improper conduct involving her
trust account and client property was negligent. The Hearing
Officer considered testimony from White-Steiner, Mr. Steiner,
and the law firm’s paralegal. Based on this evidence, the
Hearing Officer found that although White-Steiner was
responsible for time slips and billing, Mr. Steiner was
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responsible for managing the firm’s trust account. The Hearing
Officer also found that White-Steiner relied (although
unreasonably) on her husband “in management of Trust Account,
its oversight and responding to the State Bar.” Hearing
Officer’s Report, In re White-Steiner, No. 06-0796, at 25 (Mar.
3, 2008). In addition, the Hearing Officer concluded that “Mr.
Steiner ostensibly the manager of the Trust Account process was
absent from the practice and did not do his job. Respondent’s
conduct was not intentional, but was severely deficient and
negligent.” Id.
¶ 17 The Hearing Officer rejected the State Bar’s argument
that White-Steiner should have known of the trust account
problems because she and her husband had received informal
reprimands for violating some of the same ethical rules in 2001
and she also knew that her husband had participated in LOMAP.
The Hearing Officer could have reasonably concluded that neither
the 2001 informal censure (which the State Bar had then
described as resulting in part from an ambiguity in the law
firm’s fee agreement regarding where funds would be deposited)
nor Mr. Steiner’s LOMAP participation, which he successfully
completed in 2002, established that White-Steiner should have
known in 2006 that her firm was violating rules regarding trust
accounts and client property. Moreover, the Hearing Officer
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made no finding that these prior disciplinary actions involved
“similar conduct” or that they put White-Steiner “on notice”
that she was improperly dealing with client funds or mismanaging
her trust account.
¶ 18 Were we engaged in initial fact-finding, we might
agree with the Disciplinary Commission that White-Steiner knew
or should have known of the identified violations. The Hearing
Officer’s finding that White-Steiner acted negligently, however,
must be accepted on review because it has a reasonable basis in
the record. See Van Dox, 214 Ariz. at 305 ¶ 19, 152 P.3d at
1188.
3. Actual or Potential Injury
¶ 19 We must also determine whether the ethical violations
resulted in harm to clients. The Hearing Officer found that
White-Steiner’s actions caused actual harm because she paid a
client’s debt with other clients’ funds, although the Hearing
Officer did not identify an injury to any particular client.
The finding of injury, which White-Steiner does not contest, has
a reasonable basis inasmuch as the failure to deposit sufficient
personal funds to pay bank service fees and the issuance of the
insufficient funds check meant that one client’s debts were paid
with trust account monies properly belonging to other clients.
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4. Presumptive Sanction
¶ 20 The ABA Standards identify presumptive sanctions for
violations of duties owed to clients. In cases involving the
failure to preserve client property, ABA Standard 4.13 provides
that a “reprimand is generally appropriate when a lawyer is
negligent in dealing with client property and causes injury or
potential injury to a client.” ABA Standard 4.12 provides that
suspension is appropriate when a lawyer causes such injury and
“knows or should know that [s]he is dealing improperly with
client property.” The commentary to ABA Standard 4.13 further
observes that suspension or even disbarment may be appropriate
for lawyers who are grossly negligent in failing to establish
proper accounting procedures. The same commentary explains that
a reprimand (which would include a censure under Arizona’s
disciplinary procedures) is appropriate when a lawyer fails to
follow his or her accounting procedures or is negligent in
training or supervising office staff concerning proper
procedures in handling client funds.
¶ 21 Having found that White-Steiner acted negligently, the
Hearing Officer concluded that under ABA Standard 4.13 a censure
is the presumptive sanction. The State Bar does not dispute
that this is the appropriate sanction for negligent violations,
but instead argues that suspension is the presumptive standard
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under ABA Standard 4.12 because White-Steiner should have known
she was dealing improperly with client property or she was at
least grossly negligent.
¶ 22 We agree with the Hearing Officer that ABA Standard
4.13 applies and that censure is the presumptive sanction. The
State Bar’s argument that White-Steiner should have known that
she was dealing improperly with client property or that she
acted with gross negligence is unavailing given the Hearing
Officer’s finding that she acted negligently. Although the
evidence might have supported a finding that White-Steiner acted
with gross negligence, the State Bar did not even urge the
Hearing Officer to make such a finding in its proposed findings
of fact. We decline to make such a finding de novo on review.
5. Aggravating and Mitigating Factors
¶ 23 Having identified censure as the presumptive sanction,
we next consider whether any aggravating or mitigating
circumstances negate the presumption. See Peasley, 208 Ariz. at
36 ¶ 36, 90 P.3d at 773. ABA Standards 9.2 and 9.3 list
aggravating and mitigating factors to be considered in
determining appropriate sanctions. The Hearing Officer found
two aggravating factors - prior disciplinary action, ABA
Standard 9.22(a), and refusal to acknowledge wrongful nature of
conduct, ABA Standard 9.22(g) - and two mitigating factors -
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absence of dishonest or selfish motive, ABA Standard 9.32(b),
and character and reputation, ABA Standard 9.32(g). The
Disciplinary Commission agreed with the Hearing Officer’s
findings in this regard, and neither White-Steiner nor the State
Bar contests them on appeal. We accept the Hearing Officer’s
findings of aggravating and mitigating factors and conclude that
they do not alter the presumptive sanction.
B. Proportionality Review
¶ 24 We also will consider similar cases to assess what
sanctions are proportionate to the improper conduct. Van Dox,
214 Ariz. at 307 ¶ 39, 152 P.3d at 1190. White-Steiner argues
that other cases involving negligent trust account violations
have resulted in censure combined with probation. The State Bar
does not contend that such discipline would be disproportionate
as compared to other cases in which the respondent acted
negligently; nor have we identified any such cases.
C. Appropriate Sanction
¶ 25 We review de novo the appropriate sanction for
violations of the Rules of Professional Conduct and Supreme
Court Rules. See In re Walker, 200 Ariz. 155, 160 ¶ 20, 24 P.3d
602, 607 (2001). Although we consider the recommendations of
the Hearing Officer and the Disciplinary Commission, this Court
is ultimately responsible for determining the appropriate
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sanction. Peasley, 208 Ariz. at 33 ¶ 23, 90 P.3d at 770.
III. CONCLUSION
¶ 26 Based on the facts as found by the Hearing Officer,
ABA Standard 4.13, and our proportionality analysis, we conclude
that an appropriate sanction is a censure combined with two
years probation, which shall include participation by White-
Steiner in LOMAP and the State Bar’s Trust Account Program and
Trust Account Ethics Enhancement Program.
___________________________________
W. Scott Bales, Justice
CONCURRING:
___________________________________
Ruth V. McGregor, Chief Justice
___________________________________
Michael D. Ryan, Justice
___________________________________
Andrew D. Hurwitz, Justice
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