In Re Hear

FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT

DISCIPLINARY COMMISSION

Kevin McGoff Donald R. Lundberg, Executive
Secretary
Suite 400 Seth Pruden, Staff Attorney
8900 Keystone Crossing 115 West Washington Street
Indianapolis, IN 46240 Suite 1165
Indianapolis, IN 46204

IN THE

SUPREME COURT OF INDIANA

IN THE MATTER OF )
) Case No. 29S00-9911-DI-662
CHARLES F. HEAR )

DISCIPLINARY ACTION

September 28, 2001

Per Curiam

Attorney Charles F. Hear partnered with a non-lawyer to run a debt
collection business out of the non-lawyer’s home. Respondent Hear allowed
the non-lawyer unrestricted and unsupervised access to Hear’s letterhead,
signature stamp, and business and trust accounts in exchange for a portion
of the fees from the debt collection business. Today we approve a
Statement of Circumstances and Conditional Agreement for Discipline between
the respondent and the Indiana Supreme Court Disciplinary Commission, which
calls for the respondent’s suspension from the practice of law for this
misconduct. See Ind. Admission and Discipline Rule 23, Section 11.
Having been admitted to the bar of this state in 1993, the respondent
is subject to our disciplinary jurisdiction.
The parties agree to the following facts. The respondent engaged the
services of a non-lawyer to solicit debt collection clients and to
administer and manage the debt collection cases the non-lawyer solicited.
The respondent authorized the non-lawyer to use letterhead captioned
“Charles F. Hear, attorney at law” and which listed the home address and
telephone number of the non-lawyer in Anderson. The respondent never
maintained a law office at the non-lawyer’s home, but that fact was not
known to collection clients or others dealing with the non-lawyer.
The respondent also authorized the non-lawyer to use a rubber stamp of
the respondent’s signature for use on letters and to make deposits into the
respondent’s trust account. The respondent turned over physical control of
his trust and business accounts by having all checks, deposit slips, and
monthly bank statements of his accounts mailed to the non-lawyer.
The non-lawyer, on behalf of the respondent, solicited collection work
from a company in the business of purchasing accounts receivable from other
companies and thereafter attempting to collect those receivables. That
company agreed to send a few collection files to the respondent and to pay
the respondent 40 percent of all amounts collected, with the remainder of
the funds to be remitted to the company. The respondent and the non-lawyer
thereafter agreed that the non-lawyer would be paid a percentage of the 40
percent their business would retain under this arrangement.
The company sent to the respondent a matter involving a credit card
debt of approximately $1,700. The non-lawyer used the respondent’s
letterhead in corresponding with the debtors. The debtors tendered their
first payment of $200 to the non-lawyer in the form of a check made payable
to “Charles Hear, attorney at law” as instructed by the non-lawyer. Upon
receipt of the check, the non-lawyer deposited it into the respondent’s
business account. The debtors continued to make payments to the
respondent, and the non-lawyer deposited each payment into the respondent’s
business account. By the end of 1996, the debtors had made at least $800
in payments.
None of the $800 was remitted to the company. Instead, the non-lawyer
stole the funds by writing checks to himself or on his behalf from the
respondent’s business account. All of the checks bore the rubber stamp
signature of the respondent.
In 1997, the debtors paid $700 to the respondent, no portion of which
was remitted to the company. The non-lawyer deposited the money into the
respondent’s trust account, which also contained about $5,500 in funds
belonging to one of the respondent’s clients. The non-lawyer stole a total
of $3,524 from the trust account by writing checks to himself or on his
behalf and signing them with the rubber stamp of the respondent’s
signature. The non-lawyer’s misdeeds went undetected because the
respondent’s account records were sent to and maintained by the non-lawyer,
and the respondent never reviewed them.
The respondent and the non-lawyer terminated their relationship in
1997. In 1998, the debtors discovered their payments had not been credited
and attempted to contact the respondent at the address listed on the
letterhead they received. They were unsuccessful, as the non-lawyer had
vacated the premises and the telephone had been disconnected.
We find that by failing to safeguard the creditor company’s funds in
his trust account, the respondent violated Ind. Professional Conduct Rule
1.15(a), which requires a lawyer to hold in a separate account funds
belonging to clients or third persons that are in a lawyer’s possession in
connection with a representation. By failing to notify the creditor
company and promptly remit its funds, the respondent violated Prof.Cond.R.
1.15(b), which requires that lawyers promptly notify a client of receipt of
funds belonging to the client and promptly deliver those funds to the
client. By allowing funds paid by the debtors to be deposited into his
business account, the respondent violated Prof.Cond.R. 1.15(c), which
provides that when in the course of a representation a lawyer is in
possession of property in which both the lawyer and another person claim
interests, the property shall be kept separate by the lawyer until there is
an accounting and severance of their interests.
We further find that the respondent, by failing to supervise the non-
lawyer, violated Prof.Cond.R. 5.3(a), which requires that a partner in a
law firm make reasonable efforts to ensure that the firm has in effect
measures giving reasonable assurance that the conduct of a non-lawyer
employed or retained by or associated with the firm is compatible with the
professional obligations of the lawyer. The respondent, by failing to make
reasonable efforts to ensure that the non-lawyer’s conduct complied with
the respondent’s professional obligations, also violated Prof.Cond.R.
5.3(b), which provides that a lawyer having direct supervisory authority
over the non-lawyer shall make reasonable efforts to ensure that the
person’s conduct is compatible with the professional obligations of the
lawyer. By sharing fees from the collection business, the respondent
violated Prof.Cond.R. 5.4(a), which prohibits lawyers or law firms from
sharing legal fees with a non-lawyer except under circumstances not present
here.
The respondent, by engaging the non-lawyer to solicit collection work
on his behalf, violated Prof.Cond.R. 7.3(a), which prohibits a lawyer from
seeking or recommending by in-person contact (including by telephone) the
employment, as a private practitioner, of the lawyer or the lawyer’s firm
to a non-lawyer who has not sought his advice regarding employment of a
lawyer or assisting another person in doing so. By paying the non-lawyer a
commission for the business he recruited, the respondent violated
Prof.Cond.R.7.3(f), which prohibits a lawyer from compensating or giving
anything of value to a person to recommend or secure the lawyer’s
employment by a client except under circumstances not present here. [1]

Given our finding of misconduct, we must determine an appropriate
discipline. The parties agree that a 100-day suspension from the practice
of law is warranted. Where an attorney allowed non-lawyers to list him as
counsel of record in bankruptcy cases in which the non-lawyers rendered all
of the advice and prepared all filings, we imposed a 90-day suspension.
Matter of Gillaspy, 640 N.E.2d 1054 (Ind. 1994). Thus, we find that the
100-day suspension to which the parties have agreed is an appropriate
sanction for the respondent’s misconduct.
Accordingly, the respondent, Charles F. Hear, is hereby suspended from
the practice of law for 100 days, beginning October 30, 2001, at the
conclusion of which he shall be automatically reinstated.
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 United States District Courts in this state, and the Clerk of each
of the United States Bankruptcy Courts in this state with the last known
address of the respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against the respondent.

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[1] The Commission has withdrawn charges that the respondent violated
Prof.Cond.R. 8.1(a) and 8.4(c) by providing false information to the
Commission during its investigation of this case. In preparing his
response, the respondent relied on information provided by the non-lawyer,
who falsified the information as part of his efforts to conceal his
misdeeds. While the parties agree the respondent acted recklessly in
continuing to rely on the non-lawyer for information after the allegations
of misconduct were submitted to the respondent, the parties agree the
respondent did not possess the intent to deceive the Commission when he
made the erroneous statements to the Commission.