This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 176
In the Matter of Donald William
Leo, a Disbarred Attorney,
Appellant.
John F. Clennan, for appellant.
Robert H. Cabble, for respondent Grievance Committee,
10th Judicial District.
PER CURIAM:
Donald William Leo was admitted to the New York bar in 1967.
He tendered his resignation as an attorney in January 2004 in the
midst of a disciplinary investigation into alleged escrow
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violations. In connection with his resignation, Leo acknowledged
that he "failed to properly preserve the amount of funds which
should have been on deposit in his escrow account" and that he
would be unable to "successfully defend himself on the merits" of
any related disciplinary charges (Matter of Leo, 9 AD3d 218, 219
[2d Dept 2004]).
After tendering his resignation, Leo sold his law practice
to his son. According to their written agreement, the purchase
price "d[id] not include any accounts receivable" due for
"services rendered" by Leo prior to the sale. Instead, those
funds would be "promptly paid and delivered" to Leo as payment
was received on contingency fee cases. These pending matters --
more than 550 in total -- were listed in a schedule attached to
the purchase agreement, along with the corresponding percentage
of the fee to be allocated to Leo in each case.
Shortly after the sale, Leo sent letters to all of his
clients indicating that he was "relocating" to Tennessee and that
he was "transferring [his] law practice and law office assets" to
his son. The letter stated, in relevant part:
"If you decide to retain other counsel kindly
. . . have him or her contact our office
. . .
If you wish to continue with Don and our new
team of associates there is no need for you
to contact us at this time."
Three months later, the Appellate Division "accepted" Leo's
proffered resignation and Leo was formally disbarred (id. at
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219). Among other things, Leo was ordered to comply with 22
NYCRR § 691.10 -- the Second Department's rule governing the
conduct of disbarred, suspended, and resigned attorneys (id. at
220).
Seven years after his disbarment, Leo applied for
reinstatement. The Appellate Division held the motion in
abeyance and referred the matter to the Committee on Character
and Fitness. A two-member Subcommittee was assigned to conduct
an investigation and a hearing was held.
During the hearing, the Subcommittee members inquired into
the notification that Leo had provided to clients while his
resignation was pending. According to Leo, by the time the
Appellate Division accepted his resignation, all of his clients
had decided to either continue with his son or to retain new
counsel. Leo stated that, under the relevant rule, he did not
need to send a subsequent notice or otherwise notify his "former"
clients of his disbarment.
Leo was also questioned about certain payments he received
from his son arising from the sale of Leo's law practice. Leo
was unable to provide an accounting of the amounts he had
received to date, and he was unable to specify which sums, if
any, remained outstanding. Leo testified that, for the first few
years following the sale, Leo's son was merely "reimbursing" him
for "out of pocket disbursements" that Leo had "laid out prior to
leaving." Leo estimated that these reimbursements -- which were
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not declared as income on his tax returns or mentioned in the
purchase agreement -- totaled "[c]lose to $500,000." With regard
to the remaining sums, Leo stated that he had "not made a
determination" whether to allocate those payments to the purchase
price or to the fees owed from contingency cases. Although 22
NYCRR § 691.10 requires that legal fees and disbursements
received post-disbarment must be "fixed by the court," Leo had
not applied for a court order fixing compensation.
The Subcommittee was "troubled by the testimony" at the
first hearing and "decided to recommend against admission."
However, shortly after the hearing, Leo's counsel requested a
continuance. A second hearing was held nearly 18 months later.
During the second hearing, Leo testified that he had met
with his son and reviewed all of the records relating to the
payments he had received. Leo then filed motions in various
counties seeking nunc pro tunc orders fixing legal fees and
recoverable disbursements. The motions were granted, and copies
of the orders were filed as exhibits at the second hearing.
The Subcommittee thereafter concluded that Leo possessed
"the present character and fitness to practice law in New York."
Although the Subcommittee noted that Leo's actions "did not
comply with the rules relating to personal injury cases and rules
relating to compensation to disciplined attorneys," it
nonetheless concluded that Leo had "shown, by his determined
actions, that he is willing to work hard to regain th[e]
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privilege" of practicing law. The Subcommittee recommended
reinstatement.
The Full Committee on Character and Fitness disagreed and
voted to recommend that Leo's motion for reinstatement be denied.
In its letter dated May 2, 2014, the Full Committee expressed
concerns that (1) Leo's letter notifying clients that he was
relocating did not conform to the applicable rules, and (2) Leo's
failure to seek court approval of fees and disbursements until
after the Subcommittee had noted the irregularity did not
demonstrate the requisite character and fitness for
reinstatement.
The Appellate Division subsequently denied Leo's motion for
reinstatement. After considering the entire record, including
Leo's papers and the report of the Committee on Character and
Fitness, the Appellate Division concluded that Leo did not
"demonstrate the requisite fitness and character to practice
law."
We granted leave to appeal and now affirm.
In the Second Department, an applicant seeking reinstatement
to the bar must show "by clear and convincing evidence that [the
applicant] has fully complied with the provisions of the order
disbarring or suspending him or her . . . and that he or she
possesses the character and general fitness to practice law"
(former Rules of App Div, 2d Dept [22 NYCRR] § 691.11). The
Appellate Division "is the fact finder on issues of character and
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fitness and its discretion is inclusive" (Matter of Anonymous, 79
NY2d 782, 783 [1991]; see Matter of Citrin, 94 NY2d 459, 465
[2000]). Indeed, the Appellate Division is best situated to
assess an applicant's compliance with the applicable disbarment
order and to determine whether, in light of the misconduct giving
rise to his or her disbarment, the applicant's subsequent conduct
demonstrates the requisite character and fitness for readmission.
Accordingly, our standard of review is limited to whether the
Appellate Division abused its discretion in denying Leo's motion
for reinstatement. We discern no abuse of discretion here.
The record here includes evidence that Leo failed to comply
with the provisions of his disbarment order, including the
provision requiring compliance with 22 NYCRR § 691.10.
Specifically, § 691.10(b) makes clear that, in the Second
Department, "[a] disbarred, suspended or resigned attorney" may
only be compensated "on a quantum meruit basis for legal services
rendered and disbursements incurred" prior to his or her removal
from the bar, and that "the amount and manner of payment" must be
"fixed by the court" (former Rules of App Div, 2d Dept [22 NYCRR]
§ 691.10[b]). Here, Leo received payment for legal fees and
disbursements incurred prior to his disbarment, but he did not
obtain the required court orders until his error was uncovered by
the Subcommittee. Moreover, at his first hearing, Leo was unable
to provide an accurate accounting of the payments he had
received, nor could he specify whether the sums constituted
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disbursement reimbursements, fees for legal services rendered, or
installments towards the purchase price of his firm. In the
absence of the required court orders and an accurate accounting,
Leo was not in compliance with section 691.10(b).
Leo's argument regarding his pre-disbarment client
notification is also unavailing. Under section 691.10, "[a]
disbarred, suspended or resigned attorney" must provide notice to
"all clients being represented in pending matters . . . of his
disbarment, suspension or resignation and his consequent
inability to act as an attorney" (id. §§ 691.10[c]-[d]). In
this case, Leo informed his clients, in advance of his
anticipated disbarment, that he was "transferring" his law
practice to his son, but Leo did not send a subsequent notice or
otherwise inform clients of his eventual disbarment. Even if Leo
did not violate section 691.10 -- Leo had no "current" clients at
the time of his disbarment -- his notification could reasonably
be considered misleading to the extent it implied that Leo was
merely "relocating" and would remain involved in the practice.1
In sum, on this record, there is no basis to disturb the
Appellate Division's determination that Leo did not "demonstrate
1
We do not imply that Leo violated 22 NYCRR § 691.10 (c)
and (d), or "refuse[] to conclude" that he did not (concurring op
at 1). Rather, in reviewing the Appellate Division's assessment
of the entire record, we confine our decision -- in accordance
with our limited standard of review -- to issues that are
necessary to the resolution of this appeal. As the concurrence
necessarily concedes by joining in the result, this issue is not.
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the requisite fitness and character to practice law."
We have considered Leo's remaining contentions and find them
to be without merit.
Accordingly, the order of the Appellate Division should be
affirmed, without costs.
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Matter of Donald William Leo
No. 176
FAHEY, J.(concurring):
I respectfully concur in the result only. The majority
refuses to conclude that Donald William Leo did not violate the
Special Rules of the Appellate Division, Second Department,
embodied in 22 NYCRR 691.10 (c) and (d) (see majority op at 7).
To clarify: Leo did not breach those rules.
The subject rules pertain only to the conduct of
attorneys who are "disbarred, suspended or [who have] resigned"
(22 NYCRR § 691.10). At the time Leo gave the client
notification in question, none of those classifications applied
to him. Although Leo had submitted his resignation to the
Appellate Division at the time the disputed notification had been
made, that Court retained the discretion whether to accept Leo’s
request to relinquish his law license, which it did not do until
months after the communication in question.
If the submission of a letter of resignation was
sufficient there would be no need for the Appellate Division to
accept or reject it. The Appellate Division must clearly
maintain the authority to accept a resignation or issue an order
of disbarment.
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In any event, on balance I agree with the majority
"that there is evidence to sustain the decision of the Appellate
Division" (Matter of Anonymous, 79 NY2d 782, 783 [1991]; see
majority op at 7). "While one might disagree with the
determination made by that court in this case, [w]e may not
substitute our judgment on the merits for that of the Appellate
Division" (Anonymous, 79 NY2d at 783 [internal quotation marks
omitted]).
* * * * * * * * * * * * * * * * *
Order affirmed, without costs. Opinion Per Curiam. Chief Judge
DiFiore and Judges Pigott, Abdus-Salaam, Stein and Garcia concur.
Judge Fahey concurs in result in a separate concurring opinion.
Judge Rivera took no part.
Decided November 22, 2016
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