Attorney Grievance Comm'n of Md. v. Smith

443 Md. 351

116 A.3d 977

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND

v.Earl Americus SMITH.

Misc. Docket AG No. 73, Sept. Term, 2013.

Court of Appeals of Maryland.

June 23, 2015.

Raymond A. Hein, Deputy Bar Counsel (Glenn M. Grossman, Bar Counsel, Attorney Grievance Commission of Maryland), for Petitioner.

Leonard Casalino, Esquire (Dunkirk, MD), for Respondent.

Argued before: BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, McDONALD, LAWRENCE F. RODOWSKY (Retired, Specially Assigned), DALE R. CATHELL (Retired, Specially Assigned), JJ.

Opinion

McDONALD, J.

Attorney discipline cases that result in disbarment often find the attorney committing one of the seven deadly sins—e.g. , greed, lust, sloth. This is not one of those cases. The sin in this case was inattention—inattention to clients, inattention to an attorney trust account, and inattention to the activities of a non-lawyer assistant in whom the attorney misplaced his trust and who misused the attorney trust account to the detriment of the attorney's clients. Sadly, this too merits disbarment, as our regulation of the practice of law must protect the public not only from those attorneys who engage in deliberate, egregious acts of misconduct, but also those who fail to fulfill the routine duties of the profession that serve and safeguard their clients.

IBackground

A. Procedural Context

The Attorney Grievance Commission (“Commission”) charged Earl Americus Smith, III with violating numerous provisions of the Maryland Lawyers' Rules of Professional Conduct (“MLRPC”) arising out of the management of his attorney trust account, his delegation of tasks to his non-lawyer assistant, and his handling of several client matters.

Specifically, the Commission charged Mr. Smith with violating MLRPC 1.1 (competence), 1.2(a) (scope of representation), 1.3 (diligence), 1.4 (communication), 1.5(c) (fees), 1.15 (safekeeping property), 5.3 (responsibilities regarding nonlawyer assistants), 5.5(a) (unauthorized practice of law), 8.1(a) (false statement in connection with disciplinary matters), and 8.4(a) (violation of MLRPC), (c) (conduct involving deceit) and (d) (prejudice to the administration of justice). The Commission also charged Mr. Smith with violating Maryland Rules 16–606.1 (attorney trust account record keeping), 16–607 (commingling of funds), and 16–609 (prohibited transactions). The Commission later withdrew the charge as to MLRPC 8.1(a).

Pursuant to Maryland Rule 16–752(a), this Court designated Judge Larnzell Martin, Jr. of the Circuit Court for Prince George's County to conduct a hearing concerning the alleged violations and to provide findings of fact and recommended conclusions of law. Following a three-day hearing at which Mr. Smith testified and was represented by counsel, the hearing judge issued his findings of fact and conclusions of law. On the basis of those factfindings, the hearing judge concluded that Mr. Smith committed all of the alleged violations.

The Commission did not except to the hearing judge's findings and conclusions; it recommended that we disbar Mr. Smith. Mr. Smith conceded most of the violations, but filed an exception to the hearing judge's conclusion that he was responsible for violations of MLRPC 8.4 and argued for a suspension rather than disbarment. The Court heard oral argument on Mr. Smith's exception and the recommendations for sanction in January 2015.

B. Facts

The hearing judge's factual findings are uncontested; we therefore treat them as established.

Maryland Rule 16–759(b)(2)(A). The hearing judge's findings, the parties' stipulations, and the undisputed evidence in the record establish the following facts.

Mr. Smith's Law Practice

Mr. Smith was admitted to the Maryland Bar in 1983. He is also a member of the District of Columbia Bar. During 1991, Mr. Smith established a law practice under the name of Bryan & Smith, P.C., which focused on personal injury matters. Since the mid–1990s, Mr. Smith has been the only attorney at the firm.¹ The key facts relevant to the alleged violations concern Mr. Smith's delegation of responsibility to—and failure to supervise—his legal assistant, his mishandling of his attorney trust account related to personal injury cases, and his neglect of several client matters, all during the period 2009–2012.

Delegation of Responsibility to Dawn Staley–Jackson

During 1993, Mr. Smith hired Dawn Staley–Jackson² as a paralegal. Ms. Staley–Jackson worked for the firm for the next two decades as a legal assistant. During the time period relevant to the alleged violations, her name appeared on the firm's stationery with the title “Legal Assistant.”

Mr. Smith delegated substantial authority to Ms. Staley–Jackson. Indeed, the hearing judge found that he “allowed Ms. Staley–Jackson to run his law practice without any meaningful oversight.” With Mr. Smith's knowledge and acquiescence, Ms. Staley–Jackson independently sent demand letters to defendants, negotiated settlements with insurance carriers, communicated with and advised clients, dealt with medical providers, drafted pleadings and other papers for filing in court (frequently signing Mr. Smith's name), and deposited checks.

Mr. Smith gave Ms. Staley–Jackson responsibility for preparing settlement disbursement sheets, and for meeting with the client to explain the settlement sheet. Mr. Smith would not check the accuracy of the lists of disbursements with the client's file, other than to check the gross amount and his own fee. Mr. Smith also delegated to Ms. Staley–Jackson the responsibility to inform clients that settlement funds had been received.

After Ms. Staley–Jackson informed Mr. Smith that she was suffering from a serious illness, he permitted her to work from home, to take client files to her house, and to forward the office phone to her home and personal cell phone.

Operation of Personal Injury Trust Account

Mr. Smith maintained two attorney trust accounts at SunTrust Bank—one for attorney's fees and the other for receiving and disbursing funds in personal injury cases. The alleged violations concern the operation of the personal injury trust account. At all relevant times, Mr. Smith had sole check-signing authority for the personal injury trust account and used a computer software program to record deposits and disbursements and to issue checks payable from that account.

From January 2009 continuing through September 2012, Mr. Smith failed to create or maintain any meaningful records relating to the personal injury trust account. He did not keep accurate chronological listings of all deposits and disbursements, and failed to generate individual client matter records. Mr. Smith did not reconcile his trust account records on a monthly basis.

Mr. Smith ordinarily received monthly bank statements by mail. He testified that, sometime during 2010, the bank statements began to arrive by mail either sporadically or not at all. He said that he would go to the local branch to obtain a bank statement each month, but did not request copies of the negotiated checks. When Mr. Smith did receive a statement in the mail, it included photocopies of checks drawn on his trust account, but he did not regularly review these checks.

Ms. Staley–Jackson's Fraud

Beginning in at least 2009, Ms. Staley–Jackson regularly and systematically misappropriated funds from the firm's personal injury trust account by diverting checks drawn on that account payable to others or by fraudulently creating and cashing checks made payable to herself. During the first seven months of 2009, Ms. Staley–Jackson took checks made payable to Jason Carle, a chiropractor who had rendered services to Mr. Smith's clients. Ms. Staley–Jackson would forge Mr. Carle's endorsement, sign the check herself, and cash the check. She cashed approximately 15 checks payable to Mr. Carle for more than $34,000 from January to July 2009. After July 2009, Ms. Staley–Jackson was apparently able to create and cash checks drawn on the trust account that listed herself as the payee.³ The parties stipulated that, during the period from January 2009 through September 2012, Ms. Staley–Jackson misappropriated the proceeds of checks exceeding $600,000 in value.

Deposit of Personal Funds into Attorney Trust Account

Ms. Staley–Jackson's diversion of funds from the personal injury trust account resulted in insufficient funds in that account to cover the purposes for which the funds had been deposited. When Mr. Smith realized in 2010 that the personal injury trust account was short of funds, he attempted to compensate for the shortfall with personal funds.

Mr. Smith deposited his own personal funds or placed borrowed funds into the trust account on five separate occasions from December 2010 through June 2012. On December 1, 2010, Mr. Smith cashed out his personal retirement account and deposited that money ($35,900) into the personal injury trust account. On February 10, 2011, Mr. Smith obtained a $10,000 loan from his father and deposited it into the trust account. On April 18, 2011, Mr. Smith deposited into the trust account another loan from his father in the amount of $50,000. On March 5, 2012, Mr. Smith deposited into the trust account another $25,000—this time a loan from his father-in-law. On June 21, 2012, Mr. Smith deposited $100,000 into the trust account, also obtained from his father-in-law.

The hearing judge found that these deposits belied any assertion that Mr. Smith was unaware of the serious deficiencies in the personal injury trust account—that it lacked sufficient funds to cover his existing fiduciary obligations to clients and third parties. In other words, Mr. Smith was aware for more than a year and a half that his personal injury trust account at SunTrust Bank was out of trust. However, as the hearing judge found, his “persistent failure over a period of almost four years to comply with the trust account record-keeping requirements” of the Maryland Rules meant that he was unable to detect the source of the shortfall and enabled Ms....