Attorney Grievance Comm. v. Zuckerman

872 A.2d 693

386 Md. 341

ATTORNEY GRIEVANCE COMMISSION v. Charles J. ZUCKERMAN.

Misc. Docket AG No. 21, September Term, 2004.

Court of Appeals of Maryland.

April 13, 2005.

Fletcher P. Thompson, Asst. Bar Council (Melvin Hirshman, Bar Counsel for Atty. Grievance Com'n), for petitioner.

Benjamin Lipsitz, Baltimore, for respondent.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

BATTAGLIA, J.

The Attorney Grievance Commission of Maryland ("Petitioner" or "Bar Counsel"), acting through Bar Counsel and pursuant to Maryland Rule 16-751(a),¹ filed a petition for disciplinary or remedial action against respondent, Charles J. Zuckerman, Esquire, on June 11, 2004. The Petition alleged that Zuckerman, who was admitted to the Bar of this Court on June 20, 1974, violated several Maryland Rules of Professional Conduct ("MRPC"), specifically, 1.1 (Competence),² 1.3 (Diligence),³ 1.4 (Communication),⁴ 1.5 (Fees),⁵ 1.8 (Prohibited Transactions),⁶ 1.15 (Safekeeping Property),⁷ 5.3 (Responsibilities Regarding Non-lawyer Assistants),⁸ 8.4 (Misconduct),⁹ Maryland Rule 16-607,¹⁰ and Maryland Code (2000, 2004 Repl.Vol.), Sections 10-304 and 10-306 of the Business Occupations and Professions Article.¹¹

In accordance with Maryland Rules 16-752(a) and 16-757(c),¹² we referred the petition to Judge John N. Prevas of the Circuit Court for Baltimore City for an evidentiary hearing and to make findings of fact and conclusions of law. On October 27, 2004, Judge Prevas held a hearing and on January 19, 2005, issued Findings of Fact and Conclusions of Law, in which he found, by clear and convincing evidence, that Zuckerman had violated MRPC 1.1, 1.3, 1.4, 1.15(a) and (b), 5.3(a) and (b), 8.4(d), Maryland Rule 16-607, and Sections 10-304 and 10-306 of the Business Occupations and Professions Article:

"The Attorney Grievance Commission of Maryland, petitioner, by Bar Counsel, acting pursuant to Maryland Rule 16-751, filed a Petition For Disciplinary or Remedial Action against Charles Zuckerman, respondent. The case was referred to this court, Pursuant to Rules 16-752(a), for hearing pursuant to Rule 16-757(c). The petition charged that the respondent violated Maryland Rule of Professional Conduct 5.3, Responsibilities regarding nonlawyer assistants, 1.3, Diligence, 1.4, Communication, 1.15, Safekeeping Property, and Md. Bus. Occ. & Prof.Code Ann. § 10-304 by failing to deposit trust money in a trust account and § 10-306 by regularly advancing payments to clients, by failing to pay clients, medical providers, and himself funds due to them from personal injury settlements, by failing to notify clients and medical providers that he was holding funds due to them, by having a negative balance in his trust account on March 16, 2000, and by making duplicate payments to himself. Petitioner further alleged that Respondent's conduct was prejudicial to the administration of justice in violation of Rule 8.4(d). Having reviewed and considered the evidence presented at trial on October 27, 2004, the following findings of fact and conclusions of law have been made.

I. Rule 5.3(a) and (b) (Responsibilities Regarding NonLawyer Assistants).

A. Findings of Fact

"The respondent has been a member of the Maryland Bar since June 20, 1974. He served for about five and a half years as an Assistant State's Attorney in Baltimore City and as an Assistant Attorney General assigned to the Public Service Commission for about a year and a half. For the last twenty-two years the respondent has conducted a private law office in Baltimore City. His cases consisted of a high volume of small personal injury cases (settlements averaging under $10,000) and few family law and criminal law cases as well. He has no history of any disciplinary sanction or involvement prior to the occurrence which gave rise to the instant case.

"On or about May 7, 2002, respondent hired Shannon Becker as a paralegal. Ms. Becker had previously worked in his employ for six (6) months in 1999 answering the telephone and performing other clerical duties. She left respondent's employ to take what she considered a better job. Karen Kinsely, Ms. Becker's aunt, was respondent's office manager for three years prior to her retirement. While working for the respondent in that capacity, Ms. Kinsely had check-signing authority. In May of 2002, Ms. Becker was rehired by the respondent who requested her job back. She was then 23 or 24 years old. Ms. Kinsely had left the employ of the respondent in Ms. Becker's absence. Ms. Becker was to do generally what she had done before, but was also to handle what her aunt had formerly done which was to handle the accident settlements after a case was settled. This required Ms. Becker to meet with clients, go over the settlement sheet and disburse their money.

"Within one or two days of her hiring, he delegated to her the authority to write checks on his trust account so that he could "concentrate on trying cases."

He did so because of the constant need for someone to always be available to sign checks in connection with financial aspects of accident cases whenever such checks were needed. Though he personally had signed each check in the beginning, he later found he could not continue to regularly be available for that purpose, since he did the office's trial work, and it seemed much more efficient to delegate authority to do so to an employee, as he had delegated it to Ms. Kinsely and occasionally other office managers. One of the tasks assigned to Ms. Becker was to go through a group of old files to see if any money was owed to medical providers and, if so, to distribute it, some monies having accumulated during the period of Ms. Kinsely's tenure as office manager. Prior to the discovery of Ms. Becker's defalcations, respondent used a manual system, in which a separate escrow sheet was kept in each case file on which all trust account transactions were entered. Respondent currently maintains a computerized system controlling his trust account which satisfies the Bar Counsel's office.

"In early May, 2002, Ms. Becker devised a scheme to steal the money in the respondent's trust account. She did so by filling out check stubs made payable to appropriate payees for what appeared to be proper amounts, but the corresponding checks were made out for considerably larger amounts made payable to friends of Ms. Becker's, who cashed the checks and turned over the proceeds to her.

"The statement for the respondent's trust account arrived in his office on or about June 15, 2002. A comparison of the check stubs with the bank statement and investigation into the missing return checks from the statement would have revealed Ms. Becker's theft. However, respondent delegated that task to Stacy Kohler, another of his employees who never reported back to him concerning the assigned task. As a result, Ms. Becker continued to steal from respondent's trust account until mid-July when an anonymous telephone call informed him that Ms. Becker was stealing from him. Upon this information becoming known to him, respondent examined the June bank statement, and detected her theft. He immediately began an intense examination of his trust account which resulted in his discovery that Ms. Becker had been stealing from the trust account. On or about July 15, 2002, respondent contacted the police and took out criminal charges against Ms. Becker. Respondent cooperated fully with police and prosecuting authorities in connection with the charges brought against Ms. Becker, who plead guilty. She was ordered to pay restitution of approximately $137,000 and sentenced to ten (10) years incarceration with all but three years suspended.

B. Conclusion of Law: Respondent violated Rule 5.3(a) and (b).

"Maryland Rule of Professional Conduct 5.3(a) provides that "a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer." Rule 5.3(b) provides that "a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer."

"The evidence presented shows that respondent's conduct violated both 5.3(a) and (b). Respondent did not have in place reasonable measures to ensure that his trust account had on deposit all of the funds for clients for whom he was holding money. While respondent gave one of his employees, Stacy Kohler, the task of balancing the checkbook for May 2002, he made no effort to ensure that she accomplished her task. Had the employee reported to respondent after having balanced the checkbook as requested, the theft of Ms. Becker would not have occurred for another month. Further, the act of giving a new employee with no history of reliability was, by itself, a failure to make reasonable efforts to ensure that the firm had in effect measures giving reasonable assurance that the conduct would be compatible with the professional obligations of the lawyer.

"It is also directly inferable from the fact that there was a negative balance in the trust account that the employee Kohler, given the task of balancing the checkbook, was not properly instructed on how to do so. As will be discussed below, funds were regularly advanced to clients and, in one instance, on May 16, 2000, the trust account had a negative balance of which respondent was never made aware. Therefore it is apparent that respondent did not instruct his employees of the proper management of the trust account and inform himself of the status of his employees' efforts to monitor the funds in the account. Had he done so, Ms. Becker's theft would have been discovered on or about June 15, 2002 instead of July 15, 2002, when respondent received the anonymous phone call.

II. Rule 1.15(a) and Md. Bus. Occ. & Prof.Code Ann. § 10-306

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