In re Pass

314 Ga. 805

879 S.E.2d 454

In the MATTER OF Karen Lynn PASS.

S22Y1156, S22Y1176

Supreme Court of Georgia.

Decided: October 4, 2022

Andreea N. Morrison, Assistant General Counsel, Paula J. Frederick, General Counsel, Jenny K. Mittelman, William Dallas NeSmith, Deputy General Counsel, State Bar of Georgia, 104 Marietta Street, N.W. Suite 100, Atlanta, Georgia 30303-2934, for State Bar of Georgia.

Kathryn S. Whitlock, Wood Smith Henning & Berman, LLP, 1230 Peachtree Street Suite 925, Atlanta, Georgia 30309, for Pass.

Patrick H. Head, 759 Tate Overlook, Marietta, Georgia 30064, for Other Party.

Per Curiam.

These two disciplinary matters are before the Court on the consolidated report submitted by the Special Master, Patrick H. Head, who recommends that this Court impose a public reprimand with conditions upon respondent Karen Lynn Pass (State Bar No. 480920) for her violations of Rules 1.15 (I) (a), 1.15 (II) (b), and 5.3 (b) of the Georgia Rules of Professional Conduct ("GRPC"), found in Bar Rule 4-102 (d), in connection with two client matters. Neither party has filed any exceptions to the report and recommendation, see Bar Rule 4-218, and we agree that a public reprimand with conditions is appropriate discipline in this case.

According to the special master, the matter underlying Case No. S22Y1156 arose from a formal complaint charging Pass with violating a number of rules during her representation of an individual in a personal injury matter. But the special master found that clear and convincing evidence showed only that Pass had deposited funds from the settlement of her client's case into her IOLTA account at a time when that account also held funds belonging to at least one other client and that Pass admittedly kept no ledgers or other records from which she would be able to tell at any given time the actual amount of funds in her IOLTA account belonging to each client. Based on those facts, the special master concluded that Pass had violated Rules 1.15 (I) (a)¹ and 1.15 (II) (b),² which rules, he noted, were somewhat duplicative in that Rule 1.15 (I) (a) requires an attorney to keep complete records of the trust account in which she holds the "funds or other property" of any client or third party, and Rule 1.15 (II) (b) requires that those records be "kept and maintained as to reflect at all times the exact balance held for each client or third person."

With regard to Case No. S22Y1176, the special master noted that it arose from a separate formal complaint charging Pass with violations of a variety of the GRPC during her representation of a client in an investigation she agreed to undertake. After considering the evidence, however, the special master found that the Bar had shown, by clear and convincing evidence, only that Pass had taken money in advance from her client to be used for fees and expenses connected to an investigation she was to perform for the client; that she deposited the unearned expenses into her IOLTA account, but then failed to review, audit, or otherwise reconcile that account; that unbeknownst to Pass, her office manager—a longtime friend and nonlawyer employee—was accessing Pass's IOLTA account and obtaining funds via forged checks; and that, as a result, there were multiple times where Pass's IOLTA account carried a balance that was less than the almost $4,000 she should have been holding in trust on her client's behalf. The special master found that Pass was unaware of her employee's illegal actions until several months after that employee abruptly left Pass's employment, absconding with a firm computer and other office equipment and materials; that after discovering the thefts, Pass was able, over time, to restore enough of the stolen funds to replace the money she was required to return to her client; and that those funds now have been returned to the client. The special master specifically noted that there was no allegation that Pass was involved in, or even contemporaneously knew of, her employee's withdrawal of the client's funds from Pass's IOLTA account. The special master concluded that Pass had violated Rule 1.15 (I) (a) and Rule 5.3 (b)³ in that she failed to provide the proper oversight of a nonlawyer employee thereby allowing that employee to misappropriate funds belonging to Pass's client from Pass's IOLTA account; she failed to review, audit, or reconcile her IOLTA account; and, therefore, she failed to adequately safeguard her client's property.

After finding those violations, the special master turned his attention to determining the appropriate discipline in these two cases. He noted the importance of looking only at the portions of the rules found to have been violated and of focusing not on what punishment the offense may warrant, but on what punishment is required "as a penalty to the offender, a deterrent to others, and as an indication to laymen that the courts will maintain the ethics of the profession." In the Matter of Dowdy , 247 Ga. 488, 493 (4), 277 S.E.2d 36 (1981). He recited that this Court generally looks to the Standards for Imposing Lawyer Sanctions, American Bar Association Center for Professional Responsibility ("ABA Standards"), for guidance in determining punishment in disciplinary cases, see In the Matter of Morse , 266 Ga. 652, 653, 470 S.E.2d 232 (1996), and that those standards look to the duty violated, the lawyer's mental state, the actual or potential injury caused by the lawyer's misconduct, and the existence of any aggravating and mitigating factors in assessing discipline.

The special master found that Pass's violations in both cases implicated ABA Standard 4 (violations of duties owed to clients) in that Pass's failure to properly monitor her trust account and her failure to properly supervise her nonlawyer employee both affected her ability to preserve her client's property. See ABA Standard 4.1. The special master concluded, however, that Pass was merely negligent in her dealings with the IOLTA account and her clients’ funds, noting Pass's testimony that she is primarily a criminal defense attorney and, therefore, rarely has client funds in her IOLTA account. He further concluded that Pass did not have the "conscious awareness of the nature or attendant circumstances" of the actions of her nonlawyer employee, and, at worst, was merely negligent in her supervision of that employee.

With regard to injury or potential injury, the special master noted that, although the funds of the client in Case No. S22Y1176 were taken from Pass's IOLTA account, Pass did not steal those funds and, once the loss was discovered, she replaced them and returned the funds to the client. And, with regard to Case No. S22Y1156, the special master noted that there was no injury to the client in that none of that client's funds were lost or misappropriated in any way. Ultimately, the special master concluded that there was no actual injury to either client, but acknowledged that the potential for injury was present.

In terms of aggravating and mitigating factors, the special master noted, in aggravation, that Pass had one instance of prior discipline, having received a formal letter of admonition in 2011 related to a failure to communicate with a client, and that she had substantial experience in the practice of law, having been admitted to the Bar in 1994. See ABA Standards 9.22 (a) and (i). In mitigation, he somewhat discounted Pass's former discipline on the grounds that it did not involve her trust account or her failure to supervise a nonlawyer employee. See In the Matter of Kakol , 286 Ga. 469,...