STATE EX REL. OKLAHOMA BAR ASS'N v. MAYES

LAVENDER, J.

¶ 1 Complainant, the Oklahoma Bar Association (complainant or OBA) initiated disciplinary proceedings against respondent, Robert I. Mayes, Jr., pursuant to the Rules Governing Disciplinary Proceedings (RGDP), Rule 6 — Formal Proceedings Before Supreme Court and Professional Responsibility Tribunal, 5 O.S.1991, Ch. 1, App. 1-A, as amended. The parties submitted stipulations of fact, conclusions of law and an agreed recommendation of discipline to a trial panel of the Professional Responsibility Tribunal wherein respondent acknowledged certain violations of the RGDP and the Oklahoma Rules of Professional Conduct (ORPC), 5 O.S.1991, Ch. 1, App. 3-A, as amended. Complainant agreed to recommend to the trial panel and this Court a six month suspension from the practice of law as discipline, and respondent agreed to accept this recommendation. The trial panel held a hearing where respondent testified, numerous exhibits were admitted, and the stipulations, etc. were amplified. After the hearing, the stipulations, etc. were amended to clarify certain matters and to reflect respondent's testimony. In its written report the trial panel finds respondent guilty of misconduct and recommends a six month suspension. However, the panel also states in the report, a three month suspension would have been recommended but for the stipulation of the parties, complainant's recommendation and respondent's agreement to accept a six month suspension.

¶ 2 Although respondent continues to acknowledge his misconduct, he now requests this Court to consider a three month suspension, rather than six months, as the appropriate discipline. We reject his request. The amended stipulations, etc., together with their amplification through evidentiary materials submitted at the hearing, support a determination respondent is guilty of professional misconduct warranting a six month suspension. The costs of these proceedings in the amount of $1291.50 are also charged against respondent. The costs shall be paid within ninety (90) days from the date this opinion becomes final.1

PART I. FACTS, PROFESSIONAL MISCONDUCT AND MITIGATION.

¶ 3 Respondent is a licensed attorney, with the majority of his practice consisting of representing persons accused of criminal offenses.2 He, however, handles some personal injury claims on behalf of injured individuals. At the times giving rise to this matter, respondent did not personally manage his office's financial activities or watch over his office's financially related record-keeping requirements. He essentially left the day-to-day management of both his trust and operating bank account activities to Sharon Vann, his office manager/non-lawyer assistant, who he employed in 1991. Respondent gave Vann authority to use his signature stamp, to deposit money to both his trust and operating accounts and to write checks from both accounts — authority exercised by Vann without much, if any, supervision or oversight from him. Vann also had authority to open respondent's mail, including his bank statements.

¶ 4 Generally, respondent used an outside accountant to reconcile transactions or activities involving his operating and trust bank accounts only at a year's end. The record shows respondent gave so little attention to his practice's financial aspects, that he would rely on Vann to tell him whether he had earned from attorney fees funds which could be accessed by him for his personal use — i.e. he essentially relied on Vann to decide the appropriateness of placing funds in his operating account and whether or not net proceeds or funds existed in the account. As we will detail, this way of running his law practice and his delegation of other responsibilities to Vann, proved to be serious mistakes on his part.

¶ 5 In April 1996 Mary Stake and Java Collins were injured in an automobile accident. Stake, who was more severely injured, apparently was a friend of Ms. Vann, and both Stake and Collins hired respondent to represent them in regard to claims arising from the accident. No misconduct is alleged regarding respondent's representation of Stake or the handling of her claim. The misconduct arises from the Collins representation and the management of her claim by respondent and Vann.

¶ 6 Respondent represented Collins on a contingent fee basis, but no written contingency-fee agreement was signed. Respondent delegated the handling of Collins' case to Vann — the delegation including authority to negotiate on Collins' behalf with the relevant insurance company. Evidence in the record is undisputed that: Mary Stake owned the vehicle involved in the accident; Collins was driving the Stake vehicle with Stake as passenger; the accident occurred when another vehicle swerved in front of the Stake vehicle on a highway in Tulsa, causing some type of one-vehicle crash of the Stake vehicle; and neither the vehicle swerving in front of the Stake vehicle, or its owner or driver, were ever apparently located. The insurer negotiated with was, therefore, Stake's insurance carrier, and Collins' claim was an uninsured motorist claim. There was also a medical payment claim under the applicable insurance policy.

¶ 7 After negotiation, Vann reached agreement with the insurer's adjuster, and the carrier issued two checks — one dated August 7, 1996 for $4500 for uninsured motorist benefits (UM) and the other dated July 25, 1996 for $1744.57 for "med-pay", the latter amount being the exact sum owed on Collins' medical bills. Both checks were made payable to Collins and Mayes and Associates, and the record shows they were received in respondent's office about the time of issuance.

¶ 8 Although neither respondent or Vann is charged with fraudulently endorsing Collins' signature on the checks, Vann apparently endorsed Collins' signature on the two checks, as Collins did not endorse either check. Respondent believes his office had Collins' permission to endorse her name, the same type of permission he generally obtained from other clients, in order that settlement monies would be available in a quicker time frame. Further, although there is a conflict in the record as to whether either respondent or Vann sought prior approval of the $4500 UM settlement amount from Collins, the record is undisputed that the total settlement agreement was not communicated to Collins by respondent or Vann prior to Vann's agreement to settle Collins' claim — the total settlement agreement being the carrier's agreement to pay by separate check for Collins' medical bills and an additional $4500 in UM benefits.

¶ 9 After the insurer's issuance of the two checks, Vann asked Collins to come to respondent's office in August 1996 to sign papers agreeing to certain disbursements of the settlement monies. Collins did visit respondent's office where she dealt with Vann, rather than respondent. Vann presented her with a "settlement sheet" showing receipt of a $4500 gross UM coverage payment with deductions of $1744.57 for medical bills, $1499.85 as respondent's one-third attorney fee and a balance to Collins of $1255.58. Neither respondent or Vann had notified Collins about receipt of the "med-pay" check when it was received in late July 1996 and Vann continued to withhold from Collins the fact a separate "med-pay" check for $1744.57 had been received from the insurer for payment of the medical bills. Collins' medical providers were not paid by respondent or Vann from the $4500 UM settlement monies despite the fact a sufficient amount to pay them was withheld for such purpose and despite the fact that, in reality, a separate insurance company check had been received by respondent's office in July 1996 to cover Collins' medical bills.

¶ 10 In that the medical bills remained unpaid, Collins was contacted by the medical providers for payment and she actually made, at least, some payments to them from her own funds. She, in turn, made numerous attempts to obtain an accounting from respondent's office, but either received no communication or misleading information from his office. Throughout the period August 1996 through December 1996, Vann repeatedly misrepresented to Collins in writing and by telephone that the medical bills had been paid. Three of the four medical provider bills were finally paid by Vann in November 1996 with funds respondent was entitled to as his attorney fee from a settlement reached on behalf of Mary Stake,3 but the fourth medical provider bill was still not paid at that time.

¶ 11 In late December 1996, through her own efforts, Collins learned for the first time the insurance company had issued two checks, i.e. one for $4500 and another for $1744.57. After learning of the "med-pay" check's existence, Collins again contacted respondent's office to request a full accounting. In January 1997, she again visited respondent's office — again dealing with Vann, rather than respondent. At this January meeting Vann gave Collins $1163.63 in cash which Vann represented as the "med-pay" proceeds. When Collins inquired why she was only receiving this amount instead of the full "med-pay" proceeds, Vann advised her it was office policy to take one-third of any money the office receives. A settlement computation sheet given to Collins shows respondent receiving $580.94 of the $1744.57 "med-pay" check as attorney fees.

¶ 12 Collins filed a grievance with the OBA on January 6, 1997. In late January 1997 Collins contacted respondent directly by telephone, who only spoke briefly with her. He promised to look into the matter and get back with her in approximately two weeks. He did not get back with her in two weeks. The final medical provider bill was not paid until April 1997 when respondent deposited his own personal funds into his trust account to pay the bill. Respondent's trust account check (dated April 21, 1997) for this fourth and final bill was mailed to the OBA with a request it be forwarded to Collins.

¶ 13 During a July 23, 1997 interview regarding the Collins grievance with Tony Blasier, OBA investigator, respondent stated to Blasier, as his accounting of the funds, that Vann had stolen the "med-pay" check. Respondent brought Vann into the interview and she confirmed she had stolen the check. In the same interview, Blasier requested from respondent all relevant bank records concerning the matter. Although respondent provided some of the requested bank records in a timely fashion, he did not provide all relevant records until December 1997.

¶ 14 The bank records show the $4500 UM settlement check was deposited into respondent's trust account in August 1996 and that this account, on July 31, 1996, had a beginning balance of $413.80, but by the end of August 1996 the balance was $9.82. By the end of August 1996 none of the medical provider bills totaling $1744.57 had been paid from the $4500 settlement funds deposited into the trust account. The bank records also show the $1744.57 "med-pay" check was deposited into his operating account in July 1996, rather than his trust account, and that the medical provider bills were not paid with the proceeds from this check. The operating account had a beginning balance of $39.90 on June 30, 1996 and an ending balance of $37.41 on July 31, 1996. Further, review of the trust and operating account records reveal Vann misappropriated for her own use part of both the $4500 UM settlement and the $1744.57 "med-pay" proceeds, and that part of the proceeds were improperly made available to respondent by Vann, rather than being used in a reasonably prompt manner to pay the outstanding medical provider bills.

¶ 15 Respondent did not review his records to determine how the monies had been used when promised during the January 1997 telephone conversation with Collins or when he was made aware of the complaint made against him to the OBA. Had respondent reviewed his bank records, as he should have done in order to make a full and fair response to the Collins grievance, he would have realized he had himself received funds from both the "med-pay" and UM settlement checks. He would also have learned that Vann's statement she had stolen the "med-pay" check was not an accurate statement, but was only partially true, the check having actually been deposited into respondent's own operating account. In other words, it was only partially true because Vann did not, in fact, steal all the proceeds from the "med-pay" check for her own use, and some of the proceeds actually were paid by Vann to respondent himself and for other office operating expenses.

¶ 16 Although respondent's representations to OBA investigator Blasier that Vann had stolen the "med-pay" check and similar statements in his deposition — and his encouragement to Vann during her deposition to testify she had stolen the "med-pay" check — were believed by him to be true when made, these statements were made without sufficient investigation on his part of the facts to be considered a full and fair disclosure of the facts and circumstances surrounding the grievance lodged against him by Collins. In such regard, respondent acknowledges he should have made a more sufficient inquiry for the purpose of providing a full and fair response, and that he certainly should have done so by his deposition in November 1997, which he did not do. However, there is no evidence respondent knew the representations he made were false when he made them.

¶ 17 Although respondent recognizes he is professionally responsible for the conduct of his employee, Vann, the parties have also stipulated, clear and convincing evidence is lacking that respondent was informed by Vann: when the two settlement checks arrived in his office; of her deposit of the "med-pay" check into his operating account; or that the medical providers had not been paid from the $4500 UM settlement check.4 Further, after respondent received notice from complainant of Collins' grievance, Vann admitted she had hidden from respondent both her receipt and deposit of the "med-pay" check and that she used some of its funds for her own personal purposes.

¶ 18 Since this matter concerning Vann's misappropriation and deception finally came to light, the record shows respondent has taken steps which should minimize the possibility of and help to prevent the recurrence of a similar situation. These steps include: direction to his bank that it may no longer accept his signature stamp as authorization for financial transactions, but must have his original signature; institution of an office policy that only he may open his bank statements5; and removing signature authority of anyone but himself from his operating and trust accounts. The record also shows that before this matter occurred, respondent did not keep separate sub-accounts of client funds placed in his trust account, but he presently does keep such separate sub-accounts. He also testified at the trial panel hearing that after this incident involving Ms. Collins, he no longer follows the practice of obtaining clients' permission for authority to endorse their signatures on settlement checks, but now requires each client personally endorse settlement checks.

¶ 19 The record further shows that prior to the events giving rise to this matter, respondent had not had problems of a similar nature involving Ms. Vann. Complainant also acknowledged at the trial panel hearing that Ms. Collins expressed her satisfaction to the OBA that an agreement had been reached for a recommended six month suspension. The parties have also stipulated that: Collins received all funds from the insurance proceeds she was owed; this is the first time respondent will have been subjected to professional discipline; and respondent has agreed to obtain law-practice management assistance.

¶ 20 We also note, contained in the record are five exhibits offered by respondent and admitted at the trial panel hearing. The exhibits are five letters — three from attorneys, one from a Tulsa County District Judge, and one from a doctor who apparently treats respondent for a diabetic condition and other physical illnesses. The latter letter is dated in May 1998 and the other four letters in July 1998.6 All three attorneys state they have known respondent for a number of years, two attest to his honesty and integrity, and the third to his fairness. The letter from the District Judge also attests to his honesty and integrity, and all four letters speak positively concerning his professional competence. The doctor's letter outlines the nature of his diabetic condition and other physical illnesses, and contains the doctor's opinion that for respondent to maintain a reasonable legal practice he must properly manage his physical disabilities.7

¶ 21 Finally, the parties have stipulated respondent's conduct violated the following Rules of the ORPC or RGDP: Rule 1.2, ORPC — in that he failed to have an offer of settlement communicated to Collins and to obtain her authorization to settle the case8; Rule 1.3 and Rule 1.4(a) and (b), ORPC — in that he failed to keep Collins informed of the status of her case, failed, himself, to determine the actual status of the matter, particularly after learning there was a problem with payment of the medical bills and payment to Collins, and he failed to timely forward Collins her portion of the settlement proceeds9; Rule 1.5(b) and (c), ORPC — in that his contingent fee agreement with Collins was not in writing10; Rule 1.15, ORPC and Rule 1.4, RGDP — in that the insurance proceeds were not properly safeguarded, nor were they applied to the purpose for which they were entrusted11; Rule 5.3(a), (b) and (c)(1) and (2), ORPC — in that respondent failed to make reasonable efforts to ensure his non-lawyer assistant adhered to his professional obligations, he failed to make reasonable efforts to keep from ratifying Vann's misconduct, and he failed to take reasonable remedial action in regard to Vann's conduct12; and Rule 5.2, RGDP — in that, although respondent's statement(s) to the OBA during the investigation of this matter that Vann had stolen the "med-pay" check were partially true, the statements did not represent all the relevant facts and circumstances of the situation.13 Based upon the parties' factual stipulations and our review of the record, we conclude respondent is guilty of professional misconduct in violation of Rules 1.2, 1.3, 1.4, 1.5, 1.15 and 5.3 of the ORPC and Rules 1.4 and 5.2 of the RGDP.

PART II. DISCIPLINE.

¶ 22 In disciplinary proceedings this Court acts as a licensing court in the exercise of our exclusive original jurisdiction, not as a reviewing tribunal. State ex rel. Oklahoma Bar Ass'n v. Downing, 1990 OK 102, 804 P.2d 1120, 1122. Neither the parties' stipulations or findings of a trial panel of the Professional Responsibility Tribunal are binding on us insofar as the imposition of discipline is concerned. Id. It is our nondelegable, constitutional responsibility to decide the discipline warranted when an attorney is found to have engaged in professional misconduct. Id.; State ex rel. Oklahoma Bar Ass'n v. Barnett, 1997 OK 61, 940 P.2d 493, 495 (Court's duty in attorney misconduct cases is to independently determine the proper discipline).

¶ 23 Our responsibility is not to punish the offending lawyer, but to assess the offender's continued fitness to practice law. State ex rel. Oklahoma Bar Ass'n v. Meek, 1994 OK 118, 895 P.2d 692, 699. In such regard, we are required to exercise our responsibility with a view to safeguarding the interests of the public, the courts and the legal profession. Id. Also, a fit factor to be considered in arriving at appropriate discipline is the deterrent effect upon both the offending respondent and other attorneys who might contemplate similar conduct in the future. State ex rel. Oklahoma Bar Ass'n v. McMillian, 1989 OK 16, 770 P.2d 892, 899; State ex rel. Oklahoma Bar Ass'n v. Hall, 1977 OK 117, 567 P.2d 975, 978.

¶ 24 Other factors properly considered include comparing the circumstances in the matter at hand with previous disciplinary matters, and examining an attorney's past record of professional behavior. Meek, supra, 895 P.2d at 700. Mitigating circumstances are also often considered when assessing the appropriate measure of discipline. State ex rel. Oklahoma Bar Ass'n v. Thomas, 1995 OK 145, 911 P.2d 907, 913. Finally, although discipline should be administered fairly (i.e. evenhandedly), this Court has recognized that the extent of discipline must be decided on a case-by-case basis because each situation will usually involve different transgressions and different mitigating circumstances. See State ex rel. Oklahoma Bar Ass'n v. Rozin, 1991 OK 132, 824 P.2d 1127, 1130. Here, our independent review, and the combination of the above-delineated factors, leads us to conclude the appropriate discipline for respondent's professional misconduct is a six month suspension — a suspension agreed to by him — rather than a lesser suspension as he now argues is more appropriate.

¶ 25 Respondent realizes, as our cases have made plain, an attorney must supervise work done by lay personnel and a lawyer stands ultimately responsible for work done by his non-lawyer employees. State ex rel. Oklahoma Bar Ass'n v. Miskovsky, 1991 OK 88, 824 P.2d 1090, 1097. We have stated:

State ex rel. Oklahoma Bar Ass'n v. Braswell, 1983 OK 63, 663 P.2d 1228, 1231-1232. The facts borne out by the parties' factual stipulations, together with their amplification at the trial panel hearing, show respondent fell woefully short of his obligation to supervise his office manager/non-lawyer assistant in her dealings with respondent's client, Ms. Collins or to make reasonable efforts to ensure that Vann's conduct was compatible with his professional obligations. The lack of supervision, coupled with the almost total delegation to Vann of his duties to Ms. Collins and his obligations as a practicing lawyer to see to it that money entrusted to him was properly used and accounted for, in the final analysis set the stage for permitting numerous violations of our rules governing an attorney's conduct.

¶ 26 The violations began at the outset of the representation by failure to reduce to writing the contingency-fee agreement, they continued throughout the representation in the form of failure to properly communicate with Ms. Collins and, ultimately, involved the mishandling and misapplication of client funds and funds entrusted to respondent's care for a specific purpose (i.e. the "med-pay" check proceeds). Further, when the problem was brought to his attention it still took him about three months, or until April 21, 1997, to remit to Collins the funds representing payment for the last medical bill — payment which should have occurred in August 1996, eight months earlier. Respondent's lack of attention to the matter even continued during the OBA's investigation.

¶ 27 Our cases have articulated a continuum of culpability in evaluating the mishandling of client funds. State ex rel. Oklahoma Bar Ass'n v. Dunlap, 1994 OK 81, 880 P.2d 364, 366-367. Commingling occurs when a lawyer fails to keep client money, or money accepted on the client's behalf, in a separate account from that of the attorney. Id. at 367; State ex rel. Oklahoma Bar Ass'n v. Johnston, 1993 OK 91, 863 P.2d 1136, 1145. The next most serious offense occurs when an attorney uses a client's money for some purpose other than that for which it was intended. Dunlap, supra, 880 P.2d at 367; State ex rel. Oklahoma Bar Ass'n v. Farrant, 1994 OK 13, 867 P.2d 1279 (applying client payment intended for private investigator services to attorney's own fees); State ex rel. Oklahoma Bar Ass'n v. Cummings, 1993 OK 127, 863 P.2d 1164 (applying funds intended for deposition expenses toward claimed attorney fees). The most egregious offense, misappropriation, occurs when the attorney purposely deprives a client of money by way of deceit and fraud, i.e. theft by conversion or otherwise, and intentionally inflicts grave economic harm on his/her client. Johnston, supra, 863 P.2d at 1145. An attorney found guilty of this latter offense, i.e. theft by conversion or intentional misappropriation, results in disbarment. Id.; Rule 1.4(c), RGDP.

¶ 28 Although in the present case it is not appropriate to saddle respondent with responsibility for what appears to be Vann's intentional misappropriation, the record is sufficient to hold him responsible for commingling and simple conversion of, at least, some of the insurance proceeds. As we view the amended stipulations, etc. submitted, respondent has admitted responsibility for such violations. Plainly, it was respondent's lack of supervision and oversight that allowed Vann to commingle and convert money which should have either gone to Collins directly, or indirectly, for payment of her medical bills. In other words, it was his failure to live up to his obligation to supervise his employee and make reasonable efforts to ensure Vann's conduct was compatible with his professional obligations, and his lack of attention to fulfill his responsibility to see to it that Collins' funds were properly safeguarded and rightfully applied that permitted the mishandling of the funds. His oversight in regard to his financial and trust accounting responsibilities was so lax that he, himself — albeit unwittingly — received some of the money that either should have gone to Collins directly or to the payment of her medical bills. Thus, although the evidence does not warrant a finding respondent intentionally misappropriated any of his client's money or that he was aware of Vann's misappropriation or intent to misappropriate at a time when her conduct could have been avoided, respondent is professionally responsible for failure to appropriately safeguard the insurance proceeds and to rightfully apply those proceeds earmarked for payment of Collins' medical bills.

¶ 29 As Dunlap, supra sets out, this Court has assigned varying levels of discipline in matters involving the mishandling of client funds. 880 P.2d at 366. The range has been from public censure to disbarment, depending in part on the degree of harm to the client. Id. Dunlap also indicates that delay in payment to a client in mishandling-fund cases will also be a consideration in determining the appropriate discipline. Id. at 368. In our view, although no two cases are exactly alike, our cases show a six month suspension is plainly within the zone of appropriate discipline for the type of conduct respondent stands responsible.

¶ 30 In State ex rel. Oklahoma Bar Ass'n v. Wilkins, 1995 OK 59, 898 P.2d 147, an attorney was suspended for six months for failing to keep two clients reasonably informed about the status of their respective matters, failing to comply with requests for information, commingling and simple conversion of client funds, and not being honest with a client about his improper retention, as a set off for a prior attorney fee bill, of a portion of settlement proceeds received. A six month suspension was also deemed appropriate in State ex rel. Oklahoma Bar Ass'n v. Williams, 1995 OK 130, 911 P.2d 905, where an attorney was guilty of a conflict of interest, failure to keep property of third person separate from his own and applying trust account funds for purpose other than which they were entrusted. The attorney in Williams had once been previously disciplined by private reprimand during a 35 year legal career, but the parties had stipulated he had fully cooperated with the complainant during its investigation of him.

¶ 31 In State ex rel. Oklahoma Bar Ass'n v. Geb, 1972 OK 17, 494 P.2d 299, a twelve month suspension was found warranted for commingling a client's funds and failing to properly remit funds belonging to the client where the attorney had been previously privately reprimanded by the Board of Governors of the OBA. In Johnston, supra, 863 P.2d at 1146, a four month suspension was approved for a lawyer's commingling and conversion of funds, a false statement to a court, professional incompetence, failure to act promptly on behalf of his clients and failure to communicate with them. Johnston had come before this Court on the parties' agreed stipulation of facts, conclusions of law, mitigating factors and the recommendation for a four month suspension. Like the present case, no previous discipline was involved in Johnston. In Cummings, supra, we decided a one year suspension was appropriate for commingling and conversion of funds by impermissibly taking money entrusted by client for specific purpose and applying it toward a claimed fee, where the lawyer had twice been previously disciplined — once by a private reprimand before the Professional Responsibility Commission and once by public censure from this Court.

¶ 32 As can be seen by the above cases, a six month suspension cannot be considered too harsh for this respondent's professional misconduct. He stands responsible not only for failure to properly handle his client's funds by commingling and simple conversion, but serious deficiencies in managing his law practice in conformity with his professional obligations in respect to supervision and oversight of his non-lawyer assistant, and in respect to communicating with his client. He also failed to have his contingency-fee contract reduced to writing as our rules require. Further, even when the problem with payment of Collins' medical bills was brought to his attention, a significant delay followed before he paid the final bill. Taking into account the suitable factors to be considered, a six month suspension — rather than some lesser suspension — is warranted for respondent's professional misconduct.

¶ 33 Therefore, RESPONDENT IS SUSPENDED FROM THE PRACTICE OF LAW FOR SIX MONTHS FROM THE DATE THIS OPINION BECOMES FINAL. RESPONDENT IS ALSO ORDERED TO PAY THE COSTS OF THIS DISCIPLINARY PROCEEDING IN THE AMOUNT OF $1291.50 WITHIN NINETY (90) DAYS FROM THE DATE THIS OPINION BECOMES FINAL.14

¶ 34 SUMMERS, C.J., HARGRAVE, V.C.J., and HODGES, OPALA, ALMA WILSON, KAUGER, and WATT, JJ., concur.

¶ 35 SIMMS, J., concurs in result.