Tuesday, January 3, 2017

Connecticut Court Explains Misapropriation Dsicipline Standards //Legal Profession Blog

Connecticut high court explains standards for misappropriation discipline
by Michael Frisch

The Connecticut Supreme Court has issued an opinion of significance that affirmed a reprimand for a Rule 1.15 violation and rejected a harsh presumptive sanction for intentional misappropriation

This disciplinary action originates from a twelve year old fee dispute that resulted in several actions and various appeals...

The trial court found by clear and convincing evidence that the defendant violated rule 1.15 (f) of the Rules of Professional Conduct by failing to maintain the disputed fee in escrow and that his ‘‘belief that Yuille would be satisfied once Mooney was paid was erroneous and unreasonable given the totality of the circumstances.’’ Despite this violation, the trial court also found that the defendant did not knowingly misappropriate those funds. Specifically, the trial court found that the defendant’s ‘‘failure to escrow the funds . . . was not a reflection of any lack of integrity on his part and that he did not act wilfully or with intent to deceive Yuille.’’ Essentially, while the defendant appropriated the funds knowingly, he had ‘‘engaged in this conduct negligently,’’ without deceptive intent.

Bar Counsel had appealed to the Appellate Court, which affirmed, as did the court here

The plaintiff claims that Practice Book § 2-47A mandates disbarment when an attorney: (1) appropriates client funds; (2) does so knowingly; and (3) does so knowing no agreement or court order existed regarding the appropriation of the funds. In the plaintiff’s view, a finding regarding the defendant’s intent is unnecessary. We disagree.

As to sanction

On the basis of the trial court’s factual findings, as set forth in this opinion, the defendant’s transfer of funds constituted an appropriation that he undertook knowingly. The trial court found, however, that the long and tortuous procedural history of the parties’ fee dispute contributed to the defendant’s unreasonable but subjective belief that he was entitled to the disputed funds and no longer was required to maintain them in escrow.6 Put another way, the defendant appropriated client funds, did so knowingly, but did not do so with any intent to steal the escrowed funds or otherwise take them wrongfully, dishonestly, or illegally. The transfer did not constitute theft or larceny. Accordingly, because the defendant did not intend to steal from his client he did not act with the intent necessary to constitute a misappropriation and, therefore, is not subject to mandatory disbarment...

In holding that in order to be subject to mandatory disbarment pursuant to Practice Book § 2-47A, an attorney must knowingly and intentionally steal client funds, we reject the definition of ‘‘knowing misappropriation’’ from Wilson, which resembles strict liability, and the New Jersey case law that flows from it. In re Wilson, supra, 81 N.J. 455 n.1. 

In addition to being inharmonious with our statutory construction of ‘‘knowingly misappropriated,’’ such a standard would impose a severe punishment—that of mandatory disbarment for a minimum of twelve years—on attorneys for conduct that had been undertaken less than intentionally and, further, would create a rigid rule, robbing the trial court of its discretion to fashion sanctions properly suited to the offending attorney’s background, intent, and mitigating or aggravating circumstances.

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