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In re PRB

Supreme Court of Vermont

April 17, 2014

In re PRB Docket No. 2013.153

Editorial Note:

This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40

Professional Responsibility Board. DOCKET NO. 2013.153.

Paul L. Reiber, Chief Justice, John A. Dooley, Associate Justice, Marilyn S. Skoglund, Associate Justice, Beth Robinson, Associate Justice, Geoffrey W. Crawford, Associate Justice.

OPINION

ORIGINAL JURISDICTION

[ΒΆ1] Upon review of the hearing panel decision in this matter, the Court concludes as follows: The decision presents a well-reasoned discussion and resolution of a problem common in legal practice, particularly for small firms and solo practitioners. Accordingly, the Court orders review of the decision on its own motion, adopts the hearing panel decision in its entirety as a final order of this Court, waives briefing and oral argument, and orders that the decision be published in the Vermont Reports.

STATE OF VERMONT PROFESSIONAL RESPONSIBILITY BOARD

In re PRB File No. 2013.153

Page 469

Decision No. 167

The parties have filed a Stipulation of Facts, Proposed Conclusions of Law and a Recommendation for Sanctions. The Respondent has waived certain procedural rights including the right to an evidentiary hearing. The panel accepts the stipulated facts and recommendations and orders that Respondent be admonished by Disciplinary Counsel for failing to regularly reconcile his trust accounts, for failing to maintain a central trust accounting system and for placing unearned fees in his operating account in violation of Rules 1.15(a)(1) and 1.15(c) of the Vermont Rules of Professional Conduct.

Facts

In June of 2012, Respondent's trust account was selected for audit as part of the audit program conducted by Disciplinary Counsel. The audit was performed by a Certified Public Accountant (CPA) who checked the accounts for compliance with Rules 1.15 through 1.15B of the Vermont Rules of Professional Conduct for the period October 1, 2009 through July 25, 2012 (the audit period).

The CPA provided a written report to Disciplinary Counsel detailing Respondent's material noncompliance with the Rules of Professional Conduct during the audit period. As a result of the audit, Disciplinary Counsel opened an investigation into Respondent's trust account management during the audit period.

The CPA found that:

1. Trust accounts had not been reconciled to bank statements and client balances since April of 2010, and that a discontinued trust account had not been closed out.
2. Advance payment of legal fees from clients were routinely deposited into the operating account, not into a trust account. In certain types of cases, particularly DUI cases, Respondent charges a set fee for the work required up to trial. Respondent erroneously believed that this fee was earned upon receipt and thus placed the funds in his operating account.
3. Accounts holding title insurance premiums while awaiting additional legal work were not labeled " trust accounts."
4. There was no centralized accounting system or other single source of account identification for the five trust account and two fiduciary accounts that had activity during the audit period.

Respondent has advised Disciplinary Counsel that he has instituted new policies going forward to ensure trust account compliance under the Rules of Professional Conduct. An inactive trust account has been closed. The client trust account is now reconciled within five days of receiving a bank statement and the reconciliation is approved by Respondent. Lump sum fees are now placed in the trust account upon receipt and withdrawn as earned. The account holding the title insurance premiums is now labeled as the firm's title ...


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