In re PRB No. 2018-087
Original Jurisdiction Professional Responsibility Board PRB
DOCKET NO. 2018-087
above-entitled cause, the Clerk will enter:
1. Upon review of the hearing panel decision in this matter,
the Court concludes as follows: The decision presents a
well-reasoned discussion. 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.
OF VERMONT PROFESSIONAL RESPONSIBILITY BOARD
Panel No. 2
F. Cook, Esq., Chair Greg Worden, Public Member
Decision No. 220
Counsel and Respondent initiated these proceedings by filing
a proposed stipulation of facts along with jointly proposed
conclusions of law. See Administrative Order
("A.O.") 9, Rule 11(D)(1)(a) (parties may initiate
formal disciplinary proceeding by filing proposed stipulation
of facts "along with any proposed legal conclusions and
recommended sanction which disciplinary counsel and
respondent, either separately or jointly, would like the
hearing panel to consider"). Along with the proposed
stipulation, the parties submitted a request for a hearing to
present additional factual material to the Panel. On August
6, 2018, the Hearing Panel issued a decision in which it
accepted paragraphs 1 through 28, 30 through 37, 40, 41, and
44 of the proposed stipulation. The Panel rejected the other
statements in the proposed stipulation of facts on the
grounds that they consisted of conclusions of law relating to
the applicability of aggravating and mitigating factors for
purposes of determining an appropriate sanction - not
statements of fact. The Panel granted the parties' joint
request for a supplemental hearing. The final merits hearing
was held on October 23, 2018.
the factual record now complete, the above matter is ripe for
a decision on the merits of the issues presented. Based on
the stipulated facts that have been accepted by the Panel and
the additional evidence in the record, the Panel issues the
following findings of fact, conclusions of law and order:
Respondent was admitted to practice April 3, 1984 and has
been actively practicing in the same law firm his entire
1990, Respondent became the majority owner and managing
partner of his firm, located in Bennington, Vermont.
the managing partner, Respondent is responsible for all
staffing needs of the firm.
majority of Respondent's law practice involves real
Respondent maintains an IOLTA account through the Bank of
uses his account primarily for residential real estate
the course of his 34 years of practice, Respondent has
transitioned from manual trust account management to
software-based trust account management systems.
mid-2014, Respondent's law firm was using Quicken
accounting software and was in the process of upgrading to
QuickBooks accounting software.
September 8, 2014, a staff member who was managing much of
the day-to-day bookkeeping for 14 years, including the trust
accounting reconciliation, left the firm unexpectedly.
Shortly after the staff member departed, Respondent reviewed
all of the bookkeeping records and found the trust account
reconciliations were current and accurate, and decided to
hire an outside accountant to finish the transition from
Quicken to QuickBooks and restructure the organizational
system. The transition to QuickBooks was delayed for a
protracted period of time. The cause of the delay was a
failure on the part of Respondent to secure sufficient
resources to advance and complete the transition task in a
a result of the incomplete transition from Quicken to
QuickBooks and an inability to hire a suitable replacement
for the departed staff member, Respondent's law firm
operated, for a protracted period of time, with an inadequate
system for managing his IOLTA account. Respondent eventually
hired a capable person to assist him with bookkeeping
functions, but she left the firm sometime in 2016.
During the transition from Quicken to QuickBooks, Respondent
performed rudimentary manual accounting in each individual
client file on a hand-written sheet tracking funds received
Respondent personally handled all fund deposits and
disbursements during this period of time.
Respondent kept individual paper balance sheets in each
client's file and monitored the IOLTA account online.
Each individual file contained a manual list of deposit
monies in, and checks written out, with wire confirmations
and check copies attached.
Respondent maintained manual bank account deposit books with
a carbon copy of deposit slips and would attach the bank
deposit receipt when he returned from the bank.
some point in 2016, Respondent began to be struggle with the
volume of real estate transactions being handled by his firm.
In December of 2016, Respondent's firm was handling
several real estate closings every day. The required monthly
reconciliation of Respondent's IOLTA account was not
being performed at this time.
of approximately December 2016, Respondent was six months
behind in completing the requisite monthly reconciliations.
Respondent was generally aware of his obligations under the
Rules of Professional Conduct relative to managing client
trust accounts (IOLTA), including the obligation to perform
monthly reconciliation. He believed that he would catch up
with the monthly reconciliations and otherwise come into
compliance within a reasonable period of time and that, in
the meantime, no client funds were in jeopardy.
During this period of time in 2016 and through the fall of
2017, there were numerous times when Respondent did not
collect wire fees ranging from $10 to $20. When Respondent
became aware of these omissions, he promptly covered them out
of the firm's operating account.
instances where Respondent failed to collect wire fees caused
client accounts entered into QuickBooks by the firm's
outside accountant to not reconcile with the client file
memo line in checks that Respondent would write from the
trust account also lacked clarity and uniformity, which
caused confusion for the outside accountant and on occasion
caused transactions to be posted to the wrong client and
created the incorrect appearance of negative balances for
some clients and positive balance for others.
June 2017, after nearly a year of searching and a few
short-term hires that did not work out, Respondent finally
located and hired a suitable replacement staff member whom he
currently employs to assist him with his trust accounting
December 2017, as part of a routine compliance audit, JMM
& Associates' CPA Randall Sargent reviewed with
Respondent his trust account records for the period of
October 1, 2016 to November 30, 2017.
Sargent generated a two-page report, dated December 7, 2017,
in which he opined that Respondent had not complied with the
requirements of V.R.Pr.C. 1.15 and 1.15A during the period of
time in question. In his report, he found that: (1) on the
list of individual client balances maintained by Respondent
there were balances which were not identified to specific
clients, caused by deficient record keeping; (2) there were
several instances of negative balances on the
Respondent's list of client balances due to inadequate
record-keeping, which raised questions as to whether
Respondent might have been using one clients funds in
connection with a different client matter; (3) Respondent did
not have in place a system to record all receipts and
disbursements for certain interest-bearing individual client
trust accounts, caused by Respondent's practice of
informally monitoring the activity within the accounts; (4)
there was a lack of documentation showing timely notice to
clients of activity within individual interest-bearing client
trust accounts, caused by Respondent's practice of
informally discussing with clients the activity within the
accounts; and (5) in several instances, Respondent failed to
complete reconciliation of the trust accounts to the bank
statements, the ledger balance, and the list of funds held
for each client.
Respondent has agreed that the findings in the Sargent report
March 30, 2018, Disciplinary Counsel and Respondent met at
his office and reviewed the accounts that were the ...