1. The referee did not clearly err in finding that cost bond refunds in two client matters belonged to respondent and in concluding that respondent did not misappropriate clients' funds when he did not deposit these refunds into client trust accounts.
2. Respondent's failure to communicate and work diligently on a client matter and his failure to deposit unearned, advance fees into his trust account warrants a public reprimand and 1 year of supervised probation.
For Petitioner: Martin A. Cole, Director, Siama Y. Chaudhary, Senior Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota.
For Respondent: Kay Nord Hunt, Phillip A. Cole, Lommen Abdo, P.A., Minneapolis, Minnesota.
The Director of the Office of Lawyers Professional Responsibility filed petitions for disciplinary action against respondent William L. French, alleging that French committed professional misconduct in three client matters. Following an evidentiary hearing, the referee concluded that French did not commit professional misconduct in the first two matters, but that he did violate Minn. R. Prof. Conduct 1.3, 1.4(a)(3), 1.4(a)(4), and 1.15(a) in the third matter. We conclude that the referee's findings and conclusions are not clearly erroneous and that a public reprimand with 1 year of supervised probation is the appropriate discipline for French's misconduct.
French has been licensed to practice law in Minnesota since October 30, 1981. The Director filed a petition for disciplinary action against French, alleging violations in his separate representations of J.T. and J.B./M.B. The Director later filed a supplementary petition for disciplinary action, alleging violations in French's representation of K.L., and a second supplementary petition for disciplinary action, alleging violations based on attorney's lien notices French filed during the pendency of this disciplinary action. We appointed a referee to make findings of fact and conclusions and to recommend appropriate discipline. We will address the facts of each client matter in turn.
Beginning in September 2007, French represented J.T. in a lawsuit J.T. had commenced against attorney T.M. In 2010, summary judgment was granted in favor of T.M. with respect to J.T.'s claims. French agreed to represent J.T. in an appeal from the judgment, but required J.T. to pay him $1,200. J.T. paid French $1,200 on February 3, 2010, and the memo portion of his check stated " Cover Fees for Appeal." French did not put the $1,200 in his trust account. French paid costs related to the appeal totaling $1,404.75, including a cost bond of $500. The appeal was unsuccessful, and French withdrew from J.T.'s representation in August 2010. In January 2011, French received a $500 check refunding J.T.'s cost bond. French deposited the $500 in his operating account and did not notify J.T. of his receipt of the refund.
The parties dispute whether J.T.'s $1,200 payment was meant to cover costs, attorney fees, or both. The Director alleged that the payment was exclusively for costs, and that by keeping the cost bond refund, rather than placing it in his trust account, French misappropriated client funds and failed to communicate with J.T. about the refund, in violation of Minn. R. Prof. Conduct 1.4(a)(3),
1.15(a) and (c)(1), and 8.4(c) and (d). French, for his part, claimed that the payment was a " flat fee" and that he had no obligation to place any portion of the payment in his trust account or to notify J.T. of the cost bond refund. French notes that after the $500 cost bond refund was deducted from J.T.'s appellate costs paid by French, the remaining appellate costs were $904.75. And when this amount is subtracted from J.T.'s $1,200 payment, French was left with $295.25, which he kept as a fee for the legal work he performed on the appeal.
The referee found that the $1,200 was a " flat rate to cover fees and expenses." According to the referee, all of the money " had either been earned or expended by the time the $1,200 came into Mr. French's possession," and therefore the $1,200 constituted French's own funds. Although French did not deposit the $500 cost bond refund in his trust account, the referee found that French's conduct " was the product of his understanding that the refund check was his money, a belief that was, in good faith, justified by the facts of the transaction with the client." The referee found that the cost bond refund was French's property, and therefore concluded that the Director had not proven that French had committed misconduct.
Additionally, during the pendency of these disciplinary proceedings, French filed and served upon J.T. a notice of attorney's lien, claiming entitlement to $500 as fees and costs due to him. The lien action was French's attempt to establish that he was legally entitled to the $500 cost bond refund. The district court granted the lien, and French filed a satisfaction of judgment. The Director alleged that this lien notice was a frivolous claim and that it represented an attempt to collect unreasonable fees, in violation of Minn. R. Prof. Conduct 1.5(a), 3.1, and 8.4(d). The referee concluded that the notice of attorney's lien, " while perhaps unnecessary, especially in light of these pending proceedings, does not rise to the level of a violation of the Rules of Professional Conduct."
Beginning in April 2007, French represented J.B. and M.B. in litigation regarding an easement. J.B. and M.B. lost the case, and French sent a letter to them, dated December 2, 2008, stating, " I am willing to handle an appeal at no additional cost for attorney fees provided that the outstanding bill [attached to the letter ($3,100.68)] plus $1,100 (for expenses) is paid on or before an appeal is undertaken." French claims that J.B. and M.B. did
not agree to the terms of this offer, but that they came to a new agreement over the phone, pursuant to which J.B. and M.B. would pay French a total of $5,000 in attorney fees, inclusive of the $3,100.68 outstanding, with $2,500 paid before the filing of the notice of appeal and $2,500 paid in 30 days. There is ...