On review of the report of the Grievance Commission of the Supreme Court of Iowa. Review of a report filed by the Grievance Commission of the Supreme Court of Iowa recommending the suspension of an attorney's license.
Charles L. Harrington and Elizabeth E. Quinlan, Des Moines, for complainant.
William S. Morris, Des Moines, Pro se.
The Iowa Supreme Court Attorney Disciplinary Board charged William Morris with violations of the Iowa Rules of Professional Conduct after a series of audits revealed trust account irregularities. After a hearing, a division of the Grievance Commission of the Supreme Court of Iowa found Morris's actions violated several ethical rules and recommended a suspension of his license to practice law. Morris has appealed from the commission's recommendation.
After reviewing the record, we find Morris committed ethical violations warranting a suspension.
I. Factual and Procedural Background.
Morris was first licensed to practice law in 1983. He engaged in private practice in Des Moines with his older brother who--like their father--was also an attorney. Morris's early career path took an unfortunate detour in 1988 when his license to practice was suspended for three months for failing to file his state income tax returns for 1983 and 1984 and falsely representing in his 1985 and 1986 attorney questionnaires that those returns were filed. See Comm. on Prof'l Ethics & Conduct v. Morris (Morris I ), 427 N.W.2d 458, 460 (Iowa 1988). Morris's license to practice was again suspended in 1992 when this court found he violated several disciplinary rules in representing a client facing deportation. Comm. on Prof'l Ethics & Conduct v. Morris, 490 N.W.2d 806, 808-10 (Iowa 1992) (imposing suspension of six months for neglect, handling matter beyond his competence, conduct involving dishonesty, and violation of certain advertising rules).
Morris came to the attention of the Client Security Commission upon its receipt of several overdraft notices from the bank where Morris kept his client trust account. The trust account experienced one overdraft per year in 2005 through 2008. Two more overdrafts were noted in late 2009, and yet another occurred in April 2010. When auditors representing the Client Security Commission arrived at Morris's office in early May 2010 to review the status of the account, they discovered obvious bookkeeping and management deficiencies impeding an efficient and comprehensive audit.
Morris told the auditors he had no employees and revealed he personally performed all banking functions for the trust account. The auditors discovered Morris kept no general ledger for the account and no separate ledger evidencing for each client the source of all funds deposited, the names of all persons for whom the funds were held, or the record of charges and withdrawals pertaining to each client. Morris produced for the auditors some trust account bank statements in their original envelopes, a loose-leaf checkbook with a check stub register for the account covering the period from January 2009 through May 3, 2010, a handwritten list of clients, and two pages of " trust account sheets" generated by Morris for the auditors.
Morris, who was cordial and helpful in his interactions with the auditors, produced no documentary evidence for the auditors tending to show he kept running trust balances for individual clients or that he regularly reconciled the trust account. The bank records he made available to the auditors evidenced numerous deposits and disbursements that could not be attributed to specific clients and documented several account overdrafts for the years 2008 and 2009.
The auditors also found a shortage of $11,617.68 in examining the trust account. Part of this shortage was the result of activity related to a personal injury settlement Morris achieved for his clients, members of the Schwaller family. Morris told the auditors he had disbursed net settlement proceeds to the clients, and had written a check to himself for his attorney fee.
A portion of the settlement proceeds was retained briefly in the trust account for the purpose of satisfying a medical subrogation claim, but dissipated before the claim was paid. The auditors attributed the remainder of the trust account shortage to negative balances for several clients, and to the missing sum of $5686.96 that had been deposited in the account for the benefit of Morris's mother's trust. When the auditors performed the audit in May 2010, the total balance in the account was only $85.83, well short of the amount owed the Schwallers' subrogee, the amounts required to satisfy the claims of Morris's other clients, and the funds necessary to cover the deposit for the benefit of Morris's mother's trust.
Evidence reviewed by the auditors during the audit disclosed Morris had provided false answers on his " Iowa Supreme Court Client Security 2010 Combined Statement." In particular, Morris had untruthfully represented in his online answers that he had performed monthly reconciliations of the trust account and that he had experienced no trust account overdrafts during 2009. Before leaving Morris's office, the auditors provided him with written guidelines detailing for Iowa lawyers the proper management of client trust accounts.
On June 4, 2010, the assistant director for boards and commissions with the Office of Professional Regulation sent a letter to Morris summarizing the deficiencies noted by the auditors in their May 2010 review of Morris's trust account records. The letter directed Morris to deposit $11,617.68 in the account to alleviate the shortage no later than June 18. The June 4 letter also requested Morris provide the Client Security Commission with the April 2010 bank statement for the trust account, an amended account ledger documenting the dates of deposits and withdrawals, photocopies of checks written on the account, and a copy of Morris's file for the Schwaller matter. The letter further informed Morris the auditors would contact him within thirty to forty-five days for the purpose of arranging another visit by the auditors with the expectation that the record-keeping deficiencies and account arrearage would by then be remediated.
The auditors returned to Morris's office on August 24. During this visit, they requested documentation of fee billings to certain clients accounting for withdrawals from the trust account. Morris told the auditors he had been in practice for twenty-five years, but had never heard of a requirement that lawyers must provide clients a contemporaneous accounting when making trust account withdrawals for payment of the lawyer's attorney fees and expenses. Morris informed the auditors he did not typically provide clients a contemporaneous accounting when making
such withdrawals, because he instead generally prepared a bill for clients only if they requested one.
During the August 24 visit, the auditors also inquired about the fee paid to Morris for services rendered to the Reeves estate. The decedent Reeves had died on March 25. Morris was engaged to perform legal services for the estate. He received and deposited the sum of $3200 in his client trust account on April 20, as an advance payment of the fee he expected to earn for his services. Morris then withdrew $2200 from the trust account by writing a check payable to himself the very next day. He wrote two more checks to himself totaling $1000, fully depleting the trust account balance for the Reeves estate by April 26. When the auditors asked Morris to produce court orders approving payment of his legal fee charged to and collected from the Reeves estate, Morris told the auditors no court approval of the fee was required because the estate was " private engagement work." Morris was also unable to produce a written accounting to the client detailing any services performed for the fee charged to the Reeves estate. He admitted to the auditors the estate had not yet been closed on August 24.
Although the auditors confirmed during the August 2010 visit that funds had been deposited in the trust account to cover the shortage identified during the May 2010 audit, Morris was unable to demonstrate he had become compliant with the requirement of regular account reconciliation. The auditors' requests for production of deposit slips pertaining to the trust account again went unheeded. Consistent with their findings from the May audit, the auditors noted in August ...