In Re the Disciplinary Proceeding Against Malone

728 P.2d 1029, 107 Wash. 2d 263, 1986 Wash. LEXIS 1304
CourtWashington Supreme Court
DecidedNovember 26, 1986
DocketC.D. 4269
StatusPublished
Cited by17 cases

This text of 728 P.2d 1029 (In Re the Disciplinary Proceeding Against Malone) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re the Disciplinary Proceeding Against Malone, 728 P.2d 1029, 107 Wash. 2d 263, 1986 Wash. LEXIS 1304 (Wash. 1986).

Opinions

Utter, J.

Philip Malone and the Washington State Bar Association counsel challenge the Disciplinary Board's 60-day suspension of Malone for mishandling and misappropriating client funds. While we affirm the Disciplinary Board's result, we find extenuating circumstances which justify our suspending Malone's 60-day suspension from practice. We agree that Malone should be placed on 2-year probation under the conditions outlined by the hearing officer and adopted by the Board.

Philip Malone was admitted to the Washington bar on March 8, 1954. From January 1, 1974 to September 30, 1982, the period during which the alleged infractions occurred, Malone practiced in Poulsbo, Washington.

In detailed findings of fact, the hearing officer recounted numerous incidents to justify his conclusions of pervasive commingling, negative and positive client balances, invasion of client funds, client trust fund deposits and withdrawals being made without identification of client, improper maintenance of trust fund records, and failure to withdraw attorney's fees when earned. See conclusion of law 45; bar file, at 192. Moreover, the forgeries and account manipulations of Malone's bookkeeper were also attributed to Malone's failure to exercise responsibility for trust funds in his charge. While too numerous to summarize, the factual findings are amply supported by substantial evidence in the record. See especially Auditor's Report and Rainier Bank client trust account ledger. Bar file, at 14-38.

It appears that in October 1982, during a bar investigation of an unrelated complaint, Malone informed the investigator that his bookkeeper/accountant had been stealing money from him for 4 years. Earlier, on July 29, 1982, Malone had obtained a default judgment against his bookkeeper for the principal amount of the forgeries, as well as accrued interest.

In the subsequent bar audit of Malone's account records, the auditor found that the bookkeeper had indeed forged [265]*265checks on three of Malone's accounts: (1) American Marine Bank client trust account; (2) American Marine Bank general office account; and (3) American Marine Bank Chief Seattle Properties account. The auditor segregated all forged and potentially forged checks on the American Marine Bank client trust account. These checks did not become a part of the examination of Malone's trust account practices. The bar audit focused on two of Malone's accounts: (1) The American Marine Bank client trust account, and (2) the Rainier Bank client trust account (on which the bookkeeper committed no forgeries). Malone's briefs notwithstanding, the bookkeeper's thefts are not relevant to these proceedings.

While finding the violations to be "gross", "too many", and "unrefuted", the hearing officer declined to characterize them as "misappropriation" because of that word's criminal connotation. Report of Proceedings, at 339-40. At the time of the hearing, he found that Malone "does not understand the purposes of requirements of DR 9-102 or the basic requirements for handling a client trust account." Finding of fact 41. The hearing officer recommenced a 6-month suspension followed by a 2-year probation.

The hearing officer, however, noted several mitigating factors. Malone himself had brought the trust account discrepancies to the attention of the bar association and had "volunteered in a cooperative manner throughout the audit". Finding of fact 43. Malone appeared to be a competent lawyer and in over 32 years of practice had received no complaints from clients.1 Most importantly, no clients had been shorted any trust funds.

In a 10 to 2 vote, the Disciplinary Board adopted the hearing officer's findings and conclusions and modified his recommendation by ordering a 60-day suspension, to be followed by the 2-year probation. The two dissenters objected only to the modification of the suspension recom[266]*266mendation.

Both parties have appealed. Bar counsel raises the following issues: (1) Is there substantial evidence in the record to support the Disciplinary Board's determination that Malone is unlikely to commit these violations again? (2) Does Malone's conduct warrant disbarment? Malone challenges the bar's conduct in the investigation and prosecution of its claims. His various challenges are without merit and are not discussed further.

A

Likelihood of Repeat Violations

In reducing to 60 days the hearing officer's recommended sanction of a 6-month suspension, the Board determined, in part, that the violations would probably not be repeated. Bar file, at 198. Bar counsel contends that there is insufficient evidence in the record to support this finding. Counsel points to the hearing officer's written and oral observation that Malone showed no understanding of the purpose of CPR DR 9-102 or the basic requirements for handling client trust accounts. While acknowledging Malone's efforts to establish some better trust fund management practices, the hearing officer questioned the efficacy of those efforts.

This case represents one of the rare advantages of pro se advocacy in that this court was afforded the opportunity to test the bar counsel's claim. At oral argument, Malone evidenced an understanding of his basic duties as a fiduciary of client funds. Moreover, the conditions of his probation require Malone to obtain professional trust accounting assistance, as well as submit quarterly trust account reports to the association to ensure his CPR DR 9-102 compliance. We do not find Malone's ignorance, such as it is, to be "invincible" and we are confident that the probation conditions serve to justify the Board's confidence.

B

Should Malone Be Disbarred?

Bar counsel objects to the Board's reduced sanction. "There is simply no precedent at this point to support the [267]*267Disciplinary Board's decision that an attorney found to have misappropriated some $10,000 in clients funds, as part of a pattern of long time trust account abuse, should merely receive a 60-day suspension from the practice of law." Brief of Bar Association, at 21. Counsel also objects to the hearing officer's recommended 6-month suspension. He contends that the appropriate sanction is disbarment, which is "the usual sanction for misappropriation or misuses of client funds", unless there are "extraordinary mitigating circumstances". In re Stock, 104 Wn.2d 273, 280, 704 P.2d 611 (1985).

Mr. Malone contends that he should not be sanctioned at all. He argues that his reputation and finances have already been unduly harmed by bar counsel's aggressive prosecution of the case, that his retirement funds were also stolen by his bookkeeper and trusted friend, and that any violations he committed were only technical in nature. He further acknowledged that he should have more closely supervised his bookkeeper and that his accounting procedures needed radical change.

While the court is ultimately responsible for attorney discipline, it has "adopted the standard . . . that the Board's recommendation should be affirmed unless this court can articulate a specific reason to reject the recommendation." In re McLeod, 104 Wn.2d 859, 865, 711 P.2d 310 (1985). To evaluate the Board's recommendation, this court has proposed a number of factors.

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Bluebook (online)
728 P.2d 1029, 107 Wash. 2d 263, 1986 Wash. LEXIS 1304, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-disciplinary-proceeding-against-malone-wash-1986.