In re Disciplinary Action against Holker, A06-896.

Decision Date03 May 2007
Docket NumberNo. A06-896.,A06-896.
PartiesIn re Petition for DISCIPLINARY ACTION AGAINST Kenneth M. HOLKER, a Minnesota Attorney, Registration No. 46267.
CourtMinnesota Supreme Court

Timothy Michael Burke, Saint Paul, MN, for Petitioner.

Edward F. Kautzer, Saint Paul, MN, for Respondent.

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.

This attorney discipline case arose out of a petition filed by the Director of the Office of Lawyers Professional Responsibility against respondent Kenneth M. Holker alleging numerous violations of the Minnesota Rules of Professional Conduct and the Minnesota Rules on Lawyers Professional Responsibility (RLPR). After a hearing, the referee concluded that Holker had violated the following Rules of Professional Conduct as in effect before October 1, 2005: 1.3 (failing to act diligently in representing a client); 1.4 (failing to adequately communicate with the client); 1.15(a), as further interpreted by Lawyers Professional Responsibility Board Opinion No. 15 (failing to deposit client funds in a trust account); 1.15(b) (making early withdrawals from client funds before legal fees were earned); 1.15(c)(4) (failing to promptly deliver client funds as requested); 1.16(d) (failing to protect client interests upon termination of representation); 8.1(a)(1) (knowingly making false statements in connection with a disciplinary proceeding); 8.1(a)(3) (knowingly failing to respond to the director's demand for information); 8.4(c) (engaging in conduct that is dishonest); and 8.4(d) (engaging in conduct that is prejudicial to the administration of justice). In addition, the referee concluded that Holker violated Rule 25, RLPR, by failing to cooperate with the director's investigation. The referee recommended a six-month suspension and that Holker be required to petition for reinstatement. We adopt the referee's recommendation.

In October 1977, Holker was admitted to practice law in Minnesota. For more than 15 years, his practice has been limited to estate planning and probate. Prior to this discipline action, Holker was admonished five separate times for: (1) failing to return client files (1982); (2) failing to timely pay interest accruing in a pooled client trust account to the Lawyers Trust Account Board (1990)1; (3) charging interest on legal fees without making adequate disclosures (1991); (4) failing to pay for advertisements that had been published in newspapers (1995); and (5) failing to adequately explain to clients the basis of his legal fees and using an inappropriate fee agreement (1998). In addition, on February 4, 2000, Holker was publicly reprimanded by this court and placed on probation for failing to timely file federal and state individual income tax returns, failing to timely file federal and state employer quarterly tax returns and failing to timely pay withholding taxes. In re Holker, 605 N.W.2d 104 (Minn.2000).

The current allegations stem from Holker's representation of one client. On April 2, 1997, a day after her sister passed away, the 78-year-old client contacted Holker about representing her in her role as personal representative of her sister's estate. The client signed a retainer agreement with Holker on April 18.

The director claims that Holker failed to act diligently and to adequately communicate with the client to ensure that estate and income tax returns were prepared and timely filed. Holker faults the client for the untimely returns. In March 2001, Holker retained an accountant to prepare the unfiled tax returns for the estate. The director alleges that Holker failed to diligently provide the accountant with the information and documents necessary for the accountant to prepare the returns.

The director also claims that Holker failed to diligently request from the client the information necessary to commence the probate proceeding. The director claims that the information necessary to commence the proceeding was not requested until February 1999 and Holker concedes that the probate proceeding was not commenced until August 1999—more than 27 months after the sister's death. Holker does not dispute that from June 1997 through February 1998, and from May through December 1998, he failed to work on the client matter and failed to communicate with the client.

Holker admits that during his representation of the client, he paid himself from estate funds in an amount greater than the estate owed him for legal fees and expenses, and he failed to hold the unearned fees in a trust account.

In June 2003, the client retained R.H. to replace Holker as counsel for the estate. On June 27, R.H. requested that Holker forward the client's file and all estate funds remaining in Holker's trust account. The file was not given to R.H. until July 24, when R.H.'s law clerk picked up "the file." The law clerk presumed that he received the "complete file."

On July 18, 2003, R.H. filed a disciplinary complaint against Holker, alleging that Holker failed to commence and complete the client's probate matter promptly, resulting in an increased tax liability to the estate. R.H. also alleged that Holker had liquidated many of the estate's stock holdings without adequate communication with the client. In November, R.H. provided the director with a copy of the client's file that he had received from Holker.

On August 18, 2004, Holker met with the director's office and was questioned on a number of issues regarding the client's case. The file Holker had provided to R.H. did not contain correspondence between Holker and the client addressing several of the issues that were discussed. Holker told the director's office that R.H. had not received a copy of the entire client file because R.H.'s law clerk had left a "couple stacks" of things behind at Holker's office. The director's office requested that Holker produce the additional file materials that were allegedly left behind. Four months later, Holker provided the director's office with five letters from Holker to the client that were not included in the file that Holker originally provided to R.H. The director alleges that each of these letters was fabricated.

Holker ordered a transcript of the referee's hearing, thereby preserving his right to challenge the referee's factual findings. Rule 14(e), RLPR. Nevertheless, this court will only set aside the referee's findings in a disciplinary action if "upon review of the entire evidence, a reviewing court is left with the definite and firm conviction that a mistake has been made." In re Pinotti, 585 N.W.2d 55, 62 (Minn.1998). "Allegations of professional misconduct must be proved by clear and convincing evidence." In re Moeller, 582 N.W.2d 554, 556 (Minn.1998).

Holker does not challenge the referee's findings that he violated Minn. R. Prof. Conduct 1.15(a) and (b) by failing to deposit client funds in a trust account and paying himself legal fees before they were earned. He also does not explicitly challenge the referee's finding that he violated Minn. R. Prof. Conduct 1.15(c)(4) by failing to promptly deliver client funds as requested.

Minn. R. Prof. Conduct 1.3 and 1.4

Rule 1.3 requires that a lawyer "act with reasonable diligence and promptness in representing a client." Rule 1.4(a) provides that a lawyer must "keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information." The director argues that Holker's failure to ensure that the estate and income tax returns were timely filed and to timely commence the probate proceeding demonstrate Holker's failure to act diligently and to communicate with the client.

Holker does not dispute that the estate and income tax returns were untimely filed. But Holker faults the client for failing "to act diligently or promptly in providing * * * the documents and information" needed to timely prepare the tax returns. There is ample evidence to support the referee's findings that Holker bears responsibility for the late filing of the returns.

First, Holker's billing statement indicates that in April 1997 he discussed with the client "possible estate and income tax ramifications" and the "importance of completing [the] last four years income tax returns." Yet, from June 1997 through February 1998, a nine-month period, and from May through December 1998, an eight-month period, Holker has no record of working on the client's case or communicating with the client.

Second, the fee agreement between Holker and the client states that Holker was going to work on the "Probate Estate" of the client's sister. The fee agreement does not discuss who would take responsibility for tax matters related to the estate.

Third, Holker testified that the client told him that Robert Chase, a long-time friend of the client, would be handling all unfiled estate and income tax returns. Holker argues that he acted with reasonable diligence because the client had hired Chase to do the tax preparation work for the estate, and Holker was simply "waiting for Chase to complete his work." But Holker could not recall having any communications with Chase and, as mentioned above, Holker had little to no communication with the client. Holker did not even attempt to contact Chase until December 2000, when he learned that Chase had passed away in mid-2000.

After hearing of Chase's death, Holker hired an accountant to prepare all of the unfiled tax returns. The accountant testified that he was hired to work for Holker, not the estate, and that he understood that he had to go through Holker to get information from the client. The accountant testified that in May 2001, he sent Holker a list of items he needed for the 1994 income tax return, which Holker failed to provide. The accountant's testimony is supported by (1) Holker's billing statement, which indicates that in May 2001, Holker received the accountant's request; and (2) the absence of a record showing that Holker provided the...

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