In re Disciplinary Action against Berg, A07-563.

Citation741 N.W.2d 600
Decision Date29 November 2007
Docket NumberNo. A07-563.,A07-563.
PartiesIn re PETITION FOR DISCIPLINARY ACTION AGAINST James L. BERG, a Minnesota Attorney, Registration No. 139105.
CourtSupreme Court of Minnesota (US)
OPINION

PER CURIAM.

This attorney discipline case concerns the appropriate discipline to be imposed on respondent James L. Berg. The Director of the Office of Lawyer's Professional Responsibility filed a petition and a supplementary petition for discipline alleging several acts of misconduct. Berg agreed that he committed the acts of misconduct alleged in the petitions by entering a stipulation for discipline with the Director. In the stipulation, Berg and the Director jointly recommended that Berg be suspended from the practice of law in Minnesota for a minimum of five years with conditions placed on reinstatement. Because of the presence of numerous mitigating factors and because it is appropriate in this case to give some deference to the Director's recommendation in the stipulation, we impose the discipline of a five-year suspension.

In October 1982, Berg was admitted to practice law in Minnesota. Until the Director filed the petition in this case, Berg had never been the subject of a disciplinary action. Berg initially filed an answer to the petition, but withdrew that answer and agreed to the allegations and those of the supplementary petition. Berg's acts of misconduct include misappropriation and mishandling of client funds, a single instance of forgery, making false statements, failing to communicate with clients, neglecting client matters, failing to enter written contingency fee agreements, and failing to cooperate with the disciplinary investigation underlying this case.

Berg admitted to misappropriating the funds of six different clients. During his representation of C.W., Berg misappropriated funds he received on C.W.'s behalf by disbursing the proceeds from his client trust account prior to April 1, 2005. To whom Berg made these disbursements is unclear, but his trust account retained a sufficient balance to cover the C.W. funds at other times during the Director's audit of this account. Then in May and June 2005, Berg misappropriated settlement funds he received on behalf of J.R. by withdrawing the entire amount from his client trust account. In October or November 2005, Berg misappropriated settlement funds he received on K.S.'s behalf by disbursing those funds from his client trust account. Berg made these disbursements after negotiating the check by forging K.S.'s signature on the endorsement. Sometime before November 18, 2005, Berg misappropriated funds he received on behalf of B.C. by disbursing them from his client trust account for his own use. Berg also misappropriated insurance premium and mortgage escrow funds he received for L.H. by disbursing them for his own use in February 2007. Finally, Berg misappropriated funds he received from G.B. as an advance fee payment and an appellate filing fee, by failing to deposit them in his client trust account. Berg agreed that each of these disbursements, and his failure to deposit money he received from G.B., violated Minn. R. Prof. Conduct 1.15(a) & (b) and 8.4(b) & (c). Berg agreed that his forgery of K.S.'s signature, though made under the mistaken belief that he was authorized to negotiate the check for K.S., violated Minn. R. Prof. Conduct 8.4(b) and (c).

During an audit of Berg's trust account from April 2005 through April 2006, the Director discovered that Berg deposited personal funds into and made personal cash withdrawals from his client trust account. Berg also authorized his own creditors to make electronic withdrawals from that account. He also failed to disburse funds to clients by trust account checks. Berg and the Director agreed that these actions violated Minn. R. Prof. Conduct 1.15(a) and (b).

Berg failed to enter written contingency fee agreements with four different clients. Berg made these unwritten contingency fee arrangements with J.R. in March 2005, with K.S. in October 2003, with L.L.P. sometime before December 23, 2005, and with T.L. sometime before January 4, 2006. Berg also received settlement funds on behalf of J.R. for which he has never accounted. Berg agreed that his failure to execute written contingency fee agreements violated Minn. R. Prof. Conduct 1.5(c).

Berg disbursed to L.L.P. the portion of the settlement funds to which she was entitled, but he did not provide her a written statement showing the outcome of the matter or the method by which the funds were divided between his fees and her remittance. Berg did not provide K.S. and T.L. with documentation showing the outcome of their cases. Nor did he provide them with documentation showing the method of division between his fees and their remittance. Berg agreed that his failure to provide appropriate documentation to these clients violated Minn. R. Prof. Conduct 1.5(c).

Berg made false statements to G.B. and L.H. while representing them. He also made false statements to the Director during the disciplinary investigation. Berg told L.H. that he was unable to release funds to which she was entitled without first obtaining additional signatures. This statement was false because Berg had actually misappropriated the funds. Berg told G.B. that opposing counsel had asked Berg to withdraw G.B.'s appeal in March 2007 in order to settle the case. This statement was false because opposing counsel had actually contacted Berg about settling the case more than a month earlier. In response to a complaint K.S. made to the Director about Berg's representation, Berg falsely stated that he had received a settlement offer in December 2005 to which K.S. agreed. Berg had actually agreed to the settlement without K.S.'s consent in August 2005. Berg agreed that these acts violated Minn. R. Prof. Conduct 4.1 and 8.4(c).

Berg admitted to several instances of failing to communicate with clients and neglecting client matters. He failed to communicate with J.R.'s bankruptcy attorney in late 2005 about the status of funds Berg held on J.R.'s behalf. Berg also failed to resolve a lien on J.R.'s property. Berg failed to respond to K.S.'s attempts to contact him from August through December 2005. While handling an appeal for G.B., Berg failed to file a memorandum ordered by the court of appeals. This failure led to the dismissal of G.B.'s appeal. Berg never informed G.B. of the dismissal. Berg agreed that these acts violated Minn. R. Prof. Conduct 1.1, 1.3, 1.4(a), 1.4(a)(4), 3.2, 3.4(c), and 8.4(d).

Finally, Berg did not cooperate with the disciplinary investigation. He failed to comply with the district ethics committee investigator's and the Director's requests that he provide trust account records; failed to return settlement funds to J.R. pending the resolution of Berg's claim that Berg was entitled to them; failed to respond to the Director's March 2006 notice of investigation of Berg's representation of C.W. and another request regarding that representation in November 2006; failed to provide the Director with the file, retainer agreement, and trust account records related to his representation of G.B.; failed to provide trust account records related to his representation of L.H.; and failed to provide records related to the overdraft of his trust account. Berg agreed that his lack of cooperation with the investigatory process violated Minn. R. Prof. Conduct 8.1(b) and Rule 25 of the Rules on Lawyers Professional Responsibility (RLPR).

Initially, Berg responded to the petition for discipline by denying many of its allegations. He later withdrew that answer and admitted all the allegations of the petition and supplementary petition as part of the terms of the stipulation. In the stipulation, the parties jointly recommended an indefinite suspension for a minimum of five years with conditions placed on reinstatement. Because the agreed acts of misconduct would justify disbarment, we invited the parties to file briefs explaining why Berg should not be disbarred.

In the memorandum attached to the stipulation, the Director described certain aspects of Berg's conduct and of his physical and psychological condition that were considered in mitigation of some of his misconduct. First, at the time briefs were filed the Director had verified that Berg had made restitution to all of his clients other than J.R. At oral argument, the Director confirmed that Berg had made restitution to J.R. Second, prior to this disciplinary action, Berg had no disciplinary history in over 20 years of practice. Third, before any of the events leading to this disciplinary action occurred, Berg was diagnosed with a terminal heart condition known as idiopathic dilated cardiomyopathy. For Berg, this condition carries with it a 70 percent likelihood of death within the next five years. Berg's treating cardiologist indicated that the loss of function in Berg's heart caused by his condition has resulted in a deterioration of the quality of Berg's life which may have had an impact on his ability to handle client matters effectively. Finally, Berg suffers from depression and anxiety as a result of this diagnosis. The Director recognizes Berg's depression as a mitigating factor with respect to his unintentional misconduct, but not with respect to his intentional misconduct.

Because Berg does not challenge the allegations in the petitions and admits to engaging in professional misconduct, the only issue before us is the appropriate discipline to be imposed. See In re Dovolis, 572 N.W.2d 734, 736 (Minn.1998). "Disciplinary sanctions for professional misconduct are imposed to protect the public and the judicial system, and to deter future misconduct." In re Crandall, 699 N.W.2d 769, 771 (M...

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