In re Haar

• Citation: 698 A.2d 412
• Decision Date: 17 July 1997
• Docket Number: No. 96-BG-307.,96-BG-307.
• Parties: In re Paul S. HAAR, Respondent. A Member of the Bar of the District of Columbia Court of Appeals.
• Court: Court of Appeals of Columbia District

698 A.2d 412

In re Paul S. HAAR, Respondent A Member of the Bar of the District of Columbia Court of Appeals.

No. 96-BG-307.

District of Columbia Court of Appeals.

Argued December 13, 1996.

Decided July 17, 1997.

H. Clay Smith, III, Assistant Bar Counsel, with whom Leonard H. Becker, Bar Counsel, was on the brief, for petitioner, Office of Bar Counsel.

Elizabeth J. Branda, Executive Attorney, Board of Professional Responsibility, for the Board.

Jacob A. Stein filed a statement adopting the Board's brief for respondent.

Before FERREN, STEADMAN, and RUIZ, Associate Judges.

FERREN, Associate Judge:

In In re Haar, 667 A.2d 1350 (D.C.1995) (hereinafter Haar I), we concluded that Paul S. Haar, a member of the Bar of the District of Columbia, had violated Disciplinary Rule 9-103(A)(2) then in effect, forbidding an attorney to withdraw funds that allegedly belonged to the attorney from an account holding funds belonging both to the attorney and to the client, when the attorney's right to the claimed funds "is disputed by the client."¹ We remanded to the Board on Professional Responsibility for recommendation of an appropriate sanction. See id. at 1355. The Board has now recommended an informal admonition. Bar Counsel excepted, calling for a ninety-day suspension. In our view of the case, a thirty-day suspension is required.

I.

The facts are set forth in Haar I, 667 A.2d at 1351-52. Briefly, Haar represented Krishna Baldew, a Surinamese national, in a dispute concerning her termination as an employee of the United States Information Agency (USIA) at the United States Embassy in Surinam. Haar obtained a settlement for Baldew wherein USIA agreed to purge Baldew's personnel file of derogatory information and to compensate her in the amount of $20,000. Haar submitted a $12,921.75 bill for his services to Baldew. Baldew disputed the amount, offering to settle for $4,000. Haar agreed to accept $10,161.75. Further attempts to settle the dispute proved unsuccessful. After the settlement with USIA, Haar received three checks for $1,629.19, $14,503.97, and $3,866.84, respectively, the first two payable to Haar and Baldew jointly, the third payable only to Baldew. Haar informed Baldew in writing that he intended to forward $3,866.84 to her and to put the $16,133.16 balance into a trust account from which he would withdraw the "undisputed" $4,000 portion of his fee. Having received no response from Baldew, Haar withdrew the $4,000. That withdrawal provided the basis for this disciplinary action in light of what subsequently happened.

Haar wrote to Baldew that he had withdrawn the $4,000 and would withdraw an additional $6,161 from the trust account in full settlement unless Baldew objected. Baldew replied that she had agreed only to $4,000 as full and final settlement, not to Haar's proposed $10,161.75. She demanded that Haar restore the $4,000 to the trust account. He did not do so. Haar ultimately obtained a default judgment against Baldew for his full fee, $12,921.75, plus interest and costs.

In Haar I, we declined to accept the Board's view that no violation of DR 9-103(A)(2) had occurred.² The Board had found no violation because it perceived no "dispute" over Haar's claimed right to the $4,000 within the meaning of DR 9-103(A)(2). The Board premised its finding on a legal interpretation that the word "dispute" had to mean "genuine" dispute, which was not the case here, it said, because Haar had been legally entitled to at least the $4,000. See Haar I, 667 A.2d at 1353. We disagreed with the Board's interpretation.

The rule is unambiguous: an attorney may not withdraw a portion of the deposited funds when the attorney's right to receive that portion is "disputed" by the client. DR 103(A)(2). There is no requirement that the dispute be "genuine," "serious," or "bona fide," as the Board concluded.

Id. Thus, we held, the test was not whether respondent was "legally entitled to the amount claimed" but whether there merely "was in fact a fee disagreement between the parties concerning respondent's entitlement to the $4,000 amount withdrawn at the time of withdrawal." Id. We concluded that there was such a disagreement at the time of the withdrawal that Haar negligently avoided learning about:

In our view, respondent was on notice that he would be running the risk, under these circumstances, that his client, if asked, would disapprove of his withdrawal of any money from the account in the absence of an affirmative agreement on the amount authorized. Before making any withdrawal, therefore, respondent should have obtained a clear and unequivocal agreement from Ms. Baldew that it was acceptable for him to do so.

. . . . . .

Respondent's election not to telephone Ms. Baldew, and to rely instead on a self-serving assumption that Ms. Baldew's silence meant assent, constituted a resort to self-help. Respondent eschewed readily available means of ascertaining whether her consent had in fact been given. But respondent owed a fiduciary duty to Ms. Baldew. His unilateral action under these circumstances was contrary to the Disciplinary Rule.

Id. at 1354.

We therefore remanded for the Board to recommend an appropriate sanction. See id. at 1355. We noted, however, that we did not necessarily endorse the Hearing Committee's recommendation of a six-month suspension, and that the Board could consider, in light of factual findings after the hearing, that it was "now undisputed, that respondent had earned in excess of $4,000" from representing Baldew. See id. at 1355 n. 5. On remand, the Board concluded that, given the nature of the violation and various mitigating factors, an informal admonition was the appropriate sanction. See D.C. Bar R. XI §§ 3, 6, 8. Bar Counsel excepted, suggesting that "a 90-day suspension is the least severe sanction warranted by Respondent's misconduct."

II.

"We are bound to accept the recommended disposition of the Board `unless to do so would foster a tendency toward inconsistent dispositions for comparable conduct or would otherwise be unwarranted.'" In re Confidential (J.E.S.), 670 A.2d 1343, 1346 (D.C.1996) (quoting D.C. Bar R. XI § 9(g)(1)). We conclude that Haar's conduct amounted to a variant of negligent misappropriation of client funds. Because we agree, however, that there were mitigating factors — several more than Bar Counsel acknowledged but fewer than the Board found — we have decided that a thirty-day suspension is the appropriate sanction.

Bar Counsel argues that we should regard the nature of the offense as intrinsically more serious than the Board did in considering appropriate discipline. Bar counsel analogizes this violation both to negligent misappropriation of funds, where the respondent has "an honest but mistaken belief" that he or she may withdraw funds, see In re Evans, 578 A.2d 1141, 1143 (D.C.1990) (per curiam) (six-month suspension), and to technical commingling where a client's settlement check is deposited in the lawyer's personal bank account containing "funds other than client funds," see In re Ingram, 584 A.2d 602, 603-04 (D.C.1991) (per curiam) (public censure). He then argues that Haar's conduct falls somewhere in between.

In considering Bar Counsel's analogy, we note first that misappropriation concerns the actual taking of client funds, whereas commingling involves placement of client funds in the attorney's personal bank account with the attendant risk of misappropriation. See In re Hessler, 549 A.2d 700, 701-02 (D.C.1988). This case arguably is different, at least initially, from either one in that Haar deposited the settlement proceeds in a trust account consistent with the requirements of DR 9-103(A). By charging Haar with a violation of that rule, Bar Counsel must have believed that the money Haar withdrew at least potentially represented a "portion belonging to the lawyer or law firm"; otherwise, the withdrawal would have been a classic misappropriation. This situation, therefore, appears to reflect Bar Counsel's perception that Haar had retained a so-called "charging lien" whereby client and attorney have agreed to earmark a particular fund or property as security for a fee agreement. See District of Columbia Redevelopment Land Agency v. Dowdey, 618 A.2d 153, 159 (D.C.1992).

More specifically, if the parties in fact agreed that these proceeds belonged in part to Baldew and in part "presently or potentially" to Haar, then "the portion belonging to Haar could be withdrawn when due" unless Baldew disputed his right to receive the particular amount claimed, in which event Haar could not withdraw the disputed portion until the dispute was "finally resolved." DR 9-103(A)(2). Accordingly, if all the requirements of this rule were met, Haar had authority to withdraw funds undisputedly his from a trust account he properly shared with his client — a situation that clearly differs from misappropriation, as well as from commingling (where a lawyer has no right to deposit client funds in the account, let alone withdraw money from it once the commingling has occurred).³

If, on the other hand, the settlement proceeds cannot be said to have belonged "presently or potentially" to Haar — i.e., if there was no agreement that Haar was entitled to take his fee from the trust account holding the settlement proceeds — then this would be a clear case of misappropriation, because Haar would have taken client funds over which he had no claim greater than that of a general creditor.⁴

There is, however, a third possibility. How should we characterize for disciplinary purposes the situation where (1) unlike commingling, the funds are properly deposited in a lawyer-client account, and (2) the parties agree that at least some of the funds "presently or potentially" belong to the lawyer for a fee, but (3) the client disputes the lawyer's right to withdraw the particular amount taken? Is that withdrawal technically a "misappropriation," requiring as a sanction at least some form...