In re Lieber, A19-0048

• Decision Date: 19 February 2020
• Docket Number: A19-0048
• Citation: 939 N.W.2d 284
• Parties: IN RE Petition for DISCIPLINARY ACTION AGAINST Daniel Martin LIEBER, a Minnesota Attorney, Registration No. 0207731.
• Court: Minnesota Supreme Court

939 N.W.2d 284

IN RE Petition for DISCIPLINARY ACTION AGAINST Daniel Martin LIEBER, a Minnesota Attorney, Registration No. 0207731.

A19-0048

Supreme Court of Minnesota.

Filed: February 19, 2020

Susan M. Humiston, Director, Cassie Hanson, Managing Attorney, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Eric T. Cooperstein, Minneapolis, Minnesota, for respondent attorney.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility (Director) filed a petition for disciplinary action against respondent Daniel Martin Lieber. We appointed a referee. After a hearing, the referee determined that Lieber had negligently misappropriated client funds, commingled his own funds with client funds, willfully failed to maintain proper trust account books and records, and violated advertising rules. The referee found several aggravating factors, including that we had previously disbarred Lieber for, among other things, similar trust account related misconduct. The referee also found that Lieber’s personal stress, resulting from his daughter’s health problems, the health problems of other family members, and the death of his father-in-law, is a mitigating factor. The referee concluded, however, that this factor is insufficient to mitigate against the need for a suspension, and he recommended an 18-month suspension. Lieber challenges some of the referee’s findings and conclusions regarding mitigating and aggravating factors, and asserts that a 90-day stayed suspension is the appropriate discipline. The Director asks us to impose a suspension of at least 3 years. We conclude that in light of the substantial mitigation, the appropriate discipline for Lieber’s misconduct is a stayed disbarment.

FACTS

Lieber was admitted to practice law in Minnesota in 1990. Lieber has a significant disciplinary history. In 2002, Lieber received an admonition for causing a client’s signature on a release to be notarized when, in fact, the client had not appeared before the notary, in violation of Minn. R. Prof. Conduct 5.3 and 8.4(c) and (d).

Roughly 3 years later, we disbarred Lieber. In re Lieber , 699 N.W.2d 722, 722 (Minn. 2005) (order). Lieber was disbarred, in part, for conduct similar to the misconduct he committed in this case. Lieber temporarily misappropriated client funds, commingled personal and client funds in his trust account, failed to maintain proper trust account books and records, and "falsely certified that he maintained the required trust account books and records." Id. Lieber also "made improper financial advances to clients," charged an interest rate of 15 percent per month on the advanced sums, "failed to disclose his conflict of interest in the transactions, lied about his involvement in the transactions both before and during the disciplinary investigation, made false statements under oath about his involvement in the transactions, [and] ratified the false sworn testimony of one of his employees[.]" Id.

We reinstated Lieber to the practice of law on July 31, 2013, and placed him on probation for 3 years. In re Lieber , 834 N.W.2d 200, 210 (Minn. 2013). As a condition of his probation, we required Lieber to "ensure that he, and the law firm at which he practices, maintain law office and trust account books and records in compliance with Minn. R. Prof. Conduct 1.15 and Appendix 1 thereto." Id. at 210–11. Lieber’s probation ended on July 31, 2016.

The record establishes the following facts with respect to Lieber’s current misconduct. Before Lieber was disbarred, he owned a law firm and was solely responsible for the firm’s trust account books and records. He used QuickBooks, an accounting software, to assist with his trust account books and records. Following the referee’s recommendation that he be disbarred, Lieber incorporated the law firm as Metro Law Offices and sold it to R.P., his employee at the time.

After Lieber was disbarred, he continued to work at Metro Law as a claims coordinator. He also assisted R.P. with managing the firm’s trust account. No other Metro Law employee helped with the trust account.

Lieber continued working at Metro Law following his reinstatement to the practice of law in July 2013. Lieber and R.P. were the only two lawyers that worked at the firm, and Lieber continued to assist R.P. with the firm’s trust account. In November 2013, Lieber closed Metro Law’s trust account because some checks had been stolen, and he opened a new account.

During 2014 and 2015, R.P. had health issues and was in the office "a couple of times a week." Lieber was the only lawyer regularly present at the office from December 2014 through April 2016.

Lieber became primarily responsible for Metro Law’s trust account in December 2015. Lieber claimed he took over the trust account "because of his concerns about errors that [R.P.] was making in managing the account." During the hearing before the referee, Lieber testified that R.P. would handwrite trust account checks, sometimes out of numerical order, without telling Lieber. As a result, Lieber sometimes would not know that R.P. had written a check until Lieber received the monthly bank statement. And because there was no electronic record of the handwritten check, he often would not know who the client was and on which account the check was written. To correct these errors, Lieber closed the account he had opened in November 2013 and opened another new trust account. Lieber noted that in January or February 2016, he intended to go back and correct the errors in the old trust account’s records, but he did not have time to fix them.

Lieber was discharged from probation on July 31, 2016. The next day, Lieber purchased Metro Law from R.P. By then, R.P. was "semi-retired" from legal practice. Following his purchase of the firm, Lieber continued to use QuickBooks to maintain Metro Law’s trust account.

The Director began investigating Lieber’s management of his trust account in June 2017 after receiving a complaint about Lieber.¹ The Director requested complete trust account books and records for the period of January 2013 through June 2017. Lieber responded but provided only the subsidiary ledger of one client settlement account. The Director again requested complete trust account books and records, this time for the period of June 2013 through August 2017. Lieber responded, through counsel, by providing some records from his current account for the months of December 2015 through August 2017. But he failed to provide all of the additional information the Director requested, such as client subsidiary ledgers and monthly reconciliation reports. Lieber explained that a sewage backup in Metro Law’s building during the summer of 2016 had destroyed the paper records and that his computer had crashed in August 2016, destroying the QuickBooks records.² He had also failed to electronically back up his QuickBooks trust account file, as required by Minn. R. Prof. Conduct 1.15(h), as interpreted by Appendix 1(I)(7). And although Lieber claimed that he generated a trial balance report each month and compared it to the adjusted bank and register balance, he admitted that he did not print out the reports, as Minn. R. Prof. Conduct 1.15(h), as interpreted by Appendix 1(I)(7), requires.³ He therefore could not provide all the information the Director requested.

In an audit of Lieber’s trust account records, the Director found that Lieber made numerous errors in his current trust account’s check register. The errors included failing to list funds received from clients and listing incorrect amounts for clients’ portions of checks. The Director also identified several negative client ledger balances and an overall shortage in Lieber’s trust account. The Director further determined that Lieber had commingled a significant balance of his own funds in the account. The Director requested that Lieber provide his complete books and records for his current trust account for the period of September 2017 through March 2018.

Lieber deposited funds into his trust account to correct the shortage the Director identified, and again, provided only some of the materials the Director requested. In a letter dated May 11, 2018, Lieber acknowledged that he had made numerous errors in his trust account books and records. He also admitted that he had grouped the trust activity of clients with the same last name, even though the clients had unrelated matters. Because the combined subsidiary ledger never accurately reflected an individual client’s balance, Lieber could not prepare accurate trust account records. Lieber admitted that grouping clients in this manner had been his practice since before his disbarment.

In the same letter, Lieber also acknowledged that he did not have the requisite knowledge of QuickBooks to comply with his trust account bookkeeping obligations. He admitted that he did not know how to generate all of the reports he needed to run each month. Lieber informed the Director that he had retained a bookkeeper with expertise in QuickBooks.

The Director’s later audit of Lieber’s trust account records showed that Lieber had several additional negative client balances and trust account shortages. As a result, the Director asked Lieber to provide his complete trust account books and records for the period of April to July 2018. Lieber finally provided client subsidiary ledgers to the Director on September 19, 2018, 15 months after the Director first requested them in June 2017. The records Lieber did provide showed that while Lieber had attempted to correct some of the errors the Director had identified during the first audit, he had done so incorrectly, and that he had failed to correct numerous other errors that had also been identified.

In the end, the Director’s audit of Lieber’s trust account for the period of December 2015 through September 2018 showed periods of commingling and shortages. During the periods of December 21, 2015, to November 22, 2016,...