In the Matter of Jacobsen, Opinion No. 26783 (S.C. 3/1/2010), 26783

Decision Date01 March 2010
Docket NumberNo. 26783,26783
PartiesIn the Matter of Karl P. Jacobsen, Respondent.
CourtUnited States State Supreme Court of South Carolina

Lesley M. Coggiola, Disciplinary Counsel, and Barbara M. Seymour, Deputy Disciplinary Counsel, both of Columbia, for Office of Disciplinary Counsel.

Karl P. Jacobsen, of West Columbia, pro se.

PER CURIAM:

This is an attorney disciplinary matter involving multiple allegations of misconduct arising out of Karl P. Jacobsen's (Respondent's) operation of his bankruptcy practice. After a full investigation, the Office of Disciplinary Counsel (ODC) filed formal charges against Respondent with the Commission on Lawyer Conduct (the Commission). Respondent did not file an Answer and, as a result, was found to be in default. After a hearing,1 a Hearing Panel of the Commission (the Panel) recommended that Respondent be disbarred and ordered to pay costs in the amount of $552.37. Additionally, the Panel recommended that Respondent be ordered to reimburse the Lawyers' Fund for Client Protection for any amount paid to clients as a result of Respondent's misconduct. Respondent did not file a brief with this Court. We agree with the Panel's recommended sanction. Accordingly, we disbar Respondent effective the date of this opinion.2

FACTUAL/PROCEDURAL HISTORY

Respondent was licensed to practice law in South Carolina on November 16, 1998. Respondent was a member of a statewide bankruptcy firm (the Firm). Respondent and another member of the Firm worked in the Columbia office while the other member of the Firm operated the Greenville office. Respondent's practice was so extensive that it was estimated that he filed between 700 and 800 bankruptcy cases per year.

In the fall of 2003, one of the Firm's members reported to the Bankruptcy Court and to the Commission that Respondent had committed numerous ethical and rule violations.3 As a result of Respondent's errors, numerous client matters were dismissed by the Bankruptcy Court. In turn, the Office of the United States Trustee filed an action against Respondent in October 2003, seeking for Respondent to be indefinitely suspended from practicing before the Bankruptcy Court. By consent order dated November 7, 2003, the United States Trustee's complaint was resolved and Respondent was required to: (1) withdraw from practicing before the Bankruptcy Court for a period of one year; (2) consult with Lawyers Helping Lawyers and cooperate with any recommendations thereof for medical or other treatment; (3) complete 8.0 hours of approved legal ethics training and 25.0 hours of approved bankruptcy training; and (4) complete an office review by the Practice Management Assistance Program of the South Carolina Bar. In addition, Respondent was prohibited from resuming practice before the Bankruptcy Court, even after one year from the date of the order, unless Respondent provided the United States Trustee with an affidavit summarizing his compliance with the terms of the consent order.

Respondent failed to comply with the provisions of the consent order and, in fact, continued to accept new bankruptcy clients.

In October 2003, one of Respondent's partners terminated her relationship with the Firm. Subsequently, Respondent hired an associate attorney to handle the Firm's Columbia bankruptcy practice. Between December 2003 and February 2004, Respondent continued to accept bankruptcy clients with the intention that the new associate would file these clients' petitions. Apparently unable to manage the Firm's caseload, this associate submitted her resignation on February 27, 2004, which became effective on March 5, 2004.

In March 2004, with over 2000 cases pending before the Columbia Division of the Bankruptcy Court, Respondent informed the Firm's employees that the office would be closing. Respondent took no further action to close his practice or notify his clients.

Due to the numerous grievances filed against Respondent and concerns over the management of his trust account, this Court placed Respondent on interim suspension on March 18, 2004. On February 4, 2005, the Commission on CLE suspended Respondent for failure to comply. In turn, this Court suspended Respondent on April 12, 2005.4

Subsequently, the ODC went forward with formal charges on the grievance matters.5 With respect to each of these matters, Respondent failed to file the requisite bankruptcy documents, failed to communicate with his clients regarding the status of their cases, and failed to inform his clients of his decision to discontinue his bankruptcy practice. Respondent also failed to refund the fees paid by these clients and did not take reasonable steps to protect his clients' interests. Respondent did not respond to the notice of full investigation on any of these matters.

In addition to the above-listed client matters, an investigation also revealed that in 2003 the Firm's trust account was "out of balance." Specifically, there was evidence that a $15,000 shortfall existed in July 2003 and that client funds had been commingled with the Firm's operating account funds. According to the investigation, the Firm had failed to maintain journals, ledgers, checkbook registers, reconciliations, and other required records prior to July 2003.

Based on its investigation, the ODC filed formal charges against Respondent on April 14, 2009 with the Commission. By certified mail, the ODC sent notification of these charges to a West Columbia address on file with the South Carolina Bar as well as Respondent's last known address in Atlanta and a San Francisco address that was obtained by an ODC investigator.6 Because Respondent failed to respond or file an Answer to the formal charges, the Commission found Respondent in default and the charges were deemed admitted by order dated July 16, 2009.

On August 27, 2009, the Panel conducted a hearing for the purpose of determining the appropriate sanction to recommend to this Court. Respondent did not appear for this hearing.

In prefacing her case, disciplinary counsel outlined her office's failed attempts to contact Respondent via certified mail and electronic mail. In support of her claim, counsel offered into evidence four exhibits that documented this correspondence. Counsel testified her office had not heard from Respondent since an e-mail exchange in February 2006.

After summarizing the formal charges, counsel called Olean Murray, one of Respondent's former bankruptcy clients to testify regarding the basis of her grievance against Respondent. Murray testified that she paid Respondent to file a bankruptcy petition on her behalf. Under the impression that the petition had been filed, Murray went to the Bankruptcy Court to resolve the matter, but instead discovered that the petition had not been filed. On a second occasion, Respondent failed to appear at a hearing in the Bankruptcy Court on behalf of Murray. Concerned about her case, Murray repeatedly attempted to contact Respondent. According to Murray, Respondent could never be reached at his office. Ultimately, Murray discovered that Respondent was no longer handling bankruptcy cases. Although her case was "discharged" after several years of bankruptcy proceedings, Murray stated that her credit had been "ruined." She further testified that as a result of her bankruptcy and resultant credit problems, she had to refinance her $20,000 home for $60,000.

Counsel then relayed to the Panel the following aggravating circumstances: (1) Respondent's demonstrated pattern of misconduct; (2) Respondent's failure to respond to the formal charges and disciplinary proceedings; and (3) Respondent's prior disciplinary history, which included a letter of caution issued on June 21, 2002 regarding his failure to supervise associates and non-lawyer employees in the Firm.

At the conclusion of her case, counsel requested that the Panel issue a report in which it recommended that Respondent be disbarred and ordered to pay the costs of the proceedings and restitution to the Lawyers' Fund for Client Protection.

The Panel issued a report on August 27, 2009 that was filed with the Commission on the same day. As a threshold matter, the Panel clarified that Respondent had been found in default and had failed to appear for the hearing despite attempts by the ODC and the Commission to contact him. Specifically, the Panel noted that the ODC had complied with Rule 14(c) of the South Carolina Rules for Lawyer Disciplinary Enforcement (RLDE)7 in that it had sent by certified mail a copy of the formal charges to Respondent's last known address in Atlanta and to an alternate address in San Francisco. Additionally, the Panel concluded Respondent was provided sufficient notice of the Panel hearing given the Commission served Respondent with notice of the hearing by certified mail to the Atlanta and San Francisco addresses.

Having found Respondent in default, the Panel reiterated that the Formal Charges were deemed admitted.8 Based on the admitted allegations of misconduct, the Panel concluded that Respondent violated the following South Carolina Rules of Professional Conduct (RPC), Rule 407, SCACR: Rule 1.1 (competence); Rule 1.2 (scope of representation); Rule 1.3 (diligence); Rule 1.4 (communication); Rule 1.5 (fees); Rule 1.15 (safekeeping of property); Rule 1.16 (terminating representation); Rule 3.2 (expediting litigation); Rule 5.1 (responsibilities of partners); Rule 5.3 (responsibilities regarding non-lawyer assistants); Rule 5.5 (unauthorized practice of law); and Rule 8.4(e) (conduct prejudicial to the administration of justice). Based on this misconduct, the Panel found Respondent was subject to discipline pursuant to Rules 7(a)(1), (5), and (6) of the RLDE.9

Additionally, the Panel found Respondent "exacerbated his misconduct by failing to respond to disciplinary inquiries." In reaching this conclusion, the Panel pointed to Respondent's failure to communicate with the ODC regarding the...

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