Iowa Supreme Court Attorney Disciplinary Bd. v. Reilly

• Decision Date: 02 September 2016
• Docket Number: No. 05–1365.,05–1365.
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Michael Gerard REILLY, Respondent.
• Court: Iowa Supreme Court

884 N.W.2d 761

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Michael Gerard REILLY, Respondent.

No. 05–1365.

Supreme Court of Iowa.

Sept. 2, 2016.

A former attorney whose license to practice law we previously revoked submitted an application for reinstatement of his license to practice law in Iowa. APPLICATION FOR REINSTATEMENT PROVISIONALLY GRANTED SUBJECT TO THE CONDITIONS SET FORTH IN THIS OPINION.

Tara van Brederode and Wendell J. Harms, Des Moines, for complainant.

Michael G. Reilly, Council Bluffs, pro se.

PER CURIAM.

Ten years ago, we revoked the respondent's license to practice law. This matter comes before us on the respondent's application for reinstatement of his license to practice law under Iowa Court Rule 34.25(9). We provisionally grant the respondent's application for reinstatement of his law license subject to the conditions set forth in this opinion.

I. Background Facts and Proceedings.

We admitted respondent Michael G. Reilly to practice law in Iowa in June 1981, and the Nebraska Supreme Court admitted him to practice law in Nebraska in September 1982. In 2006, we revoked his license to practice law in Iowa. See Iowa Supreme Ct. Att'y Disciplinary Bd. v. Reilly, 708 N.W.2d 82, 82 (Iowa 2006). Thereafter, the Nebraska Supreme Court disbarred him in a reciprocal disciplinary proceeding. State ex rel. Counsel for Discipline of Neb. Supreme Ct. v. Reilly, 271 Neb. 465, 712 N.W.2d 278, 278–79 (2006) (per curiam). Prior to the revocation of his law licenses, Reilly engaged in the private practice of law at a law firm in Council Bluffs, Iowa. He had an excellent reputation as a diligent and skilled trial attorney.

We revoked Reilly's license to practice law in Iowa because he misappropriated client funds. In November 2000, Reilly obtained a settlement of $137,500 on behalf of the parents of a child who sustained a serious eye injury and caused a conservatorship to be opened for the child. Reilly, 708 N.W.2d at 83. Upon receiving the settlement funds, Reilly deposited them in his firm's trust account. Id. In addition to the checks issued from the trust account to cover the contingent fee and expenses associated with the case, Reilly deposited additional checks totaling the remaining balance of the settlement funds in his personal bank account rather than the conservatorship account in December 2000 and January 2001. Id. At the time, Reilly had an active gambling addiction that caused him to be constantly in need of funds. Id. at 85.

In August and September 2001, after he unsuccessfully attempted to secure a loan from a friend to repay the misappropriated funds, Reilly wrote a series of kited checks between his personal accounts attempting to float a check to the conservatorship account to replace the misappropriated funds. Id. at 83. Eventually, a bank associated with one of Reilly's personal accounts honored a check he wrote to the conservatorship account after a bank associated with another one of his personal accounts honored a kited check he had written. Id. The account with the second bank ended up $96,000 overdrawn because the bank was unable to cash another check Reilly had written from yet another account with insufficient funds. Id. By the time Reilly repaid the bank the following year, it had already notified federal authorities. Id.

After our client security and disciplinary commissions received a letter from the United States Attorney recounting these events and the Iowa Supreme Court Attorney Disciplinary Board conducted an investigation confirming them, the Grievance Commission of the Supreme Court of Iowa recommended we suspend Reilly from the practice of law for three years. Id. at 82, 83–84. Instead, we concluded consistency with our past decisions addressing misappropriation of client funds and the protection of the public warranted a harsher sanction. In January 2006, we revoked Reilly's license to practice law in Iowa. Id. at 85.

In January 2009, Reilly filed an application for reinstatement of his license to practice law in Iowa based on the progress he had made in addressing his gambling addiction. The Board opposed reinstatement, noting the Iowa Court Rules contained no provision addressing reinstatement following a license revocation as opposed to a license suspension. Though the Board acknowledged we had reinstated a revoked license in the past, it insisted the standard for assessing whether reinstatement was appropriate was set forth in Committee on Professional Ethics & Conduct v. Brodsky, 487 N.W.2d 674 (Iowa 1992), in which we stated,

License revocations are ordinarily permanent in Iowa. Indeed our rules spell out no special procedure for applying for readmission by a lawyer whose license has been revoked.

On occasion we nevertheless consider such applications under our inherent power and, in extremely rare cases, have granted them. These rare cases have arisen where, in long retrospect, it appears the need for permanent revocation was debatable, and where there has been a demonstrated reformation on the part of the lawyer so that the public interest would not be compromised by readmission.

Id. at 675. Following a hearing, we issued an order in which we rejected the application for reinstatement. In the order, we concluded Reilly had not “carried his heavy burden of showing that the need for permanent revocation was debatable and that he has undergone such a reformation that the public interest would not be threatened by readmitting him to the practice of law.”

In May 2015, following a period of public comment, we amended Iowa Court Rule 35.14 to renumber existing provisions within the rule and incorporate new provisions setting forth a procedure by which an individual whose license to practice law has been revoked may apply for its reinstatement. The amendments became effective September 1, 2015. By subsequent amendment shortly thereafter, we moved the provisions addressing reinstatement to Iowa Court Rule 34.25.¹ The purpose of the amendment was to allow an attorney who has rehabilitated him or herself the opportunity to petition the court for reinstatement and prove to the court he or she has good moral character, is fit to practice law, and is in all respects worthy of readmission to the Iowa bar. Reinstatement under the rule is not meant to be automatic.

In November 2015, Reilly filed his second application for reinstatement of his license to practice law in the State of Iowa with this court. Prior to submitting the application, Reilly submitted a request for preparation of a character and fitness report by the National Conference of Bar Examiners (NCBE) and paid an administrative fee to the Iowa Board of Law Examiners as required by Iowa Court Rule 34.25(8). In his application for reinstatement, Reilly first reported that we admitted him to the Iowa bar in June 1981 and revoked his license to practice law in Iowa in January 2006. See Iowa Ct. R. 34.25(9)(b ). Reilly next affirmed that he had complied in all respects with all orders of this court pertaining to his license revocation and the Iowa Court Rule governing the notification of clients, opposing counsel, and courts upon revocation of an attorney's license to practice law. See id. Finally, he affirmed that the Client Security Trust Fund expended no funds due to his conduct. See id. r. 34.25(9)(e ). Reilly attached a letter from the Office of Professional Regulation confirming he had paid all fees set forth in the rules governing the Client Security Commission, his annual continuing legal education fees, and all costs associated with the disciplinary matter that culminated in the revocation of his license to practice law. See id. r. 34.25(9)(d )–(e ).

With his application for reinstatement, Reilly submitted an affidavit detailing his personal history, work history, and educational history following his license revocation along with letters from six attorneys currently practicing in the Fourth Judicial District of Iowa recommending his license to practice law be reinstated. See id. r. 34.25(9)(c ). In the affidavit, Reilly indicated he received treatment for his compulsive gambling addiction from April 2002 through November 2008. He also indicated he has abstained from casino gambling since February 2002. Reilly also described his work immediately following his license revocation as a litigation consultant offering mediation services to law firms and individual attorneys, as well as his current work providing consulting services on insurance litigation and claims handling involving insurance policies of various types issued to clients throughout the country. Finally, Reilly indicated that although he has not received any formal educational training since we revoked his license, he has maintained his familiarity with current Iowa law by regularly reviewing state and federal appellate court decisions as well as through his employment, which requires him to deal with statutes, rules, and regulations in most states.

The recommendation letters Reilly submitted from members of the bar recommending his reinstatement described him as a particularly diligent and skilled trial attorney who consistently accepted responsibility for the actions that led to the revocation of his license and expressed remorse for the harm they caused. The individuals who penned the letters were practicing attorneys who knew Reilly when he was still in practice and remained in close contact with him after we revoked his license. Each expressed the opinion that Reilly is of good moral character and fit to practice law. The letters also described how Reilly aggressively pursued treatment for and overcame the gambling addiction that motivated him to engage in the conduct for which we revoked his law license.²

The Iowa Supreme Court Attorney Disciplinary Board filed a resistance to the application for reinstatement urging us to deny it. Relying on Brodsky, the Board argued reinstatement is inappropriate in this case because revocation is...