Lockett v. Bd. of Prof'l Responsibility

• Citation: 380 S.W.3d 19
• Decision Date: 03 July 2012
• Docket Number: No. E2011–01170–SC–R3–BP.,E2011–01170–SC–R3–BP.
• Parties: William S. LOCKETT, Jr. v. BOARD OF PROFESSIONAL RESPONSIBILITY.
• Court: Tennessee Supreme Court

380 S.W.3d 19

William S. LOCKETT, Jr.

v.BOARD OF PROFESSIONAL RESPONSIBILITY.

No. E2011–01170–SC–R3–BP.

Supreme Court of Tennessee,

at Knoxville.

Jan. 5, 2012 Session.

July 3, 2012.

Sandy Garrett, Senior Litigation Counsel, for the appellant, Board of Professional Responsibility of the Supreme Court of Tennessee.

William S. Lockett, Jr., pro se.

OPINION

JANICE M. HOLDER, J., delivered the opinion of the Court, in which CORNELIA A. CLARK, C.J., and GARY R. WADE, WILLIAM C. KOCH, JR., and SHARON G. LEE, JJ., joined.

JANICE M. HOLDER, J.

While working for a law firm in which he was a shareholder, an attorney performed legal services for clients and failed to remit fees owed to the law firm. Members of the law firm confronted the attorney about the misappropriated legal fees shortly after the attorney resigned his position at the law firm to assume elected public office. As a result of his conduct, the attorney pleaded guilty to theft and to willful failure to file income tax returns. During a subsequent investigation, the Board of Professional Responsibility discovered that the attorney had accepted loans from the law firm's clients while he was employed at the law firm. A hearing panel of the Board of Professional Responsibility found that the attorney should be suspended for four years. The attorney appealed, and the chancery court applied additional mitigating factors to reduce the suspension to two years. We hold that the chancery court erred in modifying the judgment without finding that any of the circumstances in Tennessee Supreme Court Rule 9, section 1.3 applied. We also hold that the hearing panel erred in imputing a conflict of interest to the attorney with respect to the loan from the law firm's client and in misapplying aggravating and mitigating factors. Despite these errors, we conclude that the length of suspension imposed by the hearing panel is consistent with the sanctions imposed on attorneys for similar conduct. We therefore reverse the chancery court's reduction of the suspension to two years and affirm the hearing panel's imposition of a four-year suspension.

I. Facts and Procedural History

William S. Lockett, Jr., received a license to practice law in the State of Tennessee in 1983. After completing a judicial clerkship, Mr. Lockett practiced law in the private sector for approximately twenty-five years. He was a shareholder, officer, and director of the Knoxville law firm of Kennedy, Montgomery & Finley (“the Firm”) during the last twenty-one years of his private practice. Mr. Lockett's employment agreement required that he work on a full-time basis for the Firm and devote substantially all of his working time and energies to the development of the Firm's business. Mr. Lockett's employment agreement also specified that all incoming rights and property generated through his professional services were the property of the Firm.

On August 31, 2008, Mr. Lockett resigned his position at the Firm to become the Knox County Law Director, an elected position. Approximately six months after he left, the Firm discovered that Mr. Lockett had performed and received payment for legal services without remitting the payments to the Firm in violation of his employment agreement.¹ Mr. Lockett failed to remit more than twenty-five separate payments to the Firm during a three-year period. Mr. Lockett self-reported his behavior to the Board of Professional Responsibility after members of the Firm confronted Mr. Lockett about his misappropriation of the Firm's funds.

While he was a member of the Firm, Mr. Lockett also requested and received loans from the Firm's current and former clients. Mr. Lockett did not obtain a written waiver from the clients before obtaining these loans. Some of the loans were repaid, and the balances on other loans were forgiven. The balance of one loan was forgiven in exchange for providing legal services. The value of those legal services was not remitted to the Firm.

Mr. Lockett received a loan from Tim Graham for $10,000 (“the Graham Loan”). Mr. Graham was a client of the Firm when Mr. Lockett received the loan. Mr. Lockett, however, was unaware that Mr. Graham was a client of the firm when the loan was made.

As a consequence of his misappropriation of the Firm's funds, Mr. Lockett submitted a guilty plea to theft over $10,000, a class C Felony, on April 8, 2010. SeeTenn.Code Ann. §§ 39–14–103,–105(2010). Mr. Lockett also submitted a guilty plea in federal court on April 27, 2010, for willful failure to file income tax returns. See26 U.S.C. § 7203 (2006).

The Board filed three separate petitions for discipline against Mr. Lockett and sought his disbarment. Those petitions were consolidated, and the Board convened a hearing panel to hear the case. Tenn. Sup.Ct. R. 9, § 8.2. The hearing panel found that Mr. Lockett's felony theft violated Tennessee Supreme Court Rule 8, Rule of Professional Conduct 8.4(a), (b), (c), and (d) and that Mr. Lockett's willful failure to file income tax returns violated Rule of Professional Conduct 8.4(b) and (d). The hearing panel also found that Mr. Lockett's request and receipt of the loan from Mr. Graham violated Rules of Professional Conduct 1.4, 1.8(a), and 8.4(a) and (d). The hearing panel made no findings with respect to any other loans, although Mr. Lockett admitted that he received loans from other individuals whom he had personally represented while working at the Firm.

In determining the appropriate discipline, the hearing panel considered as aggravating factors Mr. Lockett's substantial experience in the practice of law, his previous service as a Board of Professional Responsibility Hearing Panel member, the number of transgressions and period of time over which the transgressions occurred, and evidence that Mr. Lockett sought an elected position in public office while the misconduct was occurring. The hearing panel considered Mr. Lockett's lack of knowledge that Mr. Graham was a client of the Firm and Mr. Lockett's personal financial difficulties resulting from his son's serious illness as mitigating factors.

The hearing panel found that Mr. Lockett should be suspended for a period of four years and that Mr. Lockett should be supervised by a practice monitor for one year if he was reinstated. Mr. Lockett perfected an appeal to the Chancery Court for Knox County by petition for writ of certiorari.

Following oral argument, the chancery court applied additional mitigating factors not found by the hearing panel but made no findings pursuant to Tennessee Supreme Court Rule 9, section 1.3. The chancery court entered an order affirming the hearing panel's judgment and reducing Mr. Lockett's suspension from four years to two years. The Board has appealed.

II. Analysis

On appeal, the Board contends that the chancery court improperly reduced the length of Mr. Lockett's suspension without finding any grounds for modification of the discipline as required by Tennessee Supreme Court Rule 9, section 1.3. In response,Mr. Lockett does not dispute that he violated the Rules of Professional Conduct but asserts that the length of his suspension should be less than the two-year suspension imposed by the chancery court.

Chancery Court Decision

Tennessee Supreme Court Rule 9, section 1.3 provides that a trial court

may reverse or modify the [hearing panel's] decision if the rights of the petitioner have been prejudiced because the [hearing] panel's findings, inferences, conclusions or decisions are: (1) in violation of constitutional or statutory provisions; (2) in excess of the panel's jurisdiction; (3) made upon unlawful procedure; (4) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or (5) unsupported by evidence which is both substantial and material in the light of the entire record.

Tenn. Sup.Ct. R. 9, § 1.3. A trial court's modification of a hearing panel's decision must be based on one of the enumerated circumstances in Tennessee Supreme Court Rule 9, section 1.3. Bd. of Prof'l Responsibility v. Love, 256 S.W.3d 644, 652 (Tenn.2008). A trial court “shall not substitute its judgment for that of the [hearing] panel as to the weight of the evidence on questions of fact.” Tenn. Sup.Ct. R. 9, § 1.3. See Bd. of Prof'l Responsibility v. Allison, 284 S.W.3d 316, 323 (Tenn.2009).

The chancery court did not base its modification of the discipline imposed by the hearing panel on any of the five enumerated bases for modification set forth in Tennessee Supreme Court Rule 9, section 1.3. Instead, the chancery court reviewed the record and found additional mitigating factors that had not been considered by the hearing panel. Those factors included Mr. Lockett's personal or emotional problems, a timely, good-faith effort to make restitution, a full disclosure and cooperative attitude toward the proceedings, character references, imposition of other sanctions, remorse, and the absence of a prior disciplinary record. See ABA Standards for Imposing Lawyer Sanctions, 9.32(a), (c), (d), (e), (g), (k), ( l ).

A chancery court is not precluded from considering additional mitigating factors to reverse or modify a hearing panel's decision if one of the enumerated circumstances in Tennessee Supreme Court Rule 9, section 1.3 applies. We therefore review the chancery court's modification of the hearing panel's judgment to determine 1) the applicability of the additional factors found by the chancery court; and 2) whether the hearing panel's failure to consider one or more of the additional factors met one or more of the five enumerated bases for modification set forth in Supreme Court Rule 9, section 1.3, despite the chancery court's failure to make an explicit finding in this respect.

The chancery court considered as an additional mitigating factor Mr. Lockett's personal or emotional problems. ABA Standard 9.32(c). Arguably, the hearing panel considered Mr. Lockett's personal or emotional problems when it...