Office of Lawyer Regulation v. Hotvedt (In re Hotvedt)

• Decision Date: 04 June 2021
• Docket Number: No. 2016AP48-D,2016AP48-D
• Citation: 960 N.W.2d 910,397 Wis.2d 279,2021 WI 49
• Parties: In the MATTER OF DISCIPLINARY PROCEEDINGS AGAINST John HOTVEDT, Attorney at Law: Office of Lawyer Regulation, Complainant, v. John Hotvedt, Respondent.
• Court: Wisconsin Supreme Court

397 Wis.2d 279

960 N.W.2d 910

2021 WI 49

In the MATTER OF DISCIPLINARY PROCEEDINGS AGAINST John HOTVEDT, Attorney at Law:Office of Lawyer Regulation, Complainant,

v.John Hotvedt, Respondent.

No. 2016AP48-D

Supreme Court of Wisconsin.

Opinion Filed: June 4, 2021

ATTORNEY reinstatement proceeding. Reinstatement granted.

PER CURIAM.

¶1 We review a report filed by Referee Kim M. Peterson, recommending this court reinstate John Hotvedt's license to practice law in Wisconsin. After careful review of the matter, we agree that Attorney Hotvedt's license should be reinstated. We also conclude that Attorney Hotvedt should be required to pay the full costs of this reinstatement proceeding, which are $4,867.82 as of May 5, 2021.

¶2 Attorney Hotvedt was admitted to the practice of law in Wisconsin on May 21, 2001. He currently resides in Burlington, Wisconsin and is employed as a Vice-President for the Bear Real Estate Group (BREG) in Kenosha.

¶3 On November 18, 2016, this court suspended Attorney Hotvedt's Wisconsin law license for 18 months, effective December 30, 2016, and ordered Attorney Hotvedt to pay the costs of the disciplinary proceeding. In Re Disciplinary Proceedings Against Hotvedt, 2016 WI 93, ¶17, 372 Wis. 2d 68, 888 N.W.2d 393. In that matter, the referee recommended the disciplinary suspension after Attorney Hotvedt stipulated to the facts alleged in the disciplinary complaint filed by the Office of Lawyer Regulation (OLR), and agreed with the OLR that an 18-month suspension of his law license was merited.

¶4 Specifically, Attorney Hotvedt stipulated that he committed five counts of professional misconduct related to actions he took while associated with his former law firm as well as actions during his withdrawal from that firm. Attorney Hotvedt converted to his own use client funds belonging to the firm in excess of $173,000, in violation of Supreme Court Rule (SCR) 20:8.4(c); wrote off client fees owed to the firm, in violation of SCR 20:8.4(c); established a consulting firm to convert client fees while still employed by his firm, in violation of SCR 20:8.4(c); breached his fiduciary duty to his firm by misrepresenting to his firm that he would not bill or otherwise recover client fees from firm clients, converting client funds owed to his law firm, writing off client billings, and establishing a consulting firm for the purpose of converting client fees owed to the firm, all in violation of SCR 20:8.4(f); and failed to disclose to the OLR during its investigation the full extent of funds he converted from his firm and otherwise making misrepresentations to the OLR during its investigation, in violation of SCRs 20:8.4(h), 22.03(2) and (6). See Hotvedt, 2016 WI 93, ¶11, 372 Wis.2d 68, 888 N.W.2d 393.

¶5 Attorney Hotvedt filed a petition for reinstatement of his license to practice law on November 12, 2019. After an investigation, the OLR initially opposed Attorney Hotvedt's reinstatement because it appeared that Attorney Hotvedt had continued to practice law despite his law license suspension. See SCR 22.29(4)(b). The OLR observed that, during his license suspension, Attorney Hotvedt worked for BREG, a former firm client for which he worked prior to his suspension, and his duties appeared to include law-related work.

¶6 Admittedly, SCR 22.26(2) permits a suspended attorney to engage in "law related work" if the lawyer's efforts are engaged "for a commercial employer itself not engaged in the practice of law." Id. In other words, while suspended lawyers cannot practice law and cannot perform law student, law clerk, or other paralegal personnel work for entities engaged in the practice of law, they can perform law student, law clerk, or other paralegal personnel work for commercial employers who are not engaged in the practice of law. Id.

¶7 The OLR acknowledged that BREG "is obviously not a law firm; it is a commercial employer in the real estate industry." However, it initially appeared that Attorney Hotvedt's employment with BREG exceeded the limited scope allowed by SCR 22.26(2). His work as an employee of BREG appeared "largely indistinguishable from his work as their outside counsel." So, the OLR expressed concern that Attorney Hotvedt's work for BREG constituted "the improper practice of law during his period of suspension." If true, this concern would implicate several other reinstatement criteria, so the OLR questioned whether Attorney Hotvedt could satisfactorily fulfill other reinstatement criteria, as well.

¶8 The referee conducted a public evidentiary hearing on Attorney Hotvedt's reinstatement petition on December 15, 2020. The question of his work during his license suspension was thoroughly explored. Both parties filed post-hearing briefs. After the hearing, the OLR withdrew its objection to Attorney Hotvedt's reinstatement.

¶9 On January 21, 2021, the referee filed a report recommending that this court grant Attorney Hotvedt's reinstatement petition. Critical to the referee's recommendation is the referee's conclusion that Attorney Hotvedt did not impermissibly practice law during his license suspension.

¶10 Neither party has appealed from the referee's recommendation, so the court considers this matter pursuant to SCR 22.33(3).¹ On review, we accept a referee's findings of fact unless they are clearly erroneous. We review a referee's legal conclusions, including whether the attorney has satisfied the criteria for reinstatement, on a de novo basis. See In re Disciplinary Proceedings Against Jennings, 2011 WI 45, ¶39, 334 Wis. 2d 335, 801 N.W.2d 304 ; In re Disciplinary Proceedings Against Gral, 2010 WI 14, ¶22, 323 Wis. 2d 280, 779 N.W.2d 168.

¶11 Supreme Court Rule 22.29(4)² provides that a petition for reinstatement must show all of the following:

(a) The petitioner desires to have the petitioner's license reinstated.

(b) The petitioner has not practiced law during the period of suspension or revocation.

(c) The petitioner has complied fully with the terms of the order of suspension or revocation and will continue to comply with them until the petitioner's license is reinstated.

(d) The petitioner has maintained competence and learning in the law by attendance at identified educational activities.

(e) The petitioner's conduct since the suspension or revocation has been exemplary and above reproach.

(f) The petitioner has a proper understanding of and attitude toward the standards that are imposed upon members of the bar and will act in conformity with the standards.

(g) The petitioner can safely be recommended to the legal profession, the courts and the public as a person fit to be consulted by others and to represent them and otherwise act in matters of trust and confidence and in general to aid in the administration of justice as a member of the bar and as an officer of the courts.

(h) The petitioner has fully complied with the requirements set forth in SCR 22.26.

(j) The petitioner's proposed use of the license if reinstated.

(k) A full description of all of the petitioner's business activities during the period of suspension or revocation.

¶12 In addition, SCR 22.29(4m) requires the petitioner to show that he or she has made restitution to or settled all claims of persons injured or harmed by the petitioner's misconduct, including reimbursement to the Wisconsin Lawyers' Fund for Client Protection for all payments made from that fund, or explained the failure or inability to do so. Supreme Court Rule 22.31(1)(c) provides that an attorney seeking reinstatement has the burden of demonstrating all of the above requirements by clear, satisfactory, and convincing evidence.

¶13 Supreme Court Rule 22.31(1) also provides that an attorney seeking reinstatement must show by clear, satisfactory, and convincing evidence that he or she has the moral character to practice law; that his or her resumption of the practice of law will not be detrimental to the administration of justice or subversive to the public interest; and that he or she has complied with SCR 22.26 and the terms of the underlying disciplinary order. See SCR 22.31(1)(a), (b), and (d).

¶14 The referee's report focuses on what the referee viewed as the most significant challenge facing Attorney Hotvedt's reinstatement: whether he failed to satisfy SCR 22.29(4)(b) because he practiced law during his license suspension. The relevant rule provides:

An attorney whose license to practice law is suspended or revoked or who is suspended from the practice of law may not engage in this state in the practice of law or in any law work activity customarily done by law students, law clerks, or other paralegal personnel, except that the attorney may engage in law related work in this state for a commercial employer itself not engaged in the practice of law.

SCR 22.26(2) (Emphasis added.)

¶15 As the referee explained, "[t]here has been some question about whether Mr. Hotvedt practiced law during his suspension, while working at Bear Real Estate Group." The referee examined SCR 22.26(2), noting when working for a commercial employer, "law related work" has been defined as work of a type done by non-lawyers. The referee considered In re Disciplinary Proceedings Against Hyndman, 2002 WI 6, 249 Wis. 2d 650, 638 N.W.2d 293, a case concluding that a lawyer who represented his commercial employer in small claims court and made appearances at creditors' meetings in federal bankruptcy proceedings while under revocation was working within the permitted scope of SCR 22.26(2). The referee definitively concluded that given the specifics of Attorney Hotvedt's employment he "has not engaged in the practice of law." The referee explains:

First, Bear Real Estate Group is a commercial employer that is not itself engaged in the practice of law. Mr. Hotvedt was not involved in work that would normally be performed by a lawyer. In fact, both Mr. Mills and Mr. Hotvedt testified that Bear hired outside counsel for its legal work and spent a considerable amount of money on outside

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