In the Matter of: Richard S. Mossler , 86 N.E.3d 387 ( 2017 )

ATTORNEY FOR THE RESPONDENT ATTORNEYS FOR THE INDIANA SUPREME COURT
Margaret M. Christensen DISCIPLINARY COMMISSION
Indianapolis, Indiana G. Michael Witte, Executive Director
Rachel B. Gallagher, Staff Attorney
Larry D. Newman, Staff Attorney
Indianapolis, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court FILED
_________________________________ Dec 06 2017, 3:10 pm
CLERK
No. 29S00-1704-DI-203 Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE MATTER OF:
RICHARD S. MOSSLER,
Respondent.
_________________________________
Attorney Discipline Action
_________________________________
December 6, 2017
Per Curiam.
We find that Respondent, Richard Mossler, engaged in attorney misconduct arising from
his professional relationship with an out-of-state corporation. For this misconduct, we conclude
that Respondent should be suspended from the practice of law in this state for at least six months
without automatic reinstatement.
Pursuant to Indiana Admission and Discipline Rule 23(12.1)(b), the Indiana Supreme
Court Disciplinary Commission and Respondent have submitted for approval a “Statement of
Circumstances and Conditional Agreement for Discipline” stipulating agreed facts and proposed
discipline. The Respondent’s 1992 admission to this state’s bar subjects him to this Court’s
disciplinary jurisdiction. See IND. CONST. art. 7, § 4. The Court approves the agreement and
proposed discipline.
Stipulated Facts
Since 2008, Respondent’s practice has been dedicated almost exclusively to consumer
debt resolution. During that time, Respondent has been affiliated with Lexxiom, Inc., a Nevada
corporation with headquarters in California. Functions performed by Lexxiom for Respondent
have included marketing, client intake, bookkeeping, administration of banking transactions, and
communications with clients and debt collectors.
Nonlawyer personnel at Lexxiom would interview potential clients and then forward the
information to Respondent, who could accept or reject the client. Under Respondent’s standard
engagement contract with clients, Respondent would provide non-litigation legal services and
litigation consultation for an initial flat fee (usually 8-10% of the amount of debt the client was
seeking to resolve) plus monthly maintenance and settlement accumulation fees. Clients also
had the option to engage Respondent separately to provide litigation services. After the client
and Respondent executed an engagement contract, Lexxiom would notify creditors of
Respondent’s representation and would undertake communication to negotiate settlements with
the creditors.
For those clients not domiciled in Indiana who had a legal claim or defense, Respondent
employed attorneys in other states to provide as-needed, state-specific legal counsel to
Respondent’s clients. Respondent paid those attorneys, who were not associated with
Respondent’s firm, a monthly retainer.
In connection with his relationship with Lexxiom, Respondent opened a trust account in
California. Respondent failed to certify this trust account with the Clerk of the Indiana Supreme
Court. Respondent was not a signatory on the account; rather, the only signatories were two
nonlawyer corporate executives of Lexxiom. Clients authorized Lexxiom to withdraw agreed
attorney fees from their funds held in trust and also to withdraw settlement accumulation fees
once sufficient savings had accumulated to negotiate debts. Because of the large number of
clients with funds in the trust account and the high volume of daily transactions, withdrawals
from and deposits into the trust account were made by Lexxiom on a “batch” basis whereby a
single transaction into and out of the trust account would involve multiple clients.
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As a result of errors by Lexxiom personnel, Respondent’s trust account was overdrawn
on at least three occasions in December 2015. Due to the batching system used by Lexxiom and
his own lack of oversight, Respondent did not immediately realize that his trust account had gone
out of balance. After Respondent was alerted to the problem, he engaged an independent
accounting firm to reconcile the balance and replenished the funds that mistakenly had been
withdrawn from the trust account by Lexxiom.
Respondent did not adequately supervise the client intake, debt settlement, or trust
account administration services performed by nonlawyer personnel at Lexxiom.
The parties agree that Respondent violated these Indiana Professional Conduct Rules
prohibiting the following misconduct:
1.5(e): Improperly dividing fees between lawyers who are not in the same firm.
1.15(a): Failing to maintain and preserve complete records of client trust account funds,
failing to safeguard client funds, and opening and maintaining a trust account in a state
other than where the lawyer’s office is situated without the consent of the clients.
5.3(a): Failing to make reasonable efforts to ensure that the lawyer’s firm has taken measures
to assure that a nonlawyer assistant’s conduct is compatible with the lawyer’s
professional obligations.
5.3(b): Failing to discharge responsibilities regarding supervision of nonlawyer assistants.
5.3(c): Ordering or ratifying the misconduct of nonlawyer assistants, or failing to take
reasonable remedial action with respect to the misconduct of nonlawyer assistants under
the lawyer’s supervision.
8.4(a): Knowingly assisting another to violate the Rules of Professional Conduct.
Guideline 9.1: Failing to take reasonable measures to ensure that the conduct of nonlawyer
personnel was compatible with the lawyer’s obligations under the Rules of Professional
Conduct.
Guideline 9.3: Delegating responsibility for establishing attorney-client relationships to a
nonlawyer assistant.
Guideline 9.4: Failing to inform clients that nonlawyers performing legal functions were not
licensed to practice law.
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Guideline 9.8: Splitting legal fees with nonlawyer personnel.
Guideline 9.10: Failing to ensure that conduct of nonlawyer personnel conformed to the
Rules of Professional Conduct.
The parties also agree Respondent violated the following Indiana Admission and Discipline
Rules (2016):
2(f): Failing to notify the Clerk of the existence of an IOLTA trust account.
23(29)(a)(3): Failing to maintain a ledger with separate records for each client with funds
deposited in a trust account.
Finally, the parties agree Respondent violated Rule 7(B) of the Indiana Rules Governing
Attorney Trust Account Overdraft Reporting by allowing nonlawyer assistants to be authorized
signatories on an attorney trust account, while failing to conduct required periodic reconciliations
of the trust account.
The parties cite no facts in aggravation. In mitigation, the parties cite Respondent’s lack
of prior discipline, his cooperation with the disciplinary investigation and proceeding, and the
remedial measures taken by Respondent once he learned of his trust account problems.
Discussion and Discipline
Our analysis of appropriate discipline entails consideration of the nature of the
misconduct, the duties violated by the respondent, any resulting or potential harm, the
respondent’s state of mind, our duty to preserve the integrity of the profession, the risk to the
public should we allow the respondent to continue in practice, and matters in mitigation and
aggravation. See Matter of Newman, 958 N.E.2d 792, 800 (Ind. 2011).
We have addressed in prior disciplinary cases professional relationships similar in nature
to Respondent’s affiliation with Lexxiom. For example, in Matter of Fratini, 74 N.E.3d 1210(Ind. 2017), the respondent attorney was similarly affiliated with a California corporation that
advertised debt-relief services nationwide. In Matter of Joyce, 9 N.E.3d 142 (Ind. 2014), the
attorney was affiliated with an insurance marketing agency that sold to customers, as a “loss
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leader” intended to generate more lucrative sales of annuities and other insurance products, estate
planning packages prepared with only nominal attorney involvement. And in Matter of Dilk, 2
N.E.3d 1263 (Ind. 2014), the attorney accepted thousands of referrals from several out-of-state
“foreclosure assistance” entities, had minimal contact with clients or active involvement in their
cases, and largely followed the course of action decided upon by the companies. While the
particular facts and rule violations in each case differ slightly, ultimately these cases all derive
from the same essential problem; namely, the respondent lending his or her imprimatur as an
attorney to legal functions performed in large part by a corporation’s nonlawyer personnel,
without the requisite degrees of direct involvement and oversight mandated by our rules
governing attorney conduct.
In Fratini, Joyce, and Dilk, we suspended the respondent attorneys for six months without
automatic reinstatement. We agree with the Commission and Respondent that the same sanction
is warranted in this case, and we therefore approve the parties’ proposed discipline.
Conclusion
The Court concludes that Respondent violated Professional Conduct Rules 1.5(e),
1.15(a), 5.3(a), 5.3(b), 5.3(c), and 8.4(a); Professional Conduct Guidelines 9.1, 9.3, 9.4, 9.8, and
9.10; Admission and Discipline Rules 2(f) and 23(29)(a)(3) (2016); and Overdraft Rule 7(B).
For Respondent’s professional misconduct, the Court suspends Respondent from the practice of
law in this state for a period of not less than six months, without automatic reinstatement,
effective January 17, 2018. Respondent shall fulfill all the duties of a suspended attorney under
Admission and Discipline Rule 23(26). At the conclusion of the minimum period of suspension,
Respondent may petition this Court for reinstatement to the practice of law in this state, provided
Respondent pays the costs of this proceeding, fulfills the duties of a suspended attorney, and
satisfies the requirements for reinstatement of Admission and Discipline Rule 23(18).
The costs of this proceeding are assessed against Respondent. The hearing officer
appointed in this case is discharged.
All Justices concur.
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