Iowa Supreme Court Attorney Disciplinary Board v. Alexandra M. Nelissen ( 2015 )

IN THE SUPREME COURT OF IOWA
No. 15–1391
Filed November 20, 2015
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
ALEXANDRA M. NELISSEN,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
The grievance commission recommends suspension of an attorney
for several violations of the rules of professional conduct and rules
regarding client trust accounts. LICENSE SUSPENDED.
Charles L. Harrington, Wendell J. Harms, and Susan Wendel, Des
Moines, for complainant.
Alexandra M. Nelissen, Des Moines, pro se.
2
MANSFIELD, Justice.
This matter comes to us on a report of a division of the Grievance
Commission of the Supreme Court of Iowa. See Iowa Ct. R. 35.11(1).
The Iowa Supreme Court Attorney Disciplinary Board charged attorney
Alexandra M. Nelissen with violating several ethical rules. The
commission held a hearing, found that some but not all the alleged
violations had occurred, and recommended a thirty-day suspension. On
our review, we essentially track the well-reasoned analysis of the
commission. That is, we agree that trust account violations occurred,
that Nelissen made misrepresentations on her 2014 client security
questionnaire, and that Nelissen improperly increased her hourly rate
without notice to her client. Like the commission, we reject the other
alleged violations. We also agree with the commission’s recommended
sanction and, therefore, suspend Nelissen’s license to practice law in
Iowa for thirty days.
I. Background Facts and Proceedings.
Nelissen has practiced law in Iowa since 2001. In 2011, Nelissen
was a partner in the law firm of Nelissen & Juckette, P.C.
In August of that year, Nelissen was contacted by Linda Almburg.
The Child Support Recovery Unit (CSRU) had notified Almburg that it
intended to seek modification of the child support her ex-spouse was
paying under a 2007 dissolution decree. In that decree, the parties had
been awarded shared physical care of their two minor children, but
Almburg’s ex-husband had been ordered to pay $660 per month in child
support to Almburg based on his substantially higher income. CSRU
proposed a modification under which Almburg would pay approximately
$350 per month in child support instead of receiving $660 per month.
Almburg not only was concerned about this proposed change in child
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support, she also wanted to look into altering the children’s physical care
arrangements.
At the initial client meeting, Nelissen and Almburg agreed upon a
$3500 advance retainer. Almburg gave Nelissen a $2500 check at that
time. Nelissen deposited the $2500 into the firm’s client trust account.
Almburg understood that Nelissen would bill for her services at a rate of
$150 per hour. Although Nelissen prepared a written fee agreement, no
such agreement was ever signed by Almburg.
On September 14, CSRU filed its request for a chapter 252H
hearing to modify child support. See Iowa Code § 252H.8 (2011). A
hearing was originally scheduled for January 4, 2012. This hearing date
was continued several times—once because Nelissen was going to be out
of town meeting her son who was returning from a Marine Corps
deployment to Afghanistan and once because of Nelissen’s medical
condition. Additional continuances occurred because CSRU’s counsel
had a conflict and because Almburg’s ex-spouse refused to provide
discovery. The ex-spouse was sanctioned for this conduct and ordered to
pay $250 toward Nelissen’s attorney’s fees. The 2007 child support order
remained in effect pending the hearing.1
Almburg was unhappy with the delays in the proceeding. She
frequently emailed and texted Nelissen, who often responded promptly to
those communications.
On October 4, 2012, the hearing finally took place on CSRU’s
requested modification of child support. Nelissen represented Almburg
at the hearing, and Almburg’s ex-spouse also appeared through an
1As a further sanction for the ex-spouse’s misconduct in discovery, the district
court ordered that any modification of support would not be retroactive.
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attorney. Almburg prevailed—the district court declined to modify child
support. As the court explained,
The Court finds that the Respondent’s current “hardship”
based on his financial condition is largely attributable to the
Respondent’s actions in pursuing underemployment
activities while at the same time maintaining his unwavering
desire to maintain a lifestyle inconsistent with his financial
station.
Meanwhile, Nelissen had sent two itemized invoices to Almburg on
behalf of the Nelissen & Juckette law firm. The invoices totaled
$1097.62. The invoices appeared to indicate that Nelissen was seeking
payment of $1097.62 in addition to the $2500 on deposit.2 It is unclear
to this day what happened to the $2500 retainer provided to the Nelissen
& Juckette law firm.
In February 2012, Nelissen had split off from Jolie Juckette and
gone into practice on her own. On June 12, Almburg delivered the
balance of the original $3500 retainer (i.e., $1000) to Nelissen
individually. The $1000 was not deposited into Nelissen’s trust account.
A week later, on June 19, Nelissen sent Almburg an invoice on behalf of
her solo firm showing $2484.22 worth of work performed since February.
The $1000 was treated as a credit, so the “current balance due and
owing” was shown as $1484.22. Significantly, the hourly rate was now
$200 rather than $150; Nelissen had not previously informed Almburg of
this rate change. Even so, on July 23, Almburg paid Nelissen the
$1484.22.
On November 6, following the successful outcome of the October
child support modification hearing, Nelissen billed Almburg for an
2In fact, the second invoice, which was labeled a “pre-bill,” included a late fee for
nonpayment of the first invoice. This late fee, however, was later removed.
5
additional $4420 in fees and $.90 in costs covering the June through
October time period. Giving credit for payment of the $250 court
sanctions by Almburg’s ex-spouse, the amount shown due was now
$5655.12 despite the prior $1484.22 payment. The record does not
indicate that Almburg paid any portion of this bill.
In July 2013, a special audit was performed on the client trust
account at Nelissen’s new solo firm. Nelissen provided the auditor with
monthly bank statements, her general trust account ledger, copies of
individual client ledger records, and copies of client billings. However,
she did not provide monthly reconciliation statements or lists of client
balances.
In June 2014, after the Board had received a complaint from
Almburg, a further audit was conducted. At the audit, Nelissen
produced monthly bank statements, the general trust ledger, and
individual client ledger records. However, she still had no monthly
reconciliations or lists of client balances tied to reconciled bank
statement balances.
With respect to the Almburg representation in particular, Nelissen
claimed the $2500 retainer had been used up while she was in legal
partnership with Juckette. However, she had no documentation of this,
nor any trust account documentation relating to Almburg. Nelissen
promised to provide this documentation at a later date but never did so.
Nelissen maintains that the Almburg billing file, which she received upon
separating her practice from Juckette, was empty. Nelissen also failed to
respond to a number of inquiries from the Board.
In her client security questionnaires filed in 2011, 2012, 2013, and
2014, Nelissen certified that reconciliations of trust account balances
with bank statement balances and individual client ledger balances were
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performed monthly. She also certified that books and records relating to
client funds were preserved for at least six years after completion of the
employment to which they related.
Following its investigation, the Board charged Nelissen with
violating aspects of Iowa Rules of Professional Conduct 32:3.2 (expediting
litigation), 32:1.4 (communication), 32:1.5 (fees), 32:1.15 (safekeeping
property), 32:8.1 (disciplinary matters), and 32:8.4 (misconduct), as well
as Iowa Court Rules 45.1, 45.2, and 45.7 relating to trust accounts. A
full-day hearing was held before the commission on June 10, 2015. On
August 12, the commission issued a concise yet thorough report of
findings of fact, conclusions of law, and recommended sanction. The
commission concluded that some but not all the alleged violations had
occurred and recommended a thirty-day suspension of Nelissen’s license
to practice law.
II. Standard of Review.
As we recently summarized,
We review attorney disciplinary matters de novo. Attorney
misconduct must be proven by a convincing preponderance
of the evidence. We respectfully consider the commission’s
findings and recommendations, but are not bound by them.
Upon a finding of misconduct, we may impose a greater or
lesser sanction than recommended by the commission.
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Said, 869 N.W.2d 185, 190
(Iowa 2015) (citations omitted) (internal quotation marks omitted).
III. Violations.
We begin our discussion with the alleged violations that were not
proved by the Board. The Board charged that Nelissen violated Iowa
Rule of Professional Conduct 32:3.2 by failing to make reasonable efforts
to expedite litigation consistent with the interests of the client. It also
alleged she violated rule 32:1.4 by failing to keep her client reasonably
7
informed and failing to respond to her client’s reasonable requests for
information. Iowa R. Prof’l Conduct 32:1.4. Finally, it alleged she
violated rule 32:1.5(a) prohibiting the charging of an unreasonable fee.
Id. r. 32:1.5(a).
We agree with the commission that these alleged violations were
not established by a convincing preponderance of the evidence.
Nelissen’s reasons for seeking continuances were justified, and the
continuances were brief and nonprejudicial. We also cannot conclude
that Nelissen’s communication with Almburg was so deficient as to
amount to an ethical violation. Rather, we concur in the following
assessment by the commission:
The emails reflect a stressed client taking an active interest
in her child support modification matter and asking
pertinent questions about the proceedings. Nelissen was not
always prompt in responding to [Almburg’s] emails.
Nevertheless, the record shows that Nelissen normally
responded to emails from [Almburg] the same day or within
one or two days.
Similarly, we agree with the commission that an improper $12.61 late
charge on a “pre-bill” that was subsequently removed does not constitute
a violation of rule 32:1.5(a).
However, we uphold the violations that the commission found.
Rule 32:1.5(b) requires that “[a]ny changes in the basis or rate of the fee
or expenses shall also be communicated to the client.” Id. r. 32:1.5(b).
In February 2012, Nelissen increased her hourly rate by 33⅓% to $200
per hour. Yet she did not inform her client of this change, other than by
using the new rate in her billing. This oversight violated rule 32:1.5(b).
More serious are the trust account violations. The commission
found, as do we, that Nelissen breached various ethical rules relating to
trust accounts by mishandling funds she received from Almburg.
8
Nelissen never communicated to Almburg that withdrawals were being
made from the initial $2500 retainer. See Iowa Ct. R. 45.7(4) (requiring
contemporaneous or advance notification with a complete accounting);
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Santiago, 869 N.W.2d 172, 180
(Iowa 2015). She also failed to deposit the $1000 balance of the retainer
in her client trust account. See Iowa R. Prof’l Conduct 32:1.15(a), (c)
(requiring maintenance of client funds in a separate account and their
withdrawal only as fees are earned or expenses incurred); Iowa Ct. Rs.
45.1, .7(3) (imposing similar but more detailed requirements); Santiago,
869 N.W.2d at 180. Additionally, although the commission did not make
a specific finding on this point, we find by a convincing preponderance of
the evidence that withdrawals were made from the $2500 retainer before
the funds were actually earned.3
Furthermore, Nelissen violated rule 45.2(3) by failing to retain for
six years billing and trust account records relating to the Almburg
representation and failing to make reasonable arrangements to retain
those records when her partnership with Juckette dissolved. See Iowa
Ct. R. 45.2(3)(a), (d) (requiring retention of billing trust account records
for six years and requiring that when a law firm dissolves, “the partners
shall make reasonable arrangements for the maintenance of the records
3We do not agree with the commission that Nelissen’s failure to deposit the
$1484.22 in her client trust account was an additional violation. This was a payment
on a bill for services previously rendered. Although Nelissen later accepted that
Almburg was entitled to a credit for the unaccounted $2500 retainer, a
contemporaneous memo confirms that neither Nelissen nor Almburg viewed the
$1484.22 as an advance payment at the time.
We share the commission’s view that “there is no evidence that Nelissen’s
actions amount to conversion or misappropriation of any funds in her client trust
account.” As stated by the commission, “Nelissen’s violations of the trust account rules
appear to stem from sloppy record keeping and a disorganized separation of her legal
practice with Juckette.”
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specified in this rule”). Although it is not clear exactly what happened to
those records for the time period before the two law partners went their
separate ways, it is apparent that Nelissen made insufficient
arrangements to assure their preservation. Nelissen also committed an
ethical violation by not performing monthly reconciliations of her bank
statements with client trust account records. See id. r. 45.2(3)(a)(9)
(requiring attorneys to maintain and retain monthly reconciliations);
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Eslick, 859 N.W.2d 198, 201
(Iowa 2015).
Like the commission, we also find Nelissen violated rule 32:8.4(c)
by misrepresenting on her 2014 client security report that she was
performing monthly reconciliations of her trust account balances with
bank statements. See Iowa R. Prof’l Conduct 32:8.4(c). While the record
may be somewhat inconclusive for earlier years, it is clear that after she
went into practice on her own Nelissen knew her firm was not doing
monthly reconciliations, even though she claimed it was. See Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Kersenbrock, 821 N.W.2d 415, 421
(Iowa 2012) (finding an attorney engaged in conduct involving
misrepresentation by misstating the status of her trust account practices
in her annual client security questionnaires).
Additionally, we join the commission in determining that Nelissen
violated rule 32:8.1(b) by ignoring requests of the Board for information.
Between January and May 2014, the Board sent a series of letters to
Nelissen, as to which it received no response. See Iowa R. Prof’l Conduct
32:8.1(b) (making it an ethical violation to “knowingly fail to respond to a
lawful demand for information from an admissions or disciplinary
authority”); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Lemanski, 841
N.W.2d 131, 133 (Iowa 2013). We can infer from the repetition of the
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behavior that Nelissen “knowingly” failed to respond. See Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 604–05 (Iowa 2011).
IV. Sanctions.
Regarding sanctions, we are guided by the following principles:
There is no standard sanction for particular types of
misconduct. In the imposition of sanctions, we consider the
violations at issue, the need to deter future violations, the
protection of the public, the reputation of the bar, the
attorney’s fitness to practice law, and aggravating and
mitigating circumstances.
....
When determining what sanctions to impose, we
consider those imposed in similar cases while remaining
aware of the different circumstances in each case.
Said, 869 N.W.2d at 193 (citations omitted) (internal quotation marks
omitted).
This case mainly involves trust account violations. “Our sanctions
for trust account violations have ranged from a public reprimand to
license revocation.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Lubinus,
869 N.W.2d 546, 550 (Iowa 2015). There is no indication that Nelissen
misappropriated or converted client funds without a colorable future
claim to those funds—a situation that would warrant revocation. See id.
at 552. At the other end of the spectrum, we have imposed a public
reprimand for “isolated and minor violations,” or “minor trust account
violations [that] are the result of sloppiness or lack of oversight.” Id. at
550. Considering the specifics of this case, our precedents, and the
other factors enumerated above, we have decided to suspend Nelissen’s
license to practice law in Iowa for thirty days as recommended by the
commission.
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A reprimand would not be appropriate here for several reasons,
including Nelissen’s record of past discipline. In 2012, Nelissen received
a public reprimand primarily for trust account violations that occurred in
2010 and 2011.4 This is a significant aggravating factor. See Eslick, 859
N.W.2d at 203 (noting that an attorney’s “previous public reprimand
makes a suspension [for trust account violations] appropriate in this
case”). Additionally, during the 2013 audit, the auditor reminded
Nelissen she needed to perform monthly reconciliations, yet this problem
remained at the time of the 2014 audit. Santiago, 869 N.W.2d at 183
(finding “failure to learn” from a prior audit to be an aggravating factor);
see also Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ricklefs, 844 N.W.2d
689, 700 (Iowa 2014) (“Ricklefs knew what he needed to do after the
2008 audit but failed to do it.”). Further, Nelissen made a
misrepresentation on her client security questionnaire—conduct that we
have said “could potentially justify a more severe sanction” than would
otherwise be imposed. Ricklefs, 844 N.W.2d at 702. For these reasons,
another reprimand would not serve the goals of the attorney discipline
process. See Santiago, 869 N.W.2d at 184 (“A mere reprimand on this
record would weaken the deterrence so important to motivating
compliance with our rules that protect the public and maintain
confidence in our legal system.”).
The commission treated Nelissen’s personal health issues as a
mitigating factor. See Eslick, 859 N.W.2d at 202. However, Nelissen
opted not to testify at the hearing so we have very limited information on
those issues and no basis to tie them to her trust account violations. Cf.
4Additionally, Nelissen’s license was temporarily suspended in 2013 for failure to
pay annual fees, and she received a public reprimand in 2014 for neglect.
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id. at 202 (discussing the attorney’s testimony about her personal illness
and what she was doing to address it). We do find that lack of client
harm is a mitigating circumstance. See Ricklefs, 844 N.W.2d at 700.
This case does not involve a pervasive failure to follow trust
account rules. Cf. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morris, 847
N.W.2d 428, 436, 437 (Iowa 2014) (imposing an indefinite suspension of
at least six months on an attorney whose “record-keeping and
management deficits were severe and . . . persisted over a long period of
time even after the Client Security Commission intervened with an audit”
and who had prior suspensions); Ricklefs, 844 N.W.2d at 700, 702 (Iowa
2014) (imposing an indefinite suspension of at least three months on an
attorney who had “pervasive trust account violations,” including using
his trust account “as a conduit for personal funds,” when the situation
had continued for several years despite a prior audit); Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Powell, 830 N.W.2d 355, 359–60 (Iowa 2013)
(imposing an indefinite suspension of at least three months on an
attorney who was guilty of “years of utter disregard . . . for the trust fund
rules and practices,” while taking into account the attorney’s interim
suspension for seven months for the same conduct); Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Parrish, 801 N.W.2d 580, 589–90 (Iowa 2011)
(imposing a sixty-day suspension on an attorney who repeatedly failed to
account for client funds and whose “conduct over the last ten years has
now developed into a pattern of violating the [ethical and trust account
rules]”).
To the contrary, the record indicates that Nelissen generally had a
functioning client trust account, kept a client trust account ledger, and
maintained individual client ledger records. She also competently
represented her client in the matter that is the subject of this complaint.
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Nelissen did, however, consistently fail to perform monthly
reconciliations. Additionally, with respect to Almburg, Nelissen failed to
take reasonable steps to preserve records, paid herself out of the trust
account prematurely and without giving proper notice, and failed to
deposit a portion of the retainer in the trust account.
Although no two cases are identical, we agree with the commission
that Kersenbrock is a relevant precedent. There we imposed a thirty-day
suspension on an attorney who had committed similar trust account
violations and made misrepresentations on her client security
questionnaire. Kersenbrock, 821 N.W.2d at 419, 421, 422. True, the
trust account violations in Kersenbrock were “systematic” and we
indicated “[t]he cumulative impact of all violations is an important
consideration.” Id. at 422. On the other hand, unlike Nelissen, that
attorney had no prior disciplinary history. Id.
Also of precedential significance is our decision in Eslick. In that
case, we suspended for thirty days the license of an attorney whose trust
account was “out of whack” for months. Eslick, 859 N.W.2d at 203, 204.
Despite the serious nature of the trust account violations, the attorney
had a limited record of prior discipline (consisting of a public reprimand
for something other than trust account violations), she had not made
misrepresentations on her client security reports, and she was receiving
treatment for an illness that had affected her practice. Id. at 202–03.
Another somewhat analogous precedent is Santiago.5 See 869
N.W.2d at 181. That case involved an attorney who violated trust
account rules by not depositing cash retainers in the trust account, not
5This case was not cited by the commission because it was decided after the
commission filed its report and recommendation.
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providing notice and accounting, and not reconciling his trust account
regularly. Id. at 179. No client harm was proven, but the attorney had
been notified of deficiencies in a prior audit. We concluded a
“suspension is warranted given [the attorney]’s postaudit continuing
disregard for the trust account rules scrupulously followed by other Iowa
practitioners.” Id. at 174, 182, 184.
V. Disposition.
We suspend Nelissen’s license to practice law with no possibility of
reinstatement for thirty days from the filing of this opinion. This
suspension shall apply to all facets of the practice of law. See Iowa Ct. R.
35.13(3). Nelissen must comply with the notification requirements of
Iowa Court Rule 35.23. Costs are assessed against Nelissen pursuant to
Iowa Court Rule 35.27(1). Unless the Board objects, Nelissen shall be
automatically reinstated after the thirty-day suspension period on
condition that all costs have been paid. See id. r. 35.13(2).
LICENSE SUSPENDED.