In re Thurston , 304 Kan. 146 ( 2016 )

IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 114,543
In the Matter of JOHN W. THURSTON,
Respondent.
ORIGINAL PROCEEDING IN DISCIPLINE
Original proceeding in discipline. Opinion filed April 15, 2016. Published censure.
Kimberly L. Knoll, Deputy Disciplinary Administrator, argued the cause, and Stanton A. Hazlett,
Disciplinary Administrator, was with her on the formal complaint for the petitioner.
John J. Ambrosio, of Ambrosio & Ambrosio, Chtd., of Topeka, argued the cause, and John W.
Thurston, respondent, argued the cause pro se.
Per Curiam: This is an original proceeding in discipline filed by the office of the
Disciplinary Administrator against the respondent, John W. Thurston, of Manhattan, an
attorney admitted to the practice of law in Kansas in 2001.
On February 25, 2015, the office of the Disciplinary Administrator filed a formal
complaint against the respondent, alleging violations of the Kansas Rules of Professional
Conduct (KRPC). The respondent filed an answer on March 17, 2015. On April 7, 2015,
respondent entered into a joint stipulation of facts. Because there was no stipulation to the
existence of KRPC violations, a hearing was held on the complaint before a panel of the
Kansas Board for Discipline of Attorneys on April 9, 2015, where the respondent was
personally present and was represented by counsel. The hearing panel determined that
respondent violated KRPC 1.15(a) (2015 Kan. Ct. R. Annot. 556) (safekeeping property);
and 1.16(d) (2015 Kan. Ct. R. Annot. 572) (termination of representation).
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Upon conclusion of the hearing, the panel made the following findings of fact and
conclusions of law, together with its recommendation to this court:
"Findings of Fact
....
"10. C.B. retained the respondent to represent him in a criminal case in Riley
County District Court. C.B. faced a seven-count complaint which consisted of seven
felony sexual offenses, involving three children.
"11. On October 17, 2013, C.B. and the respondent signed a fee agreement
that provided, in part:
'FEES AND EXPENSES: You have agreed to pay the Firm for its legal
services and expenses as follows:
• $30,000.00 Fee. The sum of $20,000.00 shall be paid on October
17, 2013. The remaining sum of $10,000.00 shall be paid in
monthly payments with the remaining balance to be paid in full
on or before April 17, 2014.
• If the matter goes to a jury trial an additional fee will be
assessed. Said fee shall be determined at a later date and shall be
due and owing 30 days prior to the date set for jury trial.
• These fees do not include any work to be done at the Appellate
level or the Kansas Supreme Court.
• These fees do not include any out of pocket expenses paid or
incurred by the firm on your behalf. Such expenses include, but
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are not limited to: fees charged for discovery such as video copy
fees and photocopy fees, filing fees for Municipal Appeals, fees
for transcripts. Also not included are any fines, court costs, or
other fees due to the court.
'TERMINATION BY CLIENT: You may terminate this agreement at
any time, but you must give the Firm written notice of the termination. If
you terminate this agreement, you are still obligated to pay the fees and
expenses accrued to the time of termination. Said fees shall be calculated
at the rate of $250 per hour.'
"12. C.B. paid the respondent $23,100.00. The respondent did not deposit the
funds into his trust account.
"13. On December 19, 2013, the court conducted the preliminary hearing. At
the preliminary hearing, the respondent engaged in limited cross-examination of the
witnesses.
"14. C.B. was bound over for trial on all 7 counts. Thereafter, on January 6,
2014, the court arraigned C.B. and scheduled the matter for trial on April 28, 2014.
"15. On January 27, 2014, the respondent sent C.B. an electronic mail
message. The electronic mail message provided:
'Your case progressed faster than I expected. An unfortunate byproduct is
that we have to talk about the fee for a jury trial sooner than I expected.
As you recall our fee agreement calls for a two-stage fee, the first part
carrying us up to the point of jury trial. Given that the trial has been set
for five days my fee will be $25,000. In addition we will need to have
money set aside for investigator and expert witness fees. My estimate is
that we will need an additional $10,000 set aside for those fees.
Unfortunately due to the timeline imposed on us by the judge we will
need to have those fees paid immediately. The witness/investigator fees
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will be placed in our trust account. I wish there was a different way to
handle this, but unfortunately we all have to recognize that there is a
business aspect to every criminal case. We must handle this fee issue
now, because if I need to withdraw from your case it needs to happen
soon as to not disrupt the court's schedule.'
C.B. did not pay the additional fees.
"16. On January 31, 2014, the respondent filed a motion to withdraw as
counsel. The respondent provided the following three reasons for the motion to withdraw:
'1) Unforeseen circumstances have developed in this case
that prevent counsel from effectively representing the accused.
'2) This is not due to any action or inaction on behalf of the
accused, but rather due to circumstances beyond his control.
'3) Should there be any change in the dates currently
scheduled for the trial in this matter, any such delay will be attributed to
the defendant for purposes of speedy trial calculations.'
On February 10, 2014, the court granted the respondent's motion to withdraw and
appointed substitute counsel.
"17. After withdrawing from representation of C.B., the respondent failed to
provide C.B. with an accounting of the advance fee paid. Because the respondent failed
to keep complete time records, it was difficult to determine the amount of the unearned
fees. In fact, some of the respondent's time was tracked only by notations made on the
respondent's calendar.
"18. At the hearing on the formal complaint, the respondent testified that he
worked between 70 and 80 hours on C.B.'s case.
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'Q. How many hours can you justify in this particular case?
'A. If we're going off of just what [was] on the calendar–and I'll be
honest, I haven't added those up. I mean, I've tried to go back as
best as I could after talking to Mr. Ambrosio about it to
determine what other time I did, what other time I spent on this
case. My estimate is that I spent between 70 and 80 hours in total
on the case. But, again, that's—its very artful because I didn't
track it.'
Based upon that testimony, the hearing panel concludes the respondent worked 70 hours
on C.B.'s case, thus, earning $17,500.00. The respondent owes C.B. $5,650 in unearned
fees.
"19. Subsequent counsel filed a motion for a new preliminary hearing,
alleging that the respondent was ineffective in his representation of C.B. On April 11,
2014, the court granted the motion for a new preliminary hearing, concluding that there
was 'no apparent tactical or strategic advantage to be gained from such abbreviated cross-
examination of the witnesses.'
"Conclusions of Law
"20. Based upon the findings of fact, the hearing panel concludes as a matter
of law that the respondent violated KRPC 1.15 and KRPC 1.16, as detailed below.
[Footnote: The deputy disciplinary administrator also alleged that the respondent
violated KRPC 1.5. The hearing panel, however, concludes that insufficient evidence
was presented to establish a violation of KRPC 1.5.]
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"KRPC 1.15
"21. Lawyers must properly safeguard the property of their clients and third
persons. Properly safeguarding the property of others necessarily requires lawyers to
deposit unearned fees into an attorney trust account. KRPC 1.15(a).
"22. A lawyer may charge a flat fee to a client for a specific task to be
undertaken. When the flat fee is paid to the lawyer, it must be deposited into the lawyer's
trust account and the fee cannot be withdrawn until it is earned. Since a flat fee is not
earned until completion of the task, the entire flat fee must remain in the lawyer's trust
account until that task is completed unless the lawyer and client otherwise agree to partial
withdrawals based upon the amount earned for completion of specified subtasks. KRPC
1.15(a).
"23. The respondent failed to deposit the flat fee received from C.B. into his
trust account. Because the respondent failed to deposit unearned fees into his trust
account, the hearing panel concludes the respondent violated KRPC 1.15(a).
"KRPC 1.16
"24. KRPC 1.16 requires lawyers to take certain steps to protect clients after
the representation has been terminated. Specifically, KRPC 1.16(d) provides the
requirement in this regard:
'Upon termination of representation, a lawyer shall take steps to
the extent reasonably practicable to protect a client's interests, such as
giving reasonable notice to the client, allowing time for employment of
other counsel, surrendering papers and property to which the client is
entitled and refunding any advance payment of fee that has not been
earned. The lawyer may retain papers relating to the client to the extent
permitted by other law.'
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"25. Upon termination, a lawyer needs to be in a position to accurately
determine the fees earned to date. That requires lawyers to keep time records reflecting
actual time spent in the representation. In this case, the respondent failed to keep
adequate time records which would indicate the amount of unearned fees. Relying on
notations on the respondent's calendar and on the respondent's recollection is
unacceptable. However, for purposes of this case, it is the only available information.
"26. Based upon the respondent's testimony, the hearing panel concludes that
the respondent violated KRPC 1.16(d) when he failed to return unearned fees to C.B.
"American Bar Association
Standards for Imposing Lawyer Sanctions
"27. In making this recommendation for discipline, the hearing panel
considered the factors outlined by the American Bar Association in its Standards for
Imposing Lawyer Sanctions (hereinafter 'Standards'). Pursuant to Standard 3, the factors
to be considered are the duty violated, the lawyer's mental state, the potential or actual
injury caused by the lawyer's misconduct, and the existence of aggravating or mitigating
factors.
"28. Duty Violated. The respondent violated his duty to his client to
safeguard property.
"29. Mental State. The respondent negligently violated his duty.
"30. Injury. As a result of the respondent's misconduct, the respondent caused
actual injury to his client.
"Aggravating and Mitigating Factors
"31. Aggravating circumstances are any considerations or factors that may
justify an increase in the degree of discipline to be imposed. In reaching its
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recommendation for discipline, the hearing panel, in this case, found the following
aggravating factors present:
"32. Prior Disciplinary Offenses. The respondent has been previously
disciplined on two occasions. On October 29, 2009, the respondent entered into a
diversion agreement with the disciplinary administrator's office, case number DA10632.
In that case, the respondent stipulated that he violated KRPC 1.1. On June 14, 2013, the
respondent entered into a second diversion agreement with the disciplinary
administrator's office, case number DA11706. In that case, the respondent stipulated that
he violated KRPC 8.4(g).
"33. A Pattern of Misconduct. The respondent engaged in a pattern of
misconduct. Throughout the period of representation, the respondent failed to keep
reasonable time records on this and other matters.
"34. Substantial Experience in the Practice of Law. The Kansas Supreme
Court admitted the respondent to practice law in the State of Kansas in 2001. At the time
of the misconduct, the respondent has been practicing law for approximately 13 years.
"35. Indifference to Making Restitution. The respondent failed to return the
unearned fees to C.B.
"36. Mitigating circumstances are any considerations or factors that may
justify a reduction in the degree of discipline to be imposed. In reaching its
recommendation for discipline, the hearing panel, in this case, found the following
mitigating circumstances present:
"37. Absence of a Dishonest or Selfish Motive. The respondent's misconduct
does not appear to have been motivated by dishonesty or selfishness.
"38. The Present and Past Attitude of the Attorney as Shown by His or Her
Cooperation During the Hearing and His or Her Full and Free Acknowledgment of the
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Transgressions. The respondent fully cooperated with the disciplinary process.
Additionally, the respondent admitted the facts that gave rise to the violations.
"39. Previous Good Character and Reputation in the Community Including
Any Letters from Clients, Friends and Lawyers in Support of the Character and General
Reputation of the Attorney. The respondent is an active and productive member of the
bar of Manhattan, Kansas. The respondent also enjoys the respect of his peers and
generally possesses a good character and reputation as evidenced by several letters
received by the hearing panel.
"40. Remoteness of Prior Offenses. The two previous cases, which resulted in
participation in the attorney diversion program, appear to be remote in character to the
misconduct in this case.
"41. In addition to the above-cited factors, the hearing panel has thoroughly
examined and considered the following Standards:
'4.13 Reprimand is generally appropriate when a lawyer is negligent in
dealing with client property and causes injury or potential injury
to a client.
'7.3 Reprimand is generally appropriate when a lawyer negligently
engages in conduct that is a violation of a duty owed as a
professional, and causes injury or potential injury to a client, the
public, or the legal system.'
"Recommendation
"42. The disciplinary administrator recommended that the respondent be
censured and that the censure be published in the Kansas Reports. The respondent
recommended that the hearing panel informally admonish the respondent for the
violations.
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"43. Accordingly, based upon the findings of fact, conclusions of law, and the
Standards listed above, the hearing panel unanimously recommends that the respondent
be censured and that the censure be published in the Kansas Reports. In addition, the
hearing panel recommends that conditions be attached to the respondent's published
censure. First, the hearing panel directs the respondent to permit the auditor employed by
the disciplinary administrator's office to conduct a trust account audit within 90 days of
the date of this report. Second, the hearing panel directs the respondent to submit written
policies regarding time records and fee agreements which are in compliance with the
Kansas Rules of Professional Conduct to the disciplinary administrator's office for
approval within 30 days of the date of this report. Finally, the hearing panel directs the
respondent to pay his client $5,650 within 30 days of the date of this report.
"44. Costs are assessed against the respondent in an amount to be certified by
the Office of the Disciplinary Administrator."
DISCUSSION
In a disciplinary proceeding, this court considers the evidence, the findings of the
disciplinary panel, and the arguments of the parties and determines whether violations of
KRPC exist and, if they do, the discipline to be imposed. Attorney misconduct must be
established by clear and convincing evidence. In re Foster, 292 Kan. 940, 945, 258 P.3d
375 (2011); see Supreme Court Rule 211(f) (2015 Kan. Ct. R. Annot. 350). Clear and
convincing evidence is "'evidence that causes the factfinder to believe that "the truth of
the facts asserted is highly probable."'" In re Lober, 288 Kan. 498, 505, 204 P.3d 610
(2009) (quoting In re Dennis, 286 Kan. 708, 725, 188 P.3d 1 [2008]).
Respondent was given adequate notice of the formal complaint, to which he filed
an answer. Respondent also was given adequate notice of the hearing before the panel
and the hearing before this court. He filed no exceptions to the hearing panel's final
hearing report.
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With no exceptions before us, the panel's findings of fact are deemed admitted.
Supreme Court Rule 212(c), (d) (2015 Kan. Ct. R. Annot. 369). Furthermore, the
evidence before the hearing panel established the charged misconduct in violation of
KRPC 1.15(a) (2015 Kan. Ct. R. Annot. 556) (safekeeping property); and 1.16(d) (2015
Kan. Ct. R. Annot. 572) (termination of representation) by clear and convincing evidence
and supports the panel's conclusions of law. We therefore adopt the panel's findings and
conclusions.
The only remaining issue before us is the appropriate discipline for respondent's
violations. At the panel hearing, at which the respondent appeared, the Disciplinary
Administrator representative recommended published censure. The respondent requested
informal admonition. The Hearing Panel ultimately recommended published censure, but
it also "recommend[ed] certain conditions be attached to the respondent's published
censure." Despite the permissive, nonbinding tone established by the panel's use of the
word "recommend," it then directed the respondent to perform certain tasks within
specified time limits:
"First, the hearing panel directs the respondent to permit the auditor employed by the
disciplinary administrator's office to conduct a trust account audit within 90 days of the
date of this report. Second, the hearing panel directs the respondent to submit written
policies regarding time records and fee agreements which are in compliance with the
Kansas Rules of Professional Conduct to the disciplinary administrator's office for
approval within 30 days of the date of this report. Finally, the hearing panel directs the
respondent to pay his client $5,650 within 30 days of the date of this report."
These directions were not permissive or nonbinding. Rather, they conveyed clearly
nonnegotiable requirements of behavior, and the deadlines for that behavior to occur
were likely to ripen long before respondent's case reached its oral argument date before
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this court. This is, in fact, exactly what occurred. The panel's Final Hearing Report bears
a date of September 16, 2015, while this court heard oral argument on March 1, 2016—
well after the longest of the panel's specified time limits—90 days—expired.
Although neither respondent nor his counsel contested the panel's "conditions" or
the power of the panel to impose or enforce them, by the time the parties reached oral
argument before this court, there was evident lack of unanimity on whether respondent
had complied to the greatest extent possible. In particular, the representative of the
Disciplinary Administrator challenged the nature and completeness of documents
respondent had supplied to facilitate the required audit. As a result of what she viewed as
less-than-enthusiastic embrace of the panel's directions, she sought a sanction more
severe than the published censure she had sought at the panel hearing, i.e., a 60-day
suspension with a requirement of a reinstatement hearing.
Respondent's counsel resisted this effort to raise the stakes in this case and
implored us to provide definitive guidance, particularly for the criminal defense bar, on
how to account for flat fees and other advanced fees within ethical boundaries. Although
prompted to do so by questions from several members of the court, respondent's counsel
did not take issue with the panel's power or authority to order his client to fulfill certain
requirements pending oral argument before this court; nor did he challenge the
appropriateness of the Disciplinary Administrator's office seeking more serious sanctions
at oral argument because of perceived deficiencies in respondents' compliance with
interim panel orders. Also in response to questions from the bench, the representative of
the Disciplinary Administrator stated that she had relied on her interpretation of several
earlier disciplinary cases for the proposition that a hearing panel was empowered to
suggest or require a course of action to be followed by a respondent between the panel
hearing and Supreme Court oral argument and that this court would consider the
respondent's resulting behavior in deciding discipline. She also appeared to favor more
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extensive ethical guidance from this court for lawyers who accepted flat or other
advanced fees.
We decline counsels' invitation to issue what we believe would be an advisory
opinion on ethical accounting for flat fees and other advanced fees. Having adopted the
panel's findings and conclusions, we have already done what is necessary on that subject
in this case. We must, however, address the question of whether a disciplinary hearing
panel may issue mandatory directives to respondents—directives to be ignored or treated
casually at their peril. Certain of our prior cases may have been less than clear on this
point, and on whether the court will look favorably upon the Disciplinary Administrator's
recommendation of a more severe sanction as a result of what it regards as
noncompliance with such directives. See In re Barker, 299 Kan. 158, 172-74, 321 P.3d
767 (2014) (court adopts panel's recommendation of 6-month suspension; agrees with
certain of panel's suggested conditions, rejects another because of post-hearing
developments); In re Lee, 287 Kan. 676, 682-83, 198 P.3d 140 (2008) (panel agrees with
joint recommendation of published censure but attaches conditions; Disciplinary
Administrator notes compliance with conditions at oral argument; court adopts panel's
recommendation with suggested conditions); In re Docking, 282 Kan. 715, 147 P.3d 139
(2006) (panel's recommendation for 90-day suspension followed after respondent at least
partially complied with interim restitution recommendation of panel). It is time for a
course clarification, if not correction.
Simply put, our current Kansas Supreme Court Rules do not permit a disciplinary
hearing panel to impose discipline or to require or enforce any conditions attached it—
not between a panel hearing and oral argument to this court or at any other time. See
Supreme Court Rule 211(f). The rules plainly endow hearing panels with the power to
recommend sanctions for KRPC violations; imposition of discipline is left to this court
alone, which is free to reject recommendations from the panel or from the Disciplinary
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Administrator. See Supreme Court Rule 212(f). If members of the panel or the
Disciplinary Administrator believe that a respondent has engaged in additional behavior
meriting discipline in the period between issuance of the panel's Final Hearing Report
and oral argument before this court, then any responsive action must safeguard the
respondent's right to due process. For example, the Disciplinary Administrator's office
could file a motion to remand the current case to the panel for further factfinding on the
questioned behavior or it could file an entirely new Formal Complaint. If such a
procedure is not followed, then we are likely to end up with precisely the kind of
situation we face here: an oral argument in which counsel cannot agree on the new,
potentially critical facts. Such a dispute is not one an appellate court can reliably resolve.
We also note a further complicating factor in this particular controversy: Both sides
appear to have overread at least one of the panel's conditions/directives. The second
demands production of policies on fee agreements, not the agreements themselves.
All of this being said, we do not mean to discourage respondents from taking
corrective or rehabilitative actions between their disciplinary hearings and their oral
arguments in the Supreme Court. Indeed, such actions may appropriately be considered
by us when we decide discipline, because they may be indicative of a respondent's
acceptance of responsibility and/or remorse. We have previously remarked that
respondents should keep us and the Disciplinary Administrator's office informed of any
such actions by way of affidavit submitted before oral argument. See In re Peloquin, 301
Kan. 1, 9-12, 338 P.3d 568 (2014) (Disciplinary Administrator seeks indefinite
suspension because of respondent's failure to comply with panel's interim
recommendations; panel had rejected unworkable probation plan, urged 3-month
suspension; court states "respondent would have been well served to have filed an
affidavit" confirming psychological evaluation after panel hearing); see also In re Freed,
294 Kan. 655, 661-62, 279 P.3d 118 (2012) (panel recommends public censure plus
conditions, including psychological evaluation of respondent; respondent's late
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confirmation of evaluation, submission of revised, suggested probation plan underscore
misconduct leading to complaint, counsel suspension over published censure). And we
note that such a procedure is required in a case in which a probation plan with mandatory
terms and conditions is in place. See Kansas Supreme Court Rule 211(g)(5). This is not a
probation case; respondent has not sought probation, and the Disciplinary Administrator
has not suggested it. We do not elect to impose it sua sponte here. See In re Florez, 298
Kan. 811, 819, 316 P.3d 755 (2014). The bottom line is that a lack of compulsion of
corrective or rehabilitative actions does not necessarily equate to a lack of influence on
our decision making.
We also hasten to add that there is one type of situation in which the court will
certainly consider post-disciplinary hearing misbehavior by a respondent without
additional factfinding in a remanded or new disciplinary proceeding. That situation arises
when a respondent has been provided notice of the oral argument setting for his or her
case and nevertheless fails to appear. In such a case, the violation of KRPC has occurred
before the eyes of the court, see Kansas Supreme Court Rule 212(d), (e)(5) (respondent
shall appear before the court), and no further factfinding below is necessary to preserve
the respondent's right to due process. The court may impose discipline more severe than
that recommended by the panel or Disciplinary Administrator as a result of the new
violation, with or without a recommendation to do so. See In re Barker, 302 Kan. 156,
163, 351 P.3d 1256 (2015) (citing In re Batt, 296 Kan. 395, [405], 294 P.3d 241 [2013])
("When a respondent fails to appear before this court when facing recommendations of
indefinite suspension, a sanction greater than that recommended by the Disciplinary
Administrator or panel, even up to disbarment, may be warranted. Certainly, the lack of
an appearance at the hearing before this court qualifies as an additional aggravator of
these circumstances under consideration.").
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In this case, for all of the reasons just reviewed, we are not willing to impose
discipline more severe than published censure. The hearing panel was not empowered to
require respondent to engage in specific behaviors between issuance of the Final Hearing
Report and oral argument before this court; and the more severe recommendation from
the Disciplinary Administrator's office that arose out of the parties' interpretation of the
panel's requirements and disagreement over the respondent's compliance is rejected.
CONCLUSION AND DISCIPLINE
IT IS THEREFORE ORDERED that John W. Thurston be and is hereby disciplined by
published censure in accordance with Supreme Court Rule 203(a)(3) (2015 Kan. Ct. R.
Annot. 293).
IT IS FURTHER ORDERED that the costs of these proceedings be assessed to the
respondent and that this opinion be published in the official Kansas Reports.
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