Office of Lawyer Regulation v. Craig A. Knapp ( 2021 )

2021 WI 15SUPREME COURT OF WISCONSIN
CASE NO.: 2019AP1748-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Craig A. Knapp, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Craig A. Knapp,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST KNAPP
OPINION FILED: February 25, 2021
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
Per Curiam. ZIEGLER, J. concurs, joined by REBECCA GRASSL
BRADLEY, DALLET, HAGEDORN, and KAROFSKY, JJ.
NOT PARTICIPATING:
ATTORNEYS:
2021 WI 15NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2019AP1748-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Craig A. Knapp, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant, FEB 25, 2021
v. Sheila T. Reiff
Clerk of Supreme Court
Craig A. Knapp,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
revoked.
¶1 PER CURIAM. We review the recommendation of Referee
Robert E. Kinney that the license of Craig A. Knapp to practice
law in Wisconsin be revoked due to professional misconduct. The
referee also recommends that Attorney Knapp be ordered to pay
restitution and the full costs of this proceeding. The
referee's recommendation is based on a stipulation entered into
between Attorney Knapp and the Office of Lawyer Regulation
(OLR).
No. 2019AP1748-D
¶2 We adopt the referee's findings of fact and
conclusions of law and agree that the seriousness of Attorney
Knapp's professional misconduct warrants the revocation of his
law license. We further agree that he should pay restitution
and that he should pay the full costs of this proceeding, which
are $5,786.79 as of September 29, 2020.
¶3 Attorney Knapp was admitted to practice law in
Wisconsin in 1989 and practiced in Wausau. In 1991 Attorney
Knapp received a consensual private reprimand for a conflict of
interest violation. Private Reprimand No. 1991-31 (electronic
copy available at https://compendium.wicourts.gov/app/raw/
000053.html).
¶4 Attorney Knapp's law license is currently suspended
for failure to pay State Bar of Wisconsin dues and failure to
comply with continuing legal education requirements.
¶5 On September 17, 2019, the OLR filed a complaint
alleging that Attorney Knapp committed nine counts of
professional misconduct. Attorney Knapp filed an answer to the
complaint on November 15, 2019. On March 16, 2020, the parties
entered into a partial stipulation. On July 30, 2020, the
parties filed a comprehensive stipulation in which Attorney
Knapp pled no contest to all nine counts of misconduct alleged
in the OLR's complaint, agreed to the revocation of his law
license, and agreed to make restitution to his client. The
following facts are taken from the stipulation.
¶6 In January 2017, T.B. hired Attorney Knapp to
represent T.B. and his company, LJB Services, LLC, in a matter
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No. 2019AP1748-D
involving Stone Ridge Meat & Country Market, Inc., and D&K Land
Development, LTD. T.B. is the sole member of LJB Services.
¶7 On January 4, 2017, Attorney Knapp sent a letter to
Attorney Thomas Lorenson, counsel for Stone Ridge, in which he
said he would accept service of any legal process for LJB
Services as well as the delivery of any dividend checks. On
September 11, 2017, acting on behalf of Stone Ridge, Attorney
Lorenson sent Attorney Knapp a dividend check payable to LJB
Services and Attorney Knapp in the amount of $28,526.25.
¶8 On September 15, 2017, Attorney Knapp deposited the
check in his client trust account at the River Valley Bank in
Wausau, Wisconsin. On September 28, 2017, Attorney Knapp issued
a trust account check payable to T.B. in the amount of $23,608.
This should have left a balance of $4,918.25 attributable to LJB
Services in Attorney Knapp's trust account. In fact, the
balance in the trust account after the check was presented was
$67.03.
¶9 On October 4, 2017, Attorney Knapp deposited three
more checks payable to T.B. and LJB Services, totaling
$7,987.35, into the trust account. The balance in to the trust
account after making this deposit should have been $12,905.60
when in fact it was only $7,054.38.
¶10 In a letter dated November 6, 2017, Attorney Knapp
provided an account summary to T.B. showing that he was
currently holding $12,905.60 in his trust account for T.B.
Attorney Knapp's representation was false because the balance in
the trust account for T.B. as of November 6, 2017 was $5,921.28.
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No. 2019AP1748-D
¶11 On December 29, 2017, without having made any other
disbursements on behalf of T.B., the balance in Attorney Knapp's
trust account was $11.03.
¶12 On January 26, 2018, Attorney Knapp deposited a check
payable to T.B. and LJB Services in the amount of $20,538.90
into his trust account. After that deposit, there should have
been $33,444.50 of T.B.'s funds in Attorney Knapp's trust
account when in fact only $20,549.93 of T.B.'s funds were in the
trust account.
¶13 On February 8, 2018, the Internal Revenue Service
(IRS) sent Attorney Knapp a Notice of Levy on Wages, Salary and
Other Income relating to T.B. in the amount of $63,035.74. On
that same date, the IRS sent a similar Notice of Levy to River
Valley Bank for taxpayer DFK Chartered, Attorney Knapp's law
firm, also in the amount of $63,035.74. The Notice of Levy
directed the bank to hold funds in the taxpayer's account for 21
days before it sent the money to the IRS. The 21 day period
would have ended on March 1, 2018. As of March 1, 2018, the
balance in Attorney Knapp's trust account was $553.63. River
Valley Bank did not disburse any funds to the IRS from Attorney
Knapp's trust account.
¶14 On February 14, 2018, Attorney Knapp authorized five
electronic ACH payments from his trust account to the IRS
totaling $16,302.40. The five transactions either had to be
initiated by Attorney Knapp or authorized by him in advance.
¶15 On February 22, 2018, Attorney Knapp's trust account
became overdrawn and had a negative balance of $1,383.90. As of
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No. 2019AP1748-D
that date, Attorney Knapp failed to hold in trust, and converted
for other purposes, all $33,444.50 that he should have be
holding in his trust account on behalf of T.B.
¶16 On February 26, 2018, a trust account check in the
amount of $2,881.43 payable to the IRS, issued by Attorney Knapp
on February 12, 2018, was presented for payment, causing an
overdraft of $1,851.90 in the trust account.
¶17 On March 7, 2018, T.B. emailed Attorney Knapp asking
for the amount he was holding in his trust account for LJB
Services. On March 11, 2018, Attorney Knapp emailed T.B. back
and falsely advised the amount was $33,444.50, when in fact, the
balance in the trust account on that date was $553.63.
¶18 On March 12, 2018, T.B. emailed Attorney Knapp stating
he would like to pick up a check from Attorney Knapp's office.
On March 13, 2018, Attorney Knapp emailed T.B. and advised he
would be out of the office but asked for the amount that T.B.
needed and said he would mail the check to him. T.B. replied by
asking if Attorney Knapp could leave a check in the amount of
$24,873 for him in an envelope at the office so T.B. could pick
it up. Attorney Knapp responded by email the same day, saying
"[h]old off til we can talk to you about an irrevocable trust."
T.B. responded by email that if Attorney Knapp did not have time
to do the trust in the next 30 days, he would need to pick up
the check the following day. Attorney Knapp emailed back saying
he was on his way to the Twin Cities and would get back to T.B.
the following week with a date they could meet. Attorney Knapp
and T.B. scheduled a meeting for May 1, 2018 at Attorney Knapp's
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No. 2019AP1748-D
office. T.B. drove to Attorney Knapp's office on May 1, 2018
for the meeting, but Attorney Knapp did not show up.
¶19 On May 9, 2018, T.B. sent a letter to Attorney Knapp
telling him to send a check for all of the cash he was holding
for LJB Services in the trust account as well as any bill for
services. Attorney Knapp failed to send the check. On May 17,
2018, T.B. emailed Attorney Knapp requesting a check for the
balance of his funds. On May 21, 2018, Attorney Knapp emailed
T.B. back saying he would check the account and forward the
check to T.B. On May 30, 2018, T.B. emailed Attorney Knapp
asking why he had not yet received the check.
¶20 On May 31, 2018, Attorney Knapp emailed T.B. saying
that he had mailed the check the previous week and that there
might be a delay due to Memorial Day. Attorney Knapp also said
he would "check with the post office and put a trace on it."
T.B. never received a check for the balance of his trust account
funds.
¶21 On June 6, 2018, T.B. again emailed Attorney Knapp and
made a final request for the entire balance of $33,444.50 of his
funds in Attorney Knapp's trust account. Also in June 2018,
T.B. sent a certified letter to Attorney Knapp requesting the
return of his funds. Attorney Knapp's staff signed for the
letter, but Attorney Knapp did not respond to either the email
or the certified letter.
¶22 On June 19, 2018, T.B. confronted Attorney Knapp at a
bar near Attorney Knapp's office and requested the money. T.B.
emailed Attorney Knapp later that day saying he expected a check
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No. 2019AP1748-D
for the full amount in the trust account for LJB Services by
June 22, 2018.
¶23 On June 29, 2018, T.B. signed a resolution on behalf
of LJB Services terminating Attorney Knapp's representation and
calling for the return of all funds and property held by
Attorney Knapp.
¶24 On July 5, 2018, Attorney Alan Panek sent Attorney
Knapp a letter advising that he represented T.B. and LJB
Services; that Attorney Knapp's representation had been
terminated; and that Attorney Knapp was to provide an
accounting, full payment of client funds, and the client's file.
The letter was personally served on Attorney Knapp, but he did
not respond.
¶25 On July 17, 2018, Attorney Panek telephoned Attorney
Knapp and left a message asking why Attorney Knapp had not
responded to the July 5, 2018 letter. On July 17, 2018,
Attorney Panek filed a grievance against Attorney Knapp with the
OLR.
¶26 On July 17, 2018, Attorney Knapp sent a letter to T.B.
falsely saying that the $33,444.50 which he had in his trust
account for LJB Services had been seized by the IRS. He claimed
the IRS executed a levy on his trust account for an IRS lien
against T.B. personally. In a letter dated August 29, 2018 to
the OLR intake staff, Attorney Knapp stated:
On February 12, 2018, the IRS executed a levy on my
trust account against money held for [T.B.] of LJB
Services. The IRS took the $33,444.50 and applied it
to [T.B.'s] tax liability. I do not know how they
7
No. 2019AP1748-D
found out about our relationship, but assume it was
through DFI records. I informed [T.B.] of this loss,
but he accused me of stealing it.
¶27 Attorney Knapp's statements to the OLR about the IRS
seizure of funds were false.
¶28 Attorney Knapp's practice was primarily devoted to tax
preparation, and his work was usually completed before he billed
his clients and collected funds.
¶29 Between September 2017 and January 2019, River Valley
Bank records reflect that Attorney Knapp deposited earned fees
from 20 checks totaling $7,990 into his trust account. The bank
records did not show disbursement from the trust account in the
same or similar amounts as the deposits, indicating that
Attorney Knapp deposited earned fees to his trust account and
held them there.
¶30 Between September 2017 and January 2019, River Valley
Bank records reflect that Attorney Knapp made disbursements to
himself, his law firm, or his employee totaling $16,900.65.
Attorney Knapp did not include any notations of applicable
client matters on these trust account checks. The amount of the
disbursements exceeded the amount of earned fees that he
deposited to the trust account by $8,910.65. Because Attorney
Knapp did not have sufficient earned fees in the trust account
to cover the disbursements, he converted other third-party funds
in order to make these payments.
¶31 Between September 2017 and January 2019, Attorney
Knapp also made disbursements to other third parties not
identifiable to any client matter totaling $22,515.68. Between
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No. 2019AP1748-D
September 2017 and January 2019, Attorney Knapp made 15
electronic disbursements from his trust account totaling
$18,352.93.
¶32 Between August 2018 and February 2019, River Valley
Bank records reflect that Attorney Knapp had a number of
overdrafts on his trust account and was charged multiple
overdraft fees.
¶33 On January 4, 2019, Attorney Knapp made a $100 cash
withdrawal from his trust account.
¶34 On July 25, 2012, Attorney Knapp was arrested for
operating a motor vehicle while intoxicated in Marathon County,
Wisconsin. He was charged with misdemeanor operating a motor
vehicle while intoxicated (OWI), fourth offense
¶35 On December 18, 2012, Attorney Knapp pled no contest
and was found guilty and convicted of OWI, fourth offense. The
court revoked his driver's license; ordered an AODA assessment,
installation of an ignition interlock device, payment of a fine,
and participation in the Safe Streets Treatment Options Program.
The court also sentenced Attorney Knapp to 18-months probation
with 60 days in jail. The court then imposed 30 days in jail
with Huber privileges and stayed 30 days. Attorney Knapp failed
to notify the clerk of this court or the OLR of the conviction.
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No. 2019AP1748-D
¶36 The OLR's complaint alleged the following counts of
misconduct:
Count 1: Upon receiving funds for T.B. and LJB
Services, by failing to deliver those funds to T.B.,
Attorney Knapp violated SCR 20:1.15(e)(1).1
Count 2: By failing to hold in trust funds belonging
to T.B. and LJB Services, Attorney Knapp violated
SCR 20:1.15(b)(1).2
Count 3: By failing to fully and accurately respond
to T.B.'s requests for an accounting and information
concerning the status of funds received on behalf of
T.B. and LJB Services, Attorney Knapp violated
SCR 20:1.4(a)(4).3
Count 4: By converting funds belonging to T.B. and
LJB Services; by providing false information to T.B.
concerning amounts held in his trust account of behalf
1 SCR 20:1.15(e)(1) provides:
Upon receiving funds or other property in which a
client has an interest, or in which a lawyer has
received notice that a 3rd party has an interest
identified by a lien, court order, judgment, or
contract, the lawyer shall promptly notify the client
or 3rd party in writing. Except as stated in this rule
or otherwise permitted by law or by agreement with the
client, the lawyer shall promptly deliver to the
client or 3rd party any funds or other property that
the client or 3rd party is entitled to receive.
2 SCR 20:1.15(b)(1) provides:
A lawyer shall hold in trust, separate from the
lawyer's own property, that property of clients and
3rd parties that is in the lawyer's possession in
connection with a representation. All funds of
clients and 3rd parties paid to a lawyer or law firm
in connection with a representation shall be deposited
in one or more identifiable trust accounts.
3 SCR 20:1.4(a)(4) provides: "A lawyer shall promptly
comply with reasonable requests by the client for information."
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No. 2019AP1748-D
of T.B. and LJB Services; by misrepresenting to T.B.
and Attorney Panek the amount of funds he had been
holding on behalf of T.B. and LJB Services and that
the funds had been sized via execution of an IRS levy
on his trust account; and by misrepresenting to the
OLR intake staff the amount of funds he had been
holding on behalf of T.B. and LJB Services and that
all of the funds had been seized via execution of an
IRS levy on his trust account Attorney Knapp, in each
instance, violated SCR 20:8.4(c).4
Count 5: By depositing earned fees into his trust
account, Attorney Knapp violated SCR 20:1.15(b)(3).5
Count 6: By making 15 electronic disbursements from
his trust account totaling $18,352.93 between
September 2017 and January 2019, Attorney Knapp
violated SCR 20:1.15(f)(3).6
4 SCR 20:8.4(c) provides: "It is professional misconduct
for a lawyer to engage in conduct involving dishonesty, fraud,
deceit or misrepresentation."
5 SCR 20:1.15(b)(3) provides:
No funds belonging to a lawyer or law firm,
except funds reasonably sufficient to pay monthly
account service charges, may be deposited or retained
in a trust account. Each lawyer or law firm that
receives trust funds shall maintain at least one draft
account, other than the trust account, for funds
received and disbursed other than in a trust capacity,
which shall be entitled "Business Account," "Office
Account," "Operating Account," or words of similar
import.
6 20:1.15(f)(3) provides: "A lawyer shall not make deposits
to or disbursements from a trust account by way of an electronic
transaction, except as provided in SCR 20:1.15(f)(3)a. through
c."
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No. 2019AP1748-D
Count 7: By making a $100 cash withdrawal from his
trust account, Attorney Knapp violated
SCR 20:1.15(f)(2)a. 7
Count 8: By engaging in conduct leading to his
conviction of OWI, fourth offense, Attorney Knapp
violated SCR 20:8.4(b).8
Count 9: By failing to notify the OLR and the clerk
of the supreme court of his OWI fourth conviction,
Attorney Knapp violated SCR 21.15(5),9 enforceable via
SCR 20:8.4(f).
¶37 In the stipulation, Attorney Knapp agreed that the
facts alleged in the OLR's complaint formed the basis for the
discipline sought by the OLR, which was the revocation of
Attorney Knapp's Wisconsin law license. In the stipulation,
Attorney Knapp represented that he full understands the
7 SCR 20:1.15(f)(2)a. provides: "No withdrawal of cash
shall be made from a trust account or from a deposit to a trust
account. No check shall be made payable to "Cash." No
withdrawal shall be made from a trust account by automated
teller or cash dispensing machine."
8 SCR 20:8.4(b) provides: "It is professional misconduct
for a lawyer to commit a criminal act that reflects adversely on
the lawyer's honesty, trustworthiness or fitness as a lawyer in
other respects."
9 SCR 21.15(5) provides:
An attorney found guilty or convicted of any
crime on or after July 1, 2002, shall notify in
writing the office of lawyer regulation and the clerk
of the Supreme Court within 5 days after the finding
or conviction, whichever first occurs. The notice
shall include the identity of the attorney, the date
of finding or conviction, the offenses, and the
jurisdiction. An attorney’s failure to notify the
office of lawyer regulation and clerk of the supreme
court of being found guilty or his or her conviction
is misconduct.
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No. 2019AP1748-D
allegations; fully understands the ramifications should the
court impose the stipulated level of discipline; fully
understands his right to contest the matter; fully understands
his right to consult with counsel; states that his entry into
the stipulation is made knowingly and voluntarily; states that
he has read the complaint and the stipulation; and that his
entry into the stipulation represents his decision not to
contest the allegations in the complaint or the level and type
of discipline sought by the OLR's director. The parties agree
that an appropriate level of discipline to impose in response to
Attorney Knapp's misconduct is the revocation of Attorney
Knapp's license to practice law in Wisconsin and an order
requiring him to pay $33,444.50 restitution to LJB Services.
¶38 On August 10, 2020, an in-person plea hearing was held
at which the referee accepted Attorney Knapp's written pleas and
found that a factual basis existed for all charges. In
addition, the referee determined that Attorney Knapp committed
all nine counts of misconduct as set forth in the OLR's
complaint and stipulation.
¶39 The referee issued his report and recommendation on
September 8, 2020. The referee adopted the findings of fact
contained in the parties' stipulation. The referee found that
the OLR had met its burden of proof as to all of the counts of
misconduct alleged in the complaint. The referee found that
revocation of Attorney Knapp's license was an appropriate
sanction for the misconduct. The referee said Attorney Knapp's
conduct was motivated by dishonesty and selfishness, and his
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No. 2019AP1748-D
conversion of over $33,000 of his client's money was obviously
injurious to the client. The referee noted that Attorney Knapp
had considerable experience in the practice of law and obviously
knew that what he was doing was wrong. The referee said, "[h]is
obfuscation and avoidance behavior were clear evidence of
consciousness of guilt." The referee went on to say that
Attorney Knapp "initially embarked upon a course of attempting
to mislead the OLR" and it took extensive discovery on the part
of the OLR before Attorney Knapp "faced up to the full extent of
his wrongdoing." The referee also agreed that Attorney Knapp
should make restitution to LJB Services in the amount of
$33,444.50 and that he should pay the full costs of this
proceeding.
¶40 We will affirm a referee's findings of fact unless
they are found to be clearly erroneous, but we review a
referee's conclusions of law de novo. See In re Disciplinary
Proceedings Against Inglimo, 2007 WI 126, ¶5, 305 Wis. 2d 71,
740 N.W.2d 125. The court may impose whatever sanction it sees
fit regardless of the referee's recommendation. See In re
Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261
Wis. 2d 45, 660 N.W.2d 686.
¶41 Based upon our review of the record, we approve and
adopt the referee's findings of fact and conclusions of law. We
agree that the seriousness of Attorney Knapp's misconduct
warrants the revocation of his license to practice law.
Attorney Knapp engaged in a widespread pattern of serious
professional misconduct that has harmed his clients and
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No. 2019AP1748-D
tarnished the legal profession. Our precedent clearly supports
the revocation of his law license. See, e.g., In re
Disciplinary Proceedings Against Gedlen, 2007 WI 121, 305
Wis. 2d 34, 739 N.W.2d 274 (attorney's license revoked based on
28 counts of misconduct which included conversion of client
funds and multiple trust account violations); In re Disciplinary
Proceedings Against Kramer, 2010 WI 118, 329 Wis. 2d 361, 789
N.W.2d 322 (attorney's license revoked based on 69 counts of
misconduct which included conversion of funds from clients and
third parties and use of a trust account to conceal assets from
the Internal Revenue Service). We also agree with and adopt the
referee's recommendation that Attorney Knapp be ordered to pay
restitution and the full costs of this proceeding.
¶42 IT IS ORDERED that the license of Craig A. Knapp to
practice law in Wisconsin is revoked, effective as of the date
of this order.
¶43 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Craig A. Knapp shall pay $33,444.50 restitution
to LJB Services.
¶44 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Craig A. Knapp shall pay to the Office of Lawyer
Regulation the costs of this proceeding, which are $5,786.79.
¶45 IT IS FURTHER ORDERED that the restitution specified
above is to be completed prior to paying costs to the Office of
Lawyer Regulation.
¶46 IT IS FURTHER ORDERED that the administrative
suspension of Craig A. Knapp's license to practice law in
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No. 2019AP1748-D
Wisconsin, due to his failure to pay mandatory bar dues and for
noncompliance with continuing legal education requirements, will
remain in effect until each reason for the administrative
suspension has been rectified pursuant to SCR 22.28(1).
¶47 IT IS FURTHER ORDERED that Craig A. Knapp shall comply
with the provisions of SCR 22.26 concerning the duties of a
person whose license to practice law in Wisconsin has been
revoked.
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No. 2019AP1748-D.akz
¶48 ANNETTE KINGSLAND ZIEGLER, J. (concurring). I
concur in the court's order revoking Attorney Knapp's license to
practice law in Wisconsin. I write separately to point out that
in Wisconsin the "revocation" of an attorney's law license is
not truly revocation because the attorney may petition for
readmittance after a period of five years. See SCR 22.29(2). I
believe that when it comes to lawyer discipline, courts should
say what they mean and mean what they say. We should not be
creating false perceptions to both the public and to the lawyer
seeking to practice law again. See In re Disciplinary
Proceedings Against Moodie, 2020 WI 39, 391 Wis. 2d 196, 942
N.W.2d 302 (Ziegler, J., dissenting). And, as I stated in my
dissent to this court's order denying Rule Petition 19-10, In
the Matter of Amending Supreme Court Rules Pertaining to
Permanent Revocation of a License to Practice Law in Attorney
Disciplinary Proceedings, I believe there may be rare and
unusual cases that would warrant the permanent revocation of an
attorney's license to practice law. See S. Ct. Order 19-10
(issued Dec. 18, 2019) (Ziegler, J., dissenting).
¶49 I am authorized to state that Justices REBECCA GRASSL
BRADLEY, REBECCA FRANK DALLET, BRIAN HAGEDORN, and JILL J.
KAROFSKY join this concurrence.
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