Iowa Supreme Court Attorney Disciplinary Board v. Blake D. Lubinus

IN THE SUPREME COURT OF IOWA
No. 15–0672
Filed September 11, 2015
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
BLAKE D. LUBINUS,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
The grievance commission reports that an attorney violated several
rules of professional conduct and recommends a public reprimand.
LICENSE SUSPENDED.
Charles L. Harrington and Amanda K. Robinson, Des Moines, for
complainant.
Michael A. Horn of Kuntz, Laughlin & Horn, Des Moines, for
respondent.
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MANSFIELD, Justice.
This matter comes before us on the report of a division of the
Grievance Commission of the Supreme Court of Iowa. See Iowa Ct. R.
35.11. The Iowa Supreme Court Attorney Disciplinary Board charged
attorney Blake D. Lubinus with violating several of our ethical rules by
failing to deposit an advance fee into his trust account, transferring
unearned fees out of his trust account, and failing to furnish
contemporaneous accountings to his clients upon making trust account
withdrawals. The parties stipulated as to the underlying facts. The
stipulation also addressed the rule violations that had occurred and the
appropriate sanction for those violations. The commission accepted the
parties’ stipulation as to facts and rule violations but recommended a
public reprimand for Lubinus rather than the proposed thirty-day
suspension.
Upon our review, we determine that all the alleged ethical
violations took place. However, given the nature and extent of those
violations, we believe a reprimand is an insufficient sanction and
suspend Lubinus’s license to practice law in Iowa for thirty days, as
originally proposed by the parties.
I. Background Facts and Proceedings.
Lubinus was admitted to the Iowa bar in 2010. At the time of the
alleged ethical violations, he maintained a solo practice in Polk County.
Lubinus is engaged in the general practice of law with a focus on
commercial collections, criminal defense, and juvenile law.
In August 2012, Lubinus was retained to represent an individual
charged with operating while intoxicated (OWI). He agreed to take the
case for a $1500 flat fee. Before Lubinus had received any funds from
the client, he withdrew $400 from his operating account to cover the
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client’s bond and then transferred $400 from his office trust account to
his operating account. The bond ended up being only $180, and the
client paid Lubinus $1680 for both the flat fee and the bond. Lubinus
deposited the entire $1680 when received from the client into his
operating account. At least initially, Lubinus did not restore the $400 to
his trust account.
Lubinus handles collections cases on a contingent-fee basis,
usually receiving between twenty and twenty-five percent of the amount
collected. In this area of practice, Lubinus’s law firm uses a
computerized accounting system that processes payments for clients and
calculates the contingent fees he is entitled to withdraw from the trust
account. In June 2013, Lubinus deposited $20,379.47 total into his
trust account. In July, his deposits totaled $30,879.42. During June
and July, Lubinus made transfers totaling $6600 from his trust account
to either his office operating account or his personal bank account.
Lubinus acknowledges these funds had not yet been earned, at least in
part because Lubinus had not yet completed the work for his clients by
providing them with their respective shares of the collection payment.
These transfers were made electronically, and Lubinus did not initially
let his support staff know about them, nor did he provide
contemporaneous notice to his clients.
These transfers caused accounting errors, problems with monthly
reconciliations, and other issues with Lubinus’s trust account. Lubinus
restored $6100 to the trust account in late July and subsequently placed
another $500 in escrow when he realized he had not restored the full
$6600.
Lubinus reported his own actions to the Board. In an affidavit,
Lubinus explained that when the premature withdrawals of $6600
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occurred, “I was at a financial low point in my career. I felt desperate
and did not see any way out of my short term money problems.”
Lubinus has ceased making electronic transfers out of the trust
account, so all transactions from the trust account are now handled by
check only. Lubinus has also taken on a law partner. The parties agree
that no client lost funds as a result of Lubinus’s actions and that
Lubinus has repaid all funds to his trust account that were improperly
transferred.
The Board filed a complaint with the grievance commission on
October 13, 2014, alleging Lubinus had violated Iowa Rules of
Professional Conduct 32:1.15(a), (c), and (f) and Iowa Court Rules
45.2(3)(a)(9) and 45.7(3). On October 31, Lubinus filed an answer
admitting essentially all of the factual allegations and violations alleged
in the complaint. The parties submitted a joint stipulation of facts, legal
violations, and proposed sanction on March 31, 2015. Therein, the
parties agreed to waive a formal hearing.
On April 16, the commission adopted the parties’ factual
statements and agreed with the stipulated rule violations. It concluded,
however, that a lesser sanction was appropriate. Its report explained as
follows:
In reaching its conclusion, the Commission considers
several mitigating factors. Respondent self-reported his
misconduct to the Board and has cooperated fully during the
proceedings. Respondent admitted to the violations in an
affidavit provided to the Board and dated February 25, 2014,
and in an Answer filed with the Commission on October 31,
2014. Respondent has instituted procedures to prevent
similar violations in the future. Respondent is relatively new
to the practice of law, having been admitted in 2010, and
has no previous disciplinary complaints. No clients were
harmed or prejudiced as a result of Respondent’s actions.
Respondent has repaid to his trust account all funds that
were improperly transferred. The violations were isolated,
having taken place in June and July 2013 and August 2012.
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Based on these mitigating factors, the commission found Lubinus’s
case distinguishable from other cases involving trust account violations
that had resulted in suspensions. It therefore recommended that
Lubinus receive a public reprimand. The matter is now before us for our
independent review. In their written submissions to us regarding
sanction, the Board continues to argue for a thirty-day suspension while
Lubinus now urges us to accept the commission’s recommendation of a
public reprimand.
II. Scope of Review.
We review attorney disciplinary proceedings de novo. Iowa Ct. R.
35.11(1); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Eslick, 859 N.W.2d
198, 201 (Iowa 2015). The Board has the burden of proving the
attorney’s misconduct by a convincing preponderance of the evidence.
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Hedgecoth, 862 N.W.2d 354,
360 (Iowa 2015). “A convincing preponderance of the evidence is more
than a preponderance of the evidence, but less than proof beyond a
reasonable doubt.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Crum, 861
N.W.2d 595, 599 (Iowa 2015) (internal quotation marks omitted).
Stipulations of fact are controlling, but stipulations as to violations
and appropriate sanctions do not bind us. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Bartley, 860 N.W.2d 331, 335 (Iowa 2015). We give
respectful consideration to the commission’s recommendations but are
not bound by them. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cross,
861 N.W.2d 211, 217 (Iowa 2015).
III. Analysis.
A. Review of Alleged Ethical Violations.
1. Iowa Rule of Professional Conduct 32:1.15(a). Rule 32:1.15(a)
provides in part, “A lawyer shall hold property of clients . . . that is in a
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lawyer’s possession in connection with a representation separate from
the lawyer’s own property.” Iowa R. Prof’l Conduct 32:1.15(a). We find
Lubinus violated rule 32:1.15(a) because he failed to deposit the advance
fee he received on the OWI matter into his trust account and instead put
it into an account of his own. See Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Clarity, 838 N.W.2d 648, 655 (Iowa 2013) (determining that a
failure to deposit advance fees into a trust account violates rule
32:1.15(a)).
2. Iowa Rule of Professional Conduct 32:1.15(c). According to rule
32:1.15(c), “A lawyer shall deposit into a client trust account legal fees
and expenses that have been paid in advance, to be withdrawn by the
lawyer only as fees are earned or expenses incurred.” Iowa R. Prof’l
Conduct 32:1.15(c). We determine Lubinus violated this rule by
prematurely depositing the entire OWI advance fee into his operating
account and by transferring funds out of his trust account before he had
earned them with respect to his commercial collections cases.
3. Iowa Rule of Professional Conduct 32:1.15(f). Rule 32:1.15(f)
provides that “[a]ll client trust accounts shall be governed by chapter 45
of the Iowa Court Rules.” Id. r. 32:1.15(f). Because we find violations of
chapter 45 below, we agree Lubinus’s conduct violated rule 32:1.15(f).
4. Iowa Court Rule 45.2(3)(a)(9). A lawyer is required to maintain
“[c]opies of monthly trial balances and monthly reconciliations of the
client trust accounts maintained by the lawyer.” Iowa Ct. R.
45.2(3)(a)(9). Based on Lubinus’s stipulation that his improper
withdrawals and transfers in June and July 2013 undermined his office’s
ability to maintain accurate records of his trust account, we find his
conduct violated rule 45.2(3)(a)(9).
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5. Iowa Court Rule 45.7(3). “A lawyer must deposit advance fee
and expense payments from a client into the trust account and may
withdraw such payments only as the fee is earned or the expense is
incurred.” Id. r. 45.7(3). Lubinus violated this rule by prematurely
shifting unearned funds out of his trust account and by depositing the
entire OWI advance fee into his operating account.
6. Iowa Court Rule 45.7(4). This rule provides:
A lawyer accepting advance fee or expense payments must
notify the client in writing of the time, amount, and purpose
of any withdrawal of the fee or expense, together with a
complete accounting. The attorney must transmit such
notice no later than the date of the withdrawal.
Id. r. 45.7(4). We conclude Lubinus violated this rule by failing to notify
any of his clients when he made transfers from his trust account to his
personal and operating accounts in June and July 2013.
B. Consideration of Appropriate Sanction. In crafting the
appropriate sanction, we take into account “the nature of the violations,
protection of the public, deterrence of similar misconduct by others, the
lawyer’s fitness to practice, and [the court’s] duty to uphold the integrity
of the profession in the eyes of the public.” Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Ricklefs, 844 N.W.2d 689, 699 (Iowa 2014) (alteration
in original) (internal quotation marks omitted). “We consider mitigating
and aggravating circumstances as we calibrate the sanction.” Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Kieffer-Garrison, 847 N.W.2d 489,
495 (Iowa 2014). We also try to achieve consistency with prior cases. Id.
Our sanctions for trust account violations have ranged from a
public reprimand to license revocation. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Parrish, 801 N.W.2d 580, 588–89 (Iowa 2011)
(collecting cases). For isolated and minor violations, we have generally
8
decided a public reprimand was an appropriate sanction. See id. at 588.
For example, in Iowa Supreme Court Attorney Disciplinary Board v.
Piazza, we publicly reprimanded an attorney for failing to deposit an
advance fee into his trust account and provide an accounting to his
client in violation of our prior ethical rules. 756 N.W.2d 690, 697–98,
700 (Iowa 2008). In declining to impose a suspension, we took into
account the attorney’s lack of prior disciplinary history and the fact he
had since reformed his accounting practices. Id. at 700. Similarly, in
Iowa Supreme Court Attorney Disciplinary Board v. Denton, we publicly
reprimanded an attorney who failed to deposit one client’s advance fee
into a trust account. 814 N.W.2d 548, 550–51 (Iowa 2012). The attorney
had only recently begun to practice immigration law in Iowa and had not
yet opened a trust account for legal fees. Id. at 549. In imposing a
reprimand, we noted that he had no prior ethical violations and had
since established a trust account to avoid future violations. Id. at 551.
Likewise, when an attorney failed to provide written notice to a
client upon withdrawing a retainer from a trust account, and also
withdrew the retainer before it had been fully earned, we issued a public
reprimand. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Sobel, 779 N.W.2d
782, 789–90 (Iowa 2010). An attorney’s commingling of his own funds
and client funds in his trust account in order to hide assets from the
Internal Revenue Service also warranted a public reprimand. Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Sunleaf, 588 N.W.2d 126,
126–27 (Iowa 1999). We noted the case presented a close call “at the
precise boundary between suspension and public reprimand,” but
ultimately declined to impose a suspension due to the fact “th[e] episode
[wa]s an aberration, wholly out of plumb with [the attorney]’s many years
of practice which appear to have been honorable.” Id.
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When an attorney’s minor trust account violations are the result of
sloppiness or lack of oversight, we have levied a public reprimand rather
than a suspension. In Iowa Supreme Court Board of Professional Ethics
& Conduct v. Apland, we characterized the attorney’s failure to deposit an
advance fee, provide an accounting, and respond to the ethics
commission as the result of “lackadaisical bookkeeping practices” and
imposed a public reprimand. 577 N.W.2d 50, 56, 59–60 (Iowa 1998). In
Iowa Supreme Board of Professional Ethics & Conduct v. Herrera, we
imposed a public reprimand on an attorney for commingling funds and
failing to keep adequate records in violation of our prior ethical rules
when an office employee was able to mismanage funds due to the
attorney’s lack of oversight. 560 N.W.2d 592, 594–95 (Iowa 1997). We
noted there was significant evidence that the office employee had
intentionally mismanaged the attorney’s funds because she resented
him. Id. at 595. We also took into account the attorney’s “honesty, his
forthright responses, and his move to correct his operation” as mitigating
factors weighing in favor of a public reprimand rather than a suspension.
Id.
On the other hand, when an attorney has committed multiple or
more systematic trust account violations, we have imposed suspensions,
often of thirty days. For example, in Iowa Supreme Court Attorney
Disciplinary Board v. Boles, we imposed a thirty-day suspension for the
attorney’s “flagrant, multiyear disregard for the billing and accounting
requirements of our profession.” 808 N.W.2d 431, 441, 443 (Iowa 2012).
The attorney had prematurely withdrawn fees, delayed giving
accountings to his clients, and failed to promptly return unearned fees
with respect to four separate clients. Id. at 441–42. We noted the
“pattern of misconduct” as an aggravating factor, but also considered the
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attorney’s cooperation with the Board, reform of his accounting
practices, and extensive volunteer work as mitigating factors. Id. at 442.
We also levied a thirty-day suspension on an attorney whose
conduct demonstrated a “systematic failure to maintain adequate
accounting records.” Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Kersenbrock, 821 N.W.2d 415, 422 (Iowa 2012). An audit had revealed
the attorney “failed to keep on any kind of a regular basis a list of clients
with the balances that each client had in their trust account.” Id. at 420
(internal quotation marks omitted). We took into account that the
attorney had no prior disciplinary history and no clients were harmed,
but noted that because the attorney kept no records, “we have no way of
knowing whether the trust account violation . . . was an isolated
occurrence or a more frequent event.” Id. at 422.
Recently, we suspended for thirty days the license of an attorney
who had failed to deposit client funds into her trust account, placed large
amounts of personal funds in her trust account, failed to keep proper
records, and failed to provide clients with contemporaneous accountings
when making trust account withdrawals. Eslick, 859 N.W.2d at 201–03.
The attorney had received one prior public reprimand for neglecting
client matters, but we noted as mitigating factors that she had started to
receive treatment for her attention deficit disorder, she had cooperated
fully with the Board, and her conduct did not harm any clients. Id. at
202–03.
More serious trust account violations have led to suspensions of
longer than thirty days. For example, when an attorney with a prior
record of discipline completely disregarded the rules governing trust
accounts over a four-year period, thereby resulting in a significant
shortage in his trust account and necessitating the appointment of a
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trustee, we imposed a three-month suspension, even though a prior
interim suspension was considered as a mitigating factor. Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Powell, 830 N.W.2d 355, 356–57, 359–60
(Iowa 2013); see also Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morris,
847 N.W.2d 428, 436–37 (Iowa 2014) (suspending an attorney for six
months where the attorney’s “record-keeping and management deficits
were severe and they persisted over a long period of time even after the
Client Security Commission intervened with an audit and provided
information that should have facilitated compliance with the applicable
rules”); Ricklefs, 844 N.W.2d at 700, 702 (imposing a three-month
suspension on an attorney for repeatedly mishandling his trust account,
commingling funds, failing to maintain proper records, misrepresenting
that he was following the trust account rules, and failing to comply with
the rules even after two audits).
Likewise, when an attorney’s trust account violations are coupled
with other ethical missteps, we have imposed more severe sanctions. For
example, in Iowa Supreme Court Attorney Disciplinary Board v. Ackerman,
we suspended for ninety days the license of an attorney who committed
numerous violations of our ethical rules with regard to two probate
cases. 786 N.W.2d 491, 493 n.1, 495–96, 498 (Iowa 2010). In addition
to taking premature fees from one of the estates, the attorney had also
neglected the two estates, resulting in harm to his clients, and made
misrepresentations to the court. Id. at 495–97; see also Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Mendez, 855 N.W.2d 156, 160, 173–75 (Iowa
2014) (enjoining a California attorney from practicing law in Iowa for
sixty days for “flout[ing] our trust account rules, . . . in combination with
his other ethical breaches”); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
McCuskey, 814 N.W.2d 250, 257–59 (Iowa 2012) (imposing a one-year
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suspension on an attorney for committing trust account violations and
practicing while suspended); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Plumb, 766 N.W.2d 626, 630, 632, 634–35 (Iowa 2009) (imposing an
eighteen-month suspension on an attorney for serious trust account
violations accompanied by the revelation of confidential client
information, neglect, and failure to respond to the Board’s inquiry).
Finally, “an attorney crosses an important line when he or she
misappropriates or converts client funds without a colorable future claim
to those funds.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kelsen, 855
N.W.2d 175, 182 (Iowa 2014) (internal quotation marks omitted). When
an attorney commits theft by converting a client’s property without a
colorable future claim, revocation of the attorney’s license is the
appropriate sanction. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Carter,
847 N.W.2d 228, 232 (Iowa 2014). The burden is on the Board to prove
theft, but the attorney must come forward with evidence of a colorable
future claim to the funds. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Cepican, 861 N.W.2d 841, 844 (Iowa 2015); Carter, 847 N.W.2d at 232–
33.
Our review of the present case reveals a number of mitigating
factors. Lubinus has no prior disciplinary history. See Kersenbrock, 821
N.W.2d at 422 (observing that a lack of disciplinary history can be a
mitigating factor). Furthermore, he was forthright and cooperative, self-
reporting his trust account violations. See Boles, 808 N.W.2d at 442
(noting cooperation with the Board can be a mitigating factor).
Importantly, none of Lubinus’s clients were harmed by his improper
deposits and transfers of trust account funds. See id. (considering lack
of harm to clients as a mitigating factor). Lubinus also has taken
proactive corrective measures to ensure he commits no further trust
13
account violations. See Herrera, 560 N.W.2d at 595 (crediting an
attorney’s efforts in responding appropriately to ethical violation).
The Board has not alleged, and we do not find, that Lubinus has
misappropriated client funds such that revocation is warranted. The
parties’ factual stipulation is not particularly detailed. Nevertheless, it
appears that as debt collection funds came into the trust account,
Lubinus withdrew some of those funds, but not in excess of what would
have been his share of those funds after proper calculations and
disbursements had been performed. The OWI incident is somewhat more
troubling. There, Lubinus withdrew $400 from the trust account “to
cover this client’s bond.” Later, he received other funds from the client
and no longer needed additional money for the bond—yet he did not
restore the $400 to the trust account. Still, we cannot find that Lubinus
intentionally misappropriated funds; at most, he failed to pay them back
when it turned out the client didn’t need them, and the record is not
even clear whether the retention of the $400 was intentional or an
inadvertent error.
At the same time, we do not share the commission’s view that this
is simply a Piazza-type case. Lubinus does not argue that he thought he
had earned the withdrawn funds, cf. Piazza, 756 N.W.2d at 697–98, or
that his case merely involved sloppy or lazy bookkeeping, cf. Apland, 577
N.W.2d at 60. Rather, Lubinus admits he knowingly removed unearned
funds from his trust account prematurely because he was in financial
difficulty.
Thus, we concur with what the parties agreed to in their
stipulation, namely, that the respondent’s conduct is “more serious than
that described in” Piazza and, rather, is “similar” to the conduct in
Eslick, where we imposed a thirty-day suspension. As in Eslick, personal
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financial difficulties led to a situation where the attorney was not
following proper trust account practices. See Eslick, 859 N.W.2d at 200–
02. These inappropriate practices included the withdrawal of client
funds before they had been earned. See id. at 200–01. Like the attorney
in Eslick, Lubinus had a series of incidents involving misuse of his trust
account rather than a one-time aberration. See id. at 200. Similarly,
Lubinus’s violations related to more than just one client’s funds. See id.;
see also Boles, 808 N.W.2d at 441–42. As in Eslick, mitigating factors
include the attorney’s remorse and full cooperation, and the fact that no
clients were harmed. See Eslick, 859 N.W.2d at 202–03. Both Eslick
and Lubinus were solo practitioners who were relatively new to the
practice.
It is true, as noted by the commission, that Eslick’s trust account
violations extended over a longer time period and Eslick had a prior
reprimand (although not for a trust account violation). See id. Still, no
two attorney disciplinary cases are identical. As we have observed,
“There is no standard sanction for a particular type of misconduct, and
though prior cases can be instructive, we ultimately determine an
appropriate sanction based on the particular circumstances of each
case.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ryan, 863 N.W.2d 20,
30 (Iowa 2015) (internal quotation marks omitted). In our view,
Lubinus’s intentional short-cutting of trust account requirements to
solve a short-term financial problem brings his case within the
suspension category.
At the same time, Lubinus’s actions do not warrant a longer
suspension than thirty days. He did not demonstrate a total, long-term
disregard for the trust account rules, cf. Morris, 847 N.W.2d at 436–37;
Powell, 830 N.W.2d at 357, 359–60, nor were his trust account problems
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accompanied by other, more serious violations, cf. McCuskey, 814
N.W.2d at 257–59; Ackerman, 786 N.W.2d at 495–97; Plumb, 766 N.W.2d
at 634–35, nor had he been given a “second chance” after a prior
deficient audit, cf. Ricklefs, 844 N.W.2d at 702.
But to reiterate, unlike certain cases in which we have previously
found a public reprimand to be appropriate, Lubinus committed more
than a single, isolated trust account violation. Cf. Denton, 814 N.W.2d at
550–51; Sobel, 779 N.W.2d at 789–90; Piazza, 756 N.W.2d at 697–98,
700. And Lubinus’s accounting errors were not the result of mere
oversight or lack of diligence. Cf. Apland, 577 N.W.2d at 60; Herrera,
560 N.W.2d at 595. Rather, Lubinus admitted he was “at a financial low
point in [his] career” and he knowingly transferred trust account funds
prematurely to address his “short term money problems.”
IV. Conclusion.
We suspend Lubinus’s license to practice law in this state with no
possibility of reinstatement for thirty days from the date of the filing of
this opinion. This suspension shall apply to all facets of the practice of
law. See Iowa Ct. R. 35.13(3). Lubinus must comply with all the
requirements of Iowa Court Rule 35.23, including notifying his clients of
his suspension. Unless the Board files an objection, Lubinus will be
automatically reinstated after the thirty-day period of suspension on the
condition that all costs have been paid. See id. r. 35.13(2). The costs of
this proceeding are assessed against Lubinus pursuant to Iowa Court
Rule 35.27(1).
LICENSE SUSPENDED.
All justices concur except Hecht, J., who takes no part.