Iowa Supreme Court Attorney Disciplinary Board v. Eric K. Parrish

IN THE SUPREME COURT OF IOWA
No. 11–0326
Filed August 5, 2011
IOWA SUPREME COURT ATTORNEY
DISCIPLINARY BOARD,
Complainant,
vs.
ERIC K. PARRISH,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission reports that respondent has committed
ethical misconduct and recommends a public reprimand. LICENSE
SUSPENDED.
Charles L. Harrington and Elizabeth E. Quinlan, Des Moines, for
complainant.
David L. Brown, Des Moines, for respondent.
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ZAGER, Justice.
This attorney disciplinary proceeding comes before us on the
report of a division of the Grievance Commission of the Supreme Court of
Iowa. See Iowa Ct. R. 35.10(1). The Iowa Supreme Court Attorney
Disciplinary Board alleges the respondent, Eric K. Parrish, violated
multiple Iowa Rules of Professional Conduct as well as Iowa Court Rules.
The basis of these violations involve his handling of his trust account for
two clients in which Parrish withdrew funds from his trust account
before they were earned, failed to promptly notify his clients of the
withdrawals, did not earn the amounts withdrawn, and did not return
the remainder of funds upon request.
The commission found Parrish violated several of the Iowa Rules of
Professional Conduct and Iowa Court Rules. The commission
recommended Parrish receive a public reprimand, be ordered to
immediately refund the unearned fees, and attend continuing education
classes on billing and timekeeping. Upon our consideration of the
commission’s findings of fact, conclusions of law, and recommendation,
we find Parrish violated several of our ethical rules and suspend his
license for sixty days.
I. Scope of Review.
We review attorney disciplinary proceedings de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Keele, 795 N.W.2d 507, 509 (Iowa
2011). The board must prove an attorney’s ethical misconduct by a
convincing preponderance of the evidence. Id. A convincing
preponderance of the evidence is more than the preponderance standard
required in a typical civil case, but less than proof beyond a reasonable
doubt. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Schmidt, 796 N.W.2d
33, 36 (Iowa 2011). Although the commission’s findings and
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recommendations are not binding on us, we give them respectful
consideration. Id. “Upon proof of misconduct, we may impose a greater
or lesser sanction than the sanction recommended by the commission.”
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Templeton, 784 N.W.2d 761,
764 (Iowa 2010).
II. Findings of Fact.
The parties entered into a stipulation and agreement which
stipulates numerous facts. A stipulation of facts is binding on the
parties. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Gailey, 790 N.W.2d
801, 803 (Iowa 2010). A hearing was conducted in this matter resulting
in findings of fact, conclusions of law, and recommendation from the
commission. Based upon our de novo review of the stipulation and
agreement, and the hearing record, we find the following facts.
Parrish has been a licensed attorney in Iowa since July 1999.
Parrish is licensed to practice law in the courts of this state and has
maintained a law practice in Des Moines, Iowa, during all times material
to this matter. During the past ten years, Parrish developed a practice in
criminal defense and personal injury law. The board’s complaint alleges
Parrish engaged in multiple rule violations. The alleged misconduct
primarily concerns trust account violations.
A. Montgomery Ward Representation (Count I). In June 2005,
Montgomery Ward was arrested in Marion County, Iowa, on suspicion of
selling methamphetamine. At the time, he was also a suspect in a theft
case. On October 7, he was formally charged with possession of
methamphetamine with the intent to deliver, a class “C” felony, and theft
in the second degree, a class “D” felony.
Ward entered into an attorney fee agreement with Parrish on
October 20, indicating Ward would be billed for Parrish’s services at a
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rate of $175 per hour. Ward’s mother paid the Parrish Law Firm a
$10,000 retainer, which Parrish deposited into the firm’s trust account
on October 21. Parrish filed an appearance for Ward in Marion County.
Between October 25 and December 7, Parrish withdrew fees and
expenses from Ward’s trust account on six separate occasions. Parrish’s
withdrawals totaled $10,000, Ward’s entire retainer. Parrish did not
provide Ward with a contemporaneous written notice of the withdrawals
from the trust account or a complete accounting.
Parrish negotiated a plea agreement with the Marion County
Attorney’s Office. On June 30, 2006, Ward pled guilty to possession of
methamphetamine, a serious misdemeanor, and theft in the second
degree. At sentencing on August 11, Ward received a deferred judgment
and two years of probation.
Immediately after sentencing, Ward requested a final bill. After
numerous contacts to the Parrish Law Firm, Parrish finally provided
Ward a final bill on March 9, 2007. This bill reflected a statement for
fees and expenses incurred totaling $1532.54 with a credit balance of
$8467.46. The statement informed Ward that as soon as he received the
statement and agreed to its terms, the firm would send a refund of his
retainer within 30 days. While Ward agreed to the statement, no refund
was ever received by Ward, even after telephone and fax demands were
made on Parrish by an attorney who was then representing Ward.
On July 23, Parrish sent Ward a revised billing statement for fees
and expenses totaling $3693.54, with a credit balance of $6306.46.
Parrish explained that the changes in the statement reflected that he had
used the wrong hourly rate in his previous billing. On September 25,
Parrish sent a second revised billing statement for fees and expenses
totaling $3008 with a credit balance of $6992. On October 9, Parrish
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sent a letter to Ward’s attorney indicating he would be providing a refund
based upon his previous billing statements. Parrish never issued a
refund.
Parrish sent yet another billing statement, which was created on
November 15, claiming Parrish had earned $3020 and Ward had a credit
of $6980. After no resolution to the fee dispute, Ward filed a complaint
against Parrish with the Polk County Fee Arbitration Committee on
December 17. Both Ward and Parrish participated in the hearing before
the committee. On January 5, 2009, the committee determined Parrish
had earned $1532.54 in fees and expenses and directed him to refund
$8467.46 to Ward. No refund has been issued.
After Parrish’s adverse arbitration decision, and after Ward filed a
complaint against Parrish with the board, Parrish undertook a review of
Ward’s file for the purpose of providing more complete billing information
to the board. Upon completing his review, Parrish provided a billing
statement, dated May 12, 2009, which indicated he had earned
$10,325.01 for his work in representing Ward. At his disciplinary
hearing, Parrish explained that he believed he earned the entire $10,000
retainer during his representation of Ward. Parrish contended that his
billing statements did not fully reflect the actual amount of work he
conducted in the case. However, Parrish acknowledged his system for
tracking the hours he worked was not adequate and further admitted
that he could not provide the commission with an accounting. Parrish
also acknowledged that he did not provide a contemporaneous
accounting of the amounts he withdrew from the trust account. Lastly,
Parrish acknowledged that no refund has yet been issued to Ward.
B. James Bixler Representation (Count II). In August 2009,
James Bixler retained Parrish to represent him in a South Dakota matter
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involving a criminal charge for possession of cocaine and the civil
forfeiture of Bixler’s Harley Davidson motorcycle. On August 11, Bixler
signed a fee agreement retaining Parrish at an hourly rate of $175.
Bixler paid a $5000 retainer, which was deposited into the firm’s trust
account on August 12. On September 28, Bixler paid Parrish an
additional $3000.
After being retained, Parrish conducted research into South
Dakota law and had some communication with officials in South Dakota.
Parrish was not able to negotiate a plea agreement. Bixler’s motorcycle
was also forfeited, although this forfeiture was later set aside.
On October 5, Bixler terminated Parrish’s representation in both
the criminal and civil matters. Bixler requested a full refund of his
$3000 payment and also requested a refund of the unused portion of his
$5000 retainer. On October 8, Parrish provided a full refund of the
$3000 payment. He did not provide a refund or an accounting regarding
the $5000 retainer.
The records reflect that Parrish withdrew fees from Bixler’s trust
account on four separate occasions between August 10 and October 21.
Based upon a billing statement Parrish provided on March 10, 2010, the
records reflect that Parrish withdrew more in fees than what he had
earned. Parrish also did not provide Bixler with a contemporaneous
written notice when he withdrew these funds. Lastly, Parrish’s March 10
billing statement shows Bixler was charged, at times, an hourly rate of
$200 per hour as opposed to the $175 per hour rate specified in the fee
agreement. Parrish acknowledges that a refund is owed to Bixler, but he
has refunded no money to him.
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III. Ethical Violations.
A. Client Funds/Trust Account and Accounting. The board
alleged Parrish violated rules 32:1.5(a), 32:1.15(c), (d), and (f), as well as
rule 32:1.16(d). Rule 32:1.15(f) incorporates Iowa Court Rules 45.7(3)
and 45.7(4). We will address these alleged rule violations together
because they all apply to the handling of client funds.
Rule 32:1.5(a) prohibits counsel from making an agreement for or
collecting “an unreasonable fee.” Rule 32:1.15 reads in relevant part:
(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.
(d) Upon receiving funds or other property in which a
client or a third person has an interest, a lawyer shall
promptly notify the client or third person. Except as stated
in this rule or otherwise permitted by law or by agreement
with the client, a lawyer shall promptly deliver to the client
or a third person any funds or other property that the client
or third person is entitled to receive and, upon request by
the client or third person, shall promptly render a full
accounting regarding such property.
....
(f) All client trust accounts shall be governed by
chapter 45 of the Iowa Court Rules.
Rule 32:1.16(d) provides upon termination of representation, a lawyer
shall refund any advance payment of fee or expense that has not been
earned or incurred.
Iowa Court Rules 45.1, 45.2(2), 45.3, 45.4, and 45.7 generally set
forth the details a lawyer needs to know and follow when administering
his or her trust accounts. These rules generally require a lawyer to place
client funds into a separate subaccount, withdraw payment from the
trust account only once the fee is earned, notify the client when the
attorney anticipates making a fee withdrawal, and provide the client a
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complete accounting of any such withdrawal. The attorney must also
transmit the notice of such withdrawal and accounting no later than the
date of withdrawal.
From this court’s de novo review of the record, we find the
convincing preponderance of the evidence establishes that Parrish has
violated several ethical rules. Pursuant to Iowa Supreme Court Board of
Professional Ethics and Conduct v. Apland, 577 N.W.2d 50, 55 (Iowa
1998), the $10,000 fee paid by Ward and the $5000 fee paid by Bixler to
Parrish were both “advance fee payments.” These funds remain the
property of Ward and Bixler until Parrish earned them. Id.
Rule 32:1.5(a) provides that a lawyer shall not charge or collect an
unreasonable fee or violate any restrictions imposed by law. Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. D’Angelo, 619 N.W.2d 333,
337 (Iowa 2000). “[T]aking fees in advance of earning them is illegal.” Id.
(referring to former Iowa Code of Professional Responsibility for Lawyers
DR 2–106(A)). It is also illegal to fail to return unearned portions of
advance fees. See Apland, 577 N.W.2d at 58 (determining failure to
return unearned portion of advance fees constitutes collection of an
excessive fee under the same rule). We find Parrish withdrew Ward and
Bixler’s entire advance fees before they had been earned and then
subsequently failed to return the unearned portions. As such, he
collected an unreasonable fee in violation of rule 32:1.5(a).
We also find Parrish violated rule 32:1.15(c) and rule 45.7(3) by
withdrawing funds from the trust accounts before the fees were actually
earned. See Iowa R. Prof’l Conduct 32:1.15(c) (withdrawing fees only as
earned); Iowa Ct. R. 45.7(3) (same). Parrish stipulates to withdrawing
fees in both the Ward and Bixler matters before earning them. The
record supports the stipulation.
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We find Parrish violated rule 32:1.15(d) and rule 32:1.16(d) in the
Ward matter by failing to render an appropriate accounting and failing to
return advance payments which had not been earned. Ward immediately
requested a final bill following his sentencing on August 11, 2006. After
numerous telephone calls to Parrish’s office and other correspondence,
Ward received a billing statement for fees and expenses totaling
$1532.54. However, Parrish had withdrawn Ward’s entire $10,000 fee
advance from the trust account by December 7, 2005. Clearly, Parrish
had not yet earned these fees. Even after several attempts to justify the
fees, Parrish was never able to account for the $10,000 advance fee paid
to him. When all else failed, a hearing was conducted before the fee
arbitration committee. As a result of this hearing, Parrish was ordered to
return to Ward $8467.46 as his unearned retainer. The amount so
ordered to be refunded to Ward has yet to be paid.
Rule 32:1.15(f) incorporates rule 45.7(4) and requires attorneys to
notify their clients in writing and provide contemporaneous accounting
when the attorney withdraws fees from the trust account. Parrish did
not advise Ward contemporaneously as to when he withdrew fees, and he
did not provide Ward a full accounting regarding these fees. We find
Parrish violated these rules.
Parrish also violated rules 32:1.15(d) and (f), 32:1.16(d), and
45.7(4) in the Bixler matter based upon the same type of conduct set
forth above. While he did properly deposit the advance fees into a client
trust account, he failed to notify Bixler in writing and provide a
contemporaneous accounting when he withdrew fees from the client’s
trust account and failed, upon the termination of his representation of
Bixler, to provide a prompt accounting and a refund of any unearned
fees. In each case, Parrish has violated the Iowa Rules of Professional
10
Conduct as set forth above, and the Iowa Court Rules as alleged by the
board and found by the commission.
B. Rule 32:8.4(c). This rule states, “It is professional misconduct
for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit,
or misrepresentation[.]” Iowa R. Prof’l Conduct 32:8.4(c). The board
contends Parrish violated this rule by repeatedly misrepresenting to
Ward that a refund was forthcoming. We require a reasonable level of
scienter to find an attorney violated rule 32:8.4(c). Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 605 (Iowa 2011). “In the
legal sense, a misrepresentation usually requires something more than
negligence.” Id. Accordingly, an attorney must act with some level of
scienter greater than negligence to violate rule 32:8.4(c). Id.
We have previously found that Parrish violated rules 32:1.15(d)
and 32:1.16(d) when he failed to promptly render an accounting to his
client and promptly refund any unearned fees. When an attorney’s
conduct violates a specific rule involving dishonesty, fraud, deceit, or
misrepresentation, we will not find the same conduct to also violate a
general rule prohibiting that conduct, such as rule 32:8.4(c). Id. While
the court finds no reasonable excuse for Parrish’s failure to promptly
refund retainers to either Ward or Bixler, from the record we cannot
conclude Parrish made knowing misrepresentations of material facts by
failing to return the retainers as promised. Therefore, we find Parrish did
not violate this rule.
C. Rule 32:8.4(d). “It is professional misconduct for a lawyer to
engage in conduct that is prejudicial to the administration of justice[.]”
Iowa R. Prof’l Conduct 32:8.4(d). There is no typical form of conduct that
prejudices the administration of justice. Generally, acts that have been
deemed prejudicial to the administration of justice have “ ‘hampered the
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efficient and proper operation of the courts or of ancillary systems upon
which the courts rely.’ ” Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Wright, 758 N.W.2d 227, 230 (Iowa 2008) (quoting Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Borth, 728 N.W.2d 205, 211 (Iowa 2007)).
Examples of conduct prejudicial to the administration of
justice include paying an adverse expert witness for
information regarding an opponent’s case preparation,
demanding a release in a civil action as a condition of
dismissing criminal charges, and knowingly making false or
reckless charges against a judicial officer.
Templeton, 784 N.W.2d at 768.
Under the facts and circumstances involved in this case, this court
cannot conclude that Parrish’s failure to adhere to the requirements
involving his client trust account and fees hampered the efficient and
proper operation of the courts or of an ancillary system upon which the
courts rely. Accordingly, we find Parrish’s conduct did not violate this
rule.
IV. Discipline.
“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. Earley (Earley I), 729
N.W.2d 437, 443 (Iowa 2007). In determining an appropriate sanction,
we consider:
[T]he nature of the violations, the attorney’s fitness to
continue in the practice of law, the protection of society from
those unfit to practice law, the need to uphold public
confidence in the justice system, deterrence, maintenance of
the reputation of the bar as a whole, and any aggravating or
mitigating circumstances.
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ireland, 748 N.W.2d 498, 502
(Iowa 2008). The court has recognized, “Where there are multiple
12
violations of our disciplinary rules, enhanced sanctions may be
imposed.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Alexander,
574 N.W.2d 322, 327 (Iowa 1998). When determining appropriate
discipline, this court also considers aggravating and mitigating
circumstances present in the disciplinary action. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Earley (Earley II), 774 N.W.2d 301, 308 (Iowa 2009).
Significant aggravating factors for punishment include “ ‘the existence of
multiple instances of neglect, past disciplinary problems, and other
companion violations.’ ” Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Marks, 759 N.W.2d 328, 332 (Iowa 2009) (quoting Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Lesyshen, 712 N.W.2d 101, 106 (Iowa 2006)).
When dealing with client trust account violations, our sanctions
have ranged from a public reprimand when the violation was relatively
minor and isolated, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Piazza, 756
N.W.2d 690, 700 (Iowa 2008), to license suspension when the violation
involved poor office management and neglect, Earley I, 729 N.W.2d at
443–44, to license revocation when the violation amounted to a
misappropriation of client funds, Earley II, 774 N.W.2d at 309. Based
upon the record in this case, we are not faced with a single incident, nor
are we dealing with a case of misappropriation. Therefore, the
suspension cases are most helpful in determining the ultimate sanction
to impose in this case. Cases involving suspension for client trust
account violations range from two months in less serious cases, Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Plumb, 589 N.W.2d 746, 749
(Iowa 1999), to eighteen months in very severe cases when the violations
combine with multiple instances of neglect and other ethical violations,
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Plumb, 766 N.W.2d 626, 634–
35 (Iowa 2009).
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The commission has recommended that Parrish receive a public
reprimand. The board has recommended that Parrish’s license to
practice law be suspended for a period of no less than four months. In
considering aggravating and mitigating circumstances, the prior
disciplinary history of an attorney is a factor we must consider in
imposing discipline. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Lemanski, 606 N.W.2d 11, 14 (Iowa 2000). Since that decision, this
court has repeatedly considered prior admonitions as aggravating
circumstances that relate directly to an appropriate sanction. See, e.g.,
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cohrt, 784 N.W.2d 777, 783
(Iowa 2010) (“A prior admonition is properly considered in determining
discipline, especially when it involves the same type of conduct as the
conduct subject to discipline.”); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Barry, 762 N.W.2d 129, 132, 140 (Iowa 2009) (noting prior disciplinary
history included private admonition for a conflict of interest); Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Gottschalk, 729 N.W.2d 812, 821
(Iowa 2007) (prior discipline included two private admonitions); Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Morrison, 727 N.W.2d 115, 117, 120
(Iowa 2007) (included in the parties’ stipulation was a prior admonition
for similar conduct).
Without setting forth specific details, Parrish has been the subject
of six private admonitions dating back to December 2001. The genesis of
each of the admonitions involved Parrish’s failure to provide an
itemization of services provided, and in at least two of the previous
admonitions, the conduct involved the withdrawal of funds from a client
trust account in excess of the fees that were actually earned. While an
error in judgment or mere negligence by an attorney is not an
appropriate basis for discipline, Parrish’s conduct over the last ten years
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has now developed into a pattern of violating the Iowa Rules of
Professional Conduct and the rules of this court relating to the
administration of trust accounts. An additional aggravating
circumstance involves his failure, now over many years, to return funds
to his former clients. In the case of Ward, his refusal or inability to
return these funds is now approaching five years. While less egregious
due to the amount in question, it is instructive that Parrish likewise has
still not refunded the unearned fees to Bixler.
We also consider any mitigating circumstances. Parrish has been
involved in providing pro bono legal services to individuals, and he is also
active and involved in the community. Additionally, Parrish has
indicated that he is attempting to take remedial actions to improve the
billing and accounting problems that have plagued him in his practice.
This has included the firm updating both its billing system and case
management software so that this conduct will not be repeated.
However, as noted by counsel, none of these remedial actions excuse
Parrish’s failure to actually account for the time billed to his clients, to
withdraw the proper funds based on the billings, or to provide a
contemporaneous notice of withdrawals to his client. Finally, the court
notes that Parrish has taken full responsibility for his failures, and
Parrish cooperated fully in responding to the complaints.
Having considered all the aggravating and mitigating
circumstances, and in our de novo review, a public reprimand under this
set of facts would not be adequate. Such a sanction might have been
appropriate had this case involved only a single incident of misconduct.
See, e.g., Iowa Supreme Ct. Att’y Disciplinary Bd. v. Sobel, 779 N.W.2d
782, 789–90 (Iowa 2010) (publicly reprimanding attorney for failure to
provide accounting for an advance fee payment); Wright, 758 N.W.2d at
15
231 (finding an attorney who failed to dismiss an appeal after his client
was unable to raise enough funds warranted a public reprimand); Piazza,
756 N.W.2d at 700 (attorney received public reprimand for failing to
place advance fee payment in trust account and to provide an
accounting); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Dunahoo, 730
N.W.2d 202, 207–08 (Iowa 2007) (publicly reprimanding attorney for
failing to provide an accounting and neglect in timely closing an estate).
Unfortunately, the recurring pattern of conduct in this case warrants a
stiffer sanction—namely a suspension.
V. Disposition.
We have carefully considered the respondent’s current violations,
his prior history of ethical infractions, and his current fitness to practice
law. Accordingly, we suspend Parrish’s license to practice law in the
State of Iowa for sixty days. This suspension applies to all facets of the
practice of law. See Iowa Court Rule 35.12(3). Parrish must comply with
Iowa Court Rule 35.22 dealing with the notification of clients and
counsel. Parrish is also ordered to refund to Ward the amount of
$8467.46 and to Bixler the sum of $187.51. Prior to reinstatement,
Parrish shall provide to the court proof that these sums have been paid.
Parrish is also ordered to attend continuing education with respect to
billing, timekeeping practices, and client trust accounts, and to submit
proof of his attendance to the court prior to reinstatement. The costs of
this action are taxed to Parrish pursuant to Iowa Court Rule 35.26.
Absent an objection by the board, and under the conditions set forth
above, we shall reinstate Parrish’s license to practice law on the day after
the sixty-day suspension period expires. See Iowa Ct. R. 35.12(2).
LICENSE SUSPENDED.