Iowa Supreme Court Attorney Disciplinary Board v. Patrick Alex Henrichsen

IN THE SUPREME COURT OF IOWA
No. 12–1567
Filed January 18, 2013
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
PATRICK ALEX HENRICHSEN,
Respondent.
On review from the report of the Grievance Commission of the
Supreme Court of Iowa.
The Grievance Commission of the Supreme Court of Iowa filed a
report recommending that an attorney receive a public reprimand for a
violation of the Iowa Rules of Professional Conduct. LICENSE
SUSPENDED.
Charles L. Harrington and Teresa A. Vens, Des Moines, for
complainant.
David L. Brown and Jay D. Grimes of Hansen, McClintock & Riley,
Des Moines, for respondent.
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APPEL, Justice.
The Iowa Supreme Court Attorney Disciplinary Board alleged the
respondent, Patrick Alex Henrichsen, violated Iowa Rule of Professional
Conduct 32:8.4(c) by depositing earned fees into his personal bank
account instead of the firm’s account as directed by an agreement of the
firm’s shareholders. The Grievance Commission of the Supreme Court of
Iowa filed a report recommending a public reprimand. Pursuant to our
court rules, we are required to review the commission’s report. See Iowa
Ct. R. 35.11(1). Upon our de novo review, we suspend Henrichsen’s
license to practice law indefinitely with no possibility of reinstatement for
a period of three months.
I. Scope of Review.
Our review of attorney disciplinary proceedings is de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Johnson, 792 N.W.2d 674, 677 (Iowa
2010). The Board must prove an attorney’s ethical misconduct by a
convincing preponderance of the evidence. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 763 (Iowa 2010). We will
respectfully consider, but are not bound by, the commission’s findings of
fact, conclusions of law, and recommended sanction. Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Axt, 791 N.W.2d 98, 101 (Iowa 2010). Once the
Board has proven an attorney’s misconduct, we may impose a “lesser or
greater sanction than the discipline recommended by the grievance
commission.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Lett, 674
N.W.2d 139, 142 (Iowa 2004) (citation and internal quotation marks
omitted).
II. Factual and Procedural Background.
Henrichsen has been licensed to practice law in Iowa since 2000.
Henrichsen practices primarily in the areas of real estate, estate
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planning, and taxation, although he also helps new small businesses
form business entities. Outside of his practice, Henrichsen has
volunteered with Habitat for Humanity, participates in charitable
activities organized by his church, teaches Sunday school, and coaches
soccer. Although Henrichsen is now a solo practitioner, we are
concerned with his conduct at his former law firm.
In 2008, he became the fourth shareholder in a law firm organized
as a professional corporation in West Des Moines. Clients would
frequently address checks for legal services to a particular attorney at the
firm. Pursuant to an agreement of the shareholders, each attorney was
required to give all earned fees to the firm’s bookkeeper for deposit into
the firm’s general account. The four shareholders drew equal salaries
from the firm every two weeks. At the end of each fiscal quarter, the
remaining funds in the general operating account were distributed to the
members as deferred earnings based upon a formula that took into
account overhead costs and the different quarterly earnings of each
shareholder. Accordingly, each member would receive a share of the
quarterly distribution proportionate to the revenue for which he was
responsible.
In fall 2010, the bookkeeper began to notice that Henrichsen had
not given her any checks from the Iowa Finance Authority for some time.
These checks, which were commissions for title guarantee work, usually
came each month. At some point thereafter, the other shareholders at
the firm asked the bookkeeper to investigate Henrichsen’s billing records
and receipts. The bookkeeper reported that there may have been clients
from which the firm never received fees. The other shareholders
confronted Henrichsen, who admitted to depositing the checks into his
personal account. The other shareholders and Henrichsen estimated
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that Henrichsen failed to deposit $10,000 into the firm’s general account.
The record confirms that Henrichsen withheld at least this amount
between April 2008 and September 2010 in matters related to real estate,
estate planning, and taxation. Henrichsen and the other shareholders
mutually agreed that it would be best if Henrichsen left the firm.
Henrichsen and the firm settled their financial matters internally during
the separation process. Henrichsen then started his own practice.
The firm also investigated whether Henrichsen’s actions affected
any ongoing client matters. An audit performed by an outside
accountant did not reveal any irregularities in its client trust accounts.
Further, they confirmed that Henrichsen’s actions did not affect regularly
billed clients or cause any client to be billed more than once for the same
legal work. Thus, the firm verified that Henrichsen’s actions only
pertained to accounts receivable and did not affect any of its clients.
In October 2010, Henrichsen wrote a letter to the Board reporting
his actions. In his letter, Henrichsen stated he did not know why he
deposited the fees into his personal account. At the hearing on this
matter in June 2012 before the commission, Henrichsen testified that he
and his counselor believe he has control issues. Henrichsen also
testified that he did not spend the funds. Following the hearing, the
commission recommended that Henrichsen receive a public reprimand.
III. Ethical Violations.
Iowa Rule of Professional Conduct 32:8.4(c) prohibits a lawyer from
engaging in “conduct involving dishonesty, fraud, deceit, or
misrepresentation.” Iowa R. Prof’l Conduct 32:8.4(c). It is virtually
identical to its predecessor, DR 1–102(A)(4). See Iowa Code of Prof’l
Responsibility for Lawyers DR 1–102(A)(4). We held on numerous
occasions that a lawyer violated DR 1–102(A)(4) by depositing receivables
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intended for the firm into a personal bank account. See Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Isaacson, 750 N.W.2d 104, 108–09 (Iowa
2008); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Irwin, 679
N.W.2d 641, 644 (Iowa 2004); Iowa Supreme Ct. Bd. of Prof’l Ethics &
Conduct v. Huisinga, 642 N.W.2d 283, 286–87 (Iowa 2002); Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Schatz, 595 N.W.2d 794,
796 (Iowa 1999); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Carr,
588 N.W.2d 127, 129 (Iowa 1999); Iowa Supreme Ct. Bd. of Prof’l Ethics &
Conduct v. Sylvester, 548 N.W.2d 144, 147 (Iowa 1996); Comm. on Prof’l
Ethics & Conduct v. Piazza, 405 N.W.2d 820, 822 (Iowa 1987); Comm. on
Prof’l Ethics & Conduct v. Hanson, 244 N.W.2d 822, 824 (Iowa 1976).
We see no reason to interpret rule 32:8.4(c) differently than its
predecessor. Based on our examination of the record, we conclude
Henrichsen withheld receivables from the partnership and deposited
them into his personal bank account in violation of the shareholder
agreement. Thus, he violated rule 32:8.4(c).
IV. Sanction.
In fashioning an appropriate sanction in attorney discipline
proceedings, we respectfully consider the commission’s recommendation,
but ultimately “the matter of sanction is solely within the authority of
this court.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morrison, 727
N.W.2d 115, 119 (Iowa 2007) (citation and internal quotation marks
omitted); see also Iowa Ct. R. 35.11(1). Although the appropriate
sanction is based on the particular circumstances of each case, Schatz,
595 N.W.2d at 796, we strive to maintain “some degree of consistency” in
our sanctions, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Clauss, 711
N.W.2d 1, 4 (Iowa 2006). Thus, we may review our prior decisions
involving lawyers who committed similar ethical misconduct. See, e.g.,
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Huisinga, 642 N.W.2d at 287–88. We also consider “the nature of the
violations,” weigh any aggravating and mitigating circumstances, and
take into account “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, [and]
maintenance of the bar as a whole.” Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Ireland, 748 N.W.2d 498, 502 (Iowa 2008).
We have warned that an attorney who converts funds due his law
firm may be subject to severe sanctions. Schatz, 595 N.W.2d at 796. A
review of our prior cases reveals that we have on a number of occasions
revoked the licenses of attorneys who failed to deposit earned fees into
their firms’ general operating accounts. See, e.g., Irwin, 679 N.W.2d at
644–45; Schatz, 595 N.W.2d at 796; Carr, 588 N.W.2d at 130; Sylvester,
548 N.W.2d at 147; Piazza, 405 N.W.2d at 824; Hanson, 244 N.W.2d at
824. We have done so on the belief that honesty is paramount in the
legal profession. See Irwin, 679 N.W.2d at 644; Carr, 588 N.W.2d at 130;
see also Comm. on Prof’l Ethics & Conduct v. McClintock, 442 N.W.2d 607,
608 (Iowa 1989) (“Most law partnerships are founded upon a total trust
and confidence among the partners.”). Review of these cases, however,
reveals that the attorney’s failure to remit earned fees to his law firm in
these cases was often accompanied by other serious unethical conduct,
such as conversion of client funds, felony convictions, or attempted drug
dealing. See Irwin, 679 N.W.2d at 642–45 (attorney who believed he
could perform legal services on the side as long as he met his obligations
to his firm converted over $99,000 in fees due to his firm and failed to
deposit unearned fees into a client trust account); Schatz, 595 N.W.2d at
795–96 (attorney converted $140,000 in legal fees over a period of many
years and was subsequently convicted of two felonies involving theft and
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deceit); Carr, 588 N.W.2d at 129–30 (attorney defrauded client and firm
by collecting and failing to account for a “bogus” fee of $4700); Sylvester,
548 N.W.2d at 145, 147 (attorney engaged in “calculated, flagrant, and
ongoing” conversion of client and firm funds, altered the payee’s name on
a check, and pled guilty to felony theft); Piazza, 405 N.W.2d at 823–24
(attorney attempted to conceal his conversion of $3840 of the
partnership’s funds by writing checks to himself from the firm’s
accounts, failed to deposit over $8900 in earned fees into the firm’s
account, converted client funds to his own use, misrepresented the
status of a client’s case to that client, and failed to respond to the
disciplinary committee’s inquiry); Hanson, 244 N.W.2d at 823–24
(attorney converted client retainer instead of depositing it into firm
account, possessed marijuana, and attempted to engage in illegal drug
trafficking).
We have also on at least three occasions imposed sanctions less
than revocation where an attorney failed to deposit firm funds in the
appropriate account. In McClintock, we issued a public reprimand to an
attorney with no prior disciplinary record who retained nearly $7000 of
receivables over nine years for his own use without informing his law
partners. 442 N.W.2d at 608. The fees had been paid by checks made
out to the particular attorney, instead of to the firm, but were
nonetheless required to be deposited in the partnership’s bank account
as per the partners’ oral agreement. Id. When one of the other partners
learned of the attorney’s practice and confronted him, the attorney
admitted to withholding the fees for personal use, agreed to account for
the fees, and make full restitution to his partners, and self-reported his
actions to the committee on professional ethics and conduct. Id.
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Similarly, in Huisinga, we imposed a public reprimand and
community service requirement on an attorney who self-reported his
failure to deposit a $3180 check into his firm’s general account as
directed by the firm’s compensation agreement. Huisinga, 642 N.W.2d at
285, 288. The attorney, who handled numerous bankruptcy cases as a
court-appointed trustee and was in the middle of an acrimonious
departure from his firm, admitted he planned to withhold the funds until
he could calculate the amount his firm owed him. Id. at 285–86. In
deciding not to impose a harsher sanction, we took into account his
previously unblemished record as an attorney and the isolated nature of
this incident. Id. at 288. We also took into account the inconvenience
the attorney’s suspension would cause to the bankruptcy court and the
attorney’s other clients. Id. Finally, we noted the attorney had settled
his financial differences with his firm. Id.
Finally, in Isaacson we suspended for six months the license of an
attorney who on several occasions collected fees from clients and
deposited them into his personal account instead of the firm account.
750 N.W.2d at 108, 110. The partnership’s agreement required the
attorney to deposit earned fees into the partnership’s general account to
ensure each partner covered his share of the overhead. Id. at 108. As a
result of the attorney’s actions, the firm billed several clients multiple
times. Id. Additionally, the attorney repeatedly failed to respond to the
partnership’s requests for the missing funds, disputed the amount he
owed the partnership, failed to deposit client funds in a trust account,
failed to promptly deliver funds to a client, and failed to maintain proper
books and records. Id. at 108–09. We did not revoke the attorney’s
license because the Board had failed to prove the attorney converted the
client’s funds, but also noted “the deceit he practiced in the relationship
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with his law partner also demand[ed] a significant suspension.” Id. at
109–10.
Turning to Henrichsen, we conclude a suspension is in order. The
record reveals that Henrichsen did not defraud any of the firm’s clients,
convert unearned client fees, or fail to deliver funds owed to a client.
Nonetheless, he, on many occasions over an extended period of time,
withheld funds from his law firm without any colorable claim of
entitlement other than the fact that the client checks were made out to
him. His withholding of funds was not a one-time incident, as in
Huisinga, but represented a pattern of serious misconduct. Henrichsen
states his failure to deposit the funds in the firm account represented a
“control issue,” but this conclusory defense does not excuse the serious
misconduct over an extended period of time.
There are some mitigating factors. First, an attorney’s own
recognition of his ethical violations is a mitigating factor. See Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Thompson, 732 N.W.2d 865, 868–69
(Iowa 2007). Henrichsen self-reported his actions to the Board and
cooperated with his firm to settle the monetary difference during his
separation. It is not entirely clear, however, that the self-reporting was
not motivated in part by a desire to avoid a report by his law partners.
Second, Henrichsen does not have a prior history of attorney discipline.
See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kress, 747 N.W.2d 530,
541 (Iowa 2008). Finally, although they do not excuse his conduct, we
may consider Henrichsen’s personal issues as a mitigating factor. See
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96,
110 (Iowa 2012). He testified that he has control issues which have
pervaded multiple aspects of his life, from his marriage to his work life
and that he is working with a counselor to address them.
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In cases like these, the determination of the appropriate sanction
is a matter of line drawing. In light of the seriousness of Henrichsen’s
misconduct, we suspend Henrichsen’s license to practice law in this
state for a period of three months.
V. Conclusion.
For the reasons expressed above, we suspend Henrichsen’s license
to practice law in this state indefinitely with no possibility of
reinstatement for three months. This suspension shall apply to all facets
of the practice of law as provided in Iowa Court Rule 35.13(3). Prior to
any reinstatement, Henrichsen must establish that he has not practiced
law during the period of his suspension and that he has complied in all
ways with the requirements of rule 35.14 and the notification
requirements of rule 35.23. Costs of this action are taxed to Henrichsen
pursuant to rule 35.27.
LICENSE SUSPENDED.
All justices concur except Wiggins, J., who dissents.
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#12–1567, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Henrichsen
WIGGINS, Justice (dissenting).
I respectfully dissent for the reasons stated in my dissent in Iowa
Supreme Court Attorney Disciplinary Board v. Bieber, 824 N.W.2d 514,
530 (Iowa 2012) (Wiggins, J., dissenting). We have an obligation, as the
regulatory body for our profession, to protect the public from dishonest
attorneys. Dishonesty is a trait that disqualifies a person from the
practice of law. An attorney who converts fees from his partners, when a
dispute over the fees does not exist, is per se unfit to practice law. Thus,
I have no hesitation in revoking Henrichsen’s license to practice law.