Iowa Supreme Court Attorney Disciplinary Board v. James William McCarthy

IN THE SUPREME COURT OF IOWA
No. 11–1868
Filed June 15, 2012
IOWA SUPREME COURT ATTORNEY
DISCIPLINARY BOARD,
Complainant,
vs.
JAMES WILLIAM McCARTHY,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission recommends a two-year suspension of
respondent’s license to practice law. LICENSE SUSPENDED.
Charles L. Harrington and Wendell J. Harms, Des Moines, for
complainant.
Dan T. McGrevey, Fort Dodge, for respondent.
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WIGGINS, Justice.
The Iowa Supreme Court Attorney Disciplinary Board alleged the
respondent, James W. McCarthy, violated the Iowa Rules of Professional
Conduct in nine separate legal matters. A division of the Grievance
Commission of the Supreme Court of Iowa filed a report finding
McCarthy violated numerous rules and recommended that we
indefinitely suspend the respondent’s license to practice law in Iowa with
no possibility of reinstatement for at least two years. Pursuant to our
court rules, we are required to review the commission’s report. See Iowa
Ct. R. 35.10(1). 1 Upon our review, we agree the respondent violated our
ethical rules and suspend his license to practice law indefinitely for at
least two years.
I. Prior Discipline.
McCarthy is no stranger to the disciplinary process. In 1991,
McCarthy was admonished because he failed to advise his client of the
filing of a motion for sanctions, the hearing thereon, and the order
imposing sanctions. In 1992, McCarthy received a public reprimand for
failing to make timely filings in a probate matter and for failing to
cooperate with the subsequent disciplinary investigation. In 1993,
McCarthy received another admonishment after he represented a client
in a proceeding substantially related and adverse to the interests of a
former client without the informed consent of both parties. In 1996,
McCarthy received a second public reprimand for again representing a
client in a proceeding substantially related and adverse to the interests of
a former client. In 2000, the Board admonished McCarthy after he failed
1In February 2012, we renumbered rules 35.9 through 35.27 because of the
adoption of new Iowa Court Rule 35.9. However, we must refer to these rules in this
case as previously numbered because McCarthy’s hearing before the grievance
commission commenced prior to the renumbering. See Iowa Supreme Ct. Disciplinary
Bd. v. Marks, 814 N.W.2d 532, 542 n.1 (Iowa 2012).
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to appear for a trial and a hearing. The Board admonished McCarthy in
2001 for the fourth time after he neglected a client’s matter by failing to
tell his client that he would not pursue the client’s claim. Next, in 2003,
we publicly reprimanded McCarthy for failing to cooperate with a Board
investigation.
In 2006, we suspended McCarthy’s license for six months for his
conduct in multiple matters. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
McCarthy, 722 N.W.2d 199, 200 (Iowa 2006). In one matter, McCarthy
represented a husband and wife in a bankruptcy proceeding. Id. at 202.
He also represented the husband in a separate dissolution of marriage
proceeding. Id. Six months after the bankruptcy discharge, McCarthy
used knowledge he acquired during his representation of both parties to
amend the bankruptcy petition to the detriment of the wife. Id. at 202–
03. He also neglected client matters, which resulted in two dismissed
appeals. Id. at 203. Further, he failed to answer the Board’s complaint
in four matters. Id. at 205.
Since that time, we have temporarily suspended McCarthy’s
license on four occasions for failing to respond to notices from the Board.
Finally, in 2009, we publicly reprimanded McCarthy for the fourth time
after he represented both parties in a dissolution of marriage proceeding
and neglected that representation.
II. Grievance Commission Proceedings in the Current Matter.
The Board’s original complaint contained seven counts alleging
McCarthy violated numerous disciplinary rules. The Board later
amended the complaint by adding two more counts alleging further
violations. The Board and McCarthy entered into a joint stipulation
admitting all of the factual allegations of the complaint and agreeing to
the admission of exhibits supporting the allegations. The stipulation also
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admitted rule violations in each count, listed McCarthy’s extensive
history of prior discipline as an aggravating factor, and noted his heart
disease and open-heart surgery in April 2008 were mitigating factors.
Finally, the stipulation waived a hearing on the complaint and requested
that the commission recommend a sixty-day suspension of McCarthy’s
license.
The commission filed a report adopting the stipulation of facts.
The report set out more than fifty violations of the Iowa Rules of
Professional Conduct and seven violations of our court rules, all of which
were admitted in the joint stipulation. The commission recommended we
suspend McCarthy’s license to practice law indefinitely with no
possibility of reinstatement for at least two years.
III. Scope of Review.
We review lawyer disciplinary proceedings de novo. Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Adams, 809 N.W.2d 543, 545 (Iowa 2012).
The Board must prove disciplinary violations by a convincing
preponderance of the evidence. Iowa Supreme Ct. Att’y Disciplinary Bd.
v. Templeton, 784 N.W.2d 761, 763 (Iowa 2010). A convincing
preponderance of the evidence is more than a preponderance of the
evidence, but less than proof beyond a reasonable doubt. Id. Although
we give the commission’s recommendations respectful consideration, we
are not bound by them. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Earley, 774 N.W.2d 301, 304 (Iowa 2009). Upon proof of misconduct, we
may impose a greater or lesser sanction than that recommended by the
commission. Id.
When the parties enter into a stipulation of facts, it is binding on
them. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Gailey, 790 N.W.2d 801,
803 (Iowa 2010). In our attempt “to give effect to the parties’ intentions”
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we interpret a factual stipulation “ ‘with reference to its subject matter
and in light of the surrounding circumstances and the whole record,
including the state of the pleadings and issues involved.’ ” Id. at 803–04
(quoting Graen’s Mens Wear, Inc. v. Stille-Pierce Agency, 329 N.W.2d 295,
300 (Iowa 1983)). However, a stipulation is not binding as to a violation
or a sanction. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Knopf, 793
N.W.2d 525, 528 (Iowa 2011); Gailey, 790 N.W.2d at 804. We will
determine whether a violation occurred and the appropriate sanction
based upon the facts we find from the stipulation and our review of the
record.
IV. Findings of Fact.
Based on the parties’ stipulation and our review of the record, we
make the following findings of fact.
A. Meiners Matter. In March 2008, Gary Meiners hired
McCarthy to bring a contempt action against his ex-wife and modify a
dissolution decree. Meiners paid McCarthy a $1500 retainer. The
stipulation does not indicate whether McCarthy deposited the retainer
into a client trust account. Meiners also signed a verification on a
petition to modify a dissolution decree. McCarthy did not file the petition
at this time.
On April 10, McCarthy suffered a heart attack. He underwent
open-heart surgery ten days later. In June, McCarthy informed Meiners
he was ready and able to proceed with his case. However, McCarthy did
not take any action on Meiners’ case until September 30, when he filed
an application for a rule to show cause alleging Meiners’ ex-wife failed to
pay uncovered medical expenses for their children. That day, the district
court filed a rule to show cause and set a hearing for October 20. The
order required Meiners’ ex-wife to be personally served with a copy of the
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order no less than ten days prior to the hearing date. On the day of the
hearing, McCarthy filed a motion to continue the hearing because
Meiners’ ex-wife was not timely served and because McCarthy had a
scheduling conflict involving a hearing in another county. McCarthy,
Meiners, and Meiners’ ex-wife did not appear for the hearing, and the
district court dismissed the application without prejudice.
On October 31, McCarthy filed Meiners’ petition and an
amendment to that petition. McCarthy also filed Meiners’ second
application for a rule to show cause. The district court later combined
the two actions and set a date for trial.
Twice during McCarthy’s representation of Meiners, McCarthy
failed to attend appointments with Meiners that McCarthy had
scheduled. McCarthy also failed to keep Meiners informed as to the
status of his case. Meiners terminated the representation in November.
In December, Meiners requested a final billing statement and a refund of
the remainder of the retainer. McCarthy prepared a billing statement
amounting to all but $33.48 of Meiners’ retainer. He refunded the
remainder to Meiners. At no time prior to this point did McCarthy
provide Meiners with any documentation relating to fees or expenses.
Further, McCarthy did not withdraw his appearance until April 15, 2009.
After Meiners filed a complaint with the Board, McCarthy failed to
respond to multiple notices from the Board regarding the matter. On
May 14, we suspended his license temporarily for failing to respond to
the Board’s notice. McCarthy responded the next day, and we reinstated
his license on May 18.
B. Ricklefs Matter. In January 2008, McCarthy agreed to
represent Roberta Ricklefs in an action for dissolution of marriage.
Ricklefs paid McCarthy a $1500 retainer, but the stipulation does not
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indicate whether McCarthy deposited the funds into a client trust
account. McCarthy informed Ricklefs he would ask the district court to
award her temporary alimony. Ricklefs attempted to contact McCarthy
on multiple occasions in February, but was unable to reach him.
Ricklefs signed the petition for dissolution of marriage on March 15. At
that time, McCarthy told Ricklefs he would also seek an order demanding
her husband pay roughly $600 of her medical expenses.
On April 3, McCarthy told Ricklefs he had not taken any action on
the dissolution of her marriage, temporary alimony, or medical bill.
Following his open-heart surgery, McCarthy told Ricklefs he would be
back at work by the middle of May.
On May 21, Ricklefs was served with her husband’s petition for
dissolution of marriage. Ricklefs was surprised because she thought
McCarthy had already filed her dissolution petition when, in fact, he had
not. On May 28, Ricklefs terminated McCarthy’s representation, asked
him to return her retainer, and asked him to send her file to her new
attorney. The next day, McCarthy filed an answer on Ricklefs’ behalf.
During the course of the representation, Ricklefs sent several
letters to McCarthy by certified mail. Because McCarthy never claimed
them, the post office returned them to Ricklefs. McCarthy never filed a
motion to withdraw and, as of March 14, 2009, had not sent Ricklefs a
bill or returned any of her retainer. He also never provided Ricklefs with
any documentation relating to fees or expenses.
On July 17, the Board asked McCarthy to provide copies of his
client trust account documents relating to Ricklefs’ advance fee.
McCarthy did not reply to the Board’s request.
C. Omvig Matter. In July 2008, McCarthy agreed to represent
Michael Omvig in a criminal case and dissolution of marriage. On
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July 11, Omvig paid McCarthy a $2200 retainer. The stipulation does
not indicate whether McCarthy deposited the funds into a client trust
account. Omvig died the next day.
Omvig’s mother then asked McCarthy to contact the county
attorney’s office and obtain as much information as he could about her
son’s death, including coroner and police reports. McCarthy spoke with
the county attorney about obtaining these documents, but the county
attorney never produced them.
On October 12, Omvig’s mother asked McCarthy to refund the
retainer. McCarthy agreed that he should return the unused portion of
the retainer, but was uncertain as to how to return it due to Omvig’s
death. Believing he should return the fee to Omvig’s estate, he asked
Omvig’s mother whether an estate would be opened. Omvig’s mother
said she would look into this.
In mid-2009, Omvig’s mother filed a complaint against McCarthy
with the Board. After multiple notices from the Board and a notice of
possible temporary suspension, McCarthy finally responded. He also
prepared a billing statement for $975 in services provided to Omvig,
which included fees relating to his conversations with Omvig’s mother
and the county attorney after Omvig’s death. McCarthy wrote a check on
his personal bank account to Omvig’s mother for the unused portion of
the retainer. At no time prior to the billing statement did McCarthy
provide any documentation to Omvig or his mother about fees or
expenses.
D. L.G. Matter. McCarthy represented L.G., a minor, in early
2009. On February 19, McCarthy filed a notice of appeal on behalf of
L.G. with the Iowa Supreme Court. McCarthy did not file a notice of
appeal in the district court as required by our rules. In an order, we
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directed L.G. to file a statement within fourteen days as to whether we
had jurisdiction over the appeal. McCarthy did not file such a statement
on his client’s behalf. On April 23, we granted L.G. a delayed appeal and
ordered him to file his combined certificate within seven days. On
May 27, the deputy clerk of the supreme court issued McCarthy a notice
of default and assessment of penalty because he had failed to timely
serve and file a combined certificate. After McCarthy failed to comply, we
dismissed L.G.’s case pursuant to our court rules and forwarded the
dismissal order to the Board. In January and February 2010, McCarthy
received repeated notices from the Board and a notice of possible
temporary suspension for failure to respond to the Board. McCarthy
responded in early March.
E. Fawcett Matter. On January 7, 2009, McCarthy filed a notice
of appeal with the district court on behalf of Ryan Fawcett in a civil
proceeding. On April 14, the deputy clerk of the supreme court issued a
notice of default and assessment of penalty to McCarthy because he
failed to timely file his proof brief and pay the filing fee. When McCarthy
failed to remedy these deficiencies, we dismissed the appeal pursuant to
our court rules. In January and February 2010, McCarthy received
repeated notices from the Board and a notice of possible temporary
suspension for failure to respond to the Board. He responded in March.
F. Sandahl Matter. Amanda Sandahl retained McCarthy in
December 2009 to represent her in two criminal cases. McCarthy filed
Sandahl’s written arraignment and plea of not guilty in one case on
December 14. The district court scheduled a pretrial conference for
January 27, 2010. Although McCarthy had notice of this conference, he
and Sandahl failed to appear, resulting in the issuance of a bench
10
warrant for Sandahl’s arrest. McCarthy filed Sandahl’s guilty plea in the
second case on February 19.
On April 14, police arrested Sandahl. The district court set a
hearing for April 29. Again, McCarthy knew about the hearing, but failed
to appear. The court relieved McCarthy from further representation of
Sandahl, appointed her new counsel, and forwarded a copy of the court
files and hearing transcript to the Board. Between May 11 and
September 24, McCarthy received multiple notices from the Board
regarding his representation of Sandahl and a notice of possible
suspension for failure to respond. McCarthy responded on
September 27.
G. Mackerman Matter. Candas Mackerman hired McCarthy on
August 18, 2009, to represent her in establishing a guardianship for her
son. She paid McCarthy a $750 retainer, but the stipulation does not
indicate where McCarthy deposited these funds. Mackerman had
difficulty getting in contact with McCarthy. When she finally reached
him, McCarthy informed her that he had to publish notice in the
newspaper to inform her son’s father of the action. McCarthy also said
he would send her the guardianship papers. McCarthy failed to publish
the notice and send Mackerman the guardianship papers.
Although McCarthy never filed the guardianship petition, he told
Mackerman to meet him at the courthouse for a guardianship hearing on
four separate occasions. Mackerman and her son appeared at the
courthouse all four times, but McCarthy was never present. Each time,
the court informed Mackerman and her son that no such guardianship
action was on its schedule.
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Mackerman filed a complaint with the Board. McCarthy was
served with a notice from the Board on November 29, 2010, but never
responded.
H. Ainsworth Matter. In early March 2011, McCarthy agreed to
send a demand letter on behalf of Leslie Ainsworth to a buyer regarding a
breach of sales contract. Ainsworth asked McCarthy to send a draft of
the letter for Ainsworth’s review and approval. Shortly thereafter,
Ainsworth left numerous telephone and e-mail messages with McCarthy,
but McCarthy did not respond. On March 25, Ainsworth received a copy
of McCarthy’s letter and a proposed supplementary sales agreement.
However, McCarthy never informed Ainsworth whether he sent the letter
or proposed agreement to the buyer. Ainsworth hired a different attorney
to pursue the matter. Ainsworth paid McCarthy approximately $95 for
the preparation of the letter, but the stipulation does not indicate when
Ainsworth paid McCarthy the funds.
I. Lee Matter. In January 2011, Melissa Lee hired McCarthy to
represent her in a custody modification action involving her two children.
Lee paid McCarthy a $1300 retainer. McCarthy prepared a petition,
which Lee signed on January 11. Later that day, Lee called McCarthy
and informed him that the petition contained two errors. McCarthy told
Lee not to return to the office, that he would make the corrections, and
that he would send the revised petition to her. The revised petition
contains a signature somewhat similar to Lee’s on the original version,
but McCarthy admitted in the stipulation that Lee never received or
signed the revised petition. Nonetheless, McCarthy notarized the revised
petition.
On January 20, McCarthy filed Lee’s petition. The next day,
McCarthy told Lee he would let her know when the sheriff served her ex-
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husband. McCarthy also told Lee the court would hold a hearing before
school started for the 2011–2012 school year.
After Lee unsuccessfully attempted to contact McCarthy, she
learned from the sheriff’s office on February 4 that the sheriff had served
her ex-husband on January 25. On February 9, Lee’s ex-husband filed
an answer, counterclaim, and contempt application. He later served
McCarthy with interrogatories. On March 11, McCarthy filed a reply to
Lee’s counterclaim. Lee and McCarthy met on March 21 to complete
Lee’s answers to the interrogatories. That day, he told Lee the court had
not set a hearing date yet. McCarthy did not serve Lee’s answers to the
interrogatories.
On March 29, Lee called McCarthy and asked him whether his
license to practice law was under review. McCarthy told her he could not
speak with her at that time and would return her call. During the next
three days, Lee left McCarthy telephone messages asking McCarthy to
call her. On April 2, McCarthy told Lee that he had been too busy to
return her calls, that he would have a disciplinary hearing in May, and
that she needed to find another attorney because of his disciplinary
investigation. He also falsely told Lee the court scheduled her hearing for
July 28.
On April 7, Lee’s ex-husband filed a motion to compel Lee to file
answers to the interrogatories. On April 8, Lee met with a new attorney,
who agreed to take her case. Lee’s new attorney informed Lee about the
motion to compel and that the court scheduled a hearing in November.
Later that day, Lee asked McCarthy for her file, about her interrogatory
answers, and for the remainder of her retainer. McCarthy told Lee he
would deliver her file, which contained her answers to the
interrogatories, to her new attorney. He also told Lee he would prepare
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and send her an itemized billing statement and deliver the remainder of
the retainer to the new attorney. McCarthy withdrew from the
representation.
McCarthy did not deliver Lee’s file to the new attorney until
April 28. He also delivered a billing statement and a $214.30 refund. On
July 21, McCarthy prepared a revised billing statement that indicated he
erroneously refunded part of Lee’s retainer and that she owed him
$676.50.
V. Ethical violations.
A. Neglect. The Board alleges McCarthy violated four of our rules
pertaining to neglect. Neglect involves “a consistent failure to perform
those obligations that a lawyer has assumed, or a conscious disregard for
the responsibilities a lawyer owes to a client.” Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Lickiss, 786 N.W.2d 860, 867 (Iowa 2010) (citation and
internal quotation marks omitted).
1. Diligence. Rule 32:1.3 states, “A lawyer shall act with
reasonable diligence and promptness in representing a client.” Iowa R.
Prof’l Conduct 32:1.3. Under this rule and its predecessor, a lawyer
commits an ethical violation when he repeatedly fails to meet deadlines
and perform the functions required of him as an attorney. See Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96, 102
(Iowa 2012); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Grotewold, 642 N.W.2d 288, 293 (Iowa 2002).
In the Meiners matter, McCarthy waited six months to take any
action on his client’s behalf and seven months to file the petition his
client had signed. McCarthy did not file his clients’ petitions in the
Ricklefs and Mackerman matters even though he indicated he would do
so shortly or had already done so. Similarly, he failed to file Lee’s
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interrogatory answers. In the L.G. and Fawcett matters, McCarthy failed
to comply with an order and notices directing him to cure deficient
filings. Finally, during his representation of Sandahl, McCarthy failed to
appear at a pretrial conference and a hearing. Therefore, we find
McCarthy violated rule 32:1.3.
2. Communication with clients. The next two implicated rules
relate to McCarthy’s duty to communicate with his clients. Rule
32:1.4(a)(3) requires a lawyer to keep his or her “client reasonably
informed about the status of the matter.” Iowa R. Prof’l Conduct
32:1.4(a)(3). Further, rule 32:1.4(a)(4) requires a lawyer to “promptly
comply with reasonable requests for information.” Id. r. 32:1.4(a)(4).
Nearly all of McCarthy’s clients reported hardship in contacting
McCarthy due to McCarthy’s failure to answer his telephone and respond
to telephone and e-mail messages. This conduct might have been
enough on its own to find an ethical violation. See Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Johnson, 792 N.W.2d 674, 680 (Iowa 2010)
(finding a lawyer failed to keep his client reasonably informed when he
failed to return his client’s telephone calls). Additionally, however,
McCarthy failed to attend appointments he had scheduled with Meiners.
McCarthy also falsely told Mackerman the court had scheduled a hearing
on four different days, which caused Mackerman to appear at the
courthouse only to discover that McCarthy was not present and no
hearing was scheduled. Finally, it seems McCarthy disappeared entirely
during his representation of Ainsworth after sending a draft of the
proposed supplemental sales agreement. Consequently, McCarthy
violated rules 32:1.4(a)(3) and 32:1.4(a)(4).
3. Duty to expedite litigation. Rule 32:3.2 imposes a duty on a
lawyer to “make reasonable efforts to expedite litigation consistent with
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the interests of the client.” Iowa R. Prof’l Conduct 32:3.2. During his
representations of Meiners, L.G., and Fawcett, McCarthy failed to appear
in court or failed to timely remedy a deficient filing, which led to the
dismissal of the three of the actions he was pursuing on behalf of his
clients. McCarthy also failed to appear with his client at a pretrial
conference in the Sandahl matter, which lead to the issuance of a bench
warrant for the arrest of his client. Finally, during his representation of
Lee, McCarthy failed to timely serve his client’s interrogatory answers.
Therefore, we find McCarthy violated rule 32:3.2.
B. Failure to Communicate Fees. The Board alleged McCarthy
violated rule 32:1.5(b), which governs fee agreements. The rule requires
a lawyer to communicate to the client, preferably in writing, “the basis or
rate of the fee and expenses for which the client will be responsible . . .
before or within a reasonable time after commencing the representation.”
Iowa R. Prof’l Conduct 32:1.5(b). A billing statement following the
rendering of the lawyer’s services is not sufficient by itself to comply with
the rule, even if it sets out the lawyer’s hourly rate and time spent
working on a client’s matter. See Iowa Supreme Ct. Att’y Disciplinary Bd.
v. Hearity, 812 N.W.2d 614, 619 (Iowa 2012). McCarthy merely prepared
final billing statements in the Meiners, Ricklefs, Omvig, and Lee matters.
Therefore, we find McCarthy violated rule 32:1.5(b) because he failed to
communicate the fee and expense rate for which his clients were
responsible within a reasonable time of commencing the representation.
C. Trust Account Violations. The Board alleged McCarthy
violated multiple provisions of rule 32:1.15, which governs the
safeguarding of a client’s property. This includes retainer fees. See Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Plumb, 766 N.W.2d 626, 631–32
(Iowa 2009). The rule provides, in relevant part:
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(a) A lawyer shall hold property of clients or third
persons that is in a lawyer’s possession in connection with a
representation separate from the lawyer’s own property.
Funds shall be kept in a separate account. Other property
shall be identified as such and appropriately safeguarded.
Complete records of such account funds and other property
shall be kept by the lawyer and shall be preserved for a
period of six years after termination of the representation.
....
(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 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 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.
Id. r. 32:1.15. Rule 32:1.15 incorporates Iowa Court Rule 45.7, which
directs a lawyer as to how to handle a retainer. The rule requires a
lawyer to deposit a retainer into a trust account and withdraw payments
as the lawyer earns the fee or incurs the expense. Iowa Ct. R. 45.7(3).
The rule also requires a lawyer, at the time of a withdrawal of a fee or
expense, to notify his client in writing of the time, amount, and purpose
of the withdrawal and provide a complete accounting. Id. r. 45.7(4).
In the Meiners, Ricklefs, and Mackerman matters, McCarthy
received retainer fees from his clients, but the stipulation is unclear
whether he deposited the funds into a client trust account. Therefore,
the Board has failed to prove by clear and convincing evidence that
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McCarthy failed to deposit these funds into a client trust account.
However, in the Omvig matter, McCarthy refunded the unearned portion
of the retainer via a check written on his personal account. The fact that
McCarthy placed unearned fees into his personal account confirms he
commingled unearned client funds with his own property in violation of
rules 32:1.15(a) and (c).
Moreover, a lawyer violates the provision requiring the lawyer to
promptly return unearned fees if the lawyer takes “several months” to
return the unearned fees. Plumb, 766 N.W.2d at 632; see also Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Boles, 808 N.W.2d 431, 439 (Iowa
2012) (holding a four-month delay violated rule 32:1.15(d)). Additionally,
when a representation ends, a lawyer must “take steps to the extent
reasonably practicable to protect a client’s interests.” Iowa R. Prof’l
Conduct 32:1.16(d). This may include “surrendering papers and
property to which the client is entitled, and refunding any advance
payment of fee or expense that has not been earned or incurred.” Id.
Ricklefs discharged McCarthy on May 28, 2008. She also asked
McCarthy to refund her $1500 retainer. As of April 14, 2009, McCarthy
had not sent Ricklefs a bill or returned any of her retainer. Therefore, we
find McCarthy violated rules 32:1.15(d) and 32:1.16(d).
Finally, McCarthy admitted he did not provide a contemporaneous
written notice to his client of the time, amount, and purpose of his fee
and expense withdrawals from his client trust account in the Meiners,
Ricklefs, and Omvig matters. Consequently, McCarthy violated Iowa
Court Rule 45.7(4) and Iowa Rule of Professional Conduct 32:1.15(f).
D. Improper Withdrawal from Representation. The Board
alleged McCarthy violated rule 32:1.16, which governs a lawyer’s
withdrawal from a representation. The Board alleges McCarthy should
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have withdrawn from his representation of Ricklefs and Meiners after he
suffered a heart attack. It also alleges McCarthy should have withdrawn
from the Meiners action after Meiners discharged him. Finally, the
Board alleges Meiners did not take steps to protect his clients’ interests
following his withdrawal in the Ricklefs and Meiners actions.
1. Mandatory withdrawal because of physical condition. Rule
32:1.16(a)(2) provides that a lawyer must withdraw from a representation
where “the lawyer’s physical or mental condition materially impairs the
lawyer’s ability to represent the client.” Id. r. 32:1.16(a)(2). As we
recently noted in Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cunningham,
812 N.W.2d 541, 548 (Iowa 2012), there is very little case law
interpreting this rule or its predecessor. To prove McCarthy violated the
rule in the Meiners or Ricklefs matters, the Board would have to
demonstrate that McCarthy’s heart attack and subsequent open-heart
surgery materially impaired his representation of Meiners or Ricklefs.
We have found a lawyer’s physical condition materially impaired the
representation of a client where the lawyer allowed three appeals to be
dismissed for want of prosecution while the lawyer underwent three
surgeries to correct a chronic back ailment. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Hoglan, 781 N.W.2d 279, 283–84 (Iowa 2010).
McCarthy suffered his heart attack on April 10, 2008, and
underwent open-heart surgery on April 20. On April 25, McCarthy
communicated with Ricklefs via telephone, and McCarthy told her he
would be back to work by the middle of May. On May 21, Ricklefs
received her husband’s petition for dissolution of marriage, which
surprised her because she had signed her own petition on March 15. We
cannot find that McCarthy should have withdrawn from his
representation of Ricklefs for two reasons. First, the Board has not
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established by a convincing preponderance of the evidence that
McCarthy’s failure to file Ricklefs’ divorce petition prior to the time her
husband filed his petition put Ricklefs at any kind of a disadvantage, let
alone a material disadvantage, in her case. Second, given McCarthy’s
habitual neglect of client matters, the Board has failed to establish that
McCarthy’s heart attack and subsequent surgery, and not his dilatory
nature, caused him not to file Ricklefs’ petition prior to the time her
husband filed his petition. It is possible McCarthy would have failed to
file Ricklefs’ petition prior to May 21 even if he did not have a heart
attack.
Similarly, McCarthy met with Meiners in June, at which point
McCarthy informed Meiners he was ready and able to proceed with his
case. Although McCarthy did not take any action on Meiners’ case until
September 30, there is no indication that the delay negatively affected
Meiners’ case.
Therefore, the Board has failed to prove by a convincing
preponderance of the evidence that McCarthy’s heart attack and
subsequent surgery materially impaired his representation of Ricklefs or
Meiners. Thus, McCarthy did not violate rule 32:1.16(a)(2).
2. Mandatory withdrawal because of discharge by client. Rule
32:1.16(a)(3) requires a lawyer to withdraw if discharged by his or her
client. Iowa R. Prof’l Conduct 32:1.16(a)(3). In interpreting the rule’s
predecessor, DR 2–110(B)(4), we held a lawyer must withdraw from the
case when discharged by the client. Iowa Supreme Ct. Bd. of Prof’l Ethics
& Conduct v. Freeman, 603 N.W.2d 600, 602 (Iowa 1999). Meiners
discharged McCarthy in November, but McCarthy failed to withdraw his
appearance until April 15, 2009. Therefore, we find McCarthy violated
rule 32:1.16(a)(3).
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E. Dishonest Conduct. Rule 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). The Board alleged
McCarthy violated this rule during his representations of Mackerman
and Lee.
We will not find a lawyer’s actions violated rule 32:8.4(c) absent
some level of scienter. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Netti,
797 N.W.2d 591, 605 (Iowa 2011). A lawyer’s negligence is not enough
by itself to establish a violation. Id. However, we will find a violation of
this rule where a lawyer forges a client’s signature on court documents.
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Liles, 808 N.W.2d 203, 206
(Iowa 2012); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Rylaarsdam, 636 N.W.2d 90, 92–93 (Iowa 2001).
In the Mackerman matter, McCarthy told his client he could not
establish a guardianship for her son without first publishing notice to
the son’s father. McCarthy never published such notice. We are unable
to determine from the record presented whether McCarthy made a
knowing misrepresentation of a material fact to Mackerman when he told
her he would establish a guardianship or publish notice. Nonetheless,
we may infer McCarthy’s knowledge from the circumstances surrounding
the misrepresentation. See Iowa R. Prof’l Conduct 32:1.0(f). McCarthy
represented on numerous occasions that he filed the guardianship
papers because he told Mackerman the court had scheduled a
guardianship hearing on those occasions. These multiple
misrepresentations lead us to find that McCarthy knowingly made these
representations and that they were not a product of his neglect.
In the Lee matter, McCarthy stipulated his client never received or
signed the petition he notarized and filed. Although the stipulation does
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not indicate who forged Lee’s signature on the petition, it does indicate
McCarthy knew he filed a court document containing a forged signature.
Therefore, we find McCarthy violated rule 32:8.4(c) in both matters.
F. Failure to Cooperate with Board. The Board alleges
McCarthy failed to cooperate with the Board in multiple counts. Rule
32:8.1(b) provides that “a lawyer in connection with . . . a disciplinary
matter, shall not . . . knowingly fail to respond to a lawful demand for
information from [a] . . . disciplinary authority.” Iowa R. Prof’l Conduct
32:8.1(b). It is well established that a respondent’s failure to respond to
a notice of complaint from the Board is a violation of our rules. Johnson,
792 N.W.2d at 680; Iowa Supreme Ct. Att’y Disciplinary Bd. v. Marks, 759
N.W.2d 328, 331 (Iowa 2009); Iowa Supreme Ct. Bd. of Prof’l Ethics &
Conduct v. Honken, 688 N.W.2d 812, 821 (Iowa 2004); see also Iowa Ct.
R. 34.6(4). When a respondent fails to respond, we may infer from the
circumstances that the respondent knowingly failed to respond. Iowa R.
Prof’l Conduct 32:1.0(f).
McCarthy has repeatedly demonstrated his unwillingness to
cooperate with the Board’s investigations. He failed to respond to notices
from the Board in the Meiners, Ricklefs, Omvig, L.G., Fawcett, Sandahl,
and Mackerman matters. Further, we suspended his license temporarily
as the result of his failure to comply with the Board in one matter.
Therefore, we find McCarthy violated rule 32:8.1(b).
G. Conduct Prejudicial to the Administration of Justice. Rule
32:8.4(d) prohibits a lawyer from engaging “in conduct that is prejudicial
to the administration of justice.” Id. r. 32:8.4(d). A lawyer violates this
rule when the lawyer fails to respond to inquiries from the Board. Plumb,
766 N.W.2d at 631–32; Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ireland,
748 N.W.2d 498, 502 (Iowa 2008); McCarthy, 722 N.W.2d at 205; Comm.
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on Prof’l Ethics & Conduct v. Bromwell, 389 N.W.2d 854, 857 (Iowa 1986).
Because we have found McCarthy failed to cooperate with the Board, we
also find he engaged in conduct prejudicial to the administration of
justice in multiple matters.
VI. Sanction.
To determine the appropriate sanction, we consider the nature of
the violations, the attorney’s fitness to continue to practice law, the need
to protect the public from those unfit to practice law, the need to uphold
public confidence in our judicial system, deterrence, maintenance of the
reputation of the bar as a whole, aggravating circumstances, and
mitigating circumstances. Ireland, 748 N.W.2d at 502. Moreover, we
tailor the sanction to the facts and circumstances of each case. Comm.
on Prof’l Ethics & Conduct v. Rogers, 313 N.W.2d 535, 537 (Iowa 1981).
In summary, McCarthy neglected the matters of multiple clients,
made misrepresentations to his clients about the status of their cases to
cover up his neglect, filed a court document containing a forged
signature, failed to appear at court proceedings, and failed to comply
with orders directing him to cure deficiencies. He also failed to
communicate the fee or expense rate for which his clients were
responsible in multiple matters, failed to provide notices to his clients
about fee and expense withdrawals, commingled client funds with his
own property, failed to promptly return unearned fees, failed to withdraw
after a client discharged him, and failed to respond to the Board’s
inquiries.
Neglect alone usually results in a sanction ranging from a public
reprimand to a six-month suspension. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Moonen, 706 N.W.2d 391, 401 (Iowa 2005). However,
when a lawyer’s other misconduct compounds neglect, we may impose a
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more severe sanction. Id. We have suspended a lawyer’s license for up
to three years for conduct similar to McCarthy’s. See, e.g., Johnson, 792
N.W.2d at 682–83 (imposing a three-year suspension where the lawyer’s
misconduct included neglect, failure to communicate with clients, failure
to return unearned fees, and failure to respond to the Board’s inquiries);
Iowa Supreme Ct. Att’y Disciplinary Bd. v. McCann, 712 N.W.2d 89, 96–
98 (Iowa 2006) (suspending a lawyer’s license for two years for neglect,
conversion of client funds, misrepresentations to cover up neglect, failure
to withdraw when discharged, failure to deliver client funds when
requested, failure to respond to the Board, and other violations); Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Maxwell, 705 N.W.2d 477, 479–81
(Iowa 2005) (imposing a one-year suspension for neglect and failure to
notify a client of a hearing where the lawyer also had a record of
disciplinary actions involving neglect); Honken, 688 N.W.2d at 820, 822
(suspending a lawyer’s license for two years for “multiple acts of making
misrepresentations to the court, disregarding court orders, neglecting
client matters, misrepresenting the status of matters to . . . clients, and
failing to respond to the Board’s inquiries”); Iowa Supreme Ct. Bd. of
Prof’l Ethics & Conduct v. Moorman, 683 N.W.2d 549, 553–54 (Iowa 2004)
(imposing a two-year suspension where neglect included failure to timely
file a petition, failure to comply with rules of appellate procedure, and
failure to comply with notices of deficient filings).
A personal health issue can mitigate the sanction we impose on a
lawyer for ethical violations, but they do not excuse misconduct. Knopf,
793 N.W.2d at 531; see also Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Curtis, 749 N.W.2d 694, 703 (Iowa 2008) (finding depression to be a
mitigating factor in a discipline action resulting in a one-year suspension
for neglect, client trust account violations, and dishonesty to client);
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McCann, 712 N.W.2d at 96 (finding severe depression and anxiety
constituted mitigating factors in a disciplinary action resulting in a two-
year suspension for neglect, misrepresentation, and client trust account
violations). We find McCarthy’s heart disease and subsequent open-
heart surgery a mitigating factor.
On the other hand, McCarthy’s detailed history of prior disciplinary
violations is an aggravating factor. Since 1991, McCarthy has been
admonished four times and publicly reprimanded four times. Further,
we have temporarily suspended his license on four occasions for failure
to respond to the Board’s inquiries and suspended his license for six
months on another occasion. Much of McCarthy’s prior discipline stems
from his neglect of client matters, which is misconduct he also engaged
in here.
McCarthy has established a troubling pattern of neglect, a blatant
disregard for his clients, and a lack of respect for the disciplinary
process. In light of his numerous violations of our rules, his health
problems, and his disciplinary history, we suspend McCarthy’s license to
practice law indefinitely with no possibility of reinstatement for two
years.
VII. Disposition.
We suspend McCarthy’s license to practice law in this state
indefinitely with no possibility of reinstatement for two years. This
suspension applies to all facets of the practice of law as provided in rule
35.12(3) and requires notification of clients as outlined in rule 35.22(1).
McCarthy must also refund all unearned fees advanced to him by clients
and pay all penalties assessed for failure to comply with appellate rules.
Upon application for reinstatement, McCarthy must demonstrate that he
has not practiced law during the period of his suspension and that he
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has complied with the requirements of rule 35.13. We tax the costs of
this proceeding to McCarthy pursuant to rule 35.26(1).
LICENSE SUSPENDED.