In re Lill

Per Curiam:

This is an original proceeding in discipline filed by the Office of the Disciplinary Administrator against Don W. Lill, of Emporia, an attorney duly admitted to the practice of law in Kansas. A hearing panel of the Kansas Board for Discipline of Attorneys unanimously found a violation of Model Rules of Professional Conduct 1.3 (1992 Kan. Ct. R. Annot. 248) and 1.15 (1992 Kan. Ct. R. Annot. 281) in that Lill failed to act with reasonable diligence and promptness in representing a client and also failed to hold his clients’ property separate from his own.

Russell and Vuanta Sterkel retained Lill to represent them in a Chapter 7 bankruptcy. On October 30, 1990, a hearing was held pursuant to 11 U.S.C. § 341 (1988) at which the bankruptcy trustee told Lill to send any tax refunds due and owing the Sterkels to her. On December 8, 1990, the trustee wrote to Lill requesting he provide her with copies of the 1990 state and federal tax returns and that he contact her if any refunds were due and owing the Sterkels.

In May 1991, the Sterkels provided a copy of their tax returns to Lill. He did not forward copies of these returns to the trustee. Later in the same month, the Sterkels brought their tax refund checks, unendorsed, to Lill’s office. Lill had the Sterkels return to his office and endorse the checks. Lill’s former secretary, Brenda Croy, put the checks in the clients’ file. Lill cashed the federal tax refund check, which amounted to $840.52. At the disciplinary hearing, Lill stated the money was kept locked in his desk drawer. The Disciplinary Administrator presented no evidence to indicate Lili converted these funds to his own use.

Croy hied the complaint in this case in July 1991. On August 1, 1991, Lili was provided with a copy of Croy’s letter of complaint.

On August 8, 1991, Lili wrote to the bankruptcy trustee informing her of the amount of the refunds and requesting instructions on how to proceed in the bankruptcy action. On August 19, 1991, Lili obtained a money order payable to himself in the amount of $840.52. On August 20, 1991, Lili deposited the money order and the state income tax refund check in the amount of $53.81 into his trust account. On August 21, 1991, the trustee requested the refunds be sent to her within 10 days. On August 29, 1991, Lili complied and sent a check drawn on his trust account in the amount of both refunds, $894.33.

In a letter to the deputy disciplinary administrator, Lili explained he did not immediately deposit the tax refund checks into his trust account because both his personal and business accounts had been audited by the Internal Revenue Service in the spring of 1989. He owed the government $16,000 in back taxes. He explained the IRS had been aggressive in its efforts to collect the back taxes and he believed the IRS might contact the Sterkels and attempt to set off the refund amounts against his personal tax obligation if he deposited the tax refunds in his trust account. Lili acknowledged he made a poor decision by failing to deposit the funds into his trust account.

Following a hearing before a panel of the Kansas Board for Discipline of Attorneys, the hearing panel issued a report which stated the parties were in agreement that there was clear and convincing evidence Lili had violated MRPC 1.3 and MRPC 1.15. MRPC 1.3 provides: “A lawyer shall act with reasonable diligence and promptness in representing a client.” MRPC 1.15 provides in part:

“(a) A lawyer shall hold property of clients or third persons that is in the lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in the State of Kansas. 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 . . . .”

The panel was advised Lili was formerly disciplined by informal admonition on March 26, 1991, for alleged violations of MRPC 1.3 and 1.4 (1992 Kan. Ct. R. Annot. 251). In mitigation, Lili explained his secretary had quit during this time and he had undergone an extensive audit by the IRS. Lili fully cooperated with the Disciplinary Administrator throughout the course of the investigation in this case. Lili accepted full responsibility for his actions and apologized for his behavior. Since the time in question, Lili has worked diligently to pay the taxes he owes the government. By way of mitigation Lili explained he is a recovering alcoholic who has been alcohol-free since 1981. He has been active in community matters relating to alcohol abuse and served on the pre-planning committee to establish the Comer House Halfway House in Emporia. Lili further advised the panel the Sterkels continue to be his clients.

The panel unanimously recommended that Lili be disciplined by public censure pursuant to Supreme Court Rule 203(a)(3) (1992 Kan. Ct. R. Annot. 153) and that costs be assessed to Lili. In response to the panel’s recommendation, Lili stated he agrees with and accepts the recommendation.

We find Lili violated MRPC 1.3 and MRPC 1.15 pursuant to the findings of the panel. We find he should be disciplined by public censure.

It Is Therefore Ordered that Don W. Lili be and he is hereby disciplined by this court by public censure for his previously enumerated violations of the Model Rules of Professional Conduct.

It Is Further Ordered that the costs of these proceedings be assessed to the respondent and that this order be published in the official Kansas Reports.