Columbus Bar Assn. v. Keating (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Columbus Bar Assn. v. Keating, Slip Opinion No. 2018-Ohio-4730.]
NOTICE
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South Front Street, Columbus, Ohio 43215, of any typographical or other
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SLIP OPINION NO. 2018-OHIO-4730
COLUMBUS BAR ASSOCIATION v. KEATING.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Columbus Bar Assn. v. Keating, Slip Opinion No.
2018-Ohio-4730.]
Attorneys—Misconduct—Violations of the Rules of Professional Conduct—
Conditionally stayed six-month suspension.
(No. 2017-1740—Submitted February 27, 2018—Decided November 28, 2018.)
ON CERTIFIED REPORT by the Board of Professional Conduct of the Supreme
Court, No. 2016-071.
_______________________
Per Curiam.
{¶ 1} Respondent, Bradley D. Keating, of Gahanna, Ohio, Attorney
Registration No. 0076341, was admitted to the practice of law in Ohio in 2003.
{¶ 2} In a complaint certified to the Board of Professional Conduct on
December 6, 2016, relator, Columbus Bar Association, charged Keating with
numerous violations of the professional-conduct rules. Among other things, relator
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alleged that Keating failed to maintain proper client-trust-account records, failed to
properly identify and remit payment for medical treatment provided to three of his
firm’s personal-injury clients, and failed to inform his clients that he did not
maintain professional-liability insurance.
{¶ 3} The parties submitted stipulations of fact, some misconduct, and
aggravating and mitigating factors. They also agreed that numerous alleged
violations should be dismissed, but several remained contested.
{¶ 4} The matter proceeded to a hearing before a panel of the board. The
panel found that Keating committed 12 of the charged rule violations and
unanimously dismissed 17 others, including 14 that the parties agreed to dismiss.
The panel recommended that Keating be suspended from the practice of law for six
months, with the entire suspension stayed on conditions that included a period of
monitored probation and continuing legal education (“CLE”) in client-trust-account
management. The board adopted the panel’s findings of fact, all but one of its
conclusions of law, and its recommended sanction.
{¶ 5} Relator does not object to the length of the suspension that the board
recommended but does object to the “shortage of conditions” and urges us to
impose an additional condition on Keating’s stayed suspension: that he must remit
all the funds that are being held in a separate client trust account to the Ohio
Department of Commerce’s Division of Unclaimed Funds.
{¶ 6} For the reasons that follow, we overrule relator’s objection, adopt the
board’s report and recommendation, and suspend Keating from the practice of law
for six months, with the entire suspension stayed on the conditions recommended
by the board.
Board Findings of Misconduct
Stipulated Recordkeeping Violations
{¶ 7} From May 2011 through August 2011, three separate clients (“Case
One,” “Case Two,” and “Case Three”) retained Keating’s firm to pursue
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automobile-related personal-injury claims. Case Three was accepted by Keating’s
firm on the basis of a contingent fee. Although the client in Case Three signed the
contingent-fee agreement, neither Keating nor any other associate in the firm signed
the contract.
{¶ 8} In all three cases, the firm agreed to pay Southside Therapy Group,
L.L.C., d.b.a. Chiropractic Therapy South (“Southside Therapy”), for each client’s
chiropractic treatment out of any settlement or judgment proceeds. In Cases One
and Two, Keating’s firm had negotiated a reduction in chiropractic fees with Dr.
Gordon Spurling, the owner of Southside Therapy. In total, Southside Therapy was
owed approximately $4,175 from the three clients. And by early 2012, all three
cases had settled out of court.
{¶ 9} Although Keating claimed that the firm had paid Southside Therapy
by check, subpoenaed bank records showed that in Case Two, the check that was
issued by Keating’s firm had been made payable to the wrong chiropractic office.
And in Cases One and Three, the checks that were issued by Keating’s firm had
never been negotiated by Southside Therapy. In early October 2015, Dr. Spurling
filed a grievance against Keating. Subsequently, Keating paid Dr. Spurling in full
for the services at issue.
{¶ 10} In accord with the parties’ stipulations and with respect to each of
these matters, the panel and the board found that Keating’s conduct violated
Prof.Cond.R. 1.15(a)(5) (requiring a lawyer to perform and retain a monthly
reconciliation of the funds held in the lawyer’s client trust account) and 1.15(d)
(requiring a lawyer to promptly render a full accounting of funds or property in
which a client or a third party has an interest on the request of the client or the third
party). They also agreed that by failing to sign the contingent-fee contract with the
client in Case Three, Keating violated Prof.Cond.R. 1.5(c)(1) (requiring a lawyer
to set forth a contingent-fee agreement in a writing signed by both the client and
the lawyer).
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Contested Recordkeeping Violations
{¶ 11} From 2003 until 2009, Keating was an associate attorney at
Magelaner & Associates, Ltd.1 According to Keating, in early 2008, he and the
firm’s owner, Thomas L. Magelaner, began noticing certain accounting
discrepancies, which led them to believe that their accounting firm was stealing
money from their client trust account. And the accounting firm refused to provide
records that would enable Keating and Magelaner to identify the source and
ownership of all the funds in the client trust account. Therefore, Keating and
Magelaner decided to leave their earned attorney fees in the client trust account to
ensure that there would be ample funds to cover any client or third-party claims. In
March 2008, Keating and Magelaner discharged the accounting firm, retained a
new accountant, and opened a second client trust account (“second account”). By
August 2008, Keating and Magelaner had transferred all their client-trust funds to
the second account and the original, potentially compromised account had a zero
balance.
{¶ 12} The firm used the second account in its daily operations until July
2011. At that time, Keating and Magelaner transferred $307,368.89 from the
second account to a new client trust account (“third account”). Keating and
Magelaner decided to leave all the funds for which they could not identify an owner
in the second account. As of December 31, 2011, the balance in the second account
was $85,214.89.
{¶ 13} Effective January 1, 2012, Keating purchased Magelaner’s interest
in the law firm and renamed it The Keating Firm, Ltd. As the firm’s sole owner
and managing member, Keating assumed responsibility for all the firm’s
recordkeeping and accounting obligations. As of May 25, 2017, the second account
1. When Keating became a partner in 2009, the firm’s name changed to Magelaner, Keating &
Associates.
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had a balance of $74,517.14 (the “unidentified funds”) and the owner or owners of
those funds remained unidentified.
{¶ 14} In an effort to account for and determine the ownership of the
unidentified funds, Keating retained Rebekah A. Smith, a certified public
accountant with a certification in financial forensics. Smith analyzed the second
account and the firm’s recordkeeping policies and procedures and prepared two
separate reports—one report giving Smith’s opinion as to who owned the
unidentified funds and the second report giving Smith’s opinion as to whether the
firm’s recordkeeping policies and procedures were reasonable and accurate. Based
on her analysis, Smith concluded that “the funds remaining in the Keating Firm’s
[second account] are most likely the profits of the Keating firm and it is unlikely
that they are client funds.” Smith also found that “the Keating Firm’s past and
current policies and procedures related to its [client trust] account[s] are reasonable
to ensure accurate record keeping.” Smith made these conclusions “to a reasonable
degree of professional certainty.”
{¶ 15} The panel found that Keating satisfied his burden to account for the
funds held in the second account based on (1) Smith’s forensic analysis of the
account and her conclusion that the firm owned all the funds in the account, (2)
Keating’s testimony that no one had made any claim to the unidentified funds for
at least six years, (3) the absence of any evidence from relator that any client or
third party was asserting a claim to the unidentified funds, and (4) apart from the
problems associated with the three payments to Dr. Spurling, the absence of any
evidence from relator that Keating or Magelaner failed to pay any prior clients or
third parties from one of their client trust accounts. Nonetheless, the panel found
that Keating’s conduct violated Prof.Cond.R. 1.15(a)(3) (requiring a lawyer to
maintain for seven years a record for the lawyer’s client trust account, setting forth
the name of the account, date, amount, and client affected by each credit and debit),
1.15(a)(5), and 1.15(b) (permitting a lawyer to deposit the lawyer’s own funds in a
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client trust account for the sole purpose of paying or obtaining a waiver of bank
service charges).
{¶ 16} Citing the insufficiency of relator’s evidence, the panel unanimously
dismissed relator’s allegation that Keating had violated Prof.Cond.R. 1.15(d)
(requiring a lawyer to promptly deliver funds or other property that the client is
entitled to receive) and 8.4(h) (prohibiting a lawyer from engaging in conduct that
adversely reflects on the lawyer’s fitness to practice law).
{¶ 17} The board accepted the panel’s findings and recommendation with
respect to this conduct, except that it also voted to dismiss the alleged violation of
Prof.Cond.R. 1.15(b).
Stipulated Professional-Liability-Insurance Violations
{¶ 18} In December 2015, Keating’s insurance carrier terminated his
professional-liability insurance, and he did not obtain new insurance coverage until
July 31, 2017. However, Keating did not inform his existing clients that he no
longer maintained professional-liability insurance. Nor did he inform new clients
that he did not have professional-liability insurance. The parties stipulated—and
the panel and the board agreed—that Keating’s conduct violated Prof.Cond.R.
1.4(c) (requiring a lawyer to inform the client at the time of engagement or at any
time subsequent to the engagement if the lawyer does not maintain professional-
liability insurance and obtain a signed acknowledgment of that notice from the
client) and 1.4(c)(1) (requiring a lawyer to maintain a copy of a client’s signed
acknowledgment that the attorney does not maintain professional-liability
insurance for five years after the representation is terminated).
Recommended Sanction
{¶ 19} When imposing sanctions for attorney misconduct, we consider all
relevant factors, including the ethical duties that the lawyer violated, relevant
aggravating and mitigating factors, and the sanctions imposed in similar cases. See
Gov.Bar R. V(13)(A).
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{¶ 20} The only aggravating factor present in this case is that Keating
committed multiple offenses. See Gov.Bar R. V(13)(B)(4).
{¶ 21} As mitigating factors, the parties stipulated and the board found that
Keating (1) does not have a prior disciplinary record, (2) has not exhibited a
dishonest or selfish motive, (3) made full restitution to Dr. Spurling and modified
his office practices and procedures with regard to his client trust account, and (4)
demonstrated a cooperative attitude toward the disciplinary proceedings. See
Gov.Bar R. V(13)(C)(1) through (4).
{¶ 22} Because relator had recommended that Keating receive a fully
stayed one-year suspension, the board reviewed several cases that relator cited in
support of its recommended sanction, including Allen Cty. Bar Assn. v. Schramski,
124 Ohio St. 3d 465, 2010-Ohio-630, 923 N.E.2d 603, and Cleveland Metro. Bar
Assn. v. Walker, 142 Ohio St. 3d 452, 2015-Ohio-733, 32 N.E.3d 437. In both cases,
the attorneys failed to maintain proper client-trust-account records, commingled
personal funds with client funds, and used their client trust accounts to pay personal
and business expenses. Additionally, Schramski did not carry professional-liability
insurance for approximately 22 years and never notified her clients of this fact. And
Walker failed to (1) inform a client of decisions and circumstances that required the
client’s informed consent and (2) promptly notify that client when Walker had
received settlement proceeds on that client’s behalf. The board found that
Keating’s misconduct was not as egregious as Schramski’s and Walker’s.
{¶ 23} Instead, the board focused on numerous cases in which we imposed
conditionally stayed six-month suspensions or issued a public reprimand for client-
trust-account violations. See, e.g., Disciplinary Counsel v. Fletcher, 122 Ohio
St.3d 390, 2009-Ohio-3480, 911 N.E.2d 897; Columbus Bar Assn. v. Peden, 118
Ohio St. 3d 244, 2008-Ohio-2237, 887 N.E.2d 1183; Disciplinary Counsel v.
Bricker, 137 Ohio St. 3d 35, 2013-Ohio-3998, 997 N.E.2d 500. Like Schramski and
Walker, Fletcher, Peden, and Bricker failed to maintain proper client-trust-account
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records and commingled personal funds with client funds. Fletcher at ¶ 5; Peden
at ¶ 3; Bricker at ¶ 9. Additionally, Fletcher and Peden misappropriated client funds
by withdrawing unearned fees and overdrawing their client trust accounts. Fletcher
at ¶ 6, Peden at ¶ 3. And in each case, the attorney received either a conditionally
stayed six-month suspension or a public reprimand. Fletcher at ¶ 3 (six months, all
stayed); Peden at ¶ 9 (six months, all stayed); Bricker at ¶ 33 (public reprimand).
{¶ 24} Here, the board found that certain circumstances surrounding the
unidentified funds were mitigating factors. The board found that Keating was
placed in a no-win situation when accounting for irregularities that arose during his
tenure as an associate of Magelaner & Associates, Ltd. The law firm’s accountant
was either performing incompetently or stealing funds from the law firm’s client
trust account and refused to provide the information that another accountant would
need to reconcile the account. Under these circumstances, the board believed that
Keating and Magelaner made a rational decision to open a new client trust account,
transfer existing client-trust funds into that account, and leave earned attorney fees
in the original account to cover obligations to pay clients and third parties. While
the board suggested that Keating and Magelaner should have been more prompt in
their efforts, the board also believed that Keating and Magelaner acted in good faith
to protect their clients and the rights of third parties who may have had claims
against the funds.
{¶ 25} Therefore, the board recommended that Keating be suspended from
the practice of law in Ohio for six months, with the entire suspension stayed on the
conditions that he (1) serve a two-year period of monitored probation, (2) employ
an individual with accounting expertise to ensure proper management of his client
trust account, (3) complete three hours of CLE related to client-trust-account
management during each year of his stayed suspension and monitored probation,
and (4) engage in no further misconduct.
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Relator’s Objection to the Board’s Recommended Sanction
{¶ 26} Relator objects to the board’s recommended sanction and urges us
to impose an additional condition on Keating’s probation. Specifically, relator
argues that we should require Keating to submit the entire amount of the
unidentified funds in the second account—$74,517.14—to the Ohio Department of
Commerce’s Division of Unclaimed Funds and that Keating should follow the
procedures as detailed in R.C. Chapter 169 to recoup any amount that Keating
would be claiming as attorney fees. Furthermore, relator objects to the board’s
findings to the extent that the board suggests that relator bears some responsibility
for the uncertainty regarding the ownership of the unidentified funds.
{¶ 27} In response, Keating contends that relator has conflated its burden of
proving his alleged misconduct by clear and convincing evidence, see Gov.Bar R.
V(12)(I), with Keating’s duty to safeguard and account for client funds, see
Prof.Cond.R. 1.15. Keating argues that the evidence that has been presented
throughout these proceedings demonstrates that (1) no client or third party has
asserted any claim to the unidentified funds, (2) the last payment made from the
second account was at least six years ago, and (3) a forensic accountant concluded
that all the funds are most likely the profits of The Keating Firm, Ltd. While
Keating does not object to a requirement that he disclose to relator how the funds
will be distributed, he argues that the funds are not “unclaimed” and that he is not
a “holder” as those terms are defined in R.C. 169.01(B)(1) and (D)(1), respectively.
{¶ 28} In a disciplinary proceeding, the relator bears the burden of proving
an attorney’s misconduct by clear and convincing evidence. Disciplinary Counsel
v. Stafford, 131 Ohio St. 3d 385, 2012-Ohio-909, 965 N.E.2d 971, ¶ 21; Gov.Bar R.
V(12)(I). The clear-and-convincing standard is an “intermediate standard—‘more
than a mere preponderance, but not to the extent of such certainty as is required
beyond a reasonable doubt as in criminal cases.’ ” Disciplinary Counsel v. Stafford,
128 Ohio St. 3d 446, 2011-Ohio-1484, 946 N.E.2d 193, ¶ 55, quoting Cross v.
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Ledford, 161 Ohio St. 469, 477, 120 N.E.2d 118 (1954). Typically, cases involving
client-trust-account violations come to light after a client alleges that he has not
received all the funds to which he is entitled. Here, relator has presented evidence
showing that Keating has more than $74,000 in his second account and alleges that
his records are insufficient to reveal the identity or the whereabouts of any client
who could claim ownership of any amount of those funds. But there is no evidence
that relator has conducted even the most rudimentary investigation into whether the
records that Keating maintained were sufficient to resolve the question of
ownership. Indeed, the panel and the board dismissed an alleged violation of
Prof.Cond.R. 1.15(d), which requires a lawyer to notify and to promptly deliver
funds or other property to his client when the client has a lawful interest in those
funds or property. The decision to dismiss this violation was undoubtedly rooted
in relator’s failure to meet its burden of proof—i.e., demonstrating, through clear
and convincing evidence, that any of Keating’s clients were entitled to receive any
portion of those funds.
{¶ 29} For his part, Keating retained Smith, a forensic accountant, and
produced a number of source documents for her review, including (1) client files
dating back to at least 2006, (2) deposit slips for all the law firm’s client trust
accounts dating back to 2005, (3) bank statements for the second and third client
trust accounts, and (4) bank reconciliations for the client trust accounts for all
relevant years. After examining the receipts and disbursements from
approximately 20 cases that were picked at random, Smith found no irregularities
in the sample.
{¶ 30} On the other hand, Smith did not examine any of the client files that
closed before Keating and Magelaner discharged their first accountant in March
2008. And although she stated that she held her opinion “to a reasonable degree of
professional certainty,” Smith couched that opinion in equivocal terms: “In my
opinion, the funds remaining in the Keating Firm’s [second account] are most likely
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the profits of the Keating Firm and it is unlikely that they are client funds.”
(Emphasis added.) Therefore, Smith’s report leaves open the possibility that clients
or third parties—some dating back to Keating’s time as an associate attorney with
the firm—may still have a valid claim against those funds. Nonetheless, Smith’s
reports and opinions constitute some evidence that the unidentified funds belong to
The Keating Firm, Ltd., and not to Keating’s clients or third parties.
{¶ 31} Given the highly unusual facts of this case and the significant
deficiencies in the record before us, we decline relator’s invitation to address the
proper distribution of the unidentified funds in the context of this disciplinary
proceeding.
{¶ 32} Based on the foregoing, we overrule relator’s objection and adopt
the board’s findings of fact, conclusions of law, and recommended sanction.
Disposition
{¶ 33} Accordingly, Bradley D. Keating is suspended from the practice of
law in Ohio for six months, with the entire suspension stayed on the conditions that
he serve a two-year period of monitored probation in accordance with Gov.Bar R.
V(21), employ an individual with accounting expertise to ensure proper
management of his client trust account, complete three hours of CLE related
exclusively to client-trust-account management during each year of his stayed
suspension and probation in addition to the CLE requirements of Gov.Bar R. X,
and engage in no further misconduct. If Keating fails to comply with any condition
of the stay, the stay will be lifted and he will serve the full six-month suspension.
Costs are taxed to Keating.
Judgment accordingly.
O’CONNOR, C.J., and O’DONNELL, KENNEDY, FRENCH, FISCHER, DEWINE,
and DEGENARO, JJ., concur.
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Luper, Neidenthal & Logan and Amy L. Bostic; and Lori J. Brown, Bar
Counsel, and Judith M. McInturff and A. Alysha Clous, Assistant Bar Counsel, for
relator.
James E. Arnold & Associates, L.P.A., and Alvin E. Mathews Jr., for
respondent.
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