Lorain Cty. Bar Assn. v. Nelson (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Lorain Cty. Bar Assn. v. Nelson, Slip Opinion No. 2017-Ohio-8856.]
NOTICE
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Slip Opinion No. 2017-Ohio-8856
LORAIN COUNTY BAR ASSOCIATION v. NELSON.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Lorain Cty. Bar Assn. v. Nelson, Slip Opinion No.
2017-Ohio-8856.]
Attorneys—Misconduct—Violations of the Rules of Professional Conduct and the
Rules for the Government of the Bar—Two-year suspension with 18 months
stayed on condition.
(No. 2016-1830—Submitted May 16, 2017—Decided December 7, 2017.)
ON CERTIFIED REPORT by the Board of Professional Conduct of the Supreme
Court, No. 2016-010.
_______________________
Per Curiam.
{¶ 1} Respondent, Kenneth Allen Nelson II, of Avon Lake, Ohio, Attorney
Registration No. 0075834, was admitted to the practice of law in 2003. In October
2015, we publicly reprimanded him for neglecting a client’s personal-injury case,
failing to properly notify the client that he lacked malpractice insurance, and failing
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to cooperate in the ensuing disciplinary investigation. Lorain Cty. Bar Assn. v.
Nelson, 144 Ohio St. 3d 414, 2015-Ohio-4337, 44 N.E.3d 268.
{¶ 2} In April 2016, relator, Lorain County Bar Association, charged
Nelson with mishandling a client’s fee in a criminal matter and failing to cooperate
in relator’s investigation. After a hearing, the Board of Professional Conduct found
that Nelson engaged in most of the charged misconduct and recommended that we
suspend him for two years, with 18 months stayed on conditions. Nelson objects
to most of the board’s misconduct findings and to its recommended sanction,
arguing that a fully stayed one-year suspension is more appropriate.
{¶ 3} For the reasons explained below, we overrule Nelson’s objections and
adopt the board’s findings of misconduct and recommended sanction.
Misconduct
{¶ 4} On May 28, 2015, the federal government charged Efren Vega with a
drug-related felony, and the following day, Vega’s girlfriend, Linda Sanchez, paid
Nelson $10,000 in cash to represent him. At Nelson’s disciplinary hearing, he
testified that he considered the $10,000 a “flat fee * * * earned on receipt” and that
he therefore placed the funds in a lockbox at his house rather than in his client trust
account. Nelson admitted that at the time he collected the fee, he failed to advise
Vega or Sanchez that if he did not complete the representation, they may be entitled
to a refund of all or a portion of the fee. Nelson also failed to advise them that he
lacked malpractice insurance.
{¶ 5} Nelson completed some legal work in Vega’s case and twice visited
him in prison. However, about two weeks after Vega retained him, Vega
terminated the representation. Nelson testified that when Vega discharged him, he
advised Vega that he would refund the unearned portion of the $10,000 fee after he
completed a bill. Similarly, when Sanchez contacted Nelson about a refund, he told
her that he would refund a portion of the money upon completion of a bill. But
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after waiting two months without receiving a refund, Sanchez filed a grievance
against him.
{¶ 6} On September 10, 2015, relator sent Nelson a copy of the grievance
and requested that he respond within 20 days. Nelson did not respond to relator’s
letter or to a September 30 follow-up e-mail. On October 5, 2015, relator sent
Nelson another letter and e-mail. Although Nelson contacted relator by telephone
and indicated that he would respond to the grievance by October 9, he failed to do
so. On October 12, relator e-mailed Nelson to remind him that he had agreed to
respond to the grievance, but Nelson again failed to reply to relator’s inquiry.
{¶ 7} On February 11, 2016, relator notified Nelson of its intent to file a
disciplinary complaint, and about a month later, on March 18, Nelson formally
responded to Sanchez’s grievance. With his response, he submitted an itemized
statement of legal services in Vega’s case, showing that his fees and expenses
amounted to $6,803.50. However, he also stated that in order to resolve the dispute,
he had refunded $9,000 to Sanchez, which was the amount that she had requested
in her grievance. The parties stipulated that Nelson refunded the money on March
17, the day before he responded to the grievance. At his disciplinary hearing,
Nelson conceded that because he did not deposit the $10,000 fee into his client trust
account, he failed to comply with the record-keeping requirements for client funds
held in trust.
{¶ 8} Based on this conduct, the board found that Nelson violated
Prof.Cond.R. 1.4(c) (requiring a lawyer to inform the client on a separate written
form that the lawyer does not maintain professional-liability insurance and
requiring the client to sign the form), 1.5(d)(3) (prohibiting a lawyer from charging
a fee denominated as “earned upon receipt” or in similar terms without
simultaneously advising the client in writing that the client may be entitled to a
refund of all or part of the fee if the lawyer does not complete the representation),
1.15(c) (requiring a lawyer to deposit advance legal fees and expenses into a client
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trust account), 1.15(a)(1) through (5) (requiring a lawyer to maintain certain client
records regarding funds held in a trust account and bank records, as well as to
perform and retain monthly reconciliations of the trust account), 1.16(e) (requiring
a lawyer to promptly refund any unearned fee upon the lawyer’s withdrawal from
employment), and 8.1(b) and Gov.Bar R. V(9)(G) (both requiring an attorney to
cooperate with a disciplinary investigation).
{¶ 9} Nelson objects to the board’s findings that he mishandled the $10,000
fee and failed to cooperate in the disciplinary investigation. According to Nelson,
because he told Vega after Vega discharged him that he would refund the unearned
portion of the $10,000, he “effectively gave the notice required by Prof.Cond.R.
1.5(d)(3) to qualify as a ‘flat fee’ or as a fee ‘earned upon receipt.’ ” And because
he “effectively” complied with Prof.Cond.R. 1.5(d)(3), Nelson argues that he was
not required to deposit his fee in his client trust account and that his violation of the
rules regulating flat fees and a lawyer’s trust account should be given “little
weight.”
{¶ 10} Prof.Cond.R. 1.5(d)(3) prohibits a lawyer from collecting a fee
denominated as “earned upon receipt” or in similar terms unless the client is
simultaneously advised in writing that if the lawyer does not complete the
representation for any reason, the client may be entitled to a refund of all or a
portion of the flat fee. If a lawyer complies with the conditions in Prof.Cond.R.
1.5(d)(3), advance fees collected by the lawyer are considered the lawyer’s property
and the lawyer should deposit those funds in any place other than his client trust
account. Columbus Bar Assn. v. McCord, 150 Ohio St. 3d 81, 2016-Ohio-3298, 79
N.E.3d 503, ¶ 7; see Board of Professional Conduct Advisory Opinion No. 2016-1
(Feb. 12, 2016).
{¶ 11} Nelson, however, did not comply—or “effectively” comply—with
the conditions in Prof.Cond.R. 1.5(d)(3). According to Nelson’s own testimony,
he told Vega at the time Vega discharged him, which was about two weeks after he
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collected the fee, that he would refund the unearned portion of the $10,000.
Further, he did not give notice in writing. He therefore failed to comply with
essential elements of the rule. In addition, Nelson admits that when Vega
terminated him, a portion of the $10,000 fee was unearned and Vega was entitled
to a refund. Yet for the next nine months, Nelson kept his client’s funds in a
lockbox in his house, rather than in an appropriately safeguarded client trust
account as required by Prof.Cond.R. 1.15(c). Thus, the evidence supported the
board’s findings that Nelson failed to comply with the rules regulating flat fees and
client trust accounts.
{¶ 12} Regarding his failure to cooperate, Nelson states that he considered
Sanchez’s grievance a fee dispute and that he delayed responding to the grievance
because he thought that he could settle with her. Nelson’s belief that the grievance
amounted to a fee dispute, however, did not relieve him of his duty to timely
respond to relator’s repeated inquiries. See Gov.Bar R. V(9)(G). Relator’s
investigator testified that in September and October 2015, she sent Nelson six
inquiries about the grievance. However, he did not formally respond until March
2016. On this record, the board had ample evidence to conclude that Nelson failed
to cooperate in relator’s investigation.
{¶ 13} We therefore overrule Nelson’s objections and agree with the
board’s findings of misconduct.
Sanction
{¶ 14} When imposing sanctions for attorney misconduct, we consider
several relevant factors, including the ethical duties that the lawyer violated, the
aggravating and mitigating factors listed in Gov.Bar R. V(13), and the sanctions
imposed in similar cases.
Aggravating and mitigating factors
{¶ 15} As aggravating factors, the board found that Nelson has a prior
disciplinary record and that he failed to cooperate with relator’s investigation. See
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Gov.Bar R. V(13)(B)(1) and (5). Nelson again objects to the board’s finding that
he failed to cooperate, but for the reasons explained above, we overrule this
objection.
{¶ 16} In mitigation, the board found that Nelson lacked a selfish motive,
submitted evidence from three judges attesting to his good character and reputation,
and acknowledged some of his misconduct. See Gov.Bar R. V(13)(C)(2) and (5).
The board also noted that Nelson’s eventual cooperation in the disciplinary
process—after relator filed its complaint—is entitled to some mitigating effect.
Applicable precedent
{¶ 17} The board cited several cases to support its recommended sanction,
including Dayton Bar Assn. v. Scaccia, 141 Ohio St. 3d 35, 2014-Ohio-4278, 21
N.E.3d 290, and Disciplinary Counsel v. Summers, 131 Ohio St. 3d 467, 2012-Ohio-
1144, 967 N.E.2d 183.
{¶ 18} In Scaccia, an attorney charged a nonrefundable fee without
simultaneously advising the client that she may be entitled to a refund, failed to
deposit client funds into his trust account, failed to maintain the necessary trust-
account records, and neglected a client matter. Mitigating factors included that the
attorney had no prior discipline and submitted evidence of good character and
reputation. In aggravation, the attorney failed to make restitution or to
acknowledge the wrongfulness of his conduct. Based on those facts, we suspended
him for one year, with six months stayed on conditions.
{¶ 19} In Summers, an attorney charged a nonrefundable fee without
simultaneously advising the client that he may be entitled to a refund, failed to
promptly refund his unearned fee after withdrawing from employment, and charged
a clearly excessive fee. In mitigation, we found that the attorney had no prior
discipline and submitted extensive evidence of good character and reputation.
Aggravating factors included failing to make restitution, refusing to acknowledge
the misconduct, and a dishonest and selfish motive. Noting that the attorney had
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“fabricated mistruths about his clients” and had shown “disdain for the disciplinary
process,” we imposed an actual six-month suspension on him. Id. at ¶ 45, 49.
{¶ 20} The board noted that Nelson’s misconduct was not as egregious as
the misconduct in Scaccia or Summers, but because this is Nelson’s second
disciplinary case, the board concluded that an actual suspension is necessary.
Indeed, the board determined that Nelson’s “failure to cooperate with a disciplinary
investigation for a second time” was the “most significant factor requiring at least
six months [of] actual suspended time.”
{¶ 21} Nelson objects to the board’s reliance on Scaccia and Summers,
arguing that those cases involved substantially worse conduct and more aggravating
factors, including the failure to make restitution. He further asserts that an actual
suspension in this case is punitive and more severe than necessary to protect the
public. Citing Dayton Bar Assn. v. Washington, 143 Ohio St. 3d 248, 2015-Ohio-
2449, 36 N.E.3d 167, he argues for a fully stayed suspension.
{¶ 22} As noted above, the board recognized that Scaccia and Summers are
not directly on point, but because the range of misconduct in those cases is similar
to Nelson’s and because this is Nelson’s second disciplinary case, the board
concluded that an actual six-month suspension is warranted in this case as well. We
agree. And contrary to Nelson’s position, our opinion in Washington is not helpful
to him. Although the misconduct in Washington is somewhat comparable to
Nelson’s, there were no aggravating factors in that case and there was significant
mitigating evidence, including the attorney’s clean disciplinary record, cooperation
in the disciplinary process, and timely payment of restitution. Id. at ¶ 12. Here,
Nelson has prior discipline for the same misconduct, and he did not make restitution
or cooperate in the disciplinary process until after relator notified him of its intent
to file a disciplinary complaint.
{¶ 23} In addition, an actual suspension is necessary to protect the public.
The board noted that Nelson violated the rules relating to fees and client trust
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accounts because he failed to read and comprehend them, which shows that he does
not appreciate his obligations to comply with the professional-conduct rules. For
example, Nelson testified that although he had implemented procedures to notify
his clients in writing that he lacked malpractice insurance, he could not state
whether he had begun to ensure that they sign the notice, as required by
Prof.Cond.R. 1.4(c). Indeed, he testified that he had been “lax” with that
requirement. We disciplined Nelson for violating Prof.Cond.R. 1.4(c) in 2015, and
relator charged him with violating that rule again in this case. Yet at his disciplinary
hearing, he testified that he had failed to implement procedures to ensure
compliance with the rule. An actual suspension is necessary to give Nelson the
time to review and understand his ethical obligations and to implement the
procedures necessary to ensure compliance with the Rules of Professional Conduct,
especially those applicable to solo practitioners. Accordingly, we overrule
Nelson’s objections and adopt the board’s recommended sanction.
Conclusion
{¶ 24} For the reasons explained above, Kenneth Allen Nelson II is
suspended from the practice of law for two years, with 18 months stayed on the
condition that he engage in no further misconduct. As a condition of reinstatement,
Nelson must provide proof that he completed at least six hours of continuing legal
education relating to law-office management in addition to meeting the other
requirements of Gov.Bar R. X. Upon reinstatement, Nelson shall serve a one-year
period of monitored probation focusing on trust-account and record-keeping
requirements relating to fees and other client materials. If Nelson fails to comply
with the condition of the stay, the stay will be lifted and he will serve the entire
two-year suspension. Costs are taxed to Nelson.
Judgment accordingly.
O’CONNOR, C.J., and KENNEDY, O’NEILL, FISCHER, and DEWINE, JJ.,
concur.
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O’DONNELL, J., dissents, with an opinion joined by FRENCH, J.
_________________
O’DONNELL, J., dissenting.
{¶ 25} Respectfully, I dissent.
{¶ 26} This grievance is in the nature of a fee dispute, and I would issue a
24 month suspension all stayed, given the refund paid and that respondent
eventually cooperated in the disciplinary process.
FRENCH, J., concurs in the foregoing opinion.
_________________
D. Chris Cook, Bar Counsel, and Lindsey C. Poprocki, Interim Bar Counsel,
for relator.
Daniel G. Wightman, for respondent.
_________________
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