Office of Lawyer Regulation v. John Hotvedt

2016 WI 93
SUPREME COURT OF WISCONSIN
CASE NO.: 2016AP48-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against John Hotvedt, Attorney at Law:
Office of Lawyer Regulation,
Complainant-Respondent,
v.
John Hotvedt,
Respondent-Appellant.
DISCIPLINARY PROCEEDINGS AGAINST HOTVEDT
OPINION FILED: November 18, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2016 WI 93
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2016AP48-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against John Hotvedt, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant, NOV 18, 2016
v. Diane M. Fremgen
Clerk of Supreme Court
John Hotvedt,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. We review a report and recommendation of
Referee Richard C. Ninneman approving a stipulation filed by the
Office of Lawyer Regulation (OLR) and Attorney John E. Hotvedt.
In the stipulation, Attorney Hotvedt stipulated to the facts
underlying the five counts of misconduct alleged in the OLR's
amended complaint and joined the OLR in jointly recommending an
18-month suspension of Attorney Hotvedt's Wisconsin law license.
The referee agreed that an 18-month suspension was appropriate.
No. 2016AP48-D
¶2 Upon careful review of this matter, we uphold the
referee's findings of fact and conclusions of law and agree that
an 18-month suspension is an appropriate sanction for Attorney
Hotvedt's misconduct. We also find it appropriate to impose the
full costs of this proceeding, which are $6,309.67 as of
September 19, 2016, on Attorney Hotvedt. Since Attorney Hotvedt
has already made restitution to his law firm, the OLR does not
seek a restitution order.
¶3 Attorney Hotvedt was admitted to practice law in
Wisconsin in 2001 and practices in Kenosha. He has no prior
disciplinary history.
¶4 On January 7, 2016, the OLR filed a complaint against
Attorney Hotvedt alleging five counts of misconduct. Attorney
Hotvedt filed an answer on February 12, 2016. The referee was
appointed on April 5, 2016. The OLR filed an amended complaint
on July 11, 2016. The parties' stipulation and Attorney
Hotvedt's no contest plea was filed on August 8, 2016.
¶5 As part of the stipulation, Attorney Hotvedt agreed
that the referee could use the factual allegations of the
amended complaint as an adequate basis in the record for a
determination of misconduct as to the five counts alleged in the
amended complaint.
¶6 According to the amended complaint, Attorney Hotvedt
was formerly employed at the Burlington, Wisconsin law firm of
Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry, S.C. He was a
stockholder, director, and officer of the firm and had practiced
with the firm since he graduated from law school. By common and
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No. 2016AP48-D
accepted practice, and pursuant to written employment
agreements, all attorneys at the firm understood and agreed that
revenues generated by the practice of law belonged to the firm.
¶7 In January 2014, Attorney Hotvedt and Attorney Todd
Terry told firm shareholders that they would be withdrawing from
the firm and establishing their own law practice in Kenosha.
The shareholders of the firm agreed to dissolve the corporation
effective May 31, 2014. All firm members signed a dissolution
agreement winding up the corporation.
¶8 Subsequent to the dissolution of the firm, and in
connection with the winding up of the firm, Attorney Dennis
Lynch, the former President of the firm, noticed billing
discrepancies attributable to Attorney Hotvedt, including
writing off substantial amounts of firm billings in the years
2011 through 2013. In many instances, Attorney Hotvedt had
written off client billings, but clients reported to the firm
that they had paid legal fees directly to Attorney Hotvedt.
¶9 Review of firm accounts showed that Attorney Hotvedt
had deposited client fee payments directly into his own personal
bank account rather than depositing the fees into the law firm
account. Attorney Hotvedt did not disclose to the firm's
shareholders that he was depositing firm funds paid by clients
into his personal bank account. Attorney Hotvedt continued his
conduct of depositing client funds belonging to the firm into
his personal bank account during 2014, after he had announced
his departure from the firm and after he had executed a
dissolution agreement.
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No. 2016AP48-D
¶10 As part of its investigation into the grievance filed
against Attorney Hotvedt, the OLR discovered that in 2014
Attorney Hotvedt established his own consulting company, JBG
Consulting Services, during the time period in which he was
preparing to leave the firm. Through this consulting company,
Attorney Hotvedt converted additional attorney's fees belonging
to the firm. The OLR's investigation revealed that the total
amount of identifiable client funds converted by Attorney
Hotvedt from his former law firm was over $173,000.
¶11 The OLR's amended complaint alleged the following
counts of misconduct:
 Count One: By converting client funds belonging
to the firm in an amount in excess of $173,000
over the years 2011 through 2014, Attorney
Hotvedt violated SCR 20:8.4(c).1
 Count Two: By writing off client fees owed to
the firm, Attorney Hotvedt violated SCR
20:8.4(c).
 Count Three: By establishing JBG Consulting
Services to convert client fees while employed by
the firm for the purpose of advancing his own
financial interests, Attorney Hotvedt violated
SCR 20:8.4(c).
 Count Four: By misrepresenting to the firm that
he would not bill or otherwise recover client
fees from firm clients; by converting client
funds owed to his law firm, by writing off client
billings; by establishing JBG Consulting Services
for the purpose of converting client fees owed to
1
SCR 20:8.4(c) provides: "It is professional misconduct
for a lawyer to: . . . engage in conduct involving dishonesty,
fraud, deceit or misrepresentation.
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No. 2016AP48-D
the firm, Attorney Hotvedt breached his fiduciary
duties owed to his firm and his duty of honesty
in his professional dealings with the firm,
thereby violating a standard of conduct set forth
by the Supreme Court in In re Disciplinary
Proceedings Against Shea, 190 Wis. 2d 560, 527
N.W.2d 314 (1995), actionable via SCR 20:8.4(f).2
 Count Five: By failing to disclose to the OLR
the full extent of funds converted from the firm;
by failing to initially disclose the full amount
of fees received from JBG Consulting Services, an
entity that served to convert client funds
belonging to the firm; by failing to disclose to
the OLR that he had converted additional firm
funds through another bank after specifically
denying to the OLR that there was any other bank
into which such deposits were made, Attorney
Hotvedt violated SCR 22.03(2)3 and SCR 22.03(6),4
enforced through 20:8.4(h).5
2
SCR 20:8.4(f) provides: "It is professional misconduct
for a lawyer to: . . . violate a statute, supreme court rule,
supreme court order or supreme court decision regulating the
conduct of lawyers.
3
SCR 22.03(2) provides:
Upon commencing an investigation, the director shall
notify the respondent of the matter being investigated
unless in the opinion of the director the
investigation of the matter requires otherwise. The
respondent shall fully and fairly disclose all facts
and circumstances pertaining to the alleged misconduct
within 20 days after being served by ordinary mail a
request for a written response. The director may
allow additional time to respond. Following receipt
of the response, the director may conduct further
investigation and may compel the respondent to answer
questions, furnish documents, and present any
information deemed relevant to the investigation.
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No. 2016AP48-D
¶12 In the stipulation, Attorney Hotvedt represented that
he fully understands the misconduct allegations; fully
understands his right to contest the matter; fully understands
the ramifications of his entry into the stipulation;
acknowledges that he has had the representation and advice of
counsel; and states that the entry into the stipulation is made
knowingly and voluntarily.
¶13 As noted above, the parties agreed that an appropriate
level of discipline for Attorney Hotvedt's misconduct was an 18-
month suspension of his license to practice law in Wisconsin.
The referee agreed.
¶14 The referee's August 30, 2016 report and
recommendation found that the OLR met its burden of proof with
respect to the five counts of misconduct set forth above. The
referee said the amount of firm money misappropriated by
Attorney Hotvedt, coupled with the attorney's admitted
allegations of failing to cooperate with the OLR, supported a
very serious level of discipline. The referee commented that
4
SCR 22.03(6) provides: "In the course of the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
5
SCR 20:8.4(h) provides: "It is professional misconduct
for a lawyer to: . . . fail to cooperate in the investigation
of a grievance filed with the office of lawyer regulation as
required by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(6), or SCR
22.04(1)."
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No. 2016AP48-D
deciding on an appropriate level of discipline was made more
difficult since the parties reached a stipulation and no contest
agreement without a hearing, which meant the referee had no
opportunity to meet and observe Attorney Hotvedt's demeanor as
to his misconduct.
¶15 The referee went on to say that an 18-month suspension
for a relatively new attorney who recently started a new firm is
a significant discipline, particularly considering the
additional time it may take for him to be reinstated under the
reinstatement procedures dictated by SCR 22.28(3). The referee
noted that Attorney Hotvedt has no prior disciplinary history;
he reached an agreement with his former firm regarding
restitution; and he ultimately was willing to enter into a
stipulation and no contest agreement. Upon consideration of all
those factors, the referee said he had no difficulty agreeing to
recommend the 18-month suspension recommended by both the OLR
and Attorney Hotvedt as part of the stipulation.
¶16 This court will adopt a referee's findings of fact
unless they are clearly erroneous. Conclusions of law are
reviewed de novo. See In re Disciplinary Proceedings Against
Eisenberg, 2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747. The
court may impose whatever sanctions it sees fit, regardless of
the referee's recommendation. See In re Disciplinary
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660
N.W.2d 686.
¶17 We adopt the referee's findings of fact and
conclusions of law that Attorney Hotvedt violated the supreme
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No. 2016AP48-D
court rules as alleged in the five counts set forth above. We
further agree with the referee that an 18-month suspension of
Attorney Hotvedt's license to practice law in Wisconsin is an
appropriate level of discipline. Since no two cases are
precisely the same, there is no standard sanction for any
particular misconduct. We note that in In re Disciplinary
Proceedings Against Brown, 2005 WI 49, 280 Wis. 2d 44, 695
N.W.2d 295, this court accepted a stipulation in which an
attorney agreed to an 18-month suspension for accepting fees
from clients while informing his law firm he was acting pro
bono, converting fees belonging to the law firm, and making
misrepresentations to the OLR as part of its investigation. We
find the misconduct at issue in this case to be somewhat
analogous to the misconduct in Brown, and we find a similar
suspension to be appropriate. We also deem it appropriate, as
is our usual custom, to impose the full costs of this
disciplinary proceeding on Attorney Hotvedt.
¶18 IT IS ORDERED that the license of John E. Hotvedt to
practice law in Wisconsin is suspended for a period of 18
months, effective December 30, 2016.
¶19 IT IS FURTHER ORDERED that within 60 days of the date
of this order, John E. Hotvedt shall pay to the Office of Lawyer
Regulation the costs of this proceeding, which are $6,309.67.
¶20 IT IS FURTHER ORDERED that John E. Hotvedt shall
comply with the provisions of SCR 22.26 concerning the duties of
a person whose license to practice law in Wisconsin has been
suspended.
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No. 2016AP48-D
¶21 IT IS FURTHER ORDERED that compliance with all
conditions with this order is required for reinstatement. See
SCR 22.28(3).
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No. 2016AP48-D
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