Office of Lawyer Regulation v. Richard E. Reilly

2020 WI 19
SUPREME COURT OF WISCONSIN
CASE NO.: 2018AP1176-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Richard E. Reilly, Attorney at Law:
Office of Lawyer Regulation,
Complainant-Respondent,
v.
Richard E. Reilly,
Respondent-Appellant.
DISCIPLINARY PROCEEDINGS AGAINST REILLY
OPINION FILED: February 20, 2020
SUBMITTED ON BRIEFS: December 23, 2019
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
ZIEGLER J., dissents, joined by REBECCA GRASSL BRADLEY, J.
NOT PARTICIPATING:
ATTORNEYS:
For the respondent-appellant, there were briefs filed by
Peyton B. Engel, Richard E. Reilly, and Hurley Burish, S.C.,
Madison.
For the complainant-respondent, there was a brief filed by
Kim M. Kluck and Office of Lawyer Regulation, Madison
2020 WI 19
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2018AP1176-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Richard E. Reilly, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant-Respondent, FEB 20, 2020
v. Sheila T. Reiff
Clerk of Supreme Court
Richard E. Reilly,
Respondent-Appellant.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. Attorney Richard E. Reilly has appealed a
report and recommendation filed by Referee John B. Murphy, finding
that Attorney Reilly committed five counts of professional
misconduct and recommending that his license to practice law in
Wisconsin be suspended for 60 days. Attorney Reilly has stipulated
to the misconduct. He has appealed the referee's recommendation
for a 60-day suspension and argues that a public reprimand is an
appropriate sanction.
No. 2018AP1176-D
¶2 Upon careful review of this matter, we uphold the
referee's findings of fact and conclusions of law. We agree with
the referee that a 60-day suspension of Attorney Reilly's Wisconsin
law license is an appropriate sanction for his misconduct. We
also agree that Attorney Reilly should be required to satisfy any
financial obligations that may be imposed by the circuit court in
the E.M. case. In addition, we find it appropriate to follow our
normal custom of imposing the full costs of this proceeding, which
are $15,830.87 as of September 5, 2019, on Attorney Reilly.
¶3 Attorney Reilly was admitted to practice law in
Wisconsin in 1966 and practices at Gimbel, Reilly, Guerin & Brown,
LLP. In 1985 he received a consensual private reprimand for
neglecting two estates and not communicating with an heir. Private
reprimand, No. 85-4. In 2004, he received a consensual public
reprimand for misconduct that consisted of failing to act with
reasonable diligence and promptness by failing to thoroughly
prepare a divorce client's case and for failing to timely file his
own Wisconsin income tax returns. Public Reprimand of Richard E.
Reilly, No. 2004-6 (electronic copy available at
https://compendium.wicourts.gov/app/raw/
002074.html.
¶4 On June 25, 2018, the Office of Lawyer Regulation (OLR)
filed a complaint alleging that Attorney Reilly had engaged in
five counts of misconduct. The first three counts of misconduct
arose out of his representation of E.M. in a divorce action in
Ozaukee County Circuit Court. Attorney Reilly began representing
E.M. in the divorce in June 2014. E.M. had previously been
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No. 2018AP1176-D
represented by two other attorneys. E.M.'s husband, M.M., was
represented by Attorney Linda Ann Ivanovic in the divorce and post-
judgment proceedings.
¶5 On October 22, 2014, E.M. filed her financial disclosure
statement. She listed a number of debts that would subsequently
be listed in the same amounts in her list of debts in the divorce
judgment. Attorney Reilly's law firm assisted E.M. in preparing
the financial disclosure statement.
¶6 A trial was held in the divorce proceeding beginning on
October 22, 2014 and continuing on two days in November, 2014.
Ozaukee County Circuit Court Judge Paul V. Malloy granted the
judgment of divorce on November 25, 2014.
¶7 On December 10, 2014, Attorney Reilly deposited a check
from M.M. made payable to Gimbel, Reilly, Guerin & Brown, LLP Trust
Account in the amount of $97,286.85 into his law firm's trust
account. The funds related to a retirement account, and the memo
line on the check said, "50% of Ameritrade."
¶8 On January 21, 2015, Judge Malloy held a hearing to
clarify the divorce judgment. Judge Malloy said E.M.'s debts "need
to be resolved" and that E.M. was "not to discharge them in
bankruptcy." Referring to the funds from the retirement account,
Judge Malloy said, "As far as I'm concerned, that money was being
put into essentially a constructive trust to make sure everybody
is paid, that [E.M.] walks out of this without all kinds of debt
because they would come back to [M.M.]."
¶9 Judge Malloy entered the findings of fact, conclusions
of law and judgment of divorce in the case on February 26, 2015.
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No. 2018AP1176-D
In the judgment of divorce, Judge Malloy appointed Scribner Cohen
& Company as E.M.'s conservator to manage her funds, maintenance,
assets, and pay her bills. The judgment of divorce set forth the
division of specific debts and financial obligations and said that
E.M.'s conservator "shall manage her debts" and "is ordered to pay
all of her debts with the funds she received from Respondent's
401(k)."
¶10 The judgment of divorce specified that E.M.'s
psychologist fees, CPA fees, and fees owed to the parties'
attorneys shall take priority and be considered marital support
orders. The divorce judgment ordered that title to a 2014 Range
Rover vehicle be immediately transferred to E.M. The divorce
judgment ordered that E.M.'s one-half of the Ameritrade account be
cashed in and the funds be provided to E.M.'s conservator, who
shall manage her assets and pay her bills as specified in the
divorce judgment.
¶11 Attorney Reilly did not provide the Ameritrade funds,
which had been placed in his law firm's trust account, to the
conservator. Attorney Reilly used some of the Ameritrade funds to
pay for items not included in E.M.'s debts listed in the divorce
judgment, including cleaning services, payments for personal
loans, credit card and dentist bills for one of E.M.'s children,
cable television and DirecTV bills, car maintenance and repair
bills, medical spa treatment bills, and a plane ticket for one of
E.M.'s children. Attorney Reilly's use of the Ameritrade funds to
pay for items that were not listed in the divorce judgment left
other debts that were listed in the judgment unpaid.
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No. 2018AP1176-D
¶12 In April 2015, Capital One filed a small claims action
against E.M. to collect credit card debt that had been listed in
the divorce judgment but had not yet been paid. Judgment was
entered against E.M. on May 20, 2015 for $4,623.03, plus costs and
fees.
¶13 On June 1, 2015, Capital One filed another small claims
action against E.M. to collect credit card debt that had been
listed in the divorce judgment but had not yet been paid. Judgment
was entered against E.M. in that case on October 7, 2015 for
$5,089.25, plus costs and fees.
¶14 The judgment in the first small claims case was satisfied
in June 2015.
¶15 In either June or the beginning of July 2015, Scribner
received a check for $392,322.72 which represented E.M.'s share of
the 401(k) retirement account funds. On July 8, 2015, Attorney
Reilly directed Scribner to pay $134,375.67 to his law firm for
work performed for E.M. in the divorce. This amount represented
work performed up to the date of payment.
¶16 On July 15, 2015, E.M. was charged in a criminal
complaint with one count of battery or threat to a judge, a felony,
and two counts of aggravated battery-intend great bodily harm,
also a felony, in Ozaukee County Circuit Court. The charges
stemmed from E.M.'s efforts to hire a hit man to batter Judge
Malloy, M.M., and M.M.'s then girlfriend.
¶17 On August 3, 2015, Attorney Reilly deposited a check for
$71,000 from S & S Auto Broker, Inc. made payable to E.M. into a
second trust account at his law firm. The check was for the sale
5
No. 2018AP1176-D
of the 2014 Range Rover. Attorney Reilly did not deliver the funds
from the sale of the Range Rover to Scribner.
¶18 On August 7, 2015, Waukesha County Circuit Court Judge
Jennifer R. Dorow was assigned to preside over post-judgment
proceedings in the M. divorce.
¶19 On August 10, 2015, Attorney Reilly directed that
$25,000 be paid to his law firm as an advanced fee from his law
firm's trust account (the account holding the Range Rover sale
proceeds) as a retainer for E.M.'s criminal defense.
¶20 On August 17, 2015, Attorney Ivanovic, on behalf of M.M.,
filed a third post-judgment order to show cause for contempt on
E.M., Attorney Reilly, and Scribner, based on the fact that M.M.
had not received the attorney fees which E.M. had been ordered to
pay in the divorce judgment. On September 16, 2015, Attorney
Ivanovic amended the third order to show cause to include a request
for an accounting of E.M.'s funds held by Attorney Reilly and
Scribner.
¶21 On November 17, 2015, Attorney Reilly provided a joint
accounting to Attorney Ivanovic which did not distinguish which
funds were being held by him and which funds were being held by
Scribner.
¶22 On November 24, 2015, M.M. filed a fourth post-judgment
order to show cause for contempt alleging that Attorney Reilly and
Scribner violated the orders contained in the judgment of divorce
by directing that money be used to pay for debts which were not
specifically identified in the divorce judgment.
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No. 2018AP1176-D
¶23 On December 9, 2015, Attorney Reilly directed that
$34,000 be paid from his law firm's trust account holding the Range
Rover proceeds to the Ozaukee County Clerk of Courts for E.M.'s
bail. The $34,000 included $15,000 that Attorney Reilly's law
firm had received from E.M.'s family member and $19,000 that his
law firm received from the sale of the Range Rover. After issuing
the check for $34,000 toward E.M.'s bail and a check for GPS
monitoring, $48.25 remained in the trust account that had been
holding the Range Rover proceeds.
¶24 As of December 9, 2015, all $97,286.85 of the Ameritrade
funds had been disbursed from the trust account by Attorney
Reilly's law firm. As of that date, unpaid debts and obligations
exceeding $72,000 that had been ordered paid in the divorce
judgment remained unpaid.
¶25 On or about December 22, 2015, Attorney Reilly directed
Scribner to pay $6,000 from funds held by Scribner toward E.M.'s
bail in the criminal case.
¶26 Judge Dorow heard testimony regarding the fourth order
to show cause on January 16 and February 25, 2016. Attorney
Reilly, M.M., and Scribner representative Jessica Gatzke testified
at the hearing.
¶27 Jessica Gatzke testified she knew the $71,000 received
from the sale of the Range Rover and $97,000 from the Ameritrade
account, which the court had ordered her to manage, had been placed
in Attorney Reilly's trust accounts. Gatzke testified that she
did not request that those funds be transferred to Scribner because
7
No. 2018AP1176-D
the money was in an attorney's trust account and she had no reason
to believe it was not accounted for.
¶28 Attorney Reilly testified he did not turn over proceeds
from the sale of the Range Rover to Scribner because there was a
need for funds for E.M.'s criminal defense. Attorney Reilly
admitted that the $97,000 in funds from the Ameritrade account
were placed in his law firm's trust account and that he did not
turn those funds over to the conservator. He further admitted he
approved paying some of amounts in excess of the amounts specified
in the divorce judgment, and he admitted he directed the
conservator and his law firm to pay money for E.M.'s bail even
though there was nothing in the divorce judgment authorizing funds
to be used for that purpose.
¶29 On July 6, 2016, Attorney Reilly's law firm, on behalf
of Attorney Reilly and E.M., and Attorney Ivanovic presented
argument to Judge Dorow regarding the fourth order to show cause.
In Judge Dorow's oral decision, she found Attorney Reilly in
contempt of court for multiple intentional and willful violations
of the divorce judgment, including failing to turn over the
Ameritrade funds or the proceeds from the sale of the Range Rover
to the conservator; directing excess payments to his law firm and
other creditors; paying a $25,000 retainer to his law firm in
E.M.'s criminal matter; paying $19,000 from his law firm's trust
account toward E.M.'s bail; and directing the conservator to pay
$6,000 toward E.M.'s bail.
¶30 Judge Dorow ordered that the Ameritrade funds, the
proceeds from the Range Rover sale, the retainer in the criminal
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No. 2018AP1176-D
case, the bail money, and the excess payments of professional fees
be returned within 30 days. She also found that so long as the
debts listed in the divorce judgment remained unpaid, the contempt
of court was ongoing. Judge Dorow commented, "[It] really appears
to this Court that the funds of [E.M.] were nothing short of a
repository of funds for Gimbel, Reilly, Guerin and Brown and their
attorneys' fees." Judge Dorow entered a written decision of her
findings on July 18, 2016. Attorney Reilly and Scribner were
ordered to pay specific amounts to a successor conservator.
¶31 In August 2016, Attorney Reilly filed a notice of appeal
from the order holding him in contempt of the judgment of divorce.
The court of appeals affirmed in part and reversed in part. With
respect to the award of attorney fees, the court of appeals held
that the circuit court did not err in determining that Attorney
Reilly and Scribner engaged in contemptuous conduct in paying
Attorney Reilly fees related to the divorce action that were in
excess of the fees due through February 26, 2015. The court of
appeals remanded the issue to the circuit court to determine what
amount of fees was reasonably incurred through February 26, 2015.
¶32 The court of appeals also held that the circuit court
did not err in determining that Attorney Reilly and Scribner
engaged in contemptuous conduct in paying professional fees in
excess of the fees due. The court of appeals observed that by
paying excess professional fees, Attorney Reilly and Scribner
compromised Scribner's ability to fairly pay other debts as ordered
in the divorce judgment.
9
No. 2018AP1176-D
¶33 With respect to Scribner using $6,000 from E.M.'s funds
toward payment of E.M.'s bail, the court of appeals noted that
Scribner's clear and specific directive in the divorce judgment
was to pay E.M.'s debts and bills listed in the divorce judgment.
The court of appeals held that using funds for bail unquestionably
did not qualify as payment of a debt, much less one of the itemized
debts that Scribner was authorized and directed to pay. In
addition, the court of appeals held the circuit court did not err
in finding Attorney Reilly in contempt for directing that $19,000
be paid from his trust account toward E.M.'s bail.
¶34 The court of appeals also affirmed the circuit court's
finding of contempt in relation to Attorney Reilly's payment of
the $25,000 to his law firm because he did not specifically
challenge that finding of contempt. The court of appeals said
Attorney Reilly's involvement with selling the Range Rover and
keeping $25,000 of the funds as payment to his law firm for E.M.'s
criminal representation was directly in conflict with the divorce
judgment. Scribner filed a petition for review with this court.
This court denied the petition for review in October 2017.
¶35 The OLR's complaint alleged the following counts of
misconduct with respect to Attorney Reilly's handling of E.M.'s
divorce:
Court One: By failing to deliver the funds from the
sale of the 2014 Range Rover vehicle and the funds from
the Ameritrade account to Scribner, Attorney Reilly
10
No. 2018AP1176-D
violated former SCR 20:1.15(d)(1) and current SCR
20:1.15(e)(1).1
Count Two: By failing to comply with the February 26,
2015 judgment of divorce, Attorney Reilly violated
SCR 20:3.4(c).2
Count Three: By continuing to represent E.M. in the
post-judgment proceedings while there was a significant
risk that his representation was materially limited by
his own personal interest with respect to the order to
show cause for contempt, Attorney Reilly violated
SCR 20:1.7(a)(2).3
1 Effective July 1, 2016, substantial changes were made to
Supreme Court Rule 20:1.15, the "trust account rule." See S. Ct.
Order 14-07, 2016 WI 21 (issued Apr. 4, 2016, eff. July 1, 2016).
Because the conduct underlying this case arose prior to July 1,
2016, unless otherwise indicated, all references to the supreme
court rules will be to those in effect prior to July 1, 2016.
Former SCR 20:1.15(d)(1) was renumbered as
SCR 20:1.15(e)(1). The text of the rule was not changed
and provides:
Upon receiving funds or other property in which a
client has an interest, or in which the lawyer has
received notice that a 3rd party has an interest
identified by a lien, court order, judgment, or
contract, the lawyer shall promptly notify the client or
3rd party in writing. Except as stated in this rule or
otherwise permitted by law or by agreement with the
client, the lawyer shall promptly deliver to the client
or 3rd party any funds or other property that the client
or 3rd party is entitled to receive.
2 SCR 20:3.4(c) provides: "A lawyer shall not knowingly
disobey an obligation under the rules of a tribunal, except for an
open refusal based on an assertion that no valid obligation
exists."
3 SCR 20:1.7(a)(2) provides:
(a) Except as provided in par. (b), a lawyer shall
not represent a client if the representation involves a
concurrent conflict of interest. A concurrent conflict
of interest exists if:
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No. 2018AP1176-D
¶36 The second client matter detailed in the OLR's complaint
involved Attorney Reilly's representation of J.D'A. in a divorce
action. The divorce was filed in 2010. J.D'A. and her husband
filed a stipulated marital settlement agreement in 2011, and a
divorce judgment was entered. The divorce judgment required the
husband to pay child support arrears, child support, maintenance,
attorney fees, and other expenses.
¶37 In January 2012, J.D'A.'s prior attorney filed a motion
for contempt based on J.D'A.'s ex-husband's failure to comply with
the court order support and maintenance payments. The ex-husband
ultimately stipulated to a finding of contempt. A family court
commissioner withheld entering a finding of contempt, and the
parties stipulated to dates by which the ex-husband was to meet
his payment obligations to purge the contempt. The family court
commissioner found the ex-husband in contempt in March 2013 and
ordered him to serve 90 days in jail, but the court stayed the
sentence for 24 months if the ex-husband made payments for child
support arrears, child support, and maintenance payments.
¶38 J.D'A. hired Attorney Reilly to represent her in the
family matter in May 2013. She signed a written legal
representation agreement which provided that Attorney Reilly's
legal services would be billed at $300 per hour. She paid Attorney
. . .
(2) there is a significant risk that the
representation of one or more clients will be materially
limited by the lawyer's responsibilities to another
client, a former client or a third person or by a
personal interest of the lawyer.
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No. 2018AP1176-D
Reilly an advanced fee of $2,500. The circuit court entered an
order substituting Attorney Reilly as counsel of record on June 4,
2013.
¶39 On June 14, 2013, counsel for J.D'A.'s ex-husband sent
a letter to the family court commissioner, copying Attorney Reilly,
saying that the ex-husband had a bankruptcy proceeding pending so
all enforcement/contempt proceedings should be stayed by operation
of the automatic stay in 11 U.S.C. § 362. The bankruptcy matter
was subsequently dismissed because the ex-husband failed to file
required documents.
¶40 J.D'A.'s ex-husband filed a second bankruptcy petition
in September 2013. On that date the bankruptcy court clerk issued
a notice of bankruptcy case filing which stated, "In most
instances, the filing of the bankruptcy case automatically stays
certain collection and other actions against the debtor and the
debtor's property." Also on that date, the ex-husband's attorney
sent a letter to Attorney Reilly advising him to the bankruptcy
filing.
¶41 On September 30, 2013, counsel for J.D'A.'s ex-husband
faxed a letter to the family court commissioner and counsel,
including Attorney Reilly, saying that it is a violation of the
automatic stay provision in 11 U.S.C. § 362 to proceed with the
contempt action after a bankruptcy case has been filed.
¶42 On September 30, 2013, the family court commissioner
held a hearing regarding the earlier contempt order. The
commissioner ordered that the family matter would be stayed as a
result of the bankruptcy filing.
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No. 2018AP1176-D
¶43 The next hearing regarding the contempt matter was
scheduled for January 13, 2014. On that date, Attorney Reilly
sent a letter to the family court commissioner regarding the
bankruptcy case and said he was prepared to proceed with the
contempt hearing. Counsel for J.D'A.'s ex-husband filed a letter
with the family court commissioner saying that the bankruptcy
trustee had not yet determined what was and was not property of
the bankruptcy estate.
¶44 The family court commissioner held a hearing on the
contempt motion on January 13, 2014. An attorney from Attorney
Reilly's law firm appeared on behalf of J.D'A. and argued that the
contempt was ongoing and that there did not need to be a new
finding of contempt for the period of time after the bankruptcy
was filed. The family court commissioner made an oral ruling
stating she believed the court had the authority to lift the stay
and impose the contempt sanction and gave J.D'A.'s ex-husband until
January 31, 2014 to purge the contempt by paying $15,000.
¶45 On January 21, 2014, J.D'A.'s ex-husband commenced an
adversary case in bankruptcy court by filing a debtor's complaint
for willful violation of the automatic stay with respect to the
action to enforce the support order in the family matter during
the time the automatic stay was in effect. Attorney Reilly was
represented in the adversary case by an attorney from his law firm.
The bankruptcy judge held a hearing in the adversary case on
January 30, 2014 and ruled that the family court commissioner's
January 13, 2014 oral ruling was void and that the defendants in
the adversary case were enjoined from taking any action to enforce
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No. 2018AP1176-D
the family court commissioner's oral ruling or to reduce the oral
ruling to writing.
¶46 On March 4, 2014, Attorney Reilly's law firm opened a
new client billing matter entitled "Client: 201407603M [D'A.] –
Reilly." A subsequent report on that billing matter reflected
that the billing included work by Attorney Reilly's law firm dating
back to January 10, 2014.
¶47 Attorney Reilly and J.D'A. did not have a separate
written legal representation agreement for Attorney Reilly or his
law firm to represent her in the adversary case.
¶48 The bankruptcy judge granted a motion for summary
judgment and dismissed the adversary complaint as to Attorney
Reilly with prejudice in July 2014. On July 29, 2014, J.D'A. and
her ex-husband entered into a stipulation in the adversary case
stating that J.D'A. may be dismissed from the action with prejudice
and without costs or fees. The bankruptcy court approved the
stipulation and dismissed J.D'A. with prejudice. The bankruptcy
court also dismissed the complaint and closed the adversary case.
¶49 On February 16, 2016, Attorney Lani L. Williams sent
Attorney Reilly an email advising that J.D'A. had requested that
Attorney Williams take over representation of J.D'A. in the family
matter.
¶50 Attorney Williams met with Attorney Reilly at Attorney
Reilly's office on February 26, 2016 to discuss the case and review
the file. At the meeting, Attorney Reilly gave Attorney Williams
a billing summary, dated February 8, 2016, for work that Attorney
Reilly and his law firm had performed defending J.D'A. in the
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No. 2018AP1176-D
family matter and a Detail Work-in-Progress report dated February
8, 2016 for work that Attorney Reilly and his law firm billed for
defending Attorney Reilly personally in the adversary case in
bankruptcy court.
¶51 During the February 26, 2016 meeting, Attorney Williams
requested that Attorney Reilly give her J.D'A.'s entire client
file in the family matter. Attorney Reilly told Attorney Williams
he would only turn over the original file so she could make a copy
of it and that Attorney Williams had to return the original client
file to Attorney Reilly's office. Attorney Reilly refused to have
his office staff copy the file, saying it would cost hundreds of
dollars and hours of staff time to complete. Attorney Williams
agreed to copy the file and return it to Attorney Reilly in one
week.
¶52 Attorney Williams reviewed the client file and noted
that it contained no notes and almost no written or electronic
communications or memos between Attorney Reilly and the staff at
his law firm. Other documents were also missing from the file,
including over 80 pages of notes and memos relating to the
bankruptcy and post-divorce proceedings and a transcript of a
hearing in the family matter.
¶53 On March 2, 2016, Attorney Reilly's office sent, via
electronic mail, a "Request, Consent and Order for Substitution of
Attorneys and Judgment for Attorney Fees," with the caption of the
family matter. The proposed consent and order contained a separate
consent to judgment for attorney fees in favor of Attorney Reilly
and against J.D'A. in the amount of $31,127.26. J.D'A. did not
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No. 2018AP1176-D
sign the proposed consent and order containing the judgment for
attorney fees.
¶54 Attorney Williams returned J.D'A.'s original file in the
family matter to Attorney Reilly's office on March 4, 2016.
¶55 In a letter to Attorney Reilly dated April 14, 2016,
Attorney Williams advised Attorney Reilly that J.D'A. would not be
paying the $23,690.45 in fees and expenses that Attorney Reilly
and his law firm billed for work in defending Attorney Reilly
personally in the adversary case.
¶56 On May 25, 2016, J.D'A. filed a request for substitution
of attorneys in the family matter, substituting Attorney Williams
in place of Attorney Reilly. The circuit court signed the order
of substitution that same day.
¶57 On November 15, 2017, Attorney Reilly sent a letter to
J.D'A. stating that his law firm "wrote off and absorbed" the
$23,690.45 in fees and expenses related to J.D'A.'s ex-husband's
"ancillary tactical bankruptcy action."
¶58 The OLR's complaint alleged the following counts of
misconduct with respect to Attorney Reilly's representation of
J.D'A.:
Count Four: By billing his client for his own personal
defense as an individually named defendant in an
adversary case in the United States Bankruptcy Court for
the Eastern District of Wisconsin, Attorney Reilly
violated SCR 20:1.5(a).4
4 SCR 20:1.5(a) provides:
(a) A lawyer shall not make an agreement for,
charge, or collect an unreasonable fee or an
unreasonable amount for expenses. The factors to be
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No. 2018AP1176-D
Count Five: By failing to deliver the original case
file to his client's successor counsel, and then by only
allowing successor counsel to borrow the original case
file on the condition that she copy the file at her own
expense, Attorney Reilly violated SCR 20:1.16(d).5
¶59 Attorney Reilly filed an answer to the complaint on
August 3, 2018. On January 3, 2019, the parties filed a
considered in determining the reasonableness of a fee
include the following:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that
the acceptance of the particular employment will
preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or
by the circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability of the
lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
5 SCR 20:1.16(d) provides:
Upon termination of representation, a lawyer shall
take steps to the extent reasonably practicable to
protect a client's interests, such as giving reasonable
notice to the client, allowing time for employment of
other counsel, 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.
The lawyer may retain papers relating to the client to
the extent permitted by other law.
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No. 2018AP1176-D
stipulation whereby Attorney Reilly withdrew his answer to the
complaint and admitted all of the facts and allegations contained
in the complaint. The stipulation did not contain an agreement as
to the proposed discipline. The stipulation detailed the various
amounts that Attorney Reilly paid to the conservator and other
parties in the E.M. case. Attorney Reilly agreed to satisfy any
remedial sanctions that might be assessed by the circuit court in
the E.M. case.
¶60 The hearing on the appropriate sanction to impose for
Attorney Reilly's admitted misconduct was held on January 4, 2019.
The referee issued his report and recommendation on April 29, 2019.
The referee found, by virtue of the stipulation, the OLR had proved
by clear, satisfactory, and convincing evidence that Attorney
Reilly committed the five counts of misconduct alleged in the OLR's
complaint.
¶61 With respect to Attorney Reilly's representation of
E.M., the referee said that Attorney Reilly justified his actions
by suggesting he was acting only on his client's behalf in making
the disbursements. The referee disagreed, saying since the
disbursements were used to make payments on debts not included in
the divorce judgment, Attorney Reilly was enabling his client to
violate the circuit court's order. The referee also said Attorney
Reilly used some of the funds to pay his own fees and in the case
of the proceeds from the car sale, he provided his law firm with
a $25,000 retainer to represent E.M. in her criminal matter. The
referee said, "Absolute compliance with a court's decisions and
orders is at the foundation of our legal system. Neither litigants
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No. 2018AP1176-D
nor attorneys can pick and choose which court orders they decide
to follow and which they do not."
¶62 With respect to Attorney Reilly's representation of
J.D'A., the referee said since Attorney Reilly was aware of
J.D'A.'s financial situation, it was highly inappropriate for him
to present her with a bill which he knew she could not pay when
she retained new counsel. The referee said the only explanation
for presenting the bill was that Attorney Reilly wanted to harass
J.D'A. for purposes of retaliation because he was angry that she
obtained a new attorney. The referee also said:
Additionally, Reilly must have known that it would be
inappropriate for [J.D'A.] to pay for Reilly's own
defense in the adversary case. It was Reilly's own
disregard for the power of the Automatic Stay that got
Reilly in trouble with the Bankruptcy Court. Therefore,
Reilly was responsible for his own representation.
¶63 The referee said there was no question that all of the
acts of misconduct in both cases were intentional. The referee
said Attorney Reilly knew he should comply with the court order in
the E.M. case and deliver the funds he had received to the
conservator, but he intentionally chose not to do so. The referee
said Attorney Reilly also knew the provisions of the divorce
judgment and he chose to disregard them. The referee further said
that Attorney Reilly knew he could not represent both himself and
E.M. at the same time in the same case, yet he did not withdraw
from representing E.M. as was required. With respect to Attorney
Reilly's representation of J.D'A., the referee said that Attorney
Reilly knew he had no right to retain his client's file when she
hired a new attorney, and he also knew he could not charge his
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No. 2018AP1176-D
client for the time he spent defending himself in the adversary
case in bankruptcy court.
¶64 The referee said Attorney Reilly appeared to minimize
the extent of injury caused by his actions in both cases and his
theory seems to be he provided good legal representation to both
clients. The referee said Attorney Reilly also says he returned
the money to E.M.'s marital estate after the contempt finding, and
he did not try to collect the money that he claimed J.D'A. owed
him so little or no harm was done to either client. The referee
said:
Reilly is mistaken. First of all, by depleting the
[E.M.'s] marital estate on unauthorized expenditures
(including payments to himself) he prevented the proper
payment of the martial debts thereby exposing [M.M.] to
a variety of credit problems. Additionally, there is no
way to know what effect Reilly's cavalier attitude
toward the family court's orders had upon [E.M.'s]
bizarre behavior and her own disregard for the authority
of the court. In any case, Reilly was far from a shining
example for his client.
By giving [J.D'A.] the excessive bill in retaliation for
getting a new attorney and by asking her to sign a
consent for entry of judgment for the bill, Reilly
obviously caused [J.D'A.] to have considerable concern
over how she was going to either pay the bill or fight
its payment in court. Even though Reilly asserted later
that he was not serious about the bill, neither [J.D'A.]
nor her attorney knew this to be the case at the time.
Also, by failing to promptly turn over her divorce file,
Reilly impeded William's ability to best represent her
client in her efforts to collect needed child support.
Though Williams finally did get the file, after being
harassed by Reilly, the file was incomplete. This meant
extra work for Williams and, perhaps, a delay in getting
the support payments.
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No. 2018AP1176-D
¶65 The referee noted that Attorney Reilly has two prior
reprimands, a private reprimand in 1985 and a public reprimand in
2004. The referee said Attorney Reilly improperly used some of
E.M.'s funds to pay his law firm's fees in excess of the amount
due and to pay a retainer to his own law firm in E.M.'s criminal
case. The referee said Attorney Reilly's violation of the M.
divorce judgment was ongoing and ended only when the circuit court
intervened and found Attorney Reilly in contempt. The referee
said although Attorney Reilly admitted to all of the allegations
contained in the OLR's complaint, it was clear he still felt some
of his behavior in the E.M. case was justified. The referee said
while it is not clear that E.M. was a "victim" in the traditional
sense, there is no question E.M. was very vulnerable given her
mental condition, and it is presumed E.M. relied on Attorney Reilly
to make good legal decisions on her behalf. The referee said
J.D'A. was certainly economically vulnerable when Attorney Reilly
sought to collect his bill in an inappropriate manner and for an
inappropriate amount. The referee noted that Attorney Reilly had
actively practiced law for 53 years and was a founding member of
his law firm, so he had substantial practice in the law.
¶66 As mitigating factors, the referee said Attorney Reilly
was cooperative throughout the OLR proceeding. The referee noted
Attorney Franklyn Gimbel testified on behalf of Attorney Reilly at
the sanctions hearing and according to Attorney Gimbel, who has
known Attorney Reilly for 50 years, Attorney Reilly is an
outstanding lawyer with a reputation for taking hard cases and he
has served on the Committee for the Revision of the Code of
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No. 2018AP1176-D
Professional Responsibility of the Wisconsin Bar Association. The
referee also noted that after Attorney Reilly was found to be in
contempt of court, his law firm did repay over $61,000 to E.M.'s
marital estate. The referee said that Attorney Reilly is obviously
sorry he finds himself in the situation he is now in and says he
regrets his behavior in both matters.
¶67 The referee ultimately recommended a 60-day license
suspension. He said it is very important that Attorney Reilly
realize that disregarding the circuit court's authority, as he did
in the E.M. case, cannot be tolerated if our legal system is to
properly function. The referee also said that Attorney Reilly
must realize he cannot let his temper get the best of him in his
dealings with his clients and his fellow attorneys.
¶68 The referee said even if Attorney Reilly perceived
himself poorly used by J.D'A.'s act of hiring a new attorney, he
had no right to harass his client and her new attorney, to withhold
parts of the file, or to threaten his client using questionable
debt collection practices. In addition, the referee said the
sanction imposed on Attorney Reilly must deter other attorneys
from acting improperly in the practice of law. The referee said,
"Consistent with the concept of progressive discipline and
consistent with the seriousness of the offenses outlined in the
Complaint, a loss of practice privileges is required." The referee
said a 60-day suspension was reasonable and would meet the goals
of educating both the offending lawyer and other lawyers of the
need to fully comply with the Rules of Professional Conduct for
attorneys. The referee further recommended that Attorney Reilly
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No. 2018AP1176-D
pay the full costs of the proceeding and that he be ordered to
fully comply with the circuit court's order in the E.M. case.
¶69 In his appeal, Attorney Reilly argues that a suspension
is an excessive sanction for his admitted misconduct and that a
public reprimand is an appropriate and sufficient level of
discipline. Attorney Reilly accuses the referee of unfairly
extending the factual record to fit his view that Attorney Reilly
is "a bad actor." Attorney Reilly says he never set out to commit
misconduct. He says with respect to the E.M. case, E.M. was an
unusually troublesome client. He notes Judge Malloy opined that
E.M. has serious mental health issues. Attorney Reilly said that
E.M. went on a $74,000 shopping spree, forged checks, was jailed
multiple times for contempt, and finally tried to arrange for
someone to harm both her ex-husband and Judge Malloy.
¶70 Attorney Reilly says while the divorce judgment
attempted to bring some order to E.M.'s financial life by
prioritizing certain debts, allocating money to address them, and
appointing Scribner Cohen to manage her money, the judgment of
divorce could not have anticipated E.M.'s criminal conduct.
Attorney Reilly said, "Suddenly, [E.M.] was in need of criminal
defense, and Attorney Reilly had to think creatively about how to
fund it. Attorney Reilly believed at the time that selling the
Land Rover was an acceptable course of action, though ultimately
this proved not to be the case." Attorney Reilly said the
situation was chaotic, and although he does not contest the fact
that his actions were inconsistent with the express terms of the
judgment of divorce, he says the disbursements he made were
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No. 2018AP1176-D
legitimate expenses and his actions "were the product of having to
respond to urgent, bizarre, and unforeseeable circumstances, and
the actions he took were for [E.M.'s] benefit. They were
misconduct, but without malicious intent."
¶71 With respect to J.D'A., Attorney Reilly said he knew
very well she was in dire financial straits. He again agrees he
did not handle the matter properly, and he says he did not expect
the invoice he presented to Attorney Williams to be paid. He says,
his "effort to collect an unreasonable fee was half-hearted, at
most, and caused no harm to the client." Attorney Reilly also
admits he did not turn over J.D'A.'s file as he should have when
Attorney Williams requested it, and he agrees he should have borne
the cost of copying the file.
¶72 Attorney Reilly argues that although he has previously
received two reprimands, those events are far in the past and
concern conduct unrelated to the present matter. He disagrees
with the referee that he acted with a dishonest or selfish motive,
and he disputes the fact that his actions amounted to a continuing
pattern of misconduct.
¶73 Attorney Reilly agrees that E.M. is vulnerable, but he
says he worked on her behalf and for her benefit and says she is
not his victim. He says that to the extent there is a victim in
this case, it is J.D'A. "who was the recipient of a piece of
passive-aggressive correspondence from Attorney Reilly. She was
certainly financially vulnerable, but she was victimized only to
the extent that she received a request to consent to fees. She
did not consent, and therefore suffered no financial harm."
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No. 2018AP1176-D
¶74 Attorney Reilly says there are numerous mitigating
factors in this case, including his timely good faith effort to
rectify the consequences of his misconduct; his cooperation
throughout the proceeding; his character, reputation, and history
of service to the State Bar; the fact he has already been
sanctioned in the E.M. matter in the form of a contempt order; the
fact that he is remorseful for his misconduct; and the fact that
15 years have passed since he received his last reprimand.
¶75 Based on all these factors, Attorney Reilly argues that
a public reprimand would be an appropriate level of discipline.
In support of this argument, he points to In re Disciplinary
Proceedings Against Tjader, 2018 WI 96, 384 Wis. 2d 51, 918
N.W.2d 418, in which an attorney with substantial experience in
the practice of law and two prior reprimands received a public
reprimand after stipulating to six counts of misconduct involving
three clients.
¶76 The OLR argues that the 60-day suspension recommended by
the referee is an appropriate level of discipline. The OLR
acknowledges that the referee's report contains some minor
mistakes of fact in a very fact intensive case. For instance, the
OLR notes the referee stated that the Ameritrade funds were applied
to pay items not listed in the divorce judgment and did not pay
any of the items that were listed, when in fact, some of the
Ameritrade funds were used to pay some of the debts listed in the
divorce judgment. The OLR says the important point the referee
was making was that many of the expenses not in the divorce
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No. 2018AP1176-D
judgment were paid by Attorney Reilly, leaving a number of debts
specified in the judgment of divorce unpaid.
¶77 The OLR says the referee properly considered the nature
of Attorney Reilly's misconduct and considered both aggravating
and mitigating factors. The OLR says Attorney Reilly disobeyed a
court order on multiple occasions, ignored a conflict of interest,
tried to collect an unreasonable fee, and failed to turn over a
client's file. The OLR says that Attorney Reilly's conduct is
analogous to that In re Disciplinary Proceedings Against Marchan,
2018 WI 30, 380 Wis. 2d 598, 910 N.W.2d 531 in which an attorney
received a six-month suspension for, among other things,
attempting to collect an unreasonable fee after not having
previously billed the client and, upon termination of
representation, refusing to give the client the file unless the
client agreed to make a copy for Attorney Marchan at the client's
expense.
¶78 The OLR says whatever sanction this court imposes should
impress upon Attorney Reilly the seriousness of his misconduct and
should deter other attorneys from committing similar misconduct.
The OLR says the record supports the referee's recommendation of
a 60-day suspension and a requirement that Attorney Reilly be
ordered to fully comply with the trial court's order in the E.M.
case regarding the amount to be repaid by Attorney Reilly to E.M.'s
estate.
¶79 In his reply brief, Attorney Reilly appeals to this
court's sense of proportionality. He again notes that he
stipulated to all of the counts in the complaint. He says to the
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No. 2018AP1176-D
extent money was to be repaid, it has been. He says the lasting
effects of his misconduct, to the extent they exist, truly are
minimal. He says he acknowledges his actions were wrongful. He
says his prior discipline is remote in time. He says the referee's
and the OLR's allegations of selfish motive are at best attenuated.
He says under the particular circumstances presented here, a 60-
day suspension is excessive and a public reprimand would be an
appropriate level of discipline.
¶80 A referee's findings of fact are affirmed unless 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 sanction
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.
¶81 There has been no challenge to any of the referee's
findings of fact, and accordingly we adopt them. We further agree
with the referee's conclusions of law that Attorney Reilly violated
the Supreme Court Rules set forth above.
¶82 Turning to the appropriate level of discipline, we
conclude that the 60-day suspension recommended by the referee is
an appropriate sanction for Attorney Reilly's misconduct.
¶83 Although no two disciplinary proceedings are identical,
we find this case to be somewhat analogous to In re Disciplinary
Proceedings Against Hudec, 2019 WI 39, 386 Wis. 2d 371, 925
N.W.2d 540. In that case, an attorney with 40 years of experience
who had a series of private and public reprimands received a 60-
28
No. 2018AP1176-D
day suspension after stipulating to six counts of misconduct
arising out of two client matters. The misconduct included failing
to act with reasonable diligence and promptness in representing a
client; failing to keep a client reasonably informed about the
status of the matter; and failing to make a reasonably diligent
effort to comply with discovery requests.
¶84 This court has long adhered to the concept of progressive
discipline in attorney regulatory cases. See In re Disciplinary
Proceedings Against Netzer, 2014 WI 7, ¶49, 352 Wis. 2d 310, 841
N.W.2d 820. Even though Attorney Reilly has not been disciplined
since 2004, this is his third disciplinary proceeding. The
misconduct at issue here is serious and involved Attorney Reilly
intentionally disregarding a circuit court divorce judgment and
disregarding the automatic stay in a bankruptcy case. Imposing
another reprimand would unduly depreciate the seriousness of the
misconduct at issue.
¶85 We also agree with the referee that Attorney Reilly
should be required to fully comply with any future circuit court
orders in the E.M. case and should be required to satisfy any
additional financial obligations that may be ordered. As is our
usual custom, we find it appropriate to assess the full costs of
the proceeding against Attorney Reilly.
¶86 IT IS ORDERED that the license of Richard E. Reilly to
practice law in Wisconsin is suspended for a period of 60 days,
effective April 2, 2020.
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No. 2018AP1176-D
¶87 IT IS FURTHER ORDERED that Richard E. Reilly shall be
required to satisfy any additional financial obligations that may
be ordered by the circuit court in the E.M. case.
¶88 IT IS FURTHER ORDERED that Richard E. Reilly 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.
¶89 IT IS FURTHER ORDERED that within 60 days of the date of
this order, Richard E. Reilly shall pay to the Office of Lawyer
Regulation the costs of this proceeding, which are $15,830.87 as
of September 5, 2019.
¶90 IT IS FURTHER ORDERED that compliance with all
conditions of this order is required for reinstatement. See
SCR 22.28(2).
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No. 2018AP1176-D.akz
¶91 ANNETTE KINGSLAND ZIEGLER, J. (dissenting). While I
agree that Attorney Reilly's conduct warrants more than a public
reprimand, I would impose a 30-day suspension. In In re
Disciplinary Proceedings Against Schnitzler, 140 Wis. 2d 574, 412
N.W.2d 124 (1987), this court adopted the policy of imposing a
minimum 60-day period of suspension, in large part because it
concluded a 30-day suspension period was not sufficient time for
an attorney to notify clients, courts, administrative agencies,
and attorneys for opposing parties of the suspension. The advent
of electronic communications has largely obviated this concern.
Adhering to the policy of 60-day minimum suspension deprives the
court of the ability to impose an appropriate level of discipline
commensurate with the particular facts of each case.
¶92 Accordingly, I respectfully dissent.
¶93 I am authorized to state that Justice REBECCA GRASSL
BRADLEY joins this dissent.
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No. 2018AP1176-D.akz
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