Booze, Bribery, and Conspiracy: Rhode Island Attorneys Behaving Badly
Thursday, September 19, 2013
Those cited for discipline include an attorney caught in one of the most prominent local corruption cases, a former state senator who used his wife’s grandmother’s name to improperly obtain mortgages and loans, a lawyer implicated a decades-long scheme to defraud the federal government in millions, and others who improperly obtained money to fuel gambling or substance abuse addictions.
Stealing from clients most common offense
The most common offense is using client money held in escrow for personal use, according to Roger Williams University law professor Peter Margolies, who teaches professional ethics and responsibility and recently helped revise the state code of conduct for attorneys.
“People have issues which they are not able to fully handle. Those problems lead them astray and they lose perspective,” Margolies said. “They think more about the short-term issue that is pre-occupying them. It might be something like gambling. It might be substance abuse.”
Another common offense is lying in a professional context, Margolies added. Then there are those who commit crimes that are unrelated to their professional work, but call into question their integrity and credibility to continue practicing law, such as the South Kingstown attorney who left the scene of an accident earlier this year and later pled guilty to two felonies and a DUI.
Margolies said such cases are not unique to Rhode Island.
But another attorney says they have been on the rise in recent years.
One factor is the economic downtown, which created added financial pressures that drove some attorneys to misuse client funds, according to former state prosecutor Bob Craven. He also blames addictions to gambling, drinking, and drugs for the increase in cases.
Another cause: the steep rise in the number of attorneys in the state. When Craven was admitted to the bar in the early 1980s, there were roughly 3,000 attorneys in the state. Now, he says there are triple as many to contend for about the same amount for work. For both new attorneys trying to make it and veterans who have lost business, raiding client funds has sometimes seemed like the only way to make ends meet, according to Craven, now a state rep from North Kingstown who still practices law.
Most complaints from ‘people who are unhappy with their lawyers’
The state Supreme Court sets the rules for professional conduct and makes final decisions on how attorneys are disciplined. The Office of Disciplinary cases reviews allegations of misconduct—everything from “an attorney who allegedly does not return a client’s phone call to misappropriation of funds, and other behavior in between,” according to state judiciary spokesman Craig Berke.
Of the complaints that the state receives, those that end in discipline are “more the exception than the rule,” Berke said. Records for the past two terms show the court took disciplinary action against two dozen local attorneys.
“The overwhelming majority of complaints received by the Office of Disciplinary Counsel are from people who are unhappy with their lawyers, unhappy with the process, the progress of their cases, the time it is taking or responsiveness to phone calls from client to lawyer,” Berke said. “Many of these are worked out by the office without taking the step of opening a formal investigation or file. Sometimes all it takes is a phone call.”
A need for ‘lawyer police’
Both Margolies and Craven had nothing but good things to say about the job the court’s chief disciplinary counsel is doing. But both also agreed there is room for improvement. “No system is perfect and it’s hard to guard against human frailty,” Margolies said. “That’s one of the problems you encounter in Rhode Island.”
Craven said the disciplinary office needs more resources. “It’s necessary but probably to some degree understaffed, not necessarily with lawyers, but with resources to be proactive,” Craven said.
Craven proposes hiring investigators to uncover potential cases of misconduct, instead of how the office operates now—reacting to complaints about attorneys. Investigators, he said, also could serve as a deterrent to misbehavior. “Lawyers would know there are lawyer police out there,” Craven said.
Craven suggests a number of possible reforms. For example, he believes that banks should handle the transfer of money from the buyer to the seller of a house. Failing that, he says attorneys should get the money they hold for their clients bonded. That way, a client will be insured against a rogue lawyer who makes off with their money.
He also thinks an expanded state disciplinary office could conduct regular audits of local attorneys who hold large amounts of client funds in escrow.
Disbarment isn’t the end
Disbarment is the most serious penalty the state Supreme Court can impose for professional misconduct by an attorney.
But someone who has lost their law license still has a chance to get it back. “Under Supreme Court rules, a disbarred attorney may apply for reinstatement after five years,” Berke said. “There is a rigorous review process for reinstatement and there is no guarantee it will take place.”
“I think there’s a heavy burden in cases of egregious abuse,” Margolies said.
A pattern of misbehavior also makes re-admittance to the bar an uphill battle, Margolies said. For those who have misused client funds repeatedly in order to fuel an addiction, he said justices will want to make sure the former attorney has fully recovered from it.
The longer the track record of misconduct, the harder it is to make a comeback, as former attorney Zvi Hershel Smith found out earlier this year. Smith was disbarred in 1998 after conviction on two counts of embezzlement. At the time he also had a record of three disciplinary actions with seven more pending.
In the intervening years, Smith had served his sentence, paid restitution to the victims, and spent time in Israel studying to become a rabbi, but the disciplinary counsel remained unconvinced that he should be readmitted, noting that he had paid back most of the money by raising money from donors and claimed that he was still entitled to some of the money anyway.
“Someone with that kind of lengthy track record is going to experience some difficulty trying to get readmitted to the bar—and justly so,” Margolies said.
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