Attorney for Respondent
Derek M. Cassady, pro se.
Attorney for the Indiana Supreme Court Disciplinary
Donald R. Lundberg, Executive Secretary
Dennis K. McKinney, Staff Attorney
Indiana Supreme Court
In The Matter Of
Derek M. Cassady, ________________________________
August 30, 2004
By failing to hold settlement proceeds in trust for a third-party medical provider
entitled to a portion of the proceeds, and instead by disbursing those earmarked
funds to himself and his client, Indianapolis attorney Derek M. Cassady violated the
Rules of Professional Conduct.
By agreed resolution with the Disciplinary Commission, the respondent today asks us to
approve a 30-day suspension for his attorney misconduct, with the entire period of
suspension stayed so long as the respondent complies with certain probationary terms.
Pursuant to Ind.Admission and Discipline Rule 23(11)(c), we approve the parties tendered resolution,
and herein recount the facts and circumstances of this case.
The respondents admission to the Bar of this state in 1994 confers disciplinary
jurisdiction of this matter.
The parties stipulate that the respondent settled a personal injury claim on behalf
of a client for $15,000 and placed the proceeds in his attorney trust
account. The respondent had signed an agreement with a third party medical provider
to the client that the respondent would withhold funds from any settlement to
pay the providers bill. That provider eventually amassed charges totaling $3,809.30 with
regard to the clients injuries. Due to the relatively small settlement amount, the
respondent and the provider agreed that the provider would accept a reduced fee;
however, they could not agree on the specific amount of the reduced fee.
The provider claimed it was owed $2,250 pursuant to the agreed reduction;
the respondent claimed they had agreed to settle the providers claim for $1,000.
The respondent ultimately forwarded to the provider a check for $1,000, with
the memo proclaiming, payment in full. The provider returned the check uncashed
to the respondent and demanded the $2,250.
Rather than attempt further negotiation to settle the dispute as to the amount
of the proceeds to which the third party was entitled, the respondent simply
divided the $1,000 he had earmarked for the third party between himself and
his client, paying his client $730 and keeping $270. Further, from his
attorney trust account, the respondent withdrew $10,000 in cash to pay the client
her share of the settlement proceeds, and took his own fee in cash
without using a check made payable to a named payee. The respondent
then advised the provider that he was no longer holding any funds from
While responding to the Commissions demand for response to the providers subsequent grievance,
the respondent admitted that his lawyer trust account ledger was sloppy, incomplete, and
often nearly illegible.
See footnote The respondent also admitted that he failed to comply with
Admis.Disc.R. 23(29)(a)(2) and (3), which establish procedures for maintenance of records of attorney
trust accounts and ledgers for such accounts.See footnote
Indiana Professional Conduct Rule 1.15(b) provides, in relevant part, that a lawyer shall
promptly deliver to a client or third person any funds or other property
that the client or third person is entitled to receive and, upon request
by the client or third person, shall promptly render a full accounting regarding
such property. Implicit in that obligation is that a lawyer hold disputed
funds in trust until the dispute is resolved so that the lawyer can
effect accurate disbursement.
Matter of Young and Allen, 802 N.E.2d 922 (Ind.
2004). We find that the respondent violated Ind.Professional Conduct Rule 1.15(b) by
failing to hold in trust a portion of the settlement proceeds to pay
the outstanding bill of the third-party provider, and instead by disbursing those disputed
funds to himself and his client. He also failed to comply with
the requirements of Admis.Disc.R. 23(29)(a)(2) and (3) as already described above, and Admis.Disc.R.
23(29)(a)(5) by making a cash withdrawal from his attorney trust account rather than
a withdrawal by check to a named payee.
The parties agree to a stayed 30-day period of suspension, with a one-year
period of probation (subject to terms) underlying the stay. The probationary terms
are geared toward ensuring that the respondent learns to manage an attorney trust
account, that he pays the provider its claim of $2,250, and that a
CPA oversees his trust account. The agreed sanction calls for automatic reinstatement
should the respondent successfully comply with the terms of his probation. In
light of the respondents obvious (and self-professed) shortcomings with regard to recognition of
and adherence to required attorney trust account procedures, we find that the probationary
terms are a sufficient method of protecting the public and the profession from
future similar transgressions by the respondent.
Accordingly, the respondent, Derek M. Cassady, is hereby suspended from the practice of
law in this state for a period of not fewer than thirty (30)
days, effective immediately, with the entire thirty days of said suspension to be
stayed, and the respondent placed on probation for one year, subject to the
following terms and conditions of probation:
The respondent will pay the medical provider the $2,250 it agreed to accept
as a reduction of his clients medical expenses.
The respondent will attend an ethics seminar with a trust account management section
of at least one hour in length.
The respondent will have his trust account monitored by a CPA who will
then report quarterly to the Commission on the respondents compliance with the Rules
of Professional Conduct and the Admission and Discipline Rules for lawyer trust accounts.
The respondent will comply in all respects with his obligations, duties and responsibilities
under the Indiana Rules of Professional Conduct.
The respondent will report to the Disciplinary Commission any changes in his business
or home address or employment within fourteen (14) days of such change.
The respondent will be responsible for any other costs arising from his probation.
In the event it is established pursuant to Ind.Admission and Discipline Rule 23(17.2)
that the respondent has violated the terms of his probation, then the stay
of his thirty-day suspension will be vacated and the respondent will be suspended
from the practice of law in Indiana for thirty days, with automatic reinstatement
to the practice of law thereafter.
The respondent will immediately report to the Disciplinary Commission any failure by him
to comply with the terms of his probation. Such report is to
be made in writing within fourteen days of the compliance failure and must
specifically identify the type and circumstance of his failure to comply with the
terms of his probation.
The Clerk of this Court is directed to provide notice of this order
in accordance with Admis.Disc.R. 23(3)(d), to the hearing officer, and to the clerk
of the United States Court of Appeals for the Seventh Circuit, the clerk
of each of the United States District Courts in this state, and the
clerks of the United States Bankruptcy Courts in this state.
Costs of this proceeding are assessed against the respondent.
In his response to the Commission, the respondent also stated:
There are scratch-outs [in my attorney trust account ledger], I have written counter-checks
and not properly reflected them, there are mathematical errors and parties are not
identified with the specificity needed. The ledger does not add back the
check [the provider] never accepted. I have no excuse or defense, and
looking back through it, I am at once ashamed of it.
There is no way I could go back and amend it to bring
it into compliance; it is too late.
Specifically, Admis.Disc.R. 23(29)(a)(2) and (3) provide:
(2) Every attorney shall maintain and preserve for a period of at least
five (5) years, after final disposition of the underlying matter, the records of
trust accounts, including checkbooks, canceled checks, check stubs, written withdrawal authorizations, vouchers, ledgers,
journals, closing statements, accounting or other statements of disbursements rendered to clients or
other parties with regard to trust funds or similar equivalent records clearly and
expressly reflecting the date, amount, source, and explanation for all receipts, withdrawals, deliveries
and disbursements of the funds or other property held in trust.
(3) The "ledger" required by this rule shall set forth a separate record
of each trust, client or beneficiary, the source of all funds deposited in
that account, the names of all persons for whom the funds are, or
were, held, the amount of such funds, the description and the amounts of
charges or withdrawals, and the names of all persons to whom such funds
Footnote: Admission and Discipline Rule 23(29)(a)(5) provides:
Withdrawals shall be based upon a written withdrawal authorization stating the amount of
the withdrawal, the purpose of the withdrawal, and the payee. The authorization
shall contain the signed approval of an attorney. Withdrawals shall be made
only by check payable to a named payee and not to "cash", or
by wire transfer. Wire transfers shall be authorized by written withdrawal authorization
and evidence by a document from the financial institution indicating the date of
the transfer, the payee and the amount.