FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
Robert L. Thompson Donald R. Lundberg, Executive Secretary
Fort Wayne, Indiana Dennis K. McKinney
115 West Washington Street
Indianapolis, Indiana 46204
IN THE MATTER OF ) ) CASE NO. 02S00-0102-DI-94 FRANKLIN A. WEBSTER )
18. Webster, therefore, had the right to retain possession of monies from all
accounts collected by him on behalf of [the leasing company] as an attorney's
lien until his fees for special services performed by him for the benefit
of [the leasing company], such as appeals, bankruptcy litigation, replevin, and defense of
counter claims, had been paid.
19. In spite of the fact that Webster's notice to Plaintiff of his
claim of an attorney's lien was made long after he started withholding funds
collected for [the leasing company] and was not specific as to the accounts
or amounts affected, the lien was valid.
23. Webster's payments to himself of disputed, and not previously judicially established, attorney fees out of funds collected for [the leasing company] without the consent and knowledge of [the leasing company] constituted criminal conversions under I.C. 35 - 43 - 4 3.
When the trial court's judgment was final and after the respondents unsuccessful appeal
of the trial court's judgment to the Indiana Court of Appeals and his
unsuccessful petition for transfer to the Indiana Supreme Court, he withdrew the remainder
of the funds from his retirement account and paid the remainder to the
leasing company, with interest and attorney's fees. He reported the funds he
withdrew from his retirement account to pay the leasing company as income to
him on his 1998 U.S. Individual Income Tax Return in the form of
a taxable gross distribution from his retirement account.
The hearing officer found that the respondent violated Ind.Professional Conduct Rule 1.4(a) See footnote by failing to keep his client adequately informed as to the status of the collection matters after the fee dispute arose; Prof.Cond.R. 1.15(b) See footnote by failing promptly to notify the client of funds he had collected on its behalf but that he was keeping pursuant to his attorney retaining lien for uncompensated legal services; and Prof.Cond.R. 1.15(c) See footnote for depositing the disputed funds in a non-trust account containing the respondents own funds. We agree and find that the respondent violated Professional Conduct Rules 1.4(a), 1.15(b), and 1.15(c).
The hearing officer further concluded that the respondent did not violate Prof.Cond.R. 8.4(b), which prohibits lawyers from committing criminal acts which reflect adversely on their honesty, trustworthiness, or fitness as lawyers in other respects, by converting the clients funds. Specifically, the hearing officer found that a finding of criminal conversion requires proof of both unauthorized control over property of another and that the unauthorized control was knowing or intentional. See footnote The hearing officer found that the respondents claim of entitlement to the funds as attorney's fees for the quantum merit value of special legal services he provided demonstrates the respondents lack of knowing and intentional unauthorized control of the clients funds. He found that the respondent notified the client of his assertion of an attorneys retaining lien, that the respondent did not use the funds for purposes unrelated to the client, and that when the trial court determined that a portion of the funds belonged to the client, the respondent promptly remitted them to the client.
In its petition for review, the Commission argues that the respondents transfer of the disputed funds from the GCI account, first into his general law office operating account and later to his retirement account, constituted conversion.
The respondent retained control of the disputed funds pursuant to a good faith assertion of an attorneys retaining lien. We note that such liens are recognized both by statute and case law. See footnote However, the assertion of such a lien does not authorize an attorney to transfer funds to personal use. The respondents ignorance about his rights relative to asserting a lien was sufficiently profound to avoid our finding that he knowingly exercised unauthorized control over the disputed funds.
The respondents stewardship of the disputed funds during his assertion of the lien was defective. Professional Conduct Rule 1.15(c) clearly provides that, where a lawyer, in the course of a representation, is in possession of property in which both the lawyer and another person claim interests, the property is to be kept separate by the lawyer until there is an accounting and severance of interests. The respondent failed to keep the funds separate; hence our finding that he violated Prof.Cond.R. 1.15(c). However, we do not find that his commingling of the disputed funds amounted to their conversion.
We now turn to the issue of proper discipline. The hearing officer recommended that the respondent be suspended from the practice of law in this state, but for no more than six months. In other cases in which lawyers commingled client funds with their own and failed promptly to notify clients of funds in which the clients had an interest, this Court has not infrequently imposed a six-month suspension. See, e.g., Matter of Tracy, 676 N.E.2d 738 (1997) (depositing client funds into lawyers personal checking account, by falsely stating to disciplinary commission that he had reimbursed the Immigration and Naturalization Service (INS) for all monies owed to it due to dishonored checks, and by practicing law before the INS without having an active license to practice law); Matter of Helmer, 634 N.E.2d 56 (1994) (failing promptly to notify client of receipt of funds in which client has an interest, failing to promptly deliver funds to client, and failing to hold property of clients separate from own property). In the present case, the respondent mishandled substantial funds in which both he and his client claimed an interest. Although no permanent financial harm befell the client due to the respondents actions, the funds, held as they were in a nontrust account, were placed at risk due to the respondents handling of them. We also note that the respondent promptly remitted the disputed funds to the client once the trial courts award was final and all attempts at appeal concluded.
We are also cognizant of the fact that the hearing officer found several factors in aggravation of the respondents misconduct, including his refusal to acknowledge his actual violations of Prof.Cond.R. 1.4(a) and 1.15(b), and his substantial experience in the practice of law at the time of the misconduct at issue here. In light of all of these factors, we conclude that a suspension from the practice of law for a period of six months is appropriate.
It is, therefore, ordered that the respondent, Franklin A. Webster, is suspended from the practice of law in this state for a period of six (6) months, beginning December 1, 2002, at the conclusion of which he shall be automatically reinstated.
The Clerk of this Court is directed to provide notice of this order in accordance with Admis.Disc.R. 23(3)(d) and the hearing officer in this matter, and to provide 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 Clerk of each of the United States Bankruptcy Courts in this state with the last known address of the respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against the respondent.
Shepard, C.J., and Dickson and Sullivan, JJ., concur.
Boehm and Rucker, JJ., dissent as to sanction, and would instead impose a 30-day suspension from the practice of law.
(a) A lawyer shall keep a client reasonably informed about the status of
a matter and promptly comply with reasonable requests for information.
(b) Upon receiving funds or other property in which the client or third
person has an interest, a lawyer shall promptly notify the client or third
person. Except as stated in this rule or otherwise permitted by law
or by agreement with the client, a lawyer shall promptly deliver to the
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.
(c) When in the course of representation a lawyer is in possession of
property in which both the lawyer and another person claim interests, the property
shall be kept separate by the lawyer until there is an accounting and
severance of their interests. If a dispute arises concerning their respective interests,
the portion in dispute shall be kept separate by the lawyer until the
dispute is resolved.
"A person who knowingly or intentionally exerts unauthorized control over property of another
person commits criminal conversion, a Class A misdemeanor."