Florida Supreme Court suspends lawyer for 3 years rather than 90 days; confidentiality gives way to fiduciary obligations when holding money in trust for non-client.  [Added 12/13/11]

    Lawyer represented developer Meyer in connection with a “financing device” referred to as a “standby letter of credit.”  The underlying facts were complex and involved a number of parties.  Investors were solicited and apparently informed that the funds they invested would be held in Lawyer’s trust account and then returned to them along with “exceptional interest.”  At some point Lawyer prepared and signed 5 letters addressed to possible investors.  The letters inaccurately suggested, however, that the 5 recipients had already provided their funds to Lawyer.  The funds that were received were deposited in Lawyer’s trust account and later disbursed by him upon instructions from Meyer.  None of the investors were notified or gave their permission before the disbursement occurred.

    The Bar charged Lawyer with violations of Rule 4-8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation) and Rule 5-1.1(b) (lawyer must hold property of others with care required of professional fiduciary).  The referee before whom the case was tried recommended that Lawyer be found guilty of violating Rule 5-1.1(b).  The referee recommended that Lawyer be found not guilty of violating Rule 4-8.4(c) because Lawyer “acted negligently and, thus, did not intend to engage in misrepresentation.”  The recommended discipline was a 90-day suspension followed by a 3-year probation.  The Bar sought Florida Supreme Court review.

    The Court approved the guilty recommendation regarding the trust accounting violations but disapproved the not-guilty recommendation regarding Rule 4-8.4(c).  The Court also suspended Lawyer for 3 years instead of 90 days.

    The Court rejected the referee’s finding that Lawyer acted negligently rather than intentionally.  Citing its precedent, the Court stated that “[t]he motive behind the attorney’s action is not the determinative factor.  Rather, the issue is whether the attorney deliberately or knowingly engaged in the activity in question.”  (Citations omitted.)  The actions Lawyer took (e.g., writing and signing the letters, transferring money out of his trust account) were deliberately or knowingly engaged in, and so his conduct was intentional and violated Rule 4-8.4(c).

    The Court did not accept Lawyer’s contention that his conduct concerning the letters could not violate the rule unless it was proven that someone relied on them.  “Deceitful conduct does not have to be successful in order to be found dishonest.”

    Lawyer also asserted that Meyer was his client and so he could not provide the investors with the information that they requested regarding the status of their funds.  The Court disagreed, noting that Lawyer owed fiduciary duties to the investors.  “[L]awyers often hold funds in escrow where their client is one principal and a non-client is another principal party.  By undertaking to do so, the lawyer establishes a new legal relationship with the principal parties either by an expressed agreement or by an agreement implied in law.  The relationship that is established is one of principal and agent, in which the lawyer is an agent of, and owes a fiduciary duty to, all of the principals.  Absent a written agreement, the law implies that the attorney will know the conditions of the principals’ agreement and will exercise reasonable skill and ordinary diligence in the holding and delivering of the escrowed funds in accordance with that agreement.”

    In suspending Lawyer for 3 years, the Court stated:  “[Lawyer] misused his status as an attorney to harm members of the public.  He caused these individuals to believe that their funds would be safe in his attorney trust account, yet he intentionally disbursed their funds without their knowledge or consent.  [Lawyer]’s flagrant misuse of his position as an attorney, by which he purposefully lulled members of the public into thinking their funds would be safe in his account, merits a severe sanction.”  Florida Bar v. Watson, __ So.3d ___ (Fla., No. SC09-2022, 12/8/2011).

Florida Supreme Court disbars lawyer for multiple trust account violations.  [Added 4/8/11]  --  Florida Bar v. Mirk, 64 So.3d 1180 (Fla. 2011).

Florida Supreme Court disciplines lawyer who allowed non-lawyer to have signatory authority on escrow account.  [Added 6/10/10]  --  Florida Bar v. Hines, 39 So.3d 1196 (Fla. 2010).

Florida Supreme Court holds that lawyer whose trust account check to client has not cleared has duty to stop payment when served with writ of garnishment seeking those funds.  [Added 5/2/08]  --  Arnold, Matheny and Eagan, P.A. v. First American Holdings, Inc., 982 So.2d 628 (Fla. 2008).

Lawyer who intentionally misappropriated trust funds, but had "impaired judgment" due to medications and mental health difficulties, is suspended rather than disbarred.  The Florida Bar v. McFall, 863 So.2d 303 (Fla. 2003).