17.13. Reading: Mississippi Bar v. Coleman, 849 So. 2d 867 (Miss. 2002)

Reading Guide

Preparing for the Reading:
Misuse of client funds is (as the Mississippi Supreme Court calls it) a “cardinal sin.” Before reading the case you need to be familiar with the difference between a trust fund and an operating account. A trust fund is a bank account where money received from clients (unearned fees) and from third parties (settlement funds) are placed. The operating account is a bank account in which earned fees are placed. Comingling these funds is a significant ethical violation.

Issues:
– What happened here — how did the lawyer get to the point of being accused of commingling funds?
– How did Coleman get reported to the bar?
– Why does the court call commingling client funds the “cardinal sin”?
– Was the client harmed as a result of the commingling?
– What sanction was imposed?
– What was Justice Cobb’s position? What sanction would she impose?

Mississippi Bar v. Coleman

Mississippi Supreme Court, 2002
849 So. 2d 867

OPINION

McRae, P.J., for the Court (En Banc).

1. Attorney Joe Price Coleman was charged with commingling, misappropriation and conversion of client funds in violation of Rules 1.15 and 8.4 (a, c, and d) of the Mississippi Rules of Professional Conduct. The Complaint Tribunal (Tribunal) found a Rule 1.15 violation only and suspended Coleman from the practice of law for thirty (30) days and ordered that he receive a public reprimand. Both the Mississippi Bar (the Bar) and Coleman appeal.

2. We affirm as to Rule 1.15, but reverse as to Rules 8.4 (a, c, and d) and therefore order that Coleman is suspended from the practice of law for three (3) years.

Statement of the Case

3. The Bar brought a complaint against Coleman alleging violation of Rules 1.15 and 8.4(a), (c), and (d) of the Rules Professional of Conduct. … The Committee found that Coleman violated Rule 1.15, but not Rules 8.4(a), (c), and (d). He was suspended from practice for thirty days, and ordered to receive a public reprimand.

4. The Bar asserts that the Tribunal erred in failing to find, in addition to the Rule 1.15 violation, that Coleman misappropriated and converted those commingled client funds for his own personal use in violation of Rules 8.4(a), (c), and (d). The Bar asserts this decision is arbitrary and capricious as it is against the overwhelming weight of the evidence presented. …

Facts

6. The facts of this case arose during Jackson attorney Joe Price Coleman’s change of employment from the law firm of Daniel Coker Horton & Bell, P.A. (Daniel Coker) to the Baker, Donelson, Bearman & Caldwell, P.C. (Baker Donelson) law firm. On March 24, 2000, Coleman, as administrator of the Arkansas Shared Counsel Defense Fund (Fund), which was administered by Daniel Coker, wrote and signed a check in the amount of $14,904.94 payable to the Fund, which he signed and then deposited into his personal checking account on March 28, 2000. The purpose of the draft was to move the proceeds of that account to the Mississippi Hearing Loss Joint Defense Fund of which Raymond Brown was administrator. Coleman claims he intended to deliver the funds to Raymond Brown the following week, but that opportunities to do so in a timely manner were impeded by other responsibilities, deadlines, travel, and by the process of changing firms. Additionally, Coleman claims he was concerned that Daniel Coker would cancel the check since many of the Fund clients had not formally transferred their files to Coleman’s new firm.

7. Seventy-two (72) checks were written from Coleman’s personal bank account between the time the deposit was made and the time the money was finally delivered to Raymond Brown. Most of these were written by Mrs. Coleman. Again, at the time of deposit, the Colemans’ account had a negative balance of over $12,000. Coleman’s Banker testified that it was not unusual for Coleman’s account to be in over-draft and that no consequence would have ever resulted, as the Colemans maintained overdraft protection. He also testified that no check ever went unpaid by the bank.

8. Coleman finally delivered the money to Raymond Brown on May 1, 2000. On the very same day, Daniel Coker mailed a letter to Coleman regarding the money and requesting that he call the Firm. The letter was received at Coleman’s new firm on May 2. On May 3, 2000, Coleman called Daniel Coker and reported that the money had been transferred to Raymond Brown. Because the funds had been placed in Coleman’s personal account, however, Daniel Coker expressed its responsibility to report the matter to the Bar. Coleman desired to participate in the report and acting jointly with Daniel Coker reported the matter to the Bar. Daniel Coker never filed a written complaint.

9. Following Daniel Coker’s oral report, Complaint Counsel for the Bar drafted a “Memorandum to the Committee” (Memo) dated May 24, 2000, summarizing the results of his investigation into the matter. The memo was entitled “Commingling and Misappropriation of Funds.”

Standard of Review

12. The standard of review in this matter is de novo. Cotton v. Miss. Bar, 809 So. 2d 582, 585 (Miss. 2000). This Court has “exclusive jurisdiction and inherent jurisdiction of matters pertaining to attorney discipline.” Broome v. Miss. Bar, 603 So. 2d 349, 354 (Miss. 1992). This Court sits as the trier of fact and is not bound by a substantial evidence or manifest error rule. Asher v. Miss. Bar, 661 So. 2d 722, 727 (Miss. 1995). However, deference is given to the Tribunal’s findings on the basis that it was the exclusive trier of credibility and demeanor, which cannot be duplicated on appeal to this Court. Stegall v. Miss. Bar, 618 So. 2d 1291, 1294 (Miss. 1993)

…

Discussion

III. WHETHER THE COMPLAINT TRIBUNAL ERRED IN FAILING TO FIND COLEMAN IN VIOLATION OF RULES 8.4 (a, c, and d); AND IF SO, THEREFORE IMPOSED INADEQUATE SANCTIONS.

24. The Bar asserts that the Tribunal, despite clear and convincing evidence, failed to find that Coleman also violated Rule 8.4 (a, c and e) in addition to Rule 1.15. These Rules read as follows:

Rule 1.15 Safekeeping Property.

(a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property …

Rule 8.4. Misconduct.

It is professional misconduct for a lawyer to:

(a) violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of another …

(c) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation;

(d) engage in conduct that is prejudicial to the administration of justice.

25. In assessing disciplinary violations, this Court considers: (1) the nature of the misconduct involved; (2) the need to deter similar misconduct; (3) the preservation of the dignity and reputation of the profession; (4) the protection of the public; (5) the sanctions imposed in similar cases; (6) the duty violated; (7) the lawyer’s mental state; (8) the actual or potential injury resulting from the misconduct; and (9) the existence of aggravating or mitigating factors. Miss. Bar v. Walls, 797 So. 2d 217, 219 (Miss. 2001) (citing Rogers v. Miss. Bar, 731 So. 2d 1158, 1171 (Miss. 1999). “Worthy of most consideration when contemplating sanctions is vindicating ‘in the eyes of the public the overall reputation of the bar.’” Id. …

The duty violated

The nature of the misconduct involved

26. Commingling of client funds is the “cardinal sin” of the legal profession, whether done intentionally or not. … In many cases, it has been grounds for disbarment or denial of reinstatement. It is indeed the ultimate breach of fiduciary trust.

27. In the present case, the Tribunal found that Coleman unquestionably commingled client funds in violation of Rule 1.15. Indeed, Coleman admitted as much. Coleman testified, however, that he never intended to keep the money or convert it for his own personal use. Instead, he claimed that his job transition, the possible threat of Daniel Coker keeping the money, and his burdened schedule contributed to the delay in delivering the funds.

28. On the issue of intent, the Tribunal found that while Coleman could have “easily endorsed the Daniel Coker check to Raymond Brown, written his own personal check to Raymond Brown and promptly mailed either, or made a special trip” to deliver the funds, “there was no clear showing” that his actions demonstrated intent to misappropriate or convert the funds for his own use. We do not agree.

29. In Reid v. Miss. State Bar, 586 So. 2d 786, 788 (Miss. 1991), we found that:

When a lawyer receives and deposits in his trust account funds belonging to others, and prior to disbursing any of such funds to the lawful payees, the trust account shows a total deposit less than the amount he had been entrusted with, this supports the conclusion that the attorney has converted funds to an unauthorized and unlawful use…

30. We find Reid instructive in the present case. Coleman personally wrote the fund check out to himself and deposited it into his personal checking account. Coleman also knew for five weeks that the client’s money was in his personal account. He and his wife presented seventy-two checks on this personal account over the period of that five weeks which were paid in large measure from the clients’ money. This is simply unacceptable.

The need to deter similar misconduct

The preservation of the dignity and reputation of the profession

The protection of the public

31. This Court has repeatedly held that the primary purposes of Bar discipline are deterrence of future misconduct and the preservation of the legal profession’s reputation in the eyes of the public…

32. This Court has observed that:

There can be no legal profession in the absence of scrupulous honesty by attorneys with other people’s money. Public confidence here is vital. There may be worse sins, but the ultimate wrong of a lawyer to his profession is to divert clients’ and third parties’ funds entrusted to him to an unauthorized use. A lawyer guilty of such conduct exhibits a character trait totally at odds with the purposes, ideals and objectives of our profession.

Reid, 586 So. 2d at 788. We also said in this case, “[t]here can be no more damaging evidence … as to a lawyer’s fitness to practice law than mishandling a trust account.” Id. Further, “[t]here may be worse sins, but the ultimate wrong of a lawyer to his profession is to divert clients’ and third parties’ funds entrusted to him to an unauthorized use. A lawyer guilty of such conduct exhibits a character trait totally at odds with the purposes, ideals and objectives of our profession.” Id.

33. Indeed, the viability of the legal profession hinges upon the conservation of its character, a primary component of which is trust, an additional component of which is consistent and responsible self-regulation. No force of deterrence or public trust is served by inconsistent regulation. Discipline should be rendered consistently, and it should be maintained in order to satisfy disciplinary purposes. A thirty-day suspension on the facts of the present case fails to serve these purposes.

The lawyer’s mental state

34. Coleman’s mental state is not at issue in this case.

The existence of aggravating or mitigating factors

The actual or potential injury resulting from the misconduct

35. Coleman finally returned the money to appropriate hands, which mitigates in his favor. See Miss. Bar v. Gardner, 730 So. 2d 546, 547 (Miss. 1998) (repayment is a mitigating factor). Likewise, Coleman both initiated this proceeding with the Daniel Coker representatives and cooperated throughout the entire matter. With the exception of this incident, the record reveals that Coleman’s professional reputation is without blemish. He has been practicing for over 25 years and has not previously been charged with a disciplinary violation. Notably, he served on the Bar committee that facilitated the transfer from the Code of Professional Responsibility to the Rules of Professional Conduct. According to testimony before the tribunal, he is known as the kind of attorney an adversary can deal with on a handshake. These are all mitigating factors, but they cannot and do not aid Coleman in avoiding disciplinary action on these facts. In fact, he is the kind of attorney from whom we would naturally expect the highest regard for professional responsibility.

36. As to aggravating circumstances, the record is not revealing. Nor does it reveal any injury to third-parties as a result of Coleman’s personal use of the commingled funds.

Sanctions imposed in similar cases

***

40. While we do not find that Coleman should be disbarred, neither do we find that Coleman’s conduct warrants but a thirty-day suspension. The Tribunal is affirmed as to Rule 1.15, but reversed as to Rules 8.4 (a, c, and d). We find Coleman violated these Rules. We therefore order that Coleman be suspended from the practice of law for three years.

41. JOE PRICE COLEMAN IS HEREBY SUSPENDED FROM PRACTICING LAW IN THE STATE OF MISSISSIPPI FOR THREE YEARS.

PITTMAN, C.J., DIAZ, EASLEY AND CARLSON, JJ., CONCUR. GRAVES, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION. COBB, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED BY SMITH, P.J. WALLER, J., NOT PARTICIPATING.

COBB, J., concurring in part and dissenting in part:

45. The majority contends that Coleman’s eventual restitution of the misappropriated funds to the client is a mitigating factor, citing our case law for this proposition. See Miss. Bar v. Gardner, 730 So. 2d 546, 547 (Miss. 1998). But Gardner is an aberration in our jurisprudence on this question. “[R]estitution by an attorney of funds previously misappropriated does not mitigate the offense, particularly where the restitution has been made under pressure.” Cotton v. Miss. Bar, 809 So. 2d 582, 587 (Miss. 2000) (emphasis added)… Our opinion in Gardner failed to note Clark or Foote, or to support its reasoning on that point with any authority. I believe that these contrary authorities carry more weight than our momentary deviation. Why should the restitution to the client of what the attorney wrongly took be considered mitigation? Jail, not only disbarment, would otherwise confront the attorney. Therefore, restitution is uncertain evidence at best with regards to repentance and contrition.

46. Nor do I consider that Coleman’s reputation or service should mitigate his offense. The majority notes that he “served on the Bar committee that facilitated the transfer from the Code of Professional Responsibility to the Rules of Professional Conduct.” This makes his wrongdoing more egregious, not less. Surely if anyone should have known beyond doubt that what he was doing was absolutely unacceptable, it was Coleman. And yet, this knowledge did not deter him. Apparently he considered himself above the very rules which he had helped to adopt. …

53. I would disbar Coleman and let him pursue the arduous path to reinstatement if his calling to our profession is sincere. I therefore respectfully concur in part and dissent in part.

SMITH, P.J., JOINS THIS OPINION.