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Attorney Grievance Com'n of Maryland v. Kahl

Court of Appeals of Maryland

January 29, 2014

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND
v.
Jeffrey David KAHL.

Page 104

Dolores O. Ridgell, Assistant Bar Counsel (Glenn M. Grossman, Bar Counsel, Attorney Grievance Commission of Maryland), for Petitioner.

Jeffrey David Kahl, pro se, for Respondent.

Argued before BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, McDONALD and BELL,[*] JJ.

BELL, C.J. (Retired).

[436 Md. 619] The petitioner, the Attorney Grievance Commission of Maryland (the petitioner), acting through Bar Counsel and pursuant to Maryland Rule 16-751(a),[1] filed, pursuant to Maryland Rule 16-751, a Petition for Disciplinary or Remedial Action against Jeffrey David Kahl, the respondent. In that petition, it alleged that the respondent violated Rules 1.15, Safekeeping Property,[2] 8.1, Bar Admissions and

Page 105

Disciplinary Matters,[3] and [436 Md. 620] 8.4, Misconduct,[4] of the Maryland Lawyers' Rules of Professional Conduct (" MRPC" ), as adopted by Maryland Rule 16-812; Maryland Rules 16-606.1, Attorney trust account record-keeping; [5] and 16-609, Prohibited

Page 106

transactions,[6] and Maryland [436 Md. 621]Code (1989, 2010 Repl, Vol.) ยง 10-306 of the Business Occupations and Professions Article (" BP" ).[7] We ordered, pursuant to Maryland Rule 16-752(a), that the matter be transmitted " to the Circuit Court for Baltimore County, to be heard and determined by Judge Mickey J. Norman, of the Third Judicial Circuit, in accordance with Maryland Rule 16-757."

Although personally served with the Petition for Disciplinary or Remedial Action, Interrogatories and Request for Admissions of fact and Genuineness of Documents, the respondent made no timely response, neither filing an answer to the petition nor otherwise responding to any of the petitioner's pleadings. Nevertheless, when the matter came on for a [436 Md. 622] hearing on the merits, he was permitted to participate: the respondent was allowed to, and did, cross-examine witnesses and he was offered the opportunity to submit proposed findings of fact and conclusions of law. He chose not to testify in his defense and he failed to propose findings of fact and conclusions of law for the court's consideration, however. Following the hearing, the hearing judge made findings of fact, as follows.

The respondent, who was admitted to the Maryland Bar on January 3, 2002 and, at all times relevant to this case, maintained an office for the practice of law in Baltimore County, in February 2004, joined with Richard K. Scott, who described the respondent as his best friend, to establish a law partnership, Scott & Kahl, L.L.C. Under their agreement, they were the only attorneys in the firm, " 100% of the legal fees generated by them would be shared 50/50 ... everything was 50/50, bills and profits." The parties received " draws" or salary twice a month, on the 15th and the 30th, to be taken from the firm's operating account, one of its two bank accounts, the other being an IOLTA, or trust, account. As explained, without contradiction, by Scott, who was familiar with the procedure for depositing and withdrawing funds from these accounts and whom the hearing judge determined " diligently maintained both bank accounts,"

" ... fees owed to the Firm for professional services were not paid directly from the trust account. Rather, monies in the trust account that the parties earned were then transferred into the

Page 107

operating account. Any fee disbursements owed to the partners were distributed from the operating account.... [A] Firm's computer kept the account records on spreadsheets, accessible by either partner.... In addition to the bi-weekly salary of $ 1,500, if either partner needed additional funds, ‘ the other would take the exact same amount.’ "

In December, 2009, Scott discovered several wire transactions, made in November and December, transferring funds from the firm's trust account to the respondent's personal account. Not having been advised of those transactions and [436 Md. 623] being unable to find evidence that the respondent was owed fees other than his draw, Scott confronted the respondent, who " ‘ told Scott that he had purchased stock options and needed the money right away to pay margin calls.’ " Accepting the respondent's expression of remorse, Scott did not further pursue the matter, giving the respondent a second chance. He did institute additional safeguards against misappropriation: he placed the firm's checkbook in the office safe, took the respondent's key to the safe, and reviewed the bank accounts more frequently.

Nevertheless, on May 19 and 28, 2010, the respondent transferred $1300 and $2000, respectively, from the firm's trust account to his personal checking account. As before, Scott was not informed of either transfer, before, or after, it was made. A deposit was also made, by the respondent, " [u]sing a handwritten checking/saving deposit slip," into the firm's trust account. The source of that $1300 deposit is not known and the respondent did not advise Scott of the deposit, either before or after it was made. After confronting the respondent, who neither denied taking the monies nor offered any explanation, Scott terminated the partnership and, thereafter, filed a complaint with the petitioner.

During the investigation of the Scott complaint, the respondent admitted making both withdrawals from the firm's trust account. With respect to the $1300 withdrawal, he claimed it was a mistake, that he intended to withdraw it from the operating account, and that when he realized the mistake, he redeposited the funds into the trust account. The $2000, he explained, were donations to help defray the funeral expenses of his late brother in law, which were deposited in the trust account on the advice of " ‘ a husband and wife team [attorneys],’ " that was handling his brother in law's estate. According to the respondent, he gave the $2000 to Scott, in a white envelope, for deposit in the trust account. Scott denied ever receiving such an envelope from the respondent.

The petitioner requested the respondent's financial records, that is, his personal account at Bank of America. Although he [436 Md. 624] was reminded to provide the requested records, he never did so. The records were subpoenaed, prompting the respondent to advise the petitioner, contrary to an earlier representation, that the records had already been sent, that " he had just requested copies of the records from the bank."

The respondent, on occasion, accepted representation and fees, but did not report either in accordance with firm policy, thus mishandling funds entrusted to the firm or fees owed to the firm. One such example was that involving Keith Hoyle, whom the respondent agreed to represent in a speeding case. Although the respondent was paid $200 for the representation, " there was no record of the Respondent receiving or recording the fee in the Firm's books."

Another example involved fees owed the firm by the Public Defender for representation in conflict cases:

" Scott discovered that, on October 20, 2009, a deposit of $ 1, ...

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