Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Attorney Grievance Commission of Maryland v. Sperling

Court of Appeals of Maryland

May 21, 2018

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND
v.
SAMUEL SPERLING and JONATHAN DANIEL SPERLING

          Argued: March 5, 2018

          Circuit Court for Baltimore County Case No.: 03-C-16-010146

          Barbera, C.J., Greene, Adkins, McDonald, Watts, Hotten, Getty, JJ.

          OPINION

          ADKINS, J.

         In 2016, the Attorney Grievance Commission of Maryland ("AGC"), acting through Bar Counsel, filed a Petition for Disciplinary or Remedial Action ("Petition") against Respondents Samuel Sperling and Jonathan Daniel Sperling.[1] The AGC's investigation began in 2014 after it received notice that The Sperling Law Office, P.C.'s ("Firm") trust account was overdrawn.[2]

         Bar Counsel charged Samuel with violating the Maryland Lawyers' Rules of Professional Conduct[3] ("MLRPC") in his capacity as an attorney working at the Sperling Law Office, P.C. ("Firm"). Specifically, Bar Counsel alleged that Samuel violated MLRPC: (1) 1.15(a) and (d) (Safekeeping Property); (2) 5.3(a)-(d) (Responsibilities Regarding Nonlawyer Assistants); (3) 5.4(a) and (d) (Professional Independence of a Lawyer); (4) 5.5(a) (Unauthorized Practice of Law; Multijurisdictional Practice of Law); (5) 8.1(a) and (b) (Bar Admission and Disciplinary Matters); and (6) 8.4(a)-(d) (Misconduct).

         Bar Counsel charged Jonathan with violating MLRPC: (1) 1.1 (Competence); (2) 1.2(a) (Scope of Representation and Allocation of Authority Between Client and Lawyer); (3) 1.3 (Diligence); (4) 1.4(a)-(b) (Communication); (5) 1.5(a)-(b) (Fees); (6) 1.16(d) (Declining or Terminating Representation); (7) 5.3(d)(3) (Responsibilities Regarding Nonlawyer Assistants); (8) 8.1(a)-(b) (Bar Admission and Disciplinary Matters); and (9) 8.4(a)-(d) (Misconduct).

         We transmitted the matter to the Honorable H. Patrick Stringer ("the hearing judge") of the Circuit Court for Baltimore County to hear the case. Following a five-day hearing, the hearing judge issued Findings of Fact and Conclusions of Law, in which he found by clear and convincing evidence that Samuel violated MLRPC 1.15, 5.3(b) and (d)(3), 5.4(d)(1), and 8.4(a). The hearing judge also concluded that Jonathan violated MLRPC 5.3(d)(2)(G) and (d)(3), 8.1(a), and 8.4(a) and (c), and Maryland Rules 16-760(c)(11), (d)(3), and 16-609(b).[4]

         THE HEARING JUDGE'S FINDINGS OF FACT

         Samuel was admitted to the Maryland Bar in 1996, and Jonathan was admitted in 1998. Upon admission, both brothers began working as associates at a law firm operated as a sole proprietorship by their father, Leonard Sperling ("Leonard"). In March 2004, the Court of Appeals suspended Leonard from the practice of law.[5] During his suspension, The Sperling Law Office, P.C. was formed. The Articles of Incorporation identify Samuel as the incorporator, and Samuel and Jonathan as the initial directors. The hearing judge found that there was no evidence that Samuel and Jonathan remained as directors or served as officers of the Firm beyond the initial formation. At the same time, the Firm also established an attorney trust account. Leonard, Samuel, and Jonathan were the only attorneys with signatory authority on the trust account.

         Leonard was reinstated in July 2004 and resumed practice at the Firm. The hearing judge found that Leonard was the sole shareholder, and he ran the firm, including "managing the attorney trust account, assigning cases, settling cases, paying bills[, ] and handling the payroll."

         In July 2013, Jonathan was indefinitely suspended from the practice of law.[6] He was represented by Robert Hesselbacher, who continued advising Jonathan after his suspension about compliance with the Rules and reinstatement requirements.[7]Hesselbacher met with Jonathan, Samuel, and Leonard to discuss the limitations on Jonathan's activities as a suspended attorney. On July 10, 2013, the Firm employed Jonathan as a paralegal.

         In September 2013, Leonard was indefinitely suspended from the practice of law.[8]His suspension became effective in October 2013. At that time, there were three licensed attorneys working at the Firm: Samuel, Andrea Babest, and Michele Loewenthal. Leonard continued to work at the Firm following his suspension. In April 2014, Jonathan filed a Petition for Reinstatement, which Bar Counsel opposed. The Court of Appeals denied Jonathan's reinstatement in July 2014.

         In April and May 2014, Bar Counsel received notices stating that the Firm's trust account was overdrawn. Samuel retained an experienced ethics attorney, Michael McCabe, to assist him in responding to Bar Counsel's inquiries. McCabe advised him to start a new law firm or take over the Firm. On June 6, 2014, Samuel created The Sperling Firm, LLC ("the LLC"), where he currently practices, and is the sole member.

         On July 31, 2014, Bar Counsel filed a Complaint for a Temporary Restraining Order, Preliminary, and Permanent Injunction in the Circuit Court for Baltimore County requesting that Leonard and Jonathan no longer be associated with the Firm, prohibiting withdrawals or transfers from the Firm's accounts, and ending operation of the Firm. The Circuit Court issued a Consent Order prohibiting the Firm from operating, and appointing Edward Gilliss, Esq., as interim receiver.

         Gilliss's primary duties were to identify active files and ensure that an attorney was available to represent the clients, and to identify closed cases in which clients had not been paid. Gilliss met with Samuel, Leonard, and Jonathan regarding matters at the Firm. Samuel and Jonathan assisted Gilliss-Samuel identified active clients, and Jonathan identified closed matters wherein clients or other expenses had not been paid. Gilliss sent active clients a letter notifying them that they could elect Samuel or Babest to represent them or choose another attorney. Samuel, Babest, and Gilliss agreed to a split of attorneys' fees. Gilliss received 25% of the "legal fee that was generated from resolution of those active files, " and successor counsel received 75%.

         Gilliss discovered that Leonard had misappropriated a significant amount of money from the trust account and settled claims, but had not paid medical expenses, other lien holders, or the clients. With no money available in the trust account to pay these obligations, Gilliss referred clients to the Client Protection Fund.

         On August 26, 2014, the Court of Appeals issued an Order disbarring Leonard for multiple violations of the MLRPC, including misappropriation.[9] The hearing judge found that there was no evidence that Samuel or Jonathan misappropriated funds, or that they knew that their father was doing so.

         The Attorney Trust Account

         In 2004, the Firm implemented a system that was in effect through July 31, 2014. The Firm kept a register in which entries were made when a check was written. The "date, check amount, activity, reason for the disbursement (whether a settlement or fee) and client's name would be recorded." Samuel entered all the checks he wrote in the register.

         After Jonathan and Leonard were suspended, both remained signatories on the trust account, and continued writing checks. Leonard, Jonathan, and Samuel all wrote checks on the account during the relevant period. While Leonard wrote most of the checks, Jonathan wrote 86 checks, either payable to cash, or to the Firm. Jonathan explained that Leonard told him to "write the checks from the escrow account and deposit the money in the operating account as payment of fees earned by the firm." This was to "avoid delay of the transfer of the funds from the attorney trust account to the operating account." Jonathan did not keep any of the money.

         Samuel testified that he did not know that Leonard and Jonathan were writing checks until June 2014. Relying on the parties' stipulations, the hearing judge concluded that Samuel's testimony regarding when he had knowledge of Leonard writing checks was not accurate. The records showed that during his suspension, Leonard wrote nine checks payable to Samuel, which were drawn on the escrow account. Samuel stipulated to endorsing three of those checks.

         Samuel deposited client funds in the trust account from July 2013 until the TRO was entered. He represented "at least three . . . clients whose cases he settled and deposited their money in the trust account, but the money was not disbursed to the client[]" because it was part of those funds Leonard misappropriated. As a result, Gilliss directed them to the Client Protection Fund.

         From July 2013 until May 2014, Samuel did not "review bank records to determine what funds were being deposited or disbursed from the account, . . . perform monthly reconciliations of the trust account, " or restrict Leonard or Jonathan's access to the trust account. Samuel did not take any action to remove Leonard or Jonathan as signatories. He told Leonard and Jonathan to consult with Hesselbacher regarding actions they could or could not take as suspended attorneys.

         The hearing judge concluded that based on the number of checks that Leonard and Jonathan wrote, "Samuel should have known Jonathan and Leonard were writing checks on the trust account." Even if Samuel did not know who was writing the checks, he "should have known, or at least suspected that Leonard and Jonathan were writing checks on the trust account and inquired where the checks were." After he learned that the trust account was overdrawn, Samuel "finally confronted his father and told him and Jonathan they could not write escrow checks." But Leonard and Jonathan continued writing checks through July 2014.

         Jonathan's 5.3 Agreement

         In November 2013, Hesselbacher, acting on Jonathan's behalf, sent Bar Counsel a draft Md. Rule 16-760 affidavit, and a Md. Rule 16-781(d) statement for review. The 16-781(d) statement explained Jonathan's employment status at the Firm, and that Leonard and Samuel had supervised him since his suspension. A few days later, a paralegal with the Office of Bar Counsel notified Hesselbacher that Jonathan had not provided an employment agreement to Bar Counsel. MLRPC 5.3(d)(3) requires a suspended attorney who is employed by a lawyer to file an employment agreement with Bar Counsel within 30 days after the employment begins. Hesselbacher forwarded the e-mail to Jonathan, indicating that he needed a "written agreement with the firm with the terms of [his] employment as a paralegal and complying with that Rule."

         In November or December 2013, an employment contract ("5.3 Agreement") dated July 10, 2013 was prepared.[10] Samuel and Jonathan signed it, and Hesselbacher sent it to Bar Counsel on January 13, 2014, along with Jonathan's Rule 16-178(d) statement, Rule 16-781(g) affidavit, and supplemental 16-760 affidavit. The hearing judge concluded that backdating the 5.3 Agreement was not a misrepresentation. Relying on Hesselbacher's testimony, the hearing judge explained that the 5.3 Agreement was dated July 10, 2013 because that was when Jonathan's employment as a paralegal began, and Jonathan's Rule 16-718(d) statement specified that the 5.3 Agreement was "effective July 10, 2013." The hearing judge also considered that the position of the date, at the top of the 5.3 Agreement, was consistent with it being an "effective date, " because agreements tend to specify if a date is a signing date or locate the signing date near the signature line. The hearing judge found that Respondents did not intend to mislead Bar Counsel about the date of creation. Had they so intended, they would have included Leonard's name on the letterhead and Leonard, not Samuel, would have signed the agreement.

         Bar Counsel had requested that Samuel identify and save all computers Jonathan might have used. Samuel complied, however, in June 2015, the Firm was a victim of a ransomware attack. Samuel contacted David Spiegelman, who performed IT services and restored the firm's files. After the restoration, all documents had the same creation date- June 30, 2015-the day they were restored, and metadata[11] was missing. Bar Counsel alleged that the Respondents attempted to obstruct the investigation by destroying the metadata, specifically claiming that Samuel intentionally "did not ensure that the metadata was preserved when the computer data was restored" to prevent determination of when documents were created.

         Spiegelman identified Jonathan's computer and provided it to Phillip Blazer-Catzen, Bar Counsel's forensic computer expert, along with access to the Firm's server. Although Catzen testified that the metadata was not restored because the technician who restored it chose not to do so, he admitted that it is not uncommon to see legal documents without internal metadata, and he did not know if metadata was enabled when the 5.3 Agreement was created.

         The hearing judge found that Samuel did not ask Spiegelman to limit the information he restored, delete information, or omit or delete metadata, and that Samuel did not know what metadata was. Further, Spiegelman "did not and could not, change the metadata" because when he restored the backup data, "the operating system [gave] the data a new creation date[, ] which is the date of restoration."

         The hearing judge also concluded that Bar Counsel failed to prove by clear and convincing evidence that Respondents fabricated a claim of attorney-client privilege to prevent Bar Counsel from determining when the 5.3 Agreement was created. During an email exchange with Bar Counsel in December 2015, Respondents' attorney stated that his only copy of the 5.3 Agreement was an electronic copy that Jonathan had used to communicate with Hesselbacher, and that some edits and metadata might be privileged. The hearing judge determined that although Hesselbacher did not draft the Agreement, it did not mean that "Respondents' counsel did not have a basis to believe the internal data might be privileged."[12] Bar Counsel also acknowledged that Respondents' counsel had provided the date that the 5.3 Agreement was last modified and allowed Catzen to examine the document.

         Law-Related Activities by Suspended Attorneys

         After Jonathan was suspended, Samuel agreed, at Leonard's request, to supervise his brother. Upon Jonathan's suspension, Hesselbacher told him to examine Rule 5.3, and advised Jonathan that he could not perform law-related activities for the firm. Jonathan performed clerical and administrative duties while suspended, but did not meet with clients, take depositions, do legal research, or draft legal documents. On one occasion, with special permission by the presiding judge, Jonathan attended court with Samuel to assist a blind client.

         The hearing judge found Babest and Loewenthal to be credible and adopted their testimony about Jonathan's activities as fact.

Babest: I personally observed Jonathan Sperling doing a lot of clerical duties. He made copies if, if the attorneys needed copies of exhibits for cases or hearings, he obtained office supplies, he would pick up the mail at the end of the day if we had a particularly large amount of mail or if there was a heavy package that needed to be weighed at the post office. He picked up our payroll checks, brought them to the office. Whenever any of us had a problem with our computers or the copier of the fax machine, we would ask Jonathan to assist us. He had a knack of making the computers and everything else work or he'd be the point person to contact the repair people to come in.
****
Loewenthal: [Jonathan] would help if I had any problems with my computer. He-he helped make copies if I needed them as exhibits for trial. He ran errands. He sometimes answered the phone. . . .

         Catzen analyzed Jonathan's computer and found 69, 000 files on the hard drive of Jonathan's workstation from July 5, 2013 until July 31, 2014. Most of the files were Google Earth files. Catzen found one e-mail from Jonathan to a client ("Hill e-mail") asking the client to call the office to answer interrogatories. Of the 69, 000 files, Catzen identified 559 files from the Firm's server that he asserted Jonathan's computer had created, modified, or accessed during that time. Catzen did not analyze the files, and the hearing judge found that of the 559 documents, many of them contained dates of service "well before or after that time frame." Some of the documents were scanned and then converted to word processing documents. Others were created by Loewenthal or Samuel, and some were personal, relating to Jonathan's family and synagogue activities. The hearing judge concluded that this was not clear and convincing evidence that Jonathan's computer was used in law-related activities.

         The hearing judge accepted Babest's testimony that Jonathan used Google Earth to find pictures of accident scenes, by finding helpful angles, printing the pictures, and giving them to an attorney in the Firm. He found that this was not law related activity because "[i]t requires no legal knowledge, it is not peculiar to the practice of law, anyone can do it without any legal background . . . ." The hearing judge also found that scanning documents or converting them to word processing documents is not a law related activity because it "is not clear and convincing evidence that Jonathan drafted pleadings, discovery, or correspondence."

         The hearing judge concluded that the Hill e-mail was a law-related activity, albeit a "gray area, " and there was no evidence Jonathan met with the client. It was also determined that making deposits and disbursements from the trust account was not a law-related activity.

         Samuel's Supervisory Responsibilities

         Leonard

         In 2013, after Leonard's second suspension, he continued working in the Firm, "kept files in his office, negotiated with adjusters and settled cases." He also handled settlement checks, wrote checks on the trust account, and misappropriated funds.

         After Leonard's suspension, Babest had a conversation with Samuel about the Firm's future. She was concerned about Leonard's conduct leading to the suspension, as well as the financial viability of the Firm. There had been issues before Leonard's suspension, with paychecks not being available or bouncing and Babest told Samuel he needed to "look into whether the payroll taxes were being paid . . . ." She suggested to Samuel that "he might be facing liability from the IRS if the payroll taxes weren't being paid." Samuel explained that he was not liable because he was not an officer and did not have any official status in the Firm. Babest also testified that she did not know who managed the Firm after Leonard's suspension, but the staff knew how to run the Firm, and that it was a "collaborative effort" by the entire office after the suspensions. She indicated that Samuel's role gradually changed, and he began asking her to bring him checks to sign and inquiring about the status of cases. Babest indicated that at no time did she view Samuel as her supervisor.

         Loewenthal testified that Samuel took a more active role, delegating responsibility for handling hearings, depositions, and engaging in planning, but that others were also doing more. Hesselbacher testified that he assumed that Samuel would run the Firm, but "only because 'he was Leonard's son' and he was the 'only Sperling' who was admitted to the bar at that time." Hesselbacher admitted that he did not actually know who was running the Firm.

         The hearing judge found Babest's account of the transition "entirely credible" and an "accurate recounting of events and Samuel's role in the firm after Leonard's suspension." Samuel did not agree to take control of the Firm. Leonard was the sole shareholder of the Firm and the only individual who received a K-1. Tax forms list Leonard as the sole officer of the Firm. Samuel was an employee of the Firm, not a shareholder or partner, and received a W-2. The hearing judge found that Samuel "never agreed to supervise his father, but he told Leonard that he needed to discuss with his own attorney what he could or could not do and follow the direction of his counsel, Mr. Hesselbacher."

         In June 2014, Samuel e-mailed McCabe explaining the circumstances at the Firm. Samuel advised that he had instructed Leonard to stop signing escrow checks, and that settlements needed to be handled by an attorney. Samuel also stated that he had formed a new law firm, The Sperling Firm, LLC. At this time, he began transitioning out of the Firm to avoid leaving his clients without counsel.

         Jonathan

         Samuel agreed to supervise Jonathan after his suspension and signed the 5.3 Agreement on behalf of the Firm. Samuel reviewed Rule 5.3 to identify his supervisory responsibilities and met with Hesselbacher. Samuel told Jonathan that he "could not do legal work, go to court, attend depositions, advise clients, or give legal advice, and if he had any questions he should consult with Mr. Hesselbacher and follow his advice." The hearing judge found that Jonathan's role in the Firm was "to perform clerical and administrative duties[, ]" and Samuel did not ask Jonathan to write checks on the trust account or perform legal work.

         Allegations of Misrepresentation by Jonathan

         Bar Counsel alleged that Jonathan made multiple misrepresentations. The hearing judge considered these allegations in three different contexts: Jonathan's attempt at reinstatement, Jonathan's statement under oath on December 29, 2014 ("December Statement"), and Jonathan's deposition on April 20, 2017.

         Reinstatement

         Bar Counsel charged Jonathan with making misrepresentations to Bar Counsel in his bid for reinstatement, his Petition for Reinstatement, and his responses to Bar Counsel's filings with the Court of Appeals.

         In January 2014, Hesselbacher sent Bar Counsel: (1) a supplemental Rule 16-760 affidavit; (2) a Rule 16-781(g) affidavit; and (3) a Rule 16-781(d) Statement. Bar Counsel alleged that Jonathan made three misrepresentations in these documents by: (1) asserting in his Rule 16-781(g) affidavit that he had complied with the requirements of Md. Rule 16-760; (2) certifying in the 16-781(g) affidavit that since his suspension, he had not "engaged in the practice of law or attempted or offered to engage in the unauthorized practice of law. . . ."; and (3) stating that the 5.3 Agreement was effective July 10, 2013 in his Rule 16-781(d) statement, thus misrepresenting by omission and failing to disclose that the 5.3 Agreement was actually created in December 2013. Rather, Jonathan stated that the Agreement was "inadvertently not provided sooner."

         The hearing judge concluded Jonathan's assertion that he had complied with the requirements of Md. Rule 16-780 was not accurate for two reasons. First, Jonathan violated Rule 16-760(c)(11) by "failing to timely draft and submit the [MLRPC] 5.3(d)(3) notice and agreement . . . ." Second, Jonathan violated Rule 16-760(d)(3) because he wrote checks on the trust account after his suspension.

         The hearing judge found that the Hill e-mail was not the practice of law because it was the kind of correspondence "that could have been sent by an assistant or a paralegal, not necessarily a lawyer." Therefore, the 16-781(g) affidavit was not "knowingly false."

         With regard to the 5.3 Agreement, Hesselbacher and Jonathan discussed various limitations on suspended attorneys working in their former firms, but there was no indication that they discussed the requirement of a written employment agreement. Hesselbacher's testimony that he had overlooked the 5.3(d)(3) requirement was consistent with the Respondents' inadvertent failure to file the agreement in the appropriate time.

         Bar Counsel alleged that Jonathan made repeated knowing and intentional misrepresentations to deceive the Court of Appeals and Bar Counsel about whether he had engaged in law-related activities during his suspension. Specifically:

1. Hesselbacher's March 2014 e-mail misrepresented the activities Jonathan had been performing in the Firm.
2. Jonathan's Petition for Reinstatement and his Reply to Bar Counsel's Response to his Petition both included affidavits stating that he had not engaged in the practice of law, attempted, or offered to do so, and that his employment at the Firm only were "purely clerical or administrative . . . ."
3. Jonathan's Reply to Bar Counsel's Supplemental Response to Jonathan's Petition for Reinstatement contained misrepresentations and omissions about the scope of his conduct in writing checks on the trust account.

         With regard to the first and second allegations, the hearing judge reiterated his earlier findings that the Hill e-mail was the only law-related activity Jonathan engaged in, that itself was in a "gray area, " and that Jonathan had not "engaged in the practice of law after his suspension." Therefore, the statements were not misrepresentations.

         In June 2014, Bar Counsel filed a Supplemental Response to Jonathan's Petition for Reinstatement, which stated that Jonathan had written checks on the trust account payable to cash after his suspension. Jonathan filed a Reply, which included an affidavit stating:

2. On several occasions, when one of the other signatories on the account was not available, I was asked to write checks from the escrow account for payment of fees the law firm had earned. I was instructed that the check should be made payable to 'cash' to enable faster crediting of the check by the bank, Wells Fargo Bank. In each instance, the check was deposited into the firm's operating account, and it was my understanding that the check represented proper payment of an earned fee. It is my recollection and understanding that the purpose of each check was recorded in the check register, deposit record[, ] or both.
3. With specific regard to the check Bar Counsel submitted with the Supplemental Response to my petition for reinstatement, I was requested by Mr. Leonard Sperling to write and deposit a check in partial payment of the firm's fee for representation of a particular client, and I did so. It was and is my understanding that the fee payment was proper. I deposited the check in the firm's operating account. . . .
4. At the time I made this and several similar deposits and until Bar Counsel contacted my attorney last week, I did not realize that the Maryland Rules prohibited an escrow account check from being made payable to cash even when the purpose of the check is proper and the purpose is identified in trust account records. . . .

         Bar Counsel alleged that Jonathan knowingly and intentionally omitted a material fact-that he had acted at the direction of Leonard, a suspended attorney. The hearing judge disagreed that this was a material omission made with intent to mislead the Court of Appeals and Bar Counsel. But he found that Jonathan "has significantly understated how many times he was directed to write checks on the attorney trust account, " because "several occasions" was not an accurate description of the number of checks Jonathan wrote.

         The December Statement

         Bar Counsel argues that Jonathan testified falsely to subvert the investigation during his statement under oath in December 2014 when he testified that he could not recall whether: (1) Samuel supervised him immediately after his suspension; (2) Samuel instructed him to write checks from the trust account payable to cash; (3) he discussed his trust account activities with Samuel after his suspension; (4) there were any problems with the trust account before Bar Counsel sought a TRO; and (5) he had ever discussed Leonard's presence at the firm after Leonard was suspended with Samuel.

         The hearing judge found that Bar Counsel did not prove by clear and convincing evidence that Jonathan's inability to recall whether Samuel supervised him initially was not true. Jonathan testified that Samuel was involved in his supervision and provided a description. Accordingly, his answer was not intended to obstruct Bar Counsel's investigation. Further, Jonathan did not testify falsely when he stated that he did not remember, given the chaotic circumstances then prevailing in the Firm.

         Jonathan's Deposition

         During Jonathan's April 2017 deposition, he testified that he provided his login credentials for his computer to everyone in the office so they could use his computer, and that Loewenthal and Babest used his credentials. Both Babest and Loewenthal testified that Jonathan had never provided his credentials.

         Allegations of Misrepresentation by Samuel

         Bar Counsel contended that Samuel made multiple misrepresentations on three separate occasions: (1) in his May 30, 2014 affidavit; (2) in a 2014 letter to the State Department of Assessment and Taxation ("SDAT"); and (3) during his March 30, 2015 statement under oath.

         The May 2014 Affidavit

         Bar Counsel sent Samuel a letter in April 2014 notifying him that the AGC was investigating possible violations of the MLRPC and asking for information regarding his supervision of Jonathan, Leonard's employment status with the Firm, and any changes to the trust account following Leonard's suspension. Bar Counsel also served Samuel with a subpoena for the Firm's financial records. McCabe sent a response to Bar Counsel that included an affidavit signed by Samuel.

         Bar Counsel alleged that Samuel made seven false statements in his affidavit: (1) Samuel did not have managerial authority in the Firm; (2) Jonathan did not draft legal documents; (3) Jonathan did not receive client funds or make disbursements; (4) Jonathan signed the 5.3 Agreement on July 10, 2013; (5) the term "paralegal" as used in the 5.3 Agreement did not include drafting pleadings or discovery, communications with clients about cases, or legal research; (6) Samuel was not responsible for supervising Leonard after his suspension; and (7) Samuel had not delegated any legal tasks or law-related activity to Leonard after his suspension.

         The hearing judge found that Bar Counsel failed to prove that any of these statements were misrepresentations because there was not sufficient evidence or law to support Bar Counsel's assertions. Although Samuel's statement about when the 5.3 Agreement was signed was "clearly wrong, " the hearing judge determined that it was not an intentional misrepresentation, and Samuel had no motive to misrepresent that fact- both Respondents admitted that they violated 5.3(d)(3) by the late filing.

         The SDAT Letter

         In September 2014, Samuel wrote a letter to SDAT stating that he was not the Vice President of the Firm, and that he had never controlled the Firm's financial decisions. Bar Counsel argued that this was an intentional misrepresentation. The hearing judge concluded that there was "no evidence that Samuel was 'solely responsible for the [F]irm's bank accounts' or that he controlled the [F]irm's finances . . . ." Therefore, Bar Counsel failed to prove that this was an intentional misrepresentation.[13]

         The March Statement

         Samuel made a statement under oath to Bar Counsel on March 30, 2015, which Bar Counsel alleges was intended to obstruct the investigation by "testifying that he was unable to recall, or did not know, a number of material facts . . . ." Specifically: (1) whether Samuel had any conversations with Leonard after Jonathan was suspended about what Jonathan could or could not do under the MLRPC; (2) when Samuel signed the 5.3 Agreement; (3) who drafted the 5.3 Agreement; (4) whether after Leonard's suspension, letters were sent to Firm clients notifying them of the suspension and that they could retain Samuel to represent them, or if Samuel discussed individual client matters with Leonard after his suspension; (5) the number of cases Leonard was involved in at the time of his suspension, or whether Samuel prepared lines substituting his appearance for Leonard's; (6) the checks Leonard wrote from the trust account after his suspension; and (7) whether Leonard had any input into deposits and withdrawals from the trust account after he was suspended.

         The hearing judge observed that Bar Counsel "ha[d] not cited or referred to any evidence in support of its allegations other than to the statements themselves, " and found that Bar Counsel had not shown any evidence that the statements were not true.

         Bar Counsel also claimed that Samuel knowingly and intentionally testified falsely that: (1) Jonathan did not draft any interrogatories or pleadings for Samuel after he was suspended; (2) Leonard was only involved in administrative and clerical matters after his suspension; (3) Samuel could not identify Leonard or Jonathan's handwriting in the Firm's trust account ledgers; and (4) Samuel learned for the first time in August 2014 that Leonard had settled cases after his suspension.

         The hearing judge found that Bar Counsel failed to prove that any of these statements were not true by clear and convincing evidence. Although he observed that Samuel's June 2014 e-mail to McCabe "suggests that Samuel learned by at least early June 2014 that Leonard had settled cases and was continuing to write checks on the escrow account, " he did not find, from a two-month discrepancy alone, that Samuel made an intentional misrepresentation.

         Luvenia Jeter

         Luvenia Jeter had been a student in the Practical Nursing Program at Hagerstown Community College ("College") but was terminated after her third semester when she failed the clinical course. She thought that her termination was unfair, so she contacted the Baltimore County Referral Service and was referred to Jonathan.

         Jonathan and Jeter met at least twice at the Firm. At the first meeting, in early January 2012, which lasted about an hour and a half, Jeter "wanted to talk and wanted someone to listen to her and tell her if she had a case." They discussed the viability of a claim for unfair dismissal, and Jonathan told Jeter that her case was a "challenge." He also advised that the statute of limitations was three years. Jeter paid the Referral Service $35 for the initial consultation and Jonathan $350. At the second meeting, which lasted two hours, Jeter provided documents for Jonathan's review, including her Clinical Performance Assessment and her own notes regarding the assessment. Jonathan agreed to communicate with the College.

         Jonathan sent two letters to different individuals associated with the College asking to discuss Jeter's dismissal. He received a response from the program director "informing him that 'Ms. Jeter failed Nursing 113 due to both safety and academic reasons[, ]'" and that Jeter had not contacted her with any issues or initiated the grievance process.

         In March, Jeter gave Jonathan a check for $2, 000 as a retainer and signed a retainer agreement with the Firm. "The retainer agreement provided for a $2, 000 retainer and a contingent fee of 25% of any recovery." Jonathan sent the College notice under the State and Local Government Torts Act in April, and in May, he sent Jeter a draft complaint against the College "to be filed forthwith." Jonathan testified that "after a lot of effort and searching" he spoke with program staff "in or after May 2012, " and learned that Jeter's termination was justified because she "could not perform the activities necessary to continue in the program . . . ."

         After discussing Jeter's performance in the program, reviewing documents, transcripts, and the director's letter, as well as meeting with Jeter, "Jonathan concluded that Ms. Jeter did not have a good faith basis to go forward with a claim." He testified that after May 2012, he spoke to Jeter by telephone, discussed the matter with her, and told her that there was no basis to move forward with her claim. Jonathan testified that he had a handwritten note that confirmed his call, which Bar Counsel contended he had "fabricated." Jeter disagreed with Jonathan, asserting that Jonathan never called her after sending the draft complaint.

         Jeter testified that she called Jonathan's office regularly but was unable to reach him. She stated that she called the courthouse "in the middle of last year, 2016, " and learned that Jonathan did not file the suit, after which she filed a complaint with Bar Counsel. The hearing judge was unable to ascertain "whether the phone call occurred between Ms. Jeter and Jonathan after May 2012, and whether [Jonathan] informed her of his determination not to go forward with her case." Regarding his fee, "Jonathan testified that he spent over 20 hours investigating the case at a rate of $150 per hour. . . . [but] did not maintain time records, provide Ms. Jeter with an accounting, or determine a date when the fee was earned."

         Jeter's assertions did not correspond with events. She had communications with Jonathan after paying him and her claim that she had called the courthouse in mid-2016 and then complained to the AGC was inconsistent with the date of her AGC complaint which was filed in January 2016. After Jonathan's letter to Bar Counsel stating that Jeter's grades were poor, Jeter represented to Bar Counsel that she was "virtually an 'A' student" before her dismissal. The hearing judge reviewed Jeter's transcripts, and observing that she had failed the clinical component, and never earned an A, he found it reasonable to conclude that there was no basis to file suit. Additionally, Jeter's decision to file a complaint four years later supported "that she was told that Jonathan would not go forward with her case and over time she may have forgot[ten] that the call occurred."

         THE HEARING JUDGE'S CONCLUSIONS OF LAW

         Conclusions of Law: Samuel

         MLRPC 1.15(a) and (d): Safekeeping Property

         The hearing judge explained that "the essence of the claim . . . is not imputed liability for Leonard's misappropriation of funds from the account, but Samuel's own failure to safeguard the funds in the attorney trust account." Samuel should have known that someone else was writing checks, and a cursory review of the Firm's bank statements would have confirmed any suspicions. Samuel took no action until June 2014 to prevent Leonard's activities, he did not supervise Leonard's access, or perform monthly reconciliations. Samuel deposited client funds into the trust account and made disbursements, and he was the only licensed attorney in the office with signatory authority, consequently, he had "the duty and the right to safeguard the funds in the attorney trust account." Therefore, Samuel violated 1.15 "by his lack of oversight of the attorney trust account."

         MLRPC 5.3: Responsibilities Regarding Nonlawyer Assistants

         With regard to Samuel's responsibility for Leonard, the hearing judge concluded that Samuel did not violate 5.3 as it applied to Leonard. Samuel did not have managerial authority in the Firm and did not order or ratify Leonard's conduct. He did not employ Leonard-he was Leonard's employee.

         Turning to Samuel's responsibility for Jonathan, the hearing judge found that 5.3(b), (c), and (d) were relevant because Samuel was the only lawyer supervising Jonathan after Leonard's suspension and Samuel signed the 5.3 Agreement. Because Bar Counsel failed to prove that Jonathan had engaged in any law-related activities, except for the Hill e-mail, which Samuel knew nothing about, there was "not proof that Samuel failed to take reasonable steps to supervise Jonathan." The hearing judge found that Samuel and Jonathan violated 5.3(d)(3) because they did not draft and file the 5.3 Agreement within the mandated deadline.

         The hearing judge reasoned that Samuel failed to "make reasonable efforts to ensure that Jonathan did not continue to write checks on the attorney trust account after his suspension." Therefore, "Samuel violated 5.3(b) as to his supervision of Jonathan." Because there was no evidence that the checks Jonathan wrote were related to Leonard's misappropriation, Bar Counsel did not prove that Samuel could have avoided the consequences of Leonard's misappropriation when he learned that Jonathan was writing checks on the account. For that reason, Samuel did not violate 5.3(c).

         MLRPC 5.4(a) and (d): Professional Independence of a Lawyer

         Samuel did not violate 5.4(a) because there was no evidence that he shared legal fees with, or paid legal fees to Leonard after Leonard's 2013 suspension. Samuel did violate 5.4(d)(1) because "he continued to practice in a professional corporation owned by Leonard after Leonard's suspension."

         MLRPC 5.5(a): Unauthorized Practice of Law; Multijurisdictional Practice of Law

         Bar Counsel failed to prove that Samuel violated 5.5(a) as to Jonathan because there is no "clear and convincing evidence that Jonathan engaged in the practice of law after his suspension or that Samuel assisted him in doing so." Samuel did not violate this Rule as to Leonard because "Samuel did not supervise Leonard or control the [F]irm and there is no evidence that Samuel 'permitted'" or assisted Leonard's unauthorized practice of law.

         MLRPC 8.1: Bar Admission and Disciplinary Matters

         Samuel did not violate 8.1(a) because he did not make any knowingly false statements in his May 2014 letter, or in his March 2015 statement under oath. Regarding 8.1(b), Bar Counsel did not "prove[] by clear and convincing evidence that Samuel 'knowingly failed to respond' to Bar Counsel's questions . . . ." The hearing judge also found that Samuel did not refuse to provide information "associated with the creation date of the 5.3 Agreement."

         MLRPC 8.4(a)-(d): Misconduct

         Samuel violated 8.4(a) because he violated MLRPC 1.15, 5.3(b) and (d)(3), and 5.4(d)(1). Samuel, however, did not assist Leonard in theft and embezzlement, or commit perjury in his May 2014 affidavit, or his March 2015 statement under oath. Samuel did not make misrepresentations in his letter to SDAT. Bar Counsel did not prove that "information about the employment contract was fabricated, deleted, or withheld from Bar Counsel." The hearing judge found that Samuel did not violate 8.4(b)-(d).

         Conclusions of Law: Jonathan

         MLRPC 1.1, 1.2(a), 1.3, 1.4, 1.5(a)-(b), 1.16(d)

         Bar Counsel failed to prove by clear and convincing evidence that Jonathan violated 1.1, 1.2(a), 1.3, 1.4, 1.5(a)-(b), or 1.16(d) because the evidence available to Jonathan suggested that Jeter's termination from the nursing program was justified, and "it was a reasonable conclusion by Jonathan that there was no good faith basis to file the lawsuit." Jonathan had two meetings with Jeter, listened to her, discussed her claims, reviewed documents, and contacted individuals at the College. Bar Counsel did not prove that Jonathan failed to speak to college officials, or that Jonathan neglected to call Jeter once he concluded that she had no case. The judge considered that the facts demonstrated that Jonathan could reasonably have found that Jeter's termination was valid. Bar Counsel failed to prove that Jonathan did not tell Jeter that he had not filed suit, or that he did not think she had a basis to bring the suit. Regarding fees, the hearing judge found that Jonathan performed legal services for Jeter, and "[m]erely because Jonathan concluded that Ms. Jeter did not have a meritorious claim does not mean there was no value for Jonathan's investigation."

         MLRPC 8.1: Bar Admission and Discipline

         Jonathan violated 8.1(a) "by his statement in his Rule 16-781 affidavit that he had complied with Rule 16-760[]" because Jonathan knew that he had violated Rule 16-760(c)(11) by not filing the 5.3 Agreement within 30 days of beginning his employment as a paralegal with the Firm, and by writing checks on the attorney trust account in violation of Rule 16-760(d)(3) before he signed the affidavit. Jonathan's statement that he wrote checks "'on several occasions' [was] a misrepresentation" in violation of 8.1(a). The hearing judge concluded that Bar Counsel had not proved any other allegations of misrepresentation by clear and convincing evidence.

         MLRPC 8.4(a)-(d): Misconduct

         By violating 8.1(a) and 5.3(d)(3), Jonathan violated 8.4(a) and (c). The hearing judge concluded, however, that because Bar Counsel "failed to prove that Jonathan had engaged in the practice of law or attempted to engage in the unauthorized practice of law, " Bar Counsel had not proved that Jonathan committed perjury in his Rule 16-781(g) affidavit. Bar Counsel failed to prove that Jonathan violated 8.4(d) because she had stated that his conduct as a whole violated the Rule, but she had not proved a number of allegations by clear and convincing evidence.

          Aggravating and Mitigating Factors

         Bar Counsel alleged the existence of multiple aggravating factors for Samuel, but the hearing judge concluded that none applied. He did find multiple aggravating factors as to Jonathan. The hearing judge also found substantial mitigation for both brothers. We discuss these matters in greater detail below.

         DISCUSSION

         "In attorney discipline proceedings, this Court has original and complete jurisdiction and conducts an independent review of the record." Attorney Grievance Comm'n v. McClain, 406 Md. 1, 17 (2008). We accept the hearing judge's findings of fact unless they are clearly erroneous, and we defer to the hearing judge's assessment of the witnesses' credibility. Attorney Grievance Comm'n v. Ugwuonye, 405 Md. 351, 368 (2008). We review the hearing judge's legal conclusions without deference. Attorney Grievance Comm'n v. Hamilton, 444 Md. 163, 178 (2015).

         Both parties may file "exceptions to the findings and conclusions of the hearing judge" and recommendations for the appropriate sanction. Md. Rule 19-728(b). If a party excepts, we determine whether the findings of fact were proven by the relevant standard in Md. Rule 19-727(c). Md. Rule 19-741(b)(2)(B). We may limit our review to the findings of fact challenged by the exceptions. Id. If no exceptions are filed, we may treat the findings of fact as established. Id. (b)(2)(A).

         Samuel

         Bar Counsel excepts to the hearing judge's factual finding that Samuel lacked managerial authority in the Firm, and consequently to the hearing judge's conclusion that Samuel did not violate 5.3(a)-(d), 5.4(a), and 5.5(a), as applied to Leonard. Bar Counsel also contends that the hearing judge erred in finding that Samuel did not violate 8.1(a) and 8.4(b)-(d). Samuel excepts to the finding that he violated 1.15, asserting that the hearing judge erred in concluding that Samuel had an affirmative duty to protect client funds. Samuel reasons that because he was an employee and lacked managerial authority, he had no duty to take over the account when Leonard was suspended, absent actual knowledge of Leonard's misconduct. We first consider Samuel's authority in the Firm because that analysis determines whether we sustain or overrule numerous legal exceptions.

         Bar Counsel offers certain facts from the record to support the argument that Samuel had managerial authority, or at least direct supervisory authority, over Leonard's use of the trust account, and that Samuel employed Leonard after his suspension. These facts include that Samuel was named as one of the two directors of the Firm in the 2004 Articles of Incorporation, and no document has demonstrated that Samuel was removed. Samuel also served as the Firm's resident agent. Bar Counsel asserts that Samuel established the Firm's trust account. Samuel received both a W-2 and a Schedule C. Samuel supervised Jonathan after his suspension.

         Bar Counsel places great weight on two particular facts relating to the aftermath of Leonard's suspension: (1) Samuel was the only licensed attorney with signatory authority on the trust account; and (2) Samuel was the only Sperling licensed to practice law associated with the Firm. Bar Counsel also asserts that Samuel had authority to sign contracts on behalf of the Firm. Following Leonard's suspension, Samuel took on additional responsibilities and instructed Leonard to consult with, and follow, his attorney's advice. In June 2014, Samuel "affirmatively took control of the [F]irm, " instructed Leonard not to write checks from the trust account and took over responsibility for "all settlements of client matters."

         Judge Stringer's assessment that Samuel lacked managerial authority was based on five days of testimony and volumes of evidence. We defer to his assessment of witness credibility because he was in the best position to draw those conclusions. Attorney Grievance Comm'n v. Sheridan, 357 Md. 1, 17 (1999).

         The Firm established the trust account in 2004. The account application identifies the signatories, but Leonard, not Samuel signed the application for tax reporting purposes. The Firm's tax documents identified Leonard as the sole shareholder and officer of the Firm. Samuel testified that he did not remain a director after Leonard's 2004 reinstatement, and the hearing judge found this testimony credible. Samuel remained the Firm's resident agent, but all Maryland corporations are required to designate at least one resident agent. See Md. Code (1975, 2014 Repl. Vol.), ยง 2-108(a)(2) of the Corporations & Associations Article. Bar Counsel has not supplied any authority supporting the proposition that resident agent status is accompanied by managerial control over a ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.