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The New Jersey Supreme Court heard oral argument on “knowing misappropriation” of client funds and the mandatory disbarment rule in the matter of In re Wade, Docket No. DRB 2C-274, last week (also known as the Wilson Rule). New Jersey State Bar Association (NJSBA) Past President Robert B. Hille, of Greenbaum Rowe Smith & Davis, argued the matter on behalf of the Association, which appeared as amicus curiae in the matter.
When reviewing whether knowing misappropriation warrants the “harsh automatic disbarment rule” set forth in In re Wilson, 81 N.J. 451 (1979), the court should focus on situations where a lawyer purposely steals from or defrauds a client, Hille said.
In the case, the Office of Attorney Ethics (OAE) recommended disbarment of Dionne L. Wade, a solo practitioner in Passaic County, based on a violation of the Rules of Professional Conduct 1.15 for knowingly misappropriating client and escrow funds in her attorney trust account. During a random audit of her books, OAE discovered that Wade’s trust account had been commingled with her own funds and identified cases where she had used the funds of one client to cover the funds of another client. The Disciplinary Review Board (DRB) unanimously voted to disbar Wade.
Wade made a personal appeal to the Court, explaining her “total financial ignorance” and that she never intended to steal from any client. She urged the Court to reconsider DRB’s recommendation to disbar her, pointing out that the OAE has been helpful in teaching her how to properly operate her trust account and she has been in compliance since this discovery.
The NJSBA took no position on the facts in the case, arguing instead that in reviewing hers and other knowing misappropriation matters, there are a recent trend of cases where discipline may be appropriate, but do not necessarily rise to the level of the Wilson Rule’s mandatory disbarment. “The NJSBA agrees that public confidence is maintained with a bright-line rule requiring disbarment where there is clear and convincing evidence of an intent to steal a client’s money or to defraud a client,” said the NJSBA in its brief. “The NJSBA asserts this is what has historically been understood as ‘knowing misappropriation’ under Wilson. However, the NJSBA believes that, absent clear and convincing evidence of theft or fraud, notions of justice and fairness based on the merits of the particular facts presented require consideration of alternative appropriate sanctions, if any, short of disbarment.”
The NJSBA urged the Court to clarify what constitutes knowing misappropriation that justifies invoking a recommendation for disbarment under the Wilson Rule. It also sought a clear delineation on the “aggressive application of the Wilson rule beyond the situations of thievery and fraud to which it has justifiably been applied and limited.”
The Court peppered Wade, her counsel, and the NJSBA with questions about what message it sends to the public when it excuses the behavior of an attorney such as Wade, who admitted to having unopened bank statements for over a year and knowing that the account was sometimes underfunded. Wade’s attorney recommended a four-year suspension, but also recommended that the sanction be suspended based on mitigating actions Wade has taken since being counseled by the OAE on proper trust fund management.
Hille and Abdus-Sami M. Jameel, also from Greenbaum Rowe, authored the brief. The Court reserved judgment.