The state Supreme Court’s approval to provide a path to readmission for disbarred attorneys ends a years-long New Jersey State Bar Association campaign to address the state’s disproportionate punishment for certain attorney behaviors. The Association applauded Tuesday’s Administrative Determination from the Court to implement a reinstatement process. New Jersey joins 41 other states and the District of Columbia “that permit a disbarred attorney to apply for readmission after serving a lengthy term of disbarment and satisfying other ameliorative and rehabilitative conditions,” according to the Supreme Court’s Report by the Special Committee on the Duration of Disbarment for Knowing Misappropriation released last week.
“New Jersey’s prior approach did not account for those limited circumstances when an attorney’s conduct was caused by addiction, illness or personal struggle and where no member of the public was harmed,” NJSBA President William H. Mergner Jr. said. “The path to readmission outlined by the Court today provides appropriate guardrails that protect the public while continuing to hold attorneys to the highest ethical standards.”
The Court’s determination overturns 45 years of precedent resulting from its holding in In re Wilson, 81 N.J. 451 (1979), which created a bright-line rule that any lawyer who knowingly misappropriates client funds under any circumstances will be disbarred. “Wilson effectively eliminated any consideration of personal circumstances or mitigation in knowing appropriation cases,” said the Court in its report. The NJSBA viewed the Wilson Rule, as it became known, as a harsh punishment for some attorneys – a sentiment the Association has shared with the Court in its amicus filings, letters to the Court and ultimately in a recommendation emanating from a study on lawyer well-being.
In re Wade, 250 N.J. 581 (2022) brought to light the expansive definition of “knowing misappropriation of client funds” that resulted in an attorney with no prior discipline who fully cooperated with the Office of Attorney Ethics (OAE) being disbarred permanently. In its amicus curiae brief in Wade, the NJSBA highlighted the irony of the disproportionate punishment of disbarment where clients’ monies were not drawn for personal use, but the attorney allocated monies to the wrong accounts in an attempt to compensate for fees drawn or sloppy bookkeeping.
The attorney, Dionne Wade, admitted to not keeping her financial books accurately because of a lack of knowledge as to how to track them. An OAE audit found that Wade’s practice of depositing attorney’s fees in a trust account, and drawing the money only as she needed it for her business account, led to temporary shortages in accounts which she cured by depositing money back into those accounts. While no client was harmed, the OAE characterized these transactions as Wade borrowing client funds, rather than correcting or curing an overdraft.
In its brief in Wade, the NJSBA urged the Court to seek “greater clarity and a clear delineation that eliminates an aggressive application of the Wilson Rule beyond the situations of thievery and fraud to which it has justifiably been applied and limited.” Nevertheless, the Court upheld the decision to disbar Wade, but ordered a committee be convened to consider evaluate “whether disbarment for knowing appropriation should be permanent.”
In 2023, under then-NJSBA president Jeralyn L. Lawrence, the Association created the Putting Lawyers First Task Force to identify ways to improve the legal profession. Chief among its recommendation was to create a pathway to readmission. Lawrence was invited to participate on the Supreme Court’s Special Committee and shared research, developed by the NJSBA, about the treatment of similarly situated attorneys in other jurisdictions, the treatment of attorneys in New Jersey, case law and other relevant information.
The Supreme Court’s order creates a new Rule 1:20-21A which outlines criteria to file a petition for readmission to the bar, which may be done beginning 40 days prior to the expiration of five years from the effective date of disbarment. A copy of the Administrative Determination may be found here. A copy of R. 1:20-21A may be found here. For a copy of the Putting Lawyers First report, click here.