Office of Lawyer Regulation v. John R. Maynard
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2009 WI 106 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2008AP417-D In the Matter of Disciplinary Proceedings Against John R. Maynard, Attorney at Law: Office of Lawyer Regulation, Complainant-Respondent, v. John R. Maynard, Respondent-Appellant. DISCIPLINARY PROCEEDINGS AGAINST MAYNARD OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ATTORNEYS: December 29, 2009 2009 WI 106 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2008AP417-D STATE OF WISCONSIN : IN SUPREME COURT In the Matter of Disciplinary Proceedings Against John R. Maynard, Attorney at Law: FILED Office of Lawyer Regulation, Complainant-Respondent, DEC 29, 2009 v. David R. Schanker Clerk of Supreme Court John R. Maynard, Respondent-Appellant. ATTORNEY disciplinary proceeding. Attorney's license suspended. ¶1 Michael PER CURIAM. Ash misconduct that warrants We review the recommendation of Referee Attorney a John 90-day R. Maynard's suspension of his professional license to practice law in Wisconsin and that he bear the costs of these disciplinary proceedings.1 The Office of Lawyer Regulation's 1 Because Attorney Maynard's appeal was dismissed as untimely, the court reviews the matter pursuant to SCR 22.17(2): If no appeal is filed timely, the supreme court shall review the referee's report; adopt, reject or No. 2008AP417-D (OLR) four-count disciplinary complaint alleged Attorney Maynard failed to notify his former law firm of payments for legal services that he received and deposited in his personal account. The complaint also alleged Attorney Maynard made false and misleading communications when he failed to identify his "of counsel" status when he used law firm stationery and when he represented on a postal application that he was a principal of the law firm. The referee concluded the OLR proved three of the four counts charged in the disciplinary complaint. ¶2 We conclusions. approve and adopt the referee's findings and We determine the seriousness of Attorney Maynard's misconduct warrants a 90-day suspension of his law license. his misconduct, demonstrated dishonesty contrary to his professional obligation as a lawyer. We further conclude Attorney Attorney Maynard Maynard shall has By bear the costs of these disciplinary proceedings. ¶3 Attorney Maynard was admitted Wisconsin in 1973 and works in Cedarburg. to practice law in He has not previously been subject to attorney discipline. ¶4 Maynard's These disciplinary billings and proceedings payments arise received for from Attorney services he modify the referee's findings and conclusions or remand the matter to the referee for additional findings; and determine and impose appropriate discipline. The court, on its own motion, may order the parties to file briefs in the matter. The court permitted the parties to file briefs, but did not hold oral argument. 2 No. performed as a shareholder August 1, 2005, Attorney Maynard with 30, through 2006. June joined his with former law firm from August On Attorneys 2008AP417-D 1, 2005, McIlnay, James Bruce Button, and James Schmitt in the law firm of Maier, McIlnay, Schmitt & Button, Ltd. Soon after, the firm became known as Maynard, McIlnay, Schmitt & Button and used the acronym of MMSB or MMS&B. The referee found that the individuals understood the firm be to a shareholders. became a corporation The referee shareholder at and regarded found MMS&B, that he one when entered another Attorney a highly as Maynard fluid, rapidly changing, and perhaps confusing situation with little discussion among the other shareholders regarding their rights or obligations to the firm. generally income"; that the the money question of The firm's shareholders testified received how from clients the money would the shareholders was "firm thereafter be intended to divided was never discussed. ¶5 The referee found practice law in an arrangement through which expenses were to be incurred and paid by the corporate entity and revenues were to be paid to and distributed by that entity. The referee found: In particular, [Attorney] Maynard did understand that, during the period of his association with the Firm, invoices for legal services were to be transmitted under the Firm's name, and paid to, and then distributed by the Firm, to its creditors and shareholders, in a manner to be determined. ¶6 the other Attorney Maynard's shareholders' monthly bonus. compensation plans, plan consisting of was a similar draw plus to a On or about January 1, 2006, Attorney Maynard's 3 No. monthly compensation was substantially reduced. 2008AP417-D When Attorney Maynard announced in the spring of 2006 he would be leaving the firm, he was offered, and agreed to, the opportunity to remain with the firm "of counsel." The referee found that despite the absence of a formal signed agreement, from at least July 1, 2006, until the final parting of ways in February 2007, Attorney Maynard and the firm both understood he was no longer a shareholder but was to have "of counsel" status. ¶7 As of July 2006 there remained some open matters on which Attorney Maynard had worked as a shareholder but had not yet been billed. From July 2006 through October 2006 Attorney Maynard transmitted invoices to three clients for legal services he had rendered while he was a shareholder. stated, "PLEASE MAIL YOUR PAYMENT TO: The invoices all MMS&B, P.O. BOX 253, GRAFTON, WI 53024 IN THE ENVELOPE PROVIDED." ¶8 Without informing anyone connected with the law firm, Attorney Maynard applied for a post office box, inscribing the form with "John R. Maynard Principal" as the applicant and "MMS&B" as the name to which the box number was to be assigned. The address he gave for the box holder was apparently that of his personal residence. Other firm members did Attorney Maynard had opened this post office box. not know The referee found the invoices were misleading in that they indicated MMS&B would be receiving the money, while only Attorney Maynard knew of and had access to the post office box. ¶9 Attorney In response Maynard to the personally misleading received 4 and invoices he sent, deposited into his No. personal checking $7,776.84. account payments from 2008AP417-D clients totaling Attorney Maynard did not inform the firm he had received these funds and the firm did not receive any of these funds. The firm did not learn of the post office box or of Attorney Maynard's receipt of the funds until much later as a result of its own efforts. ¶10 One check that Attorney Maynard received had been made out to the firm. Although no longer a shareholder but "of counsel," he endorsed the check and kept the proceeds. no express authority from the firm to do so; he He had made the endorsement and kept the money without the firm's knowledge. The referee found that by his testimony, Attorney Maynard acknowledged and understood the money billed for the work he performed as a shareholder was firm income to be divided among all the shareholders after the payment of overhead. The referee concluded that by receiving the funds for services performed while a shareholder, but not notifying the firm about the receipt of those funds and not delivering those funds to the firm or at least to a trustee, the court, or an arbiter, Attorney Maynard violated former SCR 20:1.15(d)(1),2 as charged in Count 1. 2 Former SCR 20:1.15(d)(1) (effective July 1, 2004, through June 30, 2007) provided: Upon receiving funds or other property in which a client has an interest, or in which the lawyer has received notice that a 3rd party has an interest identified by a lien, court order, judgment, or contract, the lawyer shall promptly notify the client or 3rd party in writing. Except as stated in this 5 No. ¶11 2008AP417-D The referee rejected Attorney Maynard's argument that because the funds were not "client funds" they were not subject to SCR 20:1.15. The referee found nothing in the language of SCR 20:1.15 or in any case law that so narrowly limits the scope of SCR 20:1.15(d). language of SCR The referee specifically found the express 20:1.15(d)(1) broad enough to cover the circumstances in this case. ¶12 The referee also rejected Attorney Maynard's claimed defense that he was drastically underpaid by the firm and that the clients he served were his clients. The referee concluded there was no way to determine from the record what amount of revenue Attorney Maynard pocketed should ultimately have been distributed to him had he not intercepted it. The referee said that while some, or perhaps all, of the money should ultimately have gone to Attorney Maynard as he apparently believed, this would not have excused his misconduct. The referee found it was principally Attorney Maynard's misconduct that kept the issue from ever being confronted or appropriately resolved. ¶13 In addition, the referee determined that by representing on a postal application form that Attorney Maynard was a "principal" at the firm when he was not, and by sending invoices to clients with the firm's letterhead and directing them to send money to an ostensible firm's post office box to rule or otherwise permitted by law or by agreement with the client, the lawyer shall promptly deliver to the client or 3rd party any funds or other property that the client or 3rd party is entitled to receive. 6 No. 2008AP417-D which only he had access, Attorney Maynard falsely indicated to clients that the invoices originated with the firm and that payments would go to the firm, without disclosing that he was no more than "of counsel" with the firm. The referee concluded that by this conduct, Attorney Maynard made false and misleading communications about himself and his legal services, violating former SCR 20:7.1(a)3 and former SCR 20:7.5(a),4 as charged in Count 2. ¶14 The referee determined, however, that the facts failed to support a violation of SCR 20:8.4(b),5 as charged in Count 3. 3 Former SCR 20:7.1(a) (effective through June 30, 2007) provided, in pertinent part: A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it: (1) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading; . . . . 4 Former SCR 20:7.5(a) (effective through June 30, 2007) provided: A lawyer shall not use a firm name, letterhead or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1. 5 SCR 20:8.4(b) provides it is professional misconduct for a lawyer to "commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; . . . ." 7 No. 2008AP417-D Count 3 alleged that by knowingly and willingly furnishing false information to the United States Postal Service when applying for a post office box, Attorney Maynard committed crime in violation of 18 U.S.C. § 1001(a)(2).6 a federal The referee concluded this federal statute requires the offending statement to be "materially false."7 While finding Attorney Maynard's use of the term "Principal" to be false and misleading, the referee concluded that reasonable materiality doubt. The had not referee been doubted proven an beyond a individual's inaccurate description of his relationship with a law firm would ever be regarded by the postal service as "material." The OLR does not challenge the referee's conclusions as to Count 3. ¶15 Next, the referee found that at the time of the communications, Attorney Maynard was not a principal and would have known, as most lawyers would, that in context "principal" would be taken to mean a person who had controlling authority or 6 The "Warning: this form sanctions. 7 postal service form Attorney Maynard used stated, The furnishing of false or misleading information on or omission of information may result in criminal . . . 18 U.S.C. 1001." 18 U.S.C. § 1001(a)(2) provides: § 1001. Statements or entries generally (a) . . . [W]hoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully-. . . (2) makes any materially false, fictitious, fraudulent statement or representation; or . . . 8 or No. a leading position with the firm. Attorney Maynard's "of counsel" 2008AP417-D The referee found that given status, his use of the term "principal" was deceptive and misleading. The referee concluded that involved Attorney Maynard's billing scheme dishonesty, fraud, deceit, and misrepresentation, contrary to SCR 20:8.4(c)8 as charged in Count 4. Attorney Maynard does not challenge this determination. ¶16 Based on these findings, the referee determined a 90- day license suspension was warranted, together with costs.9 referee said that Attorney Maynard's misconduct The reflected dishonesty which "seems obvious to everyone except [Attorney] Maynard" and Attorney Maynard remained unrepentant and defiant. The referee also considered that Attorney Maynard's previous record was unblemished and he had fully cooperated with the OLR. In addition, the referee considered that the money involved was not alleged to have been more than $7,776.84. The referee found the or misconduct did not harm any clients threaten the administration of justice. ¶17 Attorney Maynard challenges the referee's findings and conclusions with respect to Counts 1 and 2. the recommended sanction is excessive. conduct "if viewed in isolation," He also contends While acknowledging his is a violation of SCR 8 SCR 20:8.4(c) states it is professional misconduct for a lawyer to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation; . . . ." 9 As of $11,313.75. December 22, 2008, 9 the OLR reported costs of No. 2008AP417-D 20:1.15(d) because he failed to transmit the funds, he asserts the rules permit him to hold the disputed portion of the funds until the dispute wrongdoing. See is SCR resolved, thus 20:1.15(d)(3) relieving ("If a him dispute of any arises regarding the division of the property, the lawyer shall hold the disputed portion in trust until the dispute is resolved.") ¶18 Attorney accounting is Maynard the proper between the former partners. argues that mechanism to an action resolve the for an dispute He nonetheless acknowledges he did not file suit for an accounting before exercising self-help. He admits the firm had an interest in the funds, but says his actions were justified because the firm unilaterally cut him off from the monies to which he was entitled. He says his legal research led him to believe he had the right to keep the funds. He claims that if an accounting action determines he is owed the funds, he could not be charged with an ethics violation. He contends this court and the OLR should not insert themselves into matters involving a civil dispute among members of a law firm. ¶19 Attorney Maynard further contends the term "principal" has various meanings, including a "main participant in a given situation." He argues there is no evidence any person was deceived by his use of the firm's letterhead without identifying his "of counsel" status. Also, he claims, there was no indication he was required to use the words "of counsel" in sending out his bills. He asserts that another attorney with the firm sent out a bill in November 2006, more than four months 10 No. 2008AP417-D after MMS&B ceased to exist, and the bill failed to identify Attorney Maynard as "of counsel." ¶20 unless A referee's findings of fact will not be overturned they are clearly erroneous. See In re Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 Wis. 2d 662, 636 N.W.2d 718. conclusions. determine We Id. independently review a referee's legal Also, it is our independent responsibility to appropriate discipline. See In re Disciplinary Proceedings Against Reitz, 2005 WI 39, ¶74, 279 Wis. 2d 550, 694 N.W.2d 894. We must consider the seriousness of the misconduct, as well as the need to protect the public, the courts, and the legal system from repetition of misconduct, to impress upon the attorney the seriousness of the misconduct, and to deter other attorneys from engaging in similar misconduct. See In re Disciplinary Proceedings Against Arthur, 2005 WI 40, ¶78, 279 Wis. 2d 583, 694 N.W.2d 910. ¶21 Attorney Maynard's arguments fail to demonstrate the referee's findings and conclusions are erroneous. We agree with the referee that SCR 20:1.15(d)(1) applies to the circumstances in this case. Attorney Maynard does not point to any evidence that he held the disputed funds in trust as permitted by SCR 20:1.15(d)(3), instead, as the referee found, of depositing them into his personal account. the fact that by Attorney Maynard does not challenge directing clients to send money to an ostensible firm's post office box to which only Attorney Maynard had access, he falsely indicated to clients that the invoices originated with the firm and that payments would go to the firm. 11 No. 2008AP417-D He does not dispute that as a result of his billing scheme, he received $7,776.84 for work he performed while a shareholder with the firm without notifying the firm, and that he deposited the funds into his personal checking account. Attorney Maynard's allegations regarding other firm members' conduct do not relieve him of his ethical obligations. ¶22 Under the circumstances, we conclude recommended sanction is appropriate. Maynard has never been previously the referee's We acknowledge Attorney disciplined cooperated with the OLR's investigation. and has fully We disagree, however, with his contention that this matter is simply a dispute between former law Attorney partners Maynard regarding does not an accounting seriously of dispute client the fees. referee's finding that the firm, not Attorney Maynard, had the right to receive and the obligation to distribute fairly the proceeds at issue. While the dispute over the distribution of firm revenue may have served as Attorney Maynard's motivation, his actions were inconsistent Disciplinary N.W.2d 881 with Proceedings (1995) resolving that Against O'Neil, (attorney engaged dispute. in 197 See In re Wis. 2d 224, 539 dishonesty, fraud, deceit, and misrepresentation by retaining and failing to report to his law firm legal fees he received for professional services). ¶23 The referee reasonably found it was primarily Attorney Maynard's deceptive actions that kept the dispute from being confronted or appropriately resolved. The referee aptly noted, "I know of no legal doctrine or 'law of necessity,' and have not 12 No. been pointed to any, that excuses lawyers for 2008AP417-D dishonesty." While considering both aggravating and mitigating circumstances, the referee failure Attorney to was reasonably acknowledge Maynard's concerned the with seriousness conduct Attorney his misconduct. demonstrated has of Maynard's dishonesty incompatible with his professional obligations as a lawyer. The referee's findings justify a sanction sufficient to impress upon Attorney Maynard the seriousness of his misconduct, and to deter others from engaging in misconduct.10 similar See In re Disciplinary Proceedings Against Crandall, 2008 WI 112, ¶23, 314 Wis. 2d 33, 754 N.W.2d 501. restitution. The recommendation; therefore, restitution. We OLR The referee has not recommended does approve not challenge we do not and adopt address the the referee's the issue referee's of findings, conclusions, and recommended 90-day suspension. ¶24 IT IS ORDERED that the license of John R. Maynard to practice law in Wisconsin is suspended for a period of 90 days, effective February 1, 2010. ¶25 of this IT IS FURTHER ORDERED that within 90 days of the date order John R. Maynard pay to Regulation the costs of this proceeding. the Office of Lawyer If costs are not paid within the time specified and absent a showing of his inability to pay the costs within that time, John R. Maynard's license to 10 As the referee observed, "Whatever ambiguities were in his situation, the deviousness and dishonesty apparent in his conduct should not be met by a mere scolding." 13 No. 2008AP417-D practice law in Wisconsin shall remain suspended until further order of the court. ¶26 yet done IT IS FURTHER ORDERED that to the extent he has not so, John R. Maynard shall comply with SCR 22.26 regarding the duties of a person whose license to practice law in Wisconsin has been suspended. 14 No. 1 2008AP417-D
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