In Re Lucas

Citations: 7 P.3d 1186; 269 Kan. 785; 2000 Kan. LEXIS 628Docket: 84,256

Court: Supreme Court of Kansas; July 14, 2000; Kansas; State Supreme Court

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In the disciplinary proceeding against attorney Christopher E. Lucas, the Kansas Supreme Court addressed allegations of violations of the Kansas Rules of Professional Conduct (KRPC) 1.15 and 8.4. Lucas, representing himself, contested the claims made by the Disciplinary Administrator's office. A hearing was conducted on January 6 and 19, 1999, during which the panel established several key facts through clear and convincing evidence:

1. Lucas entered into an unwritten partnership with Daniel Stuart, initially named Stuart and Associates, later renamed Stuart and Lucas, sharing income and expenses.
2. Stuart began clerking for Lucas before passing the bar, and the partnership formed as Stuart and Associates, with Lucas's name not included initially due to his employment at another firm.
3. The partnership opened bank accounts at Metcalf State Bank for its operations.
4. Ki Mun joined the partnership but was removed due to insufficient revenue generation.
5. Testimony revealed a three-way revenue-sharing agreement among Stuart, Mun, and Lucas, emphasizing that all clients were expected to benefit all partners equally.
6. After Mun's departure, Timothy Rogers joined the firm, and the partnership maintained a structure where all expenses and revenues were shared equally among the partners.
7. Lucas, however, contended that the arrangements were akin to sole proprietorships, contradicting the testimonies of Stuart and Rogers, who asserted the equal sharing of partnership responsibilities and financials.

The panel's findings highlight a significant discrepancy between Lucas's assertions and the testimonies of his former partners regarding the nature of their business relationship.

On June 1, 1995, Stuart and Associates relocated to 8101 College Boulevard in Overland Park, Kansas, opening new bank accounts at Boatmen's Bank while discussing the closure of their accounts at Metcalf State Bank. Daniel Stuart and the Respondent were authorized signers on the Metcalf accounts, while Timothy Rogers, a later addition to the firm, was not. The Respondent was responsible for closing the Metcalf accounts and, by late 1995, falsely assured Stuart and Rogers that the accounts had been closed.

In mid to late 1996, when confronted about the status of the Metcalf accounts, the Respondent initially denied their existence but later admitted they were still open, claiming to use them for personal deposits of his 401(k) funds and family loans to hide these transactions from his wife. Timothy Rogers, acting as the firm's bookkeeper, repeatedly requested information regarding the closure of the accounts and was misled by the Respondent, who claimed he could not locate bank statements.

Ultimately, Rogers discovered the Metcalf bank statements in the Respondent's office, revealing the accounts remained open into 1996 and had received deposits for about a year post-relocation. The Respondent had also redirected the bank statements to his home address, avoiding the firm's new location. Upon further confrontation, the Respondent admitted to misusing the accounts for personal gain, despite initially denying any wrongdoing.

Investigations revealed that the deposits into the Metcalf accounts were primarily from case settlements and fees, rather than the claimed 401(k) funds or family loans. When presented with evidence, including bank statements and canceled checks, the Respondent ultimately acknowledged his misconduct, admitting to retaining fees from firm cases and unauthorized endorsements of checks made out to other lawyers, which he deposited into the still-active Metcalf account without their knowledge.

An unwritten agreement existed among Respondent, Stuart, and Rogers, as well as with Mun, to share income and expenses equally. Respondent breached this agreement by using firm funds from Metcalf State Bank for personal purposes and misrepresenting to Stuart and Rogers that the accounts were closed, denying them access. Following a complaint from Stuart to the Disciplinary Administrator, Respondent solicited false statements from Stuart. Respondent falsely identified himself as a certified public accountant and misrepresented the firm's legal structure, listing it as a Limited Liability Company (L.L.C.) without proper registration with the Kansas Secretary of State. The firm’s I.R.S. identification and credit applications reflected this misrepresentation.

The panel concluded that Respondent violated Kansas Rule of Professional Conduct (KRPC) 1.15 related to client funds and KRPC 8.4(c) concerning dishonesty and misrepresentation. Aggravating factors included a selfish motive, a pattern of misconduct over several months, submission of false evidence during the disciplinary process, refusal to acknowledge wrongdoing, indifference to restitution, and illegal conduct by converting firm funds for personal use. Mitigating factors included Respondent's inexperience and lack of prior disciplinary history.

The panel determined that the violation of Rule 8.4(c) pertains to the lawyer's misconduct affecting his own firm and partners, rather than any client. The Respondent engaged in theft from his firm, intentionally deceiving and concealing his actions. Although the total amount stolen was not specified, the Respondent's willingness to misappropriate funds indicates dishonesty that could potentially harm clients, although direct harm was specifically inflicted on his partners. The panel found that aggravating factors significantly outweighed any mitigating considerations, recommending a two-year suspension from practicing law. Additionally, as a condition for reinstatement, the Respondent must make restitution agreed upon by the Complainant and Tim Rogers or determined by a competent court.

The Respondent contested various aspects of the panel's report, specifically disputing testimonies regarding agreements to share proceeds equally. He argued the absence of documentary evidence supporting such agreements and presented financial records to illustrate disparities in draws among partners. The Respondent denied several allegations related to the handling of bank accounts, asserting that he was not responsible for closing old accounts and that evidence existed to show that accounts remained operational. He also refuted claims regarding family loans deposited into accounts and maintained he had authorization to sign checks on behalf of a partner. Furthermore, he denied the existence of any unwritten agreements regarding income sharing and contended that he had met certification requirements to use the CPA title, despite lacking a license. Lastly, he did not dispute the failure to file paperwork for establishing an LLC.

Respondent filed a motion to vacate the disciplinary panel's report and request a new hearing before a different panel, citing a conflict of interest. The motion is based on the fact that Sally H. Harris, chairperson of the panel, is associated with Paul Hasty, Jr., who was prosecuting a monetary claim against the respondent. Key dates include the filing of a formal complaint against the respondent in September 1998, a disciplinary hearing in January 1999, and multiple letters from Hasty demanding payment between April and August 1999. Following these events, on November 9, 1999, respondent's counsel notified Harris about Hasty's prosecutorial role, leading to the filing of the Final Hearing Report on November 12, 1999, and the motion to vacate on November 29, 1999.

The legal basis for the motion references Supreme Court Rule 204(d), which mandates that board members refrain from involvement in cases where their impartiality might be questioned, supported by Canon 3E(1) of the Code of Judicial Conduct. Although Harris claims she was unaware of Hasty's claim against the respondent until November 9, the respondent argues that her role creates an appearance of impropriety, regardless of her actual knowledge. He asserts that Hasty may have leveraged the disciplinary proceedings for his client's advantage, supported by documents attached to his motion, including a letter from Hasty and a discovery request for respondent’s disciplinary history. Hasty's affidavit states he was unaware of the disciplinary action when he wrote the letter but learned of it before filing the discovery request. The claim against the respondent involves allegations of conversion related to insurance payments.

On August 20, 1999, Hasty communicated to the respondent that Mr. McQueen was willing to settle the claim by paying half, provided the respondent would pay the other half, expressing a desire to avoid discovery related to any ethical issues or potential punitive damages. An undated discovery request, signed by Hasty for Traders Insurance Company, sought documents regarding any complaints against the respondent related to legal matters from the previous five years. The respondent argued that in disciplinary proceedings, the appearance of impropriety necessitates recusal, citing only the case State v. Logan as supporting evidence. However, Logan did not favor the respondent's position. In Logan, a motion for a new trial was denied by the trial judge, whose son worked as an assistant district attorney, without any claim that the son influenced the case. The Court of Appeals ruled that there was no indication of bias affecting the defendant's right to a fair trial. They suggested future recusal to avoid questions of impropriety but did not find actual bias in the case. The reviewing court confirmed that the trial judge's failure to recuse did not constitute reversible error, ultimately concluding that there was no appearance of partiality since the judge’s son had no involvement in the case.

The Logan two-part analysis examines whether a duty to recuse exists, even if Harris was unaware of circumstances creating an appearance of impropriety. It suggests that such a duty would still apply despite her ignorance. If an appearance of impropriety is found, the focus shifts to whether there is evidence of actual bias or prejudice. The respondent claims bias based solely on the relationship between Harris and Hasty and the timing of the disciplinary proceeding with his lawsuit, failing to demonstrate actual bias or prejudice. Consequently, his motion is denied.

The court's review standard in disciplinary cases was established in prior cases, emphasizing the need to evaluate evidence independently. While the disciplinary board's report is advisory, it is treated with the respect of a jury's special verdict and upheld if supported by substantial evidence. The panel found credible testimony from Stuart and Rogers, and the court agrees there is sufficient evidence to support their claims, dismissing the respondent's argument to the contrary. The panel's findings indicate clear and convincing evidence that the respondent violated KRPC 8.4(c).

The recommended discipline of a two-year suspension is agreed upon, but the court does not impose a condition of restitution contingent on an agreement between the respondent and the complainants; rather, it stipulates that any unresolved payment issues should be determined by a competent court. Christopher E. Lucas is ordered suspended from practicing law in Kansas for two years, effective immediately, and must comply with continuing legal education (CLE) requirements to be reinstated afterward. The respondent is also required to pay the costs of the action, and the order will be published in the Kansas Reports. Justice Abbott concurs with the result.