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The Delaware Supreme Court has suspended solo practitioner William L. Garrett Jr. for three years for a “pattern of knowing misconduct” that resulted in nine separate violations of the Delaware Lawyers’ Rules of Professional Conduct. According to the high court’s opinion in In re Garrett, Garrett’s misconduct included commingling client and personal funds, not paying income taxes from 1994 through 2001 and failing for almost nine years to maintain the books and records for his practice’s escrow and operating accounts. Garrett also made false representations to the state Supreme Court that he was complying with state record-keeping and tax obligations, the opinion said. Garrett’s suspension became effective on Oct. 29. Office of Disciplinary Counsel attorney Michael McGinniss, who handled the matter for the ODC, said receivers have already been appointed for Garrett’s practice in order to protect the interests of the lawyer’s clients. According to the per curiam opinion from Chief Justice E. Norman Veasey, and Justices Randy J. Holland and Carolyn Berger, the court relied on a report from the Board on Professional Responsibility in making its decision. The opinion states that Garrett, who appeared pro se, did not object to the board’s report. THE BOARD’S FINDINGS The board’s report, dated Sept. 15, reflected information contained in a petition for discipline prepared by the ODC. The board found that the ODC proved the facts and violations alleged in its petition by clear and convincing evidence, the report said. The report indicated that Garrett’s troubles began when Martin Zukoff, a certified public accountant and an auditor for the Lawyers’ Fund for Client Protection, attempted to conduct a random compliance audit of the practice’s books and records. A report Zukoff submitted to the LFCP stated that his repeated attempts to conduct an audit had failed because Garrett kept rescheduling. After receiving a copy of the Zukoff report, the ODC requested that LFCP auditor Joseph F. McCullough conduct an investigative audit of Garrett’s financial books and records, the report said. McCullough did so on Sept. 5, 2002. The investigation revealed that since the inception of his solo practice in 1994, Garrett had not prepared any monthly or yearly bank reconciliations for his three business bank accounts, the board report said. The board agreed with the ODC that Garrett’s failure to maintain the record for his firm’s bank accounts violated DLRPC Rule 1.15(d), which sets forth detailed requirements for the maintenance of attorneys’ books and records, and for the handling of practice-related funds. The board report also said that by depositing unearned advance fees in the firm’s operating account, Garrett violated DLRPC Rules 1.5(f) and 1.15(a). Rule 1.5(f) states in relevant part that a lawyer may require a client to pay some or all of a fee in advance of representation, provided that the attorney retains all unearned fees in a trust account and informs the client in writing that the fee is refundable if it is not earned. Rule 1.15(a) provides in relevant part that a lawyer shall hold the property of clients or third persons separate from the lawyer’s own property and must appropriately safeguard that property. “By depositing unearned advance fees into his operating account from 1994 through September 2002,” the board report said, “the respondent commingled client funds with his own funds in violation of Rule 1.15(a).” According to the report, McCullough’s investigation also revealed that Garrett failed to pay federal, state or local income taxes for a number of years. “Upon questioning by McCullough,” the report said, “the respondent indicated that he had not filed any federal, state or local income tax returns for the past few years. … He estimated that the law firm’s net profit was in the neighborhood of $100,000 per year, and acknowledged that he would have a tax liability due and owing for each year.” The ODC later learned that Garrett had not paid any income taxes since opening his firm in 1994, the report said. “By willfully failing to file any federal, state or local income tax returns for tax years 1994 through 2001, and willfully failing to pay any federal, state or local taxes on his income for tax years 1994 through 2001, [Garrett] violated Rule 8.4(b)[,]” the report said. Garrett’s failure to file tax returns also violated Rule 8.4(d), the report said. Rule 8.4(b) states that 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. Rule 8.4(d) provides that it is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice. In the years 1996 through 2002, Garrett filed certificates of compliance with the Delaware Supreme Court. Each certificate contained false representations relating to his maintenance of his law office’s books and records, the report stated. By filing the certificates, Garrett violated Rules 8.4(c) and 8.4(d). Rule 8.4(c) provides that it is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation. THE SANCTION In determining an appropriate sanction for Garrett, the board considered the nature of the ethical duties violated, the lawyer’s mental state, the actual or potential injury caused by the misconduct and aggravating and mitigating circumstances, the report said. As to Garrett’s mental state, the board said in its report that the respondent’s position was that the violations occurred mainly as a result of his failure to properly maintain his books and records, which, as a result of extended procrastination, eventually made the task monumental. “It is clear, however, that the respondent was aware of his obligation to respond truthfully to the Supreme Court, Certificates of Compliance for years 1996 through 2002,” the report states, “and that he knowingly failed to do so in order to avoid embarrassment or humiliation.” The board noted in its report that Garrett’s rules violations had apparently caused no actual harm to his clients. But, the board said, commingling client funds and personal funds creates a risk of injury to clients. Further, the report states, failure to file or pay income taxes is misconduct that causes serious actual injury to the legal profession. In accepting the board’s finding of facts and adhering to its recommendation of a three-year suspension, the high court noted that the sanction comports with earlier holdings in similar cases, and that sanctions are not designed to be either punitive or penal in nature. Garrett declined to comment on his suspension. ODC’s ADVICE McGinniss told the Delaware Law Weekly that his office has found that compared to their counterparts in large firms, solo and small-firm practitioners experience heightened difficulties in maintaining their financial records. Noting that Garrett did not have any employees, McGinniss advised that attorneys ensure they have sufficient staffing to perform accurate bookkeeping. Ideally, firms should hire an accountant to verify that their records are properly maintained, McGinniss said. In addition, McGinniss noted that as firms have become increasingly aware of the importance of complying with state bookkeeping requirements, they have begun taking advantage of the recently launched Lawyers Compliance Services, a firm that helps attorneys comply with the DLRPC. Another important step, McGinniss said, is maintaining books and records on a computer. Computer software can generate valuable reports that enable firms to follow up on potential problems, he said.

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