I was digesting some ethics decisions the other day and came across a perennial bugaboo for lawyers—getting grieved, and disciplined, for not paying bills. It seems wrong, kind of like debtors’ prison or the old prejudice that owing money is a moral failing. But I’m a minority on this.
Now I’m not talking about failing to honor letters of protection, or what I call the chiropractors’ right to make lawyers their collection agents program. There’s a robust body of law related to that problem, which can be tricky when the lawyer knows her client owes money to a treating doctor who expects to be paid but where there is no assignment or agreement to pay. That, and issues related to an attorney’s status as an equitable trustee under some statutory and common-law schemes, keeps many awake at night and fills a lot of the disciplinary docket.
Nor am I talking about the issue that unpaid debt is a huge issue in bar admissions. Instead of obtaining criminal records on applicants, many states would rather get credit reports. Because we’re so thinly regulated related to our management of other people’s money, it’s only sensible to worry that someone deep in debt might be inclined to dip into the firm piggy bank to make a mortgage payment or pay child support. Sometimes, it’s better to avoid putting folks into situations where they are likely to fail.
No, what I’m talking about here is the fact that lawyers routinely get disciplined for not paying judgments against them, especially if the debt is related to their practice or is something owed to a client. In the case I was digesting, a lawyer who had been suspended effectively bankrupted herself by giving all of her money to now-former clients as refunds of prepaid legal fees. That left her with nothing to pay a judgment she had stipulated to in order to settle a legal malpractice case.
Her defense was that while she’d love to pay the judgment, she had no money left and was not likely to earn any while under a long suspension. No blood from a stone. The committee was unimpressed, pointing out that she chose to make other clients whole instead of paying the judgment and ordered her in front of a judge for consideration of more suspension. It views not paying a judgment as conduct prejudicial to the administration of justice, a violation of Rule 8.4(4). I think it was more like her spreading the limited money available among as many as possible than intentionally violating a court order, but I didn’t get a vote.
We all know that many of us aren’t really all that good at running the business end of the law, but I’ve met few lawyers in financial extremis who didn’t start out thinking things would be fine or who intentionally bankrupted themselves. Things have a way of going awry despite best intentions, and these things usually start small and mushroom. True, sometimes there is more than a bit of fault on the lawyer. Like the fellow who told me that things had been fine for him until his clients’ fund account “sprung a leak.” It leaked into his pocket as I remember.
We’re not outliers in this. Many states take the same position. Nevertheless, if it’s a situation where the lawyer got in over his or her head for no other reason than bad luck, I still think it’s unfair to make debt a character and fitness issue. Being American, for many of us, means being in debt, especially young lawyers who start out owing huge amounts of student debt.
I did find a pretty well-reasoned case in the U.S. Virgin Islands where the court refused to impose a recommended disciplinary order of suspension until the respondent lawyer paid a modest malpractice judgment against him, pointing out that this was akin to placing a commercial lien on a professional license. Instead, the court imposed a six-month suspension (there were some other problems too) and noted that whether the lawyer had tried to make headway on paying the judgment would be an issue at the time of reinstatement. I didn’t find any cases dealing with whether failure to pay a debt discharged in bankruptcy could still be charged as a disciplinary violation, but I’ll keep looking.
Bottom line, there are sometimes different rules for us than for other commercial actors, perhaps by virtue of our positions as keepers of the keys to the justice system. As I tell some clients, “it ain’t fair, but it’s the law.”
Mark Dubois, a former Connecticut chief disciplinary counsel, is with Geraghty & Bonnano in New London.