Opinion 24-35

March 14, 2024

Digest:  A judge who determines there is a substantial likelihood that an attorney failed to maintain client funds in an escrow account must report the conduct to a disciplinary authority.

Rules:   22 NYCRR 100.2; 100.2(A); 100.3(D)(2); Opinions 10-85; 08-198; 07-129; Matter of Fisher, 210 AD3d 1 (1st Dept 2022).

Opinion:     

          The inquiring judge recently found an attorney in contempt for failing to follow a court order to turn over funds held in escrow in satisfaction of a civil judgment.  During the proceedings, the attorney admitted that the funds were no longer available in the attorney’s escrow account.  Later, after a sanction hearing was scheduled, the judge was advised that the judgment had been satisfied.

          A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]).  Therefore, a judge who has information indicating a “substantial likelihood” that a lawyer has committed a “substantial violation” of the Rules of Professional Conduct must take “appropriate action” (22 NYCRR 100.3[D][2]).

          We generally advise judges that they must determine whether there is a substantial likelihood that an attorney committed a substantial violation of the Rules of Professional Conduct because each individual judge is in the best position to evaluate and assess all relevant, known circumstances (see Opinions 08-198; 07-129).  The judge is required to report the conduct to a disciplinary authority only if it rises “to a level that seriously calls into question the attorney’s honest, trustworthiness or fitness as a lawyer” (Opinion 10-85).

          While this determination is generally within the judge’s discretion, in a few instances we have advised that a judge must report a lawyer’s alleged misconduct to a disciplinary authority.  In those instances, based on the facts disclosed by the respective inquiring judges, the initial two-prong test was met and the alleged substantial misconduct rose to such an egregious level that it seriously called into question the attorney’s honesty, trustworthiness or fitness as a lawyer (see e.g. Opinion 07-129 [attorney admitted under oath that he/she committed perjury]).  Accordingly, on those occasions, we advised that the only appropriate action was to report the lawyer to the appropriate disciplinary authority. 

          It appears the inquiring judge has already determined that the two-prong test is met, so the judge must take “appropriate action.”  The question that remains for us is what action is “appropriate” under the circumstances.  The Appellate Division has “consistently held that intentional misappropriation of client funds warrants disbarment absent extremely unusual mitigating circumstances” (Matter of Fisher, 210 AD3d 1, 4 [1st Dept 2022]).  Given this precedent, we conclude the alleged conduct seriously calls into question the attorney’s fitness as a lawyer.  Accordingly, the judge must report the attorney to the appropriate grievance committee.