Board Of Overseers Of The Bar v. Warren

34 A.3d 1103 (2011)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

John Duncan was a partner practicing in Verrill's private clients group. One of the firm's paralegals discovered a discrepancy in the account of one of Duncan's clients. The check register reflected that a payment had been made to Verrill, but the check, as shown on the account's bank statement, had been made payable to Duncan. The paralegal told Duncan's secretary who identified a total of fourteen such discrepancies dating back to 2003. In June 2007, Duncan's secretary confided in another attorney at the firm, who promptly notified Warren, the firm's managing partner, of the concerns and delivered the supporting documentation to him. On June 13 or 14, 2007, Warren advised Kilbreth, the chair of the firm's executive committee, that Duncan appeared to be writing checks from a client account to himself rather than to the firm. Duncan explained that the checks represented attorney fees that he had earned for work on the account, but which should have been paid over to the firm in accordance with the partnership agreement. Duncan offered to write the firm a check to cover the funds and to resign from the firm. Duncan repaid the money in full. The committee agreed to decline Duncan's offer to resign. There was no discussion during this meeting about making a report to P. They did not discuss bringing Duncan's conduct to the attention of Gene Libby, the firm's in-house general counsel. The committee concluded that Warren should notify Kurt Klebe, the head of the private clients group, to allow him to implement practices to prevent similar events from occurring in the future. Warren delayed notifying Klebe. On October 2, 2007, Warren told Klebe and Klebe quickly discovered another account from which Duncan had written a check to himself, ostensibly for fees, which had not been turned over to the firm. As more accounts were reconciled, the problem kept getting bigger. On October 10, 2007, the firm's in-house general counsel, learned that Duncan had been mishandling funds and began an investigation. Duncan was terminated December 31, 2007. The audit revealed that Duncan had also billed clients for work he had not performed and taken money from those clients' accounts to 'pay' himself. Libby resigned from Verrill in November of 2007. Libby informed P that he believed he had unprivileged knowledge of violations of the Maine Bar Rules that had occurred. P subpoenaed the information and Verrill moved to quash the subpoena, asserting that the information was protected by the lawyer-client privilege and the work product doctrine. A single justice found that the crime-fraud exception to the lawyer-client privilege applied to all of the disputed documents. Verrill appealed. The case was vacated and remanded. The single justice granted Verrill's motion to quash. The single justice found that Libby and the firm had a lawyer-client relationship and that the firm had 'met the requirements of M.R. Evid. 502(a)-(c)' for asserting the lawyer-client privilege. P filed an information alleging that Warren and the five members of the executive committee had violated M. Bar R. 3.1(a), 3.2(e)(1), (f)(2), (3), (4), 3.6(i), 3.13(a), (b) by failing to investigate, discover, and report Duncan's misconduct, and failing to mitigate losses to clients and the firm resulting from Duncan's misconduct. The single justice found that P had failed to prove, by a preponderance of the evidence, that the six attorneys committed the violations charged in the information. P appealed.