The San Antonio Court of Appeals has affirmed a trial court order suspending an attorney’s license for 18 months for mishandling client funds.
Ruth v. Commission for Lawyer Discipline (No. 04-23-00122-CV; July 24, 2024) arose from a grievance filed by Ruth’s client stemming from his representation of her in a personal injury action. The suit settled for $43,000. Ruth deposited the settlement check in his spouse’s non-IOLTA bank account (oops) and wrote his client a $33,000 check out of a different non-IOLTA bank account (oops). He deducted from the settlement a $10,000 fee but never had a written fee agreement with the client (oops). Finally, he failed to provide his client with a written statement describing the outcome of the case and showing the remittance to the client and how he determined it (oops). The Commission for Lawyer Discipline determined that Ruth violated several disciplinary rules, to wit: Rule 1.04(d) (requiring contingency fee agreements to be in writing and requiring a written statement describing the outcome and showing remittance and method determination); Rule 1.05(b)(1) (prohibiting lawyer from disclosing client’s confidential information); Rule 1.14(a) (requiring attorneys to hold client funds in separate trust account); and Rule 8.04(a)(1) (prohibiting a lawyer from violating the rules). The Commission moved for partial summary judgment, which the trial court granted. After a one-day bench trial on sanctions, the trial court issued an order suspending Ruth from the practice of law for 18 months. Ruth appealed.
In an opinion by Justice Chapa, the court of appeals affirmed. Ruth admitted that he broke the rules but argued that the sanctions were too severe because he didn’t really hurt anybody and some of the exacerbating evidence heard in the hearing came from a prior license suspension that was under appeal. The court didn’t buy what was Ruth was selling, observing that he knew he was breaking the rules and exposing client’s funds to creditors by placing them in his own accounts was potentially harmful to the client, even if she didn’t suffer actual harm. Ruth argued further that the severity of the violations should be mitigated by his “inexperience” and the “absence of a dishonest motive,” but testimony at the hearing from the Coryell County District Attorney and a special prosecutor revealed that Ruth had been charged with assaulting a public servant, resisting or evading arrest, breach of fiduciary duty and obstruction, retaliation, and fraudulent use of identifying information, and, to top it off, aggravated perjury. Though he pleaded guilty to lesser charges, Ruth was suspended for five years in 2022. In response to Ruth’s arguments that none of that should have been considered because he was appealing the prior suspension, the court found nothing in the record indicating that the suspension had been stayed or that the trial court should not have considered such aggravating circumstances. Consequently, there was no abuse of discretion.
This is a good example of why the disciplinary rules should be enforced even in cases in which the violations arguably did not harm the client. The court of appeals rightly considered the violations not only in terms of their effect on the client, but on the damage that any attorney misconduct does to court system itself. Everybody makes mistakes, to be sure, and the temptation to ease up on an offender who freely admits to making them is not easy to resist. We applaud the Commission for Lawyer Discipline, the trial court, the court of appeals, and the attorney’s client for holding his feet to the fire.
