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Disciplinary Counsel v. Squire.

November 3, 2011

DISCIPLINARY COUNSEL
v.
SQUIRE.



ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline of the Supreme Court, No. 09-023.

Per curiam.

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Disciplinary Counsel v. Squire, Slip Opinion No. 2011-Ohio-5578.]

NOTICE

This slip opinion is subject to formal revision before it is published in an advance sheet of the Ohio Official Reports. Readers are requested to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 South Front Street, Columbus, Ohio 43215, of any typographical or other formal errors in the opinion, in order that corrections may be made before the opinion is published.

SLIP OPINION NO. 2011-OHIO-5578

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Disciplinary Counsel v. Squire, Slip Opinion No. 2011-Ohio-5578.]

Attorney misconduct--Multiple violations of the Rules of Professional Conduct-- Indefinite license suspension.

Submitted April 5, 2011

{¶1} Respondent, Percy Squire of Columbus, Ohio, Attorney Registration No. 0022010, was admitted to the practice of law in Ohio in 1981.

{¶2} On February 17, 2009, relator, Disciplinary Counsel, filed his initial complaint charging Squire with a single count of misconduct arising from his alleged mishandling of a $25,000 flat fee. The matter proceeded, however, on relator's five-count second amended complaint, which charged Squire with multiple violations of the Rules of Professional Conduct based upon allegations that he misappropriated and mishandled client funds, failed to maintain adequate records documenting client funds entrusted to him, and engaged in business relationships with clients without notifying them of the conflicts of interest inherent in those relationships.

{¶3} The parties submitted certain stipulations of fact and misconduct and more than 70 stipulated exhibits. The remaining issues were tried to a panel of the Board of Commissioners on Grievances and Discipline. In its report, which was not unanimous, the panel made findings of fact, determined that Squire had committed 12 violations of the Rules of Professional Conduct, recommended that 13 alleged violations be dismissed for lack of sufficient evidence, and recommended that Squire be suspended from the practice of law for two years with one year stayed on conditions. The board adopted the panel's report without qualification.

{¶4} Relator objects to the board's findings with respect to count three of the complaint, which addresses a loan Squire obtained from his friend, Bishop Norman Wagner, and two funds for Squire's client Mark D. Lay, as well as the recommended sanction. He argues that the evidence with respect to count three clearly and convincingly demonstrates that Squire converted or misappropriated client funds and that we should therefore indefinitely suspend Squire from the practice of law.

{¶5} Having carefully considered the arguments of the parties and the evidence presented in this case, we sustain relator's objections in part and overrule them in part and indefinitely suspend Squire from the practice of law in Ohio.

Misconduct

Count One

{¶6} On Friday, December 7, 2007, Mike Riley ("Riley") retained Squire to represent him and his father in various pending legal matters and signed an engagement letter agreeing to pay a flat fee of $100,000 in installments by February 15, 2008. Riley gave Squire $5,000 in cash so that he would begin working immediately, with the understanding that when Squire received the first $25,000 installment, he would send $5,000 to Riley's son.

{¶7} Later that day, the first $25,000 installment was wired into Squire's business account. Squire did not deposit the $5,000 cash into his client trust account or his business account, but instead spent it on undisclosed personal matters over the weekend. He did, however, write a $5,000 check from his business account payable to Riley's son as he had promised.

{¶8} The following Monday morning, December 10, 2007, Riley informed Squire that his legal services were no longer required. He asked Squire to deduct his earned fees and return the balance of the $25,000 payment. Squire, however, informed Riley that he was unable to return the $25,000 because he had already spent it. Squire gave Riley a promissory note from Percy Squire, L.L.C., promising to return the entire $25,000 plus interest by January 10, 2008. Squire failed to timely pay on the note, and when Riley visited his office on March 11, 2008, Squire issued a $25,000 check, postdated to March 12. Riley attempted to cash the check immediately, but it was rejected for insufficient funds. Later that day, Squire gave Riley a cashier's check for $25,000.

{¶9} Based upon these facts, the board found that Squire had violated Prof.Cond.R. 1.15(a) (requiring a lawyer to hold property of clients separate from the lawyer's own property), 1.15(c) (requiring a lawyer to deposit into a client trust account legal fees and expenses that have been paid in advance and to withdraw them only as fees are earned or expenses incurred), 1.16(e) (requiring a lawyer to promptly refund any unearned fee upon the lawyer's withdrawal from employment), and 8.4(h) (prohibiting a lawyer from engaging in conduct that adversely reflects on the lawyer's fitness to practice law).

{¶10} The board recommends that we dismiss an alleged violation of Prof.Cond.R. 8.4(c) (prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation), concluding that banking records demonstrating a balance of approximately $5,000 in Squire's operating account did not render his professed inability to refund Riley's $25,000 dishonest. The board further recommends that we dismiss alleged violations of Prof.Cond.R. 1.7(a)(2) (providing that a lawyer's continued representation of a client creates a conflict of interest if there is a substantial risk that the lawyer's ability to represent the client will be materially limited by the lawyer's responsibilities to another client, former client, or third person or by the lawyer's own personal interests), 1.7(b)(2) (requiring a lawyer to obtain informed consent in writing from each affected client before accepting or continuing representation of a client whose interests conflict with his own), and 1.8(a) (prohibiting a lawyer from entering into a business transaction with a client unless the client is advised in writing of the desirability of obtaining independent legal counsel and the terms of the transaction are fair, reasonable, and fully disclosed in a writing signed by the client), observing that Riley had terminated Squire's representation before Squire had issued the promissory note to secure his refund and before Squire took affirmative action to seek Riley's assistance in obtaining financing for an unrelated business venture.

{¶11} We adopt these findings of fact, which are supported by the record and clearly and convincingly demonstrate that Squire has violated Prof.Cond.R. 1.15(a), 1.15(c), 1.16(e), and 8.4(h). Because we find that the alleged violations of Prof.Cond. R. 1.7(a)(2), 1.7(b)(2), 1.8(a), and 8.4(c) are not supported by clear and convincing evidence, they are hereby dismissed.

Count Two

{¶12} Squire had engaged in business dealings with Curtis Jewell for 15 years. Jewell was also Squire's client. On March 12, 2008, Squire borrowed $30,000 from Jewell in order to refund the $25,000 discussed in Count One to Riley. He executed a promissory note to pay "to the order of Curtis Jewell the sum of Thirty Thousand Five Hundred Dollars ($30,000) [sic] on or before March 18, 2008," and stating that any holder could declare the "entire debt due and owing if the payment of $30,000 [sic] is not paid on or before March 18, 2008, or whatever sum is due and owing at the time of payment." The note further provided, "Overdue installations of interest and principal shall bear interest at the rate of 12% per annum payable immediately. In addition, overdue penalties will accrue at a rate of 18% commencing March 19, 2008."

{¶13} Squire stipulated that he did not advise the client in writing that he should seek the advice of independent counsel, nor did he obtain the client's informed consent in writing to the essential terms of the transaction and Squire's role in the transaction, and he did not disclose whether he was representing the client in the transaction. On March 17, 2008, Squire wired $31,500 from his client trust account to Jewell as payment on the note.

{¶14} In his June 2009 answer to an interrogatory in which relator sought information regarding the source of the funds Squire had used to pay his debt to Riley, Squire stated that he had obtained $25,000 from Jewell and that he had repaid Jewell the following week with funds he had borrowed from his friend, Bishop Norman Wagner. When asked to identify the terms of the loan "as they were explained to Mr. Jewell," Squire replied, "Percy Squire Co. LLC, would borrow $25,000.00 for one or two days," but did not disclose the existence of the promissory note. Then, in October 2009, Squire disclosed the promissory note and advised relator that he had borrowed $28,500 from Jewell and that the remaining $3,000 represented interest on those funds.

{¶15} Based upon these facts, the board found that Squire had violated Prof.Cond.R. 1.8(a) and recommended that we dismiss an alleged violation of Prof.Cond.R. 8.4(h). We adopt the board's findings of fact, misconduct, and violation of Prof.Cond.R. 1.8(a) and hereby dismiss the alleged violation of Prof.Cond.R. 8.4(h).

Count Three

I. The Bishop Wagner Loan

{¶16} Squire borrowed $100,000 from Bishop Norman Wagner, who had borrowed the money from Huntington National Bank. On March 17, 2008, the money was wired to Squire's client trust account, and Squire signed a promissory note and an indemnification agreement as the sole member of Percy Squire Co., L.L.C. In those documents, he promised to repay $75,000 on or before March 19, 2009, to pay Wagner for all of the interest payments on the Huntington loan, and to indemnify and hold Wagner harmless in the event of a default on the Huntington loan.

{¶17} Squire also executed a security agreement that granted Wagner a security interest in "[a]ll accounts, contract rights, instruments, documents, chattel paper, and all obligations in any form arising out of the sale or lease of goods or rendition of services by [Percy Squire Co., L.L.C.]" and "[a]ll general intangibles, chooses [sic] in action, causes of action, obligations or indebtedness owed to [Percy Squire Co., L.L.C.] from any source whatsoever, and all other intangible personal property of every kind and nature." The security agreement further gave Wagner the right "to verify the validity, amount, or any other matter relating to any Accounts * * * and after default by [Percy Squire Co., L.L.C.] hereunder collect the same directly," and "to notify post office authorities to change the address for delivery of [Percy Squire Co., L.L.C.'s] mail to an address designated by [Wagner], to receive and open all mail addressed to [Percy Squire Co., L.L.C.] and to retain all mail relating to Collateral and forward all other mail to [Percy Squire Co., L.L.C.]." *fn1 Relator has not submitted any evidence tending to show that Wagner or his heirs have exercised these rights or that any client confidences have been disclosed to them.

{¶18} From March 17, 2008, when proceeds of the Huntington Loan were wired to Squire's client trust account, through April 21, 2008, Squire made 19 withdrawals from his client trust account--all for his personal or business expenses. He also received two deposits, totaling $17,500, both of which, Squire testified, represented fees for legal representation.

{¶19} In response to relator's inquiries regarding the loan from Wagner, Squire initially stated that he had received $75,000 from Wagner. Upon further inquiry, he admitted that he had received $100,000, but claimed that the $25,000 that was not included in the promissory note represented payment for work he had performed in a wrongful-death case filed on behalf of the estate of Wagner's nephew, brother of Brian and Kim Wallace (discussed more fully in Count Four, below). But when relator reminded Squire that he had taken the wrongful-death case on a contingent-fee basis, which would render the $25,000 payment clearly excessive, Squire claimed that his prior statement had been erroneous. At his deposition, he testified that he had made a mistake in excluding the $25,000 from the promissory note, because he and Wagner had contemplated that he would use the remaining $25,000 to repay Riley. Although Squire testified that his responses were based on an honest mistake of memory, rather than an intentional misrepresentation, the board did not find this testimony credible. At the time of the hearing, Squire had not repaid Wagner, his widow, or his estate the principal due on the note.

{¶20} Based upon this conduct, we find that Squire has violated Prof.Cond.R. 1.15(a) (requiring a lawyer to hold property of clients separate from the lawyer's own property and to maintain detailed records documenting the funds received, disbursements made, and current balance in the account), 1.15(c), 8.1(a) (prohibiting knowingly making a false statement of material fact in connection with a disciplinary matter), 8.4(c), and 8.4(h).

{¶21} Although the board implies that Disciplinary Counsel v. Shaver, 121 Ohio St.3d 393, 2009-Ohio-1385, 904 N.E.2d 883, stands for the proposition that a violation of Prof.Cond.R. 1.6(a) does not require an actual disclosure of confidential client information, it has nonetheless recommended that we dismiss an alleged violation of that rule, as well as alleged violations of 1.7(a) (prohibiting a lawyer from accepting or continuing a client's representation if that representation will be directly adverse to another client or there is a substantial risk that the lawyer's ability to carry out the representation will be materially limited by the lawyer's responsibilities to another client, a third person, or the lawyer's own personal interests) and 1.7(b) (prohibiting a lawyer from accepting or continuing the representation of a client if such representation would create a conflict of interest, unless the lawyer would be able to provide competent, diligent ...


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