Iowa Supreme Court Attorney Disciplinary Board Vs. John W. Carty ( 2007 )

IN THE SUPREME COURT OF IOWA
No. 70 / 07-0385
Filed August 31, 2007
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
JOHN W. CARTY,
Respondent.
________________________________________________________________________
On review of the report of the Grievance Commission.
Grievance Commission reports that respondent has committed
ethical misconduct and recommends a suspension from the practice of
law. LICENSE SUSPENDED.
Charles L. Harrington and Wendell J. Harms, Des Moines, for
complainant.
Brent B. Green and Bradley C. Obermeier of Duncan, Green,
Brown & Langeness, Des Moines, for respondent.
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CADY, Justice.
The Iowa Supreme Court Attorney Disciplinary Board (Board)
charged John W. Carty with numerous violations of the Iowa Code of
Professional Responsibility for Lawyers. The Grievance Commission of
the Supreme Court of Iowa (Commission) found Carty violated the Iowa
Code of Professional Responsibility for Lawyers. It recommended Carty
be suspended from the practice of law for a period not less than four
months. Upon our review, we find Carty violated the Iowa Code of
Professional Responsibility for Lawyers, and we suspend his license to
practice law for a period of sixty days.
I. Background Facts and Proceedings.
John W. Carty has practiced law in Winfield, Iowa, since 1952.
During his long career, he was disciplined on one occasion for
professional misconduct. This occurred in 1994 when he was publicly
reprimanded for becoming personally involved in a business interest of a
client.
At the time of the facts and circumstances that gave rise to this
proceeding, Carty was in the process of limiting his clientele in
contemplation of retirement. His long-time secretary, or legal assistant,
also left her employment during this time, and Carty employed a new
secretary.
In April 2001, Carty was designated as the attorney for the estate
of Ralph G. Beech, who died testate on March 18, 2001. Carty had
prepared a will for Beech and performed other legal services for him
shortly before his death.
The district court eventually ordered that Carty be paid fees for his
ordinary services in the estate in the amount of $19,086.74. This fee
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was based on the gross value of the estate, as disclosed by the report and
inventory prepared and filed with the court by Carty.
Carty subsequently completed the essential legal work in the case
without incident and was preparing to close the estate. He arranged for
the coexecutors to come to his law office to sign the tax returns, final
report and other documents so the closing order could be entered upon
receipt of the tax clearances.
One of the coexecutors failed to appear at the appointment
scheduled by Carty. The other coexecutor appeared and signed the
documents. The coexecutor also issued a check to Carty for his legal
fees in the full amount previously allowed by the district court. Carty
intended to place the check into his trust account, but his new secretary
deposited it in his office account.
The coexecutor who failed to appear at Carty’s office to sign the
documents died before he was able to execute all of the necessary closing
documents. Carty then discovered the deceased coexecutor had
submitted documents to him that overvalued Beech’s estate by nearly
$90,000. Consequently, Carty filed an amended inventory with the court
to reflect the reduced value of the estate, together with amended tax
returns and other documents, but never sought to reduce the amount of
the fees for his ordinary services based on the reduced amount of the
gross value of the estate. Instead, Carty eventually sought an allowance
for extraordinary services based on the additional work he was required
to perform to correct the mistake caused by the deceased coexecutor.
Carty requested extraordinary fees of $23,871.69 based on 182
hours of legal work. However, a portion of his application for fees
detailed legal services that were duplicative of some of the services
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performed as a part of his ordinary fees. The inclusion of these services
was likely due to miscommunication between Carty and his secretary
during a time when Carty was working from his home after recuperating
from heart surgery.
The district court approved the application for extraordinary fees
requested by Carty. Carty was then paid the extraordinary fees
requested in his application, and the estate was closed. Carty never
sought to return the excessive ordinary fees ($1665), and he did not seek
to return any portion of the duplicative extraordinary fees after they were
discovered.
II. Board Complaint.
The Board charged Carty with a variety of disciplinary violations,
and the parties subsequently stipulated to conduct to support a finding
by the Commission that Carty violated the Iowa Code of Professional
Responsibility. Specifically, the Commission found that Carty: (1)
collected an illegal fee in violation of DR 2—106(A) when he received his
full ordinary fee prior to the time the final report was filed and the costs
were paid, and (2) charged or collected an illegal or clearly excessive fee
in violation of DR 2—106(A) by failing to amend the ordinary-fee claim
and submitting a claim for extraordinary fees that included duplicative
services. See DR 2—106(A) (“A lawyer shall not enter into an agreement
for, charge, or collect an illegal or clearly excessive fee.”). The
Commission also found Carty’s conduct violated DR 1—102(A)(1) (lawyer
shall not “[v]iolate a disciplinary rule”) and DR 1—102(A)(6) (lawyer shall
not “[e]ngage in any other conduct that adversely reflects on the fitness
to practice law”).
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III. Scope of Review.
We review attorney disciplinary matters de novo. Iowa Supreme Ct.
Bd. of Prof’l Ethics & Conduct v. Bernard, 653 N.W.2d 373, 375 (Iowa
2002). We give the findings of the Commission weight, but are not
bound by them. Id.
IV. Violation.
A lawyer may not charge or collect an illegal or clearly excessive
fee. DR 2—106(A). Carty violated this rule in three ways.
First, Carty violated DR 2—106(A) when he accepted a full probate
fee prior to the time he filed the final report and paid the costs, contrary
to the Iowa Rules of Probate Procedure. See Iowa Ct. R. 7.2(4) (“One half
of the fees for ordinary services may be paid when the federal estate tax
return, if required, and Iowa inheritance tax return, if required, are
prepared. . . . The remainder of the fees may be paid when the final
report is filed and the costs have been paid.”). The collection of the full
fee was illegal.
Second, Carty violated DR 2—106(A) when he failed to amend his
ordinary fee claim once the gross value of the estate was reduced to
reflect the correct amount. An attorney may not be compensated for
ordinary services in a probate proceeding in an amount greater than the
fee schedule under Iowa Code section 633.197 (2001). This fee schedule
caps the maximum fee at two percent of the amount of the gross estate
over $5000, as disclosed in the probate inventory, plus $220. The
collection of a probate fee in excess of the amount permitted by statute is
illegal.
Finally, Carty violated DR 2—106(A) when he charged and
collected duplicative fees for extraordinary services. Carty submitted a
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claim for extraordinary services that included ordinary services for which
he had previously been compensated. He charged and collected an
illegal fee.
Although the violations resulted in part from miscommunication
between Carty and his secretary, this circumstance does not excuse
Carty from his violations. See Iowa Supreme Ct. Bd. of Prof’l Ethics &
Conduct v. Beckman, 674 N.W.2d 129, 137–38 (Iowa 2004) (alleging an
error was made due to a change in secretaries). Carty violated DR 2—
106(A). By violating this disciplinary rule, he also violated DR 1—
102(A)(1). Similarly, Carty also violated DR 1—102(A)(6). See Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Johnston, 732 N.W.2d 448,
454 (Iowa 2007).
V. Discipline.
Carty is not the first Iowa lawyer to collect illegal or excessive fees
in a probate proceeding. In prior cases, the resulting discipline has
ranged from a reprimand to a suspension of various degrees. See Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Fleming, 602 N.W.2d 340,
340 (Iowa 1999) (suspension not less than six months); Iowa Supreme Ct.
Bd. of Prof’l Ethics & Conduct v. Evans, 537 N.W.2d 783, 786 (Iowa 1995)
(suspension not less than thirty days); Comm’n on Prof’l Ethics & Conduct
v. Winkel, 415 N.W.2d 601, 602 (Iowa 1987) (reprimand). The case that
best approximates the conduct that occurred in this case is Evans. In
that case, an experienced probate attorney collected fees that were both
premature and excessive. 537 N.W.2d at 784–85. The attorney was
suspended from the practice of law for thirty days. Id. at 786. However,
we find aggravating circumstances in this case that were not present in
Evans. Carty never took any action to correct the obvious excessive fees
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for ordinary and extraordinary services once the mistakes were
discovered. This conduct reflects adversely on Carty and warrants
additional discipline.
We conclude Carty should be suspended from the practice of law
for sixty days. Prior to his reinstatement under Iowa Court Rule
35.12(2), Carty shall make restitution in the amount of $6165 to the
trust established under the Beech will for distribution to the beneficiaries
of the trust. We conclude Carty received ordinary fees of $1665 in excess
of the maximum fee permitted under section 633.197, and that $4500 of
his fees for extraordinary services was ordinary services or should have
been included as ordinary services. Carty shall also be responsible for
any fees, expenses, and costs incurred in making the restitution.
VI. Conclusion.
We suspend Carty’s license to practice law in Iowa for a period of
sixty days. The suspension imposed applies to all facets of the practice
of law as provided by Iowa Court Rule 35.12(3) and requires notification
of clients as provided in Iowa Court Rule 35.21. Carty shall make
restitution as provided in this opinion, and no automatic reinstatement,
as provided under Iowa Court Rule 35.12(2), shall be ordered until all
restitution has been made. The costs of this proceeding are taxed
against Carty pursuant to Iowa Court Rule 35.25(1).
LICENSE SUSPENDED.