Lorain Cty. Bar Assn. v. Nelson , 2022 Ohio 1288 ( 2022 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Lorain Cty. Bar Assn. v. Nelson, Slip Opinion No. 2022-Ohio-1288.]
NOTICE
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SLIP OPINION NO. 2022-OHIO-1288LORAIN COUNTY BAR ASSOCIATION v. NELSON.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Lorain Cty. Bar Assn. v. Nelson, Slip Opinion No.
2022-Ohio-1288.]
Attorneys—Misconduct—Violations of the Rules of Professional Conduct,
including failing to hold funds belonging to clients in a client trust account
and engaging in conduct involving dishonesty, fraud, deceit, or
misrepresentation—Two-year suspension with one year conditionally
stayed.
(No. 2021-0759—Submitted October 6, 2021—Decided April 21, 2022.)
ON CERTIFIED REPORT by the Board of Professional Conduct of the Supreme
Court, No. 2020-055.
______________
Per Curiam.
{¶ 1} Respondent, Kenneth Allen Nelson II, of Avon Lake, Ohio, Attorney
Registration No. 0075834, was admitted to the practice of law in Ohio in 2003. On
October 22, 2015, we publicly reprimanded Nelson for committing multiple ethical
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violations arising from his representation of a single client. Lorain Cty. Bar Assn.
v. Nelson, 144 Ohio St.3d 414, 2015-Ohio-4337, 44 N.E.3d 268. On December 7,
2017, we suspended him from the practice of law for two years, with 18 months
conditionally stayed, for multiple ethical violations, including his failure to deposit
and hold client fees paid in advance in his client trust account until they were
earned. Lorain Cty. Bar Assn. v. Nelson, 152 Ohio St.3d 222, 2017-Ohio-8856, 94
N.E.3d 551. Upon reinstating Nelson to the practice of law on July 24, 2018, we
ordered him to serve a one-year period of monitored probation “focusing on trust-
account and record-keeping requirements relating to fees and other client
materials.” Lorain Cty. Bar Assn. v. Nelson, 153 Ohio St.3d 1239, 2018-Ohio-
2895, 109 N.E.3d 1250, ¶ 3.
{¶ 2} In a September 2020 complaint, relator, Lorain County Bar
Association, alleged that Nelson violated multiple ethical rules by failing to deposit
advance legal fees into his client trust account, making false statements of fact in
an application to terminate his monitored probation, and failing to cooperate with
relator’s disciplinary investigation.
{¶ 3} The parties submitted stipulations of fact and aggravating and
mitigating factors. After a hearing, a three-member panel of the Board of
Professional Conduct issued a report finding that Nelson had committed four of the
charged rule violations and unanimously dismissing two others. The panel
recommended that Nelson be suspended from the practice of law for two years,
with one year stayed on conditions, and that he be required to work with a
monitoring attorney for two years upon his reinstatement to the profession. The
board adopted the findings and recommendation of the panel. Nelson objects to the
board’s recommended sanction—primarily arguing that it is “more than [is]
necessary to adequately * * * protect the public from [his] misconduct.” For the
reasons that follow, we adopt the board’s findings of misconduct and suspend
Nelson from the practice of law for two years, with the second year stayed on the
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conditions recommended by the board, followed by a two-year period of monitored
probation.
Misconduct
Modest Means Program Client Fees
{¶ 4} When Nelson was reinstated to the practice of law in July 2018, he
was required to serve one year of monitored probation focused on trust-account and
record-keeping requirements relating to fees and other client materials. While on
probation, Nelson contacted relator to inquire about its Modest Means Program, a
referral service that is intended to provide affordable legal representation to clients
who cannot afford to obtain counsel at market rates. Attorneys who participate in
the program agree to accept a retainer of $500 and to bill clients at a rate of $75 per
hour with the retainer to be replenished as needed. The bar association provides
the attorneys with a sample fee agreement that sets forth those terms.
{¶ 5} From early 2019 through early 2020, Nelson accepted 18 referrals
from the Modest Means Program. By February 27, 2020, Nelson was aware that
relator was investigating his compliance with the terms of his monitored probation
and client-trust-account rules and that the investigation related to his handling of
the retainers paid by his Modest Means Program clients.
{¶ 6} On April 30, 2020, relator served Nelson with a notice advising him
that relator believed he had violated the terms of his probation by continuing to
deposit client funds into an improper account. Relator also informed Nelson that it
intended to proceed with a petition to revoke his probation and reinstate his stayed
suspension.
{¶ 7} At relator’s invitation, Nelson appeared at its May 18, 2020 ethics-
committee meeting to explain his conduct. Later that week, Nelson filed an
application with this court to terminate his probation. Thereafter, relator charged
Nelson with (1) failing to deposit the funds he received from his Modest Means
Program clients into his client trust account and failing to hold those fees there until
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they were earned, (2) engaging in dishonesty and making a false statement of fact
in his application to terminate his probation, and (3) failing to cooperate in the
ensuing disciplinary investigation.
{¶ 8} At Nelson’s disciplinary hearing, Jeannie Motylewski, relator’s
executive director, testified that she informed each attorney participating in the
Modest Means Program how the program worked and provided them with a sample
fee agreement that the bar association asked them to use. Motylewski testified that
after discussing the program with Nelson by telephone, she emailed him a copy of
the fee agreement. A copy of Motylewski’s April 25, 2019 email and the attached
fee agreement were admitted into evidence over the objection of Nelson, who
claimed that he did not recall speaking with Motylewski about the program or
receiving those documents.
{¶ 9} In his opening statement and testimony throughout his disciplinary
hearing, Nelson maintained that he had misunderstood how the Modest Means
Program worked. He claimed that he had believed that it was a flat-fee program,
in which the $500 retainers were earned upon receipt, and that as a result of that
belief, he did not deposit those retainers into his client trust account.
{¶ 10} Prof.Cond.R. 1.15 sets forth a lawyer’s duties regarding the
safekeeping of client funds and property. Prof.Cond.R. 1.15(a) requires a lawyer
to hold the funds of clients in an interest-bearing client trust account, separate from
the lawyer’s own property, and Prof.Cond.R. 1.15(c) requires a lawyer to deposit
advance legal fees and expenses into a client trust account, to be withdrawn by the
lawyer only as fees are earned or expenses are incurred.
{¶ 11} In his defense, Nelson claimed that he used his own fee agreement
for each of his Modest Means Program clients and charged them a flat fee of $500.
In addition, he claimed that his fee agreement complied with Prof.Cond.R.
1.5(d)(3), which provides an exception to the general rule that a client’s advance
payment of legal fees must be deposited into a lawyer’s client trust account.
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Specifically, Prof.Cond.R. 1.5(d)(3) permits a lawyer to charge a fee denominated
as “earned upon receipt” only if the attorney simultaneously advises the client in
writing that the client may be entitled to a refund of all or part of the fee if the
lawyer does not complete the representation. Nelson maintained that, consistent
with this rule, he was not required to deposit the retainers he received from his
Modest Means Program clients into his client trust account.
{¶ 12} However, Nelson testified that he could provide only one of the 18
fee agreements for his Modest Means Program clients and that the rest were
missing. While the board found that the one fee agreement Nelson produced
satisfied the requirements of Prof.Cond.R. 1.5(d)(3), Nelson’s representation in that
case did not begin until after Nelson was informed that relator had commenced its
investigation into his compliance with the terms of his probation and client-trust-
account regulations. Indeed, the fee agreement is dated March 2, 2020—at least
four days after Nelson learned of relator’s investigation.
{¶ 13} Relator requested production of all of Nelson’s fee agreements in
discovery in October 2020, and Nelson twice requested extensions of time to
respond. When Nelson finally responded in January 2021, he objected to relator’s
request solely on the basis of attorney-client privilege. It was not until his February
2021 deposition—after he had been ordered by the panel chair to produce them—
that Nelson first claimed that his fee agreements had been misplaced.
{¶ 14} At his March 2021 disciplinary hearing, Nelson testified that he and
his legal assistant were forced to leave his office following protests in downtown
Cleveland in May 2020. Nelson said that he believed that his legal assistant had
taken a box containing the fee agreements and that she later told him that she was
unable to locate the box or the fee agreements but was still looking for them. When
asked why he did not provide copies of those documents to relator after learning of
relator’s investigation in February 2020 and before vacating his office in May 2020,
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Nelson claimed that relator did not ask him for copies of his fee agreements and
that “[i]f I would have thought of it, absolutely, I would have provided them.”
{¶ 15} The board found that Nelson’s actions throughout the disciplinary
process rendered his testimony and defense suspect. Further, because Nelson had
been found to have violated Prof.Cond.R. 1.5(d)(3) in a prior disciplinary case, the
board found that he knew or should have known that he had an obligation to prove
his compliance with that rule. The board noted that although producing copies of
his fee agreements would have been the easiest and most direct way for Nelson to
establish his compliance and end the investigation, he did not provide those
documents before he fled his office in May 2020. Nelson then waited until his
deposition in February 2021 to assert that his fee agreements had gone missing in
that exodus. Moreover, he offered no legitimate explanation for his failure (1) to
call his legal assistant to testify about how the fee agreements went missing, (2) to
call his clients to testify regarding the content of their fee agreements, or (3) to
obtain copies of those fee agreements from his clients and provide them to relator.
{¶ 16} The board found that Nelson’s conduct violated Prof.Cond.R.
1.15(a) and 1.15(c). The record supports these findings of fact and misconduct.
Application to Terminate Probation
{¶ 17} On May 22, 2020, Nelson filed an application with this court to
terminate the monitored probation we had imposed in his 2017 disciplinary case,
see Nelson, 152 Ohio St.3d 222, 2017-Ohio-8856, 94 N.E.3d 551, at ¶ 24. Included
with that application was an affidavit in which Nelson averred that “he [had]
complied with the conditions of the probation and that there [were] no disciplinary
proceedings pending against [him].” Relator alleged that that statement was
knowingly false and dishonest because just four days before Nelson filed it, he
appeared before relator’s ethics committee to address allegations that he had not
complied with the terms of his probation.
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{¶ 18} Nelson defended against those allegations by arguing that he did not
knowingly make any false or dishonest statements in his affidavit because he had
believed that he was in compliance with the terms of his probation and had
misunderstood the terms of the Modest Means Program.
{¶ 19} The board found that there was insufficient evidence to support a
finding that Nelson knowingly made a false statement that he had complied with
the terms of his probation because relator had not established that Nelson was aware
that he was not in compliance at the time he filed his affidavit.
{¶ 20} On the other hand, Nelson admitted that he knew there was a
disciplinary investigation pending at the time he submitted his application to
terminate his probation. Nelson withdrew his application on the advice of his
monitoring attorney less than three weeks after he filed it, but the board found that
that withdrawal did “not negate the knowingly false statement” Nelson made in that
document. Consequently, the board found that Nelson knowingly made a false
statement in violation of Prof.Cond.R. 3.3(a)(1) (prohibiting a lawyer from
knowingly making a false statement of fact or law to a tribunal) and 8.4(c)
(prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit,
or misrepresentation) when he asserted that there were no disciplinary proceedings
pending against him.
Alleged Failure to Respond to Disciplinary Investigation
{¶ 21} The board unanimously dismissed allegations that Nelson’s delays
in responding to discovery and disclosing that his fee agreements were missing
constituted a violation of Prof.Cond.R. 8.1(b) and Gov.Bar R. V(9)(G) (requiring a
lawyer to cooperate with a disciplinary investigation). Nevertheless, the board
stated that the facts relating to those allegations constituted aggravating factors to
be considered in determining the appropriate sanction for Nelson’s other rule
violations.
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Recommended Sanction
{¶ 22} When imposing sanctions for attorney misconduct, we consider all
relevant factors, including the ethical duties that the attorney violated, the
aggravating and mitigating factors listed in Gov.Bar R. V(13), and the sanctions
imposed in similar cases.
{¶ 23} In addition to the single aggravating factor stipulated to by the
parties—that Nelson has been disciplined by this court on two prior occasions—
the board found that he also engaged in a pattern of misconduct involving multiple
offenses. See Gov.Bar R. V(13)(B)(1), (3), and (4). And although Nelson had been
previously disciplined for treating client fees as earned upon receipt without
complying with Prof.Cond.R. 1.5(d)(3), the board noted that he had engaged in that
same misconduct an additional 17 times in this case. The board further attributed
aggravating effect to Nelson’s failure to cooperate in the disciplinary process, as
demonstrated by his reluctant and tardy responses to relator’s discovery requests
and his refusal to acknowledge the wrongfulness of his conduct. See Gov.Bar R.
V(13)(B)(5) and (7).
{¶ 24} In mitigation, the board adopted the parties’ stipulation that Nelson
lacked a dishonest or selfish motive and also found that he took corrective action
in response to relator’s investigation by depositing the credit balances from his
Modest Means Program clients into his client trust account. See Gov.Bar R.
V(13)(C)(2) and (3). In addition, the board noted that there was no evidence that
Nelson’s clients received anything less than diligent and professional
representation, that they suffered any financial harm as a result of his misconduct,
or that Nelson profited from his misconduct.
{¶ 25} Relator argued that an indefinite suspension was the appropriate
sanction for Nelson’s misconduct, while Nelson argued that if his conduct
amounted to any ethical violations, it warranted a sanction no greater than a fully
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stayed suspension. However, the board found that the appropriate sanction in this
case fell somewhere in between those recommendations.
{¶ 26} The board noted that the misconduct at issue in Nelson’s 2017
disciplinary case included client-trust-account violations that are almost identical
to those before us today and emphasized that his misconduct in this case occurred
while he was still on probation for those earlier offenses. On those facts, the board
concluded that Nelson did not learn from his past misconduct and that the sanction
imposed in his most recent disciplinary case—a two-year suspension with 18
months conditionally stayed—did not deter him from engaging in similar
misconduct. The board therefore recommended that we suspend Nelson from the
practice of law for two years with one year stayed on the conditions that he commit
no further misconduct and pay the costs of these proceedings. Additionally, the
board recommended that Nelson be required to work with a monitoring attorney,
appointed by relator, for two years and that he submit to monthly reviews of his fee
agreements and client trust account, to be conducted by his monitoring attorney or
an accountant.
Nelson’s Objection to the Board’s Report and Recommendation
{¶ 27} In a single objection, Nelson argues that the board’s recommended
sanction is greater than is necessary to adequately protect the public from future
misconduct. Nelson primarily argues that a two-year conditionally stayed
suspension accompanied by a two-year relationship with a monitoring attorney is
the appropriate sanction in this case. But he also challenges the board’s findings
that he made a false statement of fact in his application to terminate his probation
in violation of Prof.Cond.R. 3.3(a)(1) and 8.4(c). For the reasons that follow, we
find that these arguments are without merit.
{¶ 28} “One of the fundamental tenets of the professional responsibility of
a lawyer is that he should maintain a degree of personal and professional integrity
that meets the highest standard.” Cleveland Bar Assn. v. Stein, 29 Ohio St.2d 77,
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81, 278 N.E.2d 670 (1972). Here, Nelson claims that he truthfully averred that he
had complied with the conditions of his probation and that there were no
disciplinary proceedings pending against him when he submitted his application to
terminate probation. He maintains that when he filed his affidavit on May 22, 2020,
he “believed that he was in compliance with the terms of his probation” and that
there was no disciplinary proceeding pending against him because relator “was
investigating [his] compliance with the terms of probation, not any new violation.”
(Emphasis added.) That argument carries no weight given that Nelson has admitted
that he learned of relator’s investigation into his handling of client funds in
February 2020, and that by the time he appeared before relator’s ethics committee
on May 18, 2020, he knew that relator intended to proceed with a petition to revoke
his probation. In light of that knowledge, and the fact that any violation of his
probation would necessarily involve new allegations of misconduct, Nelson could
not have honestly claimed that there were no disciplinary proceedings pending
against him when he made those averments in his affidavit. We therefore overrule
Nelson’s objection to the board’s findings that his conduct violated Prof.Cond.R.
3.3(a)(1) and 8.4(c). Furthermore, we find that the evidence in this case amply
supports the board’s findings that Nelson’s conduct violated Prof.Cond.R. 1.15(a),
1.15(c), 3.3(a)(1), and 8.4(c), and we adopt those findings as our own.
{¶ 29} With respect to his argument that the board’s recommended sanction
is too severe, Nelson contends that his misconduct and the aggravating and
mitigating factors in this case most closely resemble three cases in which we
imposed fully stayed suspensions followed by a term of monitored probation—
namely Mahoning Cty. Bar Assn. v. Gerchak, 144 Ohio St.3d 138, 2015-Ohio-
4305, 41 N.E.3d 404; Disciplinary Counsel v. Dockry, 133 Ohio St.3d 527, 2012-
Ohio-5014, 979 N.E.2d 313; and Disciplinary Counsel v. Adelstein, 160 Ohio St.3d
511, 2020-Ohio-3000, 159 N.E.3d 1126. Based on that precedent, he argues that
his misconduct warrants a sanction no greater than a fully stayed two-year
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suspension. But we find that the facts of this case are readily distinguishable from
Gerchak, Dockry, and Adelstein.
{¶ 30} In Gerchak, we imposed a fully stayed two-year suspension on an
attorney who failed to deposit and maintain the unearned fees he received from a
single client in his client trust account. Gerchak at ¶ 7, 11. The only aggravating
factor present in that case was a record of prior discipline for rule violations that
bore no similarities to Gerchak’s subsequent misconduct. Id. at ¶ 9. In mitigation,
he lacked a dishonest or selfish motive, cooperated in the disciplinary proceedings,
submitted evidence of his good character and reputation, acknowledged his
wrongdoing, refunded the entire fee even though he had performed some work, and
acknowledged the need for mentoring. Id. Nelson, in contrast, failed to deposit the
fees of 17 clients into his client trust account while he was on probation for prior
violations of the same ethical rules. Nelson also engaged in dishonest conduct by
submitting a false statement of fact to this court in the affidavit that accompanied
his application to terminate his probation.
{¶ 31} Nelson asserts that like Gerchak, he submitted evidence of his good
character and reputation—specifically, three letters from judges attesting to his
good character, reputation, and competence as an attorney. The board, however,
did not mention those letters in its report or accord them any mitigating effect. And
while the record shows that Nelson did submit three character letters with his post-
hearing brief, the hearing transcript does not indicate that he sought or obtained
leave from the panel chair to submit those documents after the close of evidence.
Moreover, those letters were not authenticated in accordance with Evid.R. 901 or
902, and relator has not stipulated to their authenticity. Furthermore, Jud.Cond.R.
3.3 prohibits a judge from “testify[ing] as a character witness in a judicial,
administrative, or other adjudicatory proceeding or otherwise vouch[ing] for the
character of a person in a legal proceeding, except when duly summoned.”
(Emphasis added.) Yet there is no record that the jurists who have offered their
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opinions regarding Nelson’s character were subpoenaed in this case. On these
facts, we find that Nelson’s character letters have not been admitted into evidence
and are entitled to no mitigating effect.
{¶ 32} In Dockry and Adelstein, we imposed fully stayed one-year
suspensions on attorneys who violated some of the same ethical rules that Nelson
violated. In contrast to Nelson, Dockry deposited unearned attorney fees into his
client trust account. But he also deposited personal funds into that account, used it
to pay his personal and business expenses, and took an unauthorized loan from the
account. Dockry, 133 Ohio St.3d 527, 2012-Ohio-5014, 979 N.E.2d 313, at ¶ 6-8.
We found that numerous mitigating factors—including the absence of prior
discipline, Dockry’s prompt payment of restitution, and evidence of his good
character and reputation—outweighed the sole aggravating factor of a dishonest or
selfish motive. Id. at ¶ 23.
{¶ 33} Adelstein failed to deposit unearned legal fees into her client trust
account, commingled personal and client funds in that account, used the account to
pay personal expenses, and failed to maintain required records pertaining to the
account. Her mismanagement of that account resulted in numerous overdrafts and
notices that the account contained insufficient funds to honor payment requests.
Adelstein, 160 Ohio St.3d 511, 2020-Ohio-3000, 159 N.E.3d 1126, at ¶ 5-9. In
addition, Adelstein allowed a company to withdraw funds from a second client trust
account to settle a fee dispute with a client, even though the client’s retainer had
never been deposited into that account. Id. at ¶ 12.
{¶ 34} Just three aggravating factors were present—Adelstein’s record of
prior discipline (two suspensions for failing to timely pay her attorney-registration
fees), a selfish or dishonest motive, and multiple offenses. Id. at ¶ 1, 15-16.
Mitigating factors included Adelstein’s cooperation in the disciplinary proceedings,
the absence of harm to her clients, and letters from two clients who attested to her
competence and capability as an attorney. Id. at ¶ 28. We also were convinced that
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most of Adelstein’s violations were “the result of her failure to fully understand her
obligations” with respect to her client trust account and “her status as a sole
practitioner with no support staff to assist her with those tasks.” Id.
{¶ 35} In comparison, Nelson had already been disciplined for treating
client retainers as earned upon receipt without simultaneously advising his clients
in writing that they may be entitled to a refund of all or a portion of the fee if he did
not complete the representation. Despite having been suspended from the practice
of law for two years—with 18 months conditionally stayed—for that misconduct,
Nelson did not deposit the fees paid by 17 Modest Means Program clients into his
client trust account. Nor did he submit any evidence other than his own self-serving
testimony to establish the affirmative defense that those fees were earned upon
receipt because he had complied with Prof.Cond.R. 1.5(d)(3).
{¶ 36} In short, the sanction we imposed in December 2017 was insufficient
to deter Nelson from engaging in additional misconduct, and the repeated nature of
his client-trust-account violations combined with his lack of candor in his
application to terminate probation render the facts of this case more egregious than
those in Gerchak, Dockry, and Adelstein.
“If a prior attempt at discipline has been ineffective to
provide the protection intended for the public, then such further
safeguards should be imposed as will either tend to effect the
reformation of the offender or remove him entirely from the
practice. The discipline for a repeated offense may be much greater
than would have been imposed were it a first offense, yet such
greater discipline is not a meting out of further punishment for prior
acts but is a determination of the attorney’s fitness to practice.”
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Disciplinary Counsel v. Lawson, 130 Ohio St.3d 184, 2011-Ohio-4673, 956 N.E.2d
839, ¶ 34, quoting In re Disbarment of Lieberman, 163 Ohio St. 35, 41, 125 N.E.2d
328 (1955). On these facts, we overrule Nelson’s objection to the board’s
recommended sanction and agree with the board’s assessment that a two-year
suspension with one year conditionally stayed, followed by two years of work with
a monitoring attorney, is necessary to protect the public from future misconduct.
Conclusion
{¶ 37} Accordingly, Kenneth Allen Nelson II is suspended from the
practice of law in Ohio for two years, with one year stayed on the conditions that
he commit no further misconduct and pay the costs of these proceedings. If Nelson
fails to comply with the conditions of the stay, the stay will be lifted and he will
serve the full two-year suspension. Upon reinstatement to the practice of law,
Nelson shall be required to serve a two-year period of monitored probation in
accordance with Gov.Bar R. V(21). As part of that probation, Nelson shall submit
all fee agreements and client-trust-account records to his monitoring attorney on a
monthly basis. The monitoring attorney shall review those documents to ensure
that Nelson’s handling of client funds is in compliance with the Rules of
Professional Conduct and client-trust-account regulations. The monitoring
attorney shall immediately inform relator or another appropriate disciplinary
authority upon discovery or receipt of any evidence that Nelson has failed to either
properly account for client funds in his possession or otherwise comply with client-
trust-account regulations. The costs of this proceeding are taxed to Nelson.
Judgment accordingly.
O’CONNOR, C.J., and KENNEDY, FISCHER, DEWINE, DONNELLY, STEWART,
and BRUNNER, JJ., concur.
_________________
O’Toole, McLaughlin, Dooley & Pecora, Co., L.P.A., Matthew A. Dooley,
and Michael R. Briach, for relator.
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Kenneth Allen Nelson II, pro se.
_________________
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