S.E. 2d
THE STATE OF SOUTH CAROLINA
In The Supreme Court
In the Matter of Sharon
G. Marshall, Respondent.
Opinion No. 24775
Heard January 21, 1998 - Filed March 23, 1998
DEFINITE SUSPENSION
J. Cordell Maddox, Jr., of Glenn, Haigler & Maddox, of
Anderson, for respondent.
Attorney General Charles M. Condon and Assistant
Deputy Attorney General J. Emory Smith, Jr., both of
Columbia, for Complainant.
PER CURIAM: In this attorney disciplinary matter, respondent,
Sharon G. Marshall, is charged with several acts of misconduct arising out of
her representation of her clients and her supervision of her employee. We find
respondent committed misconduct and impose a definite suspension from the
practice of law for a period of six months. In addition, respondent must
complete the Law Office Management Assistance Program (LOMAP) of the South
Carolina Bar and make restitution prior to reinstatement.
PROCEDURAL BACKGROUND
This disciplinary, matter concerns six complaints filed against
respondent between May 1995 and May 1996. The complaints alleged ten
separate matters in which respondent was charged with misconduct.1 A hearing
1 The Third Supplemental Complaint was abandoned by Complainant prior
to the hearing because the witnesses were unable to attend the hearing. The
Panel made no findings concerning the allegations made in the Fifth
Supplemental Complaint, and neither party has excepted to the Panel's lack of
p.15
IN THE MATTER OF MARSHALL
was held on June 18, 19, and 20, 1996. Respondent was represented by counsel.
On April 12, 1997, the Hearing Panel (Panel) issued its report finding
misconduct and recommending a definite suspension for one year. Both
respondent and Complainant filed exceptions to this report. The Interim Review
Committee2 of the Board of Commissioners on Grievances and Discipline
(Committee) agreed with the Panel's findings of fact and conclusions of law. In
addition to recommending a one year suspension, the Committee recommended
respondent provide restitution to the victims and complete the LOMAP of the
South Carolina Bar prior to reinstatement. Both respondent and Complainant
filed exceptions and briefs with this Court. Complainant claims the Panel and
Committee erred in not finding respondent was directly involved in several
schemes to defraud her clients. Respondent argues, because the Panel concluded
she was not involved in these schemes to defraud her clients, the recommended
sanction of one year suspension is too harsh.
DISCIPLINARY VIOLATIONS
Although this Court is not bound by the findings of the Panel and
Committee, these findings are entitled to great weight, particularly when the
inferences to be drawn from the testimony depend on the credibility of the
witnesses. Matter of Yarborough, Op. No. 24662 (S.C. Sup. Ct. filed Aug. 4,
1997) (Davis Adv. Sh. No. 23 at 15). However, this Court may make its own
findings of fact and conclusions of law. Id. Further, a disciplinary violation
must be proven by clear and convincing evidence. Id.
In 1991, respondent hired Miriam Durham, whom she had known
since childhood, to manage her office and to be a paralegal. Ms. Durham had
previously worked for several other attorneys and respondent contacted one of
these attorneys who gave Ms. Durham a good reference.
Respondent's office staff was controlled by Ms. Durham. Ms.
Durham directed all of respondent's appointment making, telephone calls and
mail to herself. Respondent erroneously believed the office procedure was for
mail to be brought to the receptionist's desk and then to respondent. After Ms.
Durham's departure in April 1994, many documents were found in her office,
findings on this matter.
2 The order adopting the new Rules for Lawyer Disciplinary Enforcement
provided that any disciplinary case in which a hearing had been held by a
hearing panel prior to January 1, 1997, would continue to conclusion under the
former Rule on Disciplinary Procedure. The Interim Review Committee was
created to fulfill the functions performed by the Executive Committee under
Paragraph 14(a) of the former Rule on Disciplinary Procedure in those cases.
Rule 413, SCACR.
p.16
IN THE MATTER OF MARSHALL
including original letters regarding some of the matters involved in this
proceeding.
Respondent was often out of the office. She was the juvenile public
defender for Anderson County and was required to be in court each Wednesday
and, usually, additional mornings or afternoons each week.
From 1991 to 1994, respondent delegated to Ms. Durham
unsupervised and unfettered authority within her office, including control over
the day to day financial affairs. Although respondent's bookkeeping was
handled by an outside company, Triple A Bookkeeping, Ms. Durham usually
dealt with Triple A. All of respondent's bank statements were sent directly to
Triple A and respondent rarely, if ever, closely reviewed these statements.
Eventually, Ms. Durham caused respondent to terminate her relationship with
Triple A. Ms. Durham then handled the bookkeeping.
In April 1994, respondent changed the office locks after a telephone
conversation with another attorney regarding Ms. Durham's misrepresentation of
her identity at a local jewelry store. On the day the locks were changed,
respondent did not confront Ms. Durham about the misrepresentation or about
the changing of the locks. Ms. Durham left that same day and never returned.
After Ms. Durham ended her employment, "clients" came to
respondent inquiring about their cases. Respondent had not previously met
many of these "clients." These persons brought receipts which respondent had
never seen and checks which had been forged by Ms. Durham. Respondent did
attempt to help several of these people or to reimburse them for the money they
paid to Ms. Durham. In 1995, respondent was diagnosed with cancer and has
since undergone treatment.
Ms. Durham had a criminal record in Anderson County for
fraudulent checks prior to 1991. Ms. Durham's ex-husband testified he thought
respondent had represented Ms. Durham in a criminal proceeding prior to hiring
her. Respondent denied ever representing Ms. Durham and denied any
knowledge of Ms. Durham's past criminal record for fraudulent checks.
Respondent admitted she was aware Ms. Durham had credit problems. A
colleague of respondent expressed concerns to respondent about Ms. Durham's
character shortly after respondent hired Ms. Durham. Respondent dismissed
these concerns because Ms. Durham was doing a great job running the office
and because she attributed the concerns to a personality conflict between the
colleague and Ms. Durham. Further, this colleague testified her concerns
partially arose out of her envy that respondent had found such a hard working
employee. Respondent's brother also attempted to warn respondent in 1992 that
Ms. Durham could not be trusted. Respondent's brother had entrusted
respondent with a large sum of money. Respondent placed a portion of this
money in her trust account and the rest she held as cash in a box at her office.
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IN THE MATTER OF MARSHALL
Supposedly, respondent would hold this money for her brother and as he needed
it, she would disburse it. Respondent's brother refused to believe the accuracy
of the accounting provided to him by respondent and Ms. Durham of the
disbursement of his funds; instead, he accused Ms. Durham of stealing the
money. Respondent refused to believe Ms. Durham had stolen this money.
Respondent testified her brother was irresponsible with money.
Ms. Durham testified during this hearing. The Panel's report did
not address her testimony. We conclude her testimony is completely incredible.
Provident Matter
Beginning in 1989, respondent represented a client on a social
security disability claim. The client received an award of $12,530.10.
Respondent was owed 25% of this award for attorney fees.
After receiving her disability award in May 1992, the client was
required to reimburse Provident Insurance Company (Provident) for monies
provided by Provident to the client before her disability award. Ms. Durham
informed the client she would be required to repay Provident $12,530.10 in a
lump sum. The client brought Ms. Durham a check for this amount. This
check was deposited into respondent's trust account on August 8, 1992. Ms.
Durham also instructed the client to cash another check for $949.67 and to
bring the cash back to Ms. Durham. Ms. Durham assured the client she would
send these monies to Provident as repayment but she never did. On August 28,
1992, the client gave Ms. Durham another check for $3,798.68. Ms. Durham
told the client this check would also be part of the repayment to Provident.
This check was deposited into respondent's trust account. Ms. Durham received
from the client a total of $17,278.35.
The client then received a letter from an employee of Provident
stating, that Provident's overpayment to the client was $9,991.53. This amount
was calculated based on the amount of the award minus the attorney fees.
Provident asked the client to forward a check or money order for that amount.
Because the client thought she had repaid Provident, the client contacted Ms.
Durham to inquire about the letter. Ms. Durham claimed she was working on
the matter and she told the client not to speak with any employees of Provident.
The client then received another letter from Provident asking for repayment.
The client scheduled an appointment with respondent to discuss this
matter. However, shortly before her appointment, Ms. Durham canceled the
appointment. The client never talked directly to respondent about the problems
arising from the Provident matter.
The client never owed Provident more than $9,991.53. Checks were
written to respondent from the trust account for "[the client] SS" on August 28,
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IN THE MATTER OF MARSHALL
1992 in the amount of $1,200.00 and on August 31, 1992 in the amount of
$2,000.00. The signatures on these checks were made by a signature stamp.
Respondent testified she had authorized Ms. Durham to use this stamp in
emergencies. These checks were deposited into respondent's operating account.
By September 30, 1992, the trust account balance into which $15,828.78 had
been deposited, was $239.00. None of the missing monies were ever paid to
Provident. However, from April 1993 to March 1994, respondent paid Provident
$1200.00 on behalf of the client. Respondent testified in 1993 Ms. Durham told
her the client could not repay Provident in a lump sum. Thus, respondent
contacted Provident on behalf of the client, and Provident agreed to accept
monthly payments of $200.00. Respondent conveyed this information to Ms.
Durham who was to inform the client of the arrangement. Afterwards, when
Ms. Durham would inform respondent the client had paid $200.00, respondent
would send Provident a check for that amount.
In the fall of 1994, after the client became aware Ms. Durham had
left respondent's office by seeing Ms. Durham's picture on the television show
."American's Most Wanted," the client contacted respondent and told her about
her experiences with Ms. Durham. Respondent was receptive to the client's
information. The client asked respondent to repay her for the money Ms.
Durham had taken. At that time, respondent indicated perhaps she could help
the client with her repayment to Provident. However, because respondent
received a grievance notice concerning this matter shortly after this
conversation, respondent did not contact the client again. After Ms. Durham's
departure in April 1994, respondent discovered several documents regarding the
Provident matter in Ms. Durham's office. Respondent had not previously seen
these documents.
At the time of the hearing, Provident was drafting $60.00 each
month from the client's social security check of $300.00, leaving the client with
$240.00 per month.
The Panel concluded respondent, through her failure to supervise
Ms. Durham, violated Rule 407, SCACR, Rule 1.15 by failing to promptly deliver
to the client funds she was entitled to receive. and by failing to promptly render
a full accounting to the client. In addition, the Panel found respondent, through
failure to supervise Ms. Durham, violated Rule 407, SCACR, Rule 1.3 by failing
to act with reasonable diligence in representing this client during the time the
client's financial matters were being handled by respondent's office. Further,
respondent, through her failure to supervise Ms. Durham, failed to keep the
client reasonably informed about the status of her payments to Provident and
respondent failed to supervise her office staff to ensure the client's requests for
information would receive a reasonable response. Rule 407, SCACR, Rule 1.4(a).
Moreover, the Panel concluded respondent's failure to adequately supervise Ms.
Durham violated Rule 407, SCACR, Rule 5.3. Finally, the Panel found
respondent's failure to supervise the operations of her office demonstrated a
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IN THE MATTER OF MARSHALL
current lack of professional competence in the practice of law in violation of Rule
407, SCACR, Rule 1.1 and Rule 413, SCACR, IU5(E).
We agree with the Panel's findings. If respondent had property
supervised and monitored her office and her bank statements, respondent. could
have at least mitigated the damage caused by Ms. Durham. With proper
supervision, respondent may have been able to prevent Ms. Durham's activities.
Inter-Serve Matters
Inter-Serve is a company which loans money at very high interest
rates to persons with pending personal injury lawsuits. The person obtaining
the loan agrees to repay the loan plus interest when he recovers on his lawsuit.
In 1991 Don King, the owner of Inter-Serve, informed respondent of
this business for the purpose of obtaining respondent's agreement to refer clients
to his business. Mr. King left pamphlets with Ms. Durham. Thereafter
respondent's firm began to refer clients to Inter-Serve.
Mr. King met with respondent in August 1992 concerning the status
of her clients' lawsuits. Mr. King was unsure if Ms. Durham was also present
at this meeting. Mr. King claims he discussed the cases of Michelle Patterson,
Russell Fair, Lawrence Fair and a Marian Durham.3 with respondent and
respondent verified all these cases were outstanding. However, respondent
denies having a discussion about these particular loans. Instead, she claims the
meeting was very general and no specific cases were discussed. Mr. King
testified he mailed respondent a list of the outstanding loans.
During this time, Ms. Durham was screening respondent's mail;
therefore, it is possible respondent never received this list. Further, none of the
paperwork concerning these loans was signed by respondent. Instead, Ms.
Durham signed all the necessary documents and was the one who usually dealt
with Inter-Serve.
Ms. Durham's Relatives
Michelle Patterson was the fiancee of Russell Fair, Ms. Durham's
son, and is the mother of Ms. Durham's grandchild. At the direction of Ms.
Durham, Ms. Patterson went to Inter-Serve to obtain a loan by falsely telling
Inter-Serve she had been in an accident and respondent was representing her.
Ms. Durham verified this information when contacted by an Inter-Serve
employee. Ms. Durham instructed Ms. Patterson to cash the $4,500.00 loan
check and give Ms. Durham the cash. Ms. Durham gave Ms. Patterson $100.00
3 The name Marian was probably an alias used by Ms. Durham.
p.20
IN THE MATTER OF MARSHALL
in cash. Ms. Patterson never received any more of this money. Inter-Serve was
never repaid.
Ms. Patterson testified Ms. Durham told her the money was needed
because the IRS was investigating respondent and respondent needed the money
to pay her taxes. Ms. Patterson admits she never discussed the loan with
respondent. However, according to Ms. Patterson, respondent was in the office
during the transaction and saw Ms. Durham hand Ms. Patterson $100.00.4
Although respondent admitted she was having to pay back taxes to the IRS
during this time, respondent denied having any knowledge of this transaction.
However, respondent testified she had observed Ms. Durham giving Ms.
Patterson and other family members money in the past.
Russell Fair is Ms. Durham's son. At Ms. Durham's direction, Mr.
Fair obtained a loan from Inter-Serve. Ms. Durham had already filled out the
paperwork and had cleared the loan with Inter-Serve by confirming that Mr.
Fair was a client of respondent. Mr. Fair testified respondent never represented
him on a personal injury claim. Pursuant to Ms. Durham's instructions, Mr.
Fair took the loan check for $3,500.00 to the bank, cashed it, brought the cash
back to Ms. Durham, and was given $50.00 in cash by Ms. Durham. Mr. Fair
never received any more money. Further, Inter-Serve was never repaid.
Mr. Fair testified that although respondent was present in the office
during this transaction, he did not discuss the loan with respondent.
Respondent denied knowledge of this transaction.
Lawrence Fair is the brother of Ms. Durham. Mr. Fair claimed
respondent asked him to get a loan from Inter-Serve so she could pay her taxes.
According to Mr. Fair, respondent promised she would repay the loan. However,
Mr. Fair testified Ms. Durham was the one who set up the loan with Inter-Serve
and who falsely verified that he was a client of respondent. Mr. Fair testified
he had never been a client of respondent. Mr. Fair cashed his loan check and
took the cash to Ms. Durham. She gave him a portion of the cash for his
trouble. Inter-Serve was never repaid.
Social Security Client
Respondent represented a client on a social security claim.
According to client he borrowed $3,000.00 from Inter-Serve on April 30, 1992.
He then turned over the check to respondent. Respondent told client she was
going to put the money in escrow for medical bills and "whatnots." Respondent
4 Respondent's law firm included a small office for Ms. Durham and an
office for respondent, separated by a small conference room. Both Ms. Patterson
and Russell Fair testified all transactions took place in Ms. Durham's office.
p.21
IN THE MATTER OF MARSHALL
did not pay the medical bills; instead, client had to pay these bills himself.
The $3,000.00 check was deposited into respondent's trust account.
Three checks, one for $800.00, one for $475.00, and one for $300.00, were
written on respondent's trust account for client. The $475.00 check was
redeposited into the trust account, and the $800.00 check and $300.00 check
.were deposited into respondent's operating account. The signatures on these
checks were produced with a signature stamp.
On July 2, 1992, a check was written to respondent on the trust
account for $682.58. A portion of this check was deposited into respondent's
personal account. Respondent's signature on the check was made with a
signature stamp. Respondent testified it was possible the endorsement on the
back of this check was not her signature. On July 3, 1992, a check was written
to respondent on the trust account for $400.00 for "[client]." The respondent's
signature on the front of this check was made with a signature stamp.
However, a handwriting expert testified there were indications that respondent
endorsed this check.5 A portion of this check was deposited into respondent's
personal account. Respondent denied endorsing this check. Respondent testified
she left a deposit book for her personal account in the office.
A series of checks totaling $831.00 were issued on the trust account
to client from April 30 to August 1992. Therefore, a total of $3,013.58 was
withdrawn from respondent's trust account during this time.
Respondent testified part of the proceeds from this Inter-Serve loan
was used to pay for her services. According, to respondent, in addition to
representing this client in the social security matter, she also handled other
matters, including child support issues, for him. Client claimed respondent did
not do any work for him on the social security matter and, in fact, he
successfully concluded the matter himself.
The Panel found respondent, by delegating to Ms. Durham the
complete operation of her office with little or no supervision, violated Rule 407,
SCACR, Rule 5.3 by failing to assure Ms. Durham's conduct was compatible
with respondent's professional obligations. This failure to supervise facilitated
Ms. Durham's scam of Inter-Serve and her embezzlement of funds belonging to
respondent's clients. Further, the Panel found respondent violated Rule 407,
SCACR, Rule 1.15 by failing to monitor her trust account and safeguard her
clients' funds. The Panel concluded had respondent complied with Rule 407,
SCACR, Rule 1.15, respondent could have prevented Ms. Durham's
embezzlement. Although the Panel found respondent was not directly involved
5 "Indications" means the handwriting expert is approximately 60% sure
the signature is respondent's.
p.22
IN THE MATTER OF MARSHALL
with the Inter-Serve matters except for the Social Security client, the Panel held
respondent responsible for Ms. Durham's conduct because respondent should
have noticed the many warning signals concerning Ms. Durham's criminal
activity, including the advice given by her brother and her colleagues. The Panel
concluded Complainant had not clearly and convincingly demonstrated
respondent was a co-conspirator with Ms. Durham in the Inter-Serve scam. The
Panel found Russell Fair's testimony incredible and did not address Lawrence
Fair's testimony. The Panel did not mention Mr. King's testimony in its report.
As to the Inter-Serve matters concerning Ms. Durham's relatives,
we agree with the Panel's conclusions of law. However, in addition to finding
Russell Fair's testimony not credible, we also find the portions of Ms. Patterson's
and Lawrence Fair's testimony which attempted to include respondent in this
scam unbelievable. Further, while we believe Mr. King generally discussed the
loans with respondent, we do not find that at the August 1992 meeting they
discussed specific cases. Instead, it is our opinion Mr. King discussed specific
cases with Ms. Durham since she was the person with whom he usually dealt.
Thus, we do not find the evidence clearly and convincingly supports the
conclusion respondent was participating in this scam or had knowledge of this
scam. However, respondent's lack of supervision of Ms. Durham created this
problem, and therefore, respondent is ethically responsible for Ms. Durham's
conduct.6
As to the Social Security client, the Panel concluded respondent had
written the check for $800.00 which was deposited into her operating account
and the check for $400.00 which was deposited into her personal bank account.
Thus, the Panel implicitly found the endorsement on the back of the $400.00
check was respondent's signature and not a forgery. In our opinion, the
endorsement on the $400.00 check does not appear to be respondent's signature.
The endorsement on the $682.58 check is not respondent's signature. Instead,
we find these signatures are forgeries. Only a small portion of the cash from
these checks was actually deposited into respondent's personal account ($20 of
the $400.00 check and $175.58 of the S682.58 check). The balance of the money
was received as cash. Ms. Durham had access to respondent's personal account
and respondent testified Ms. Durham had done some of her personal banking in
the past. As to the checks deposited into the operating account, we note the
signatures on these checks are by signature stamp. Thus, we find Ms. Durham
was the only one writing these checks. However, respondent's lack of
supervision of Ms. Durham and her failure to properly monitor her bank
accounts created these problems and she is ethically responsible for Ms.
Durham's misappropriation of these funds in violation of Rule 407, SCACR,
Rules 1.15 and 5.3. If respondent had been properly monitoring her bank
6 The Inter-Serve matters have been resolved and Inter-Serve has been
repaid $16,000.00 by respondent's insurance company.
p.23
IN THE MATTER OF MARSHALL
accounts she could have at least mitigated the damage caused by Ms. Durham's
conduct.
Criminal Matter
Respondent was retained by client's brother.7 (Brother) to represent
client in a criminal matter. While represented by other counsel, the client was
convicted of murder in Orangeburg County on July 14, 1991 and pled guilty to
conspiracy in Hampton County on October 23, 1991.
According to respondent, on or about October 14, 1991,
respondent and Ms. Durham met with Brother in Augusta, Georgia, to discuss
her representation of client in a post conviction relief (PCR) proceeding in the
Orangeburg County matter. Respondent testified she agreed to represent client
in the PCR matter for a fee of $15,000.00, plus costs. Respondent claimed she
was not hired to represent client in the Hampton County case since the client
had not yet terminated the services of his other attorney. According to
respondent, Brother was to obtain a refund of a portion of the fee paid to client's
previous attorney and he would use this refund to pay respondent's fee.
Respondent testified she discussed the refund and payment of the fee with
Brother several times. According to respondent, financial matters were only
discussed with Brother.
Client testified respondent was retained to represent him in the
Hampton County matter and to pursue PCR in the Orangeburg County matter
for $15,000.00, plus costs. Client claimed in December 1991, respondent
personally requested $5,000.00 to pay for a transcript of the Orangeburg County
trial. Client testified respondent accepted several collect calls made by him to
her office.
It is undisputed that on October 21, 1991, $15,000.00 was bank
wired into respondent's account by client's family. Further, on December 3,
1991, an additional 45,000.00 was bank wired into respondent's account by
client's family.
Respondent met with client on Sunday, October 20, 1991.8
Respondent also met with client at least one other time before receiving the
December 3, 1991, payment of $5,000.00. Respondent testified she was unaware
of the October 21, 1991, wire transfer of 415,000.00 until Brother advised
respondent of this payment in August 1994. According to respondent, she was
7 Brother died on November 24, 1994.
.8 The Panel mistakenly found this was the date of the meeting in Augusta.
p.24
IN THE MATTER OF MARSHALL
only aware of the $5,000.00 and she thought that money was sent so she would
begin to work on the PCR matter.
The day after the wire transfer of $15,000.00 was received, Ms.
Durham wrote a check to herself on respondent's account for $11,000.00. On
December 4, 1991, Ms. Durham wrote another check to herself on respondent's
account for $4,000.00. Respondent's signature stamp was used to sign the
checks. Ms. Durham pled guilty in December 1996 to writing these checks to
herself.
Respondent did not appear in the Hampton County matter.
Instead, client's previous attorney handled this matter. Respondent filed a
Notice of Appeal (NA) in the Hampton County matter in November of 1991;
however, it was dismissed by this Court due to the failure of respondent to file
an initial brief and to designate material to be included in the Record on
Appeal. Respondent did not seek nor receive permission from client to abandon
this appeal. Respondent testified she filed the NA in order to protect client;
however, because she was never retained to pursue this matter she permitted
the appeal to be dismissed without discussing the dismissal with client.
Respondent requested a transcript of the Orangeburg County trial
on April 4, 1993. The court reporter on three occasions requested payment from
respondent before payment was effected. The cost of the transcript was
$1,223.70. Respondent testified she delayed ordering the transcript because she
had not yet received her full fee of $15,000.00. Further, respondent claimed she
delayed making payment in hopes that client's family would provide the
necessary funds to cover this expense.
The Panel concluded the evidence was not clear and convincing that
respondent had been retained to represent the client in the Hampton County
matter; therefore, respondent committed no ethical violations by failing to attend
court. However, the Panel found respondent failed to act with reasonable
diligence and promptness in representing client in violation of Rule 407, SCACR,
Rule 1.3 by filing a NA in the Hampton County matter and then failing to
either perfect the appeal or seek permission of her client to abandon the appeal.
Further, the Panel found it incredible that respondent would travel
over two hours to visit with the client prior to receiving payment or that
respondent would expend any time or effort on the case between the initial
meeting with client's family and the receipt of the $5,000.00 on December 3,
1991, when respondent admitted she knew nothing of client's family's financial
resources or reputation prior to the initial meeting. Thus, the Panel implicitly
concluded respondent was aware of the initial $15,000.00 wire transfer.
However, the Panel did not reach the issue of whether respondent had
participated in a "scam" to obtain an additional $5,000.00 from client's family.
Instead, the Panel concluded the evidence clearly and convincingly demonstrated
p.25
IN THE MATTER OF MARSHALL
respondent had violated Rule 407, SCACR, Rule 5.3 by failing to adequately
supervise Ms. Durham.
Finally, the Panel concluded respondent did little or no work in
return for the payments of $15,000.00 and $5,000.00. The transcript of the
Orangeburg trial was not ordered until April 1993. Further, a PCR application
was never filed. Respondent has neither accounted for nor refunded any of the
monies paid by client's family.
We do not find it incredible that respondent would begin
preliminary work on the PCR matter prior to receiving any payment. Further,
because respondent had, for all practical purposes, delegated the day to day
operations of the office to Ms. Durham, we find it believable that respondent
was unaware of the first wire transfer of $15,000.00. At this time, respondent's
bank statements were being sent directly to Triple A Bookkeeping. Thus,
respondent had little first hand knowledge of her bank accounts. Instead, she
depended on Ms. Durham to keep her informed. We find that respondent was
only aware of the $5,000.00 wire transfer and that she thought this was a
partial payment of her fee and was not money with which to order a transcript.
In our opinion, respondent was not attempting to defraud, client's family.
However, we agree with the Panel's finding respondent violated Rule 407,
SCACR, Rule 5.3 by failing to adequately supervise Ms. Durham. Respondent
gave Ms. Durham unrestrained control over the financial affairs of her office and
failed to monitor Ms. Durham's activities. Respondent also violated Rule 407,
SCACR, Rule 1.15 by failing to adequately monitor her trust account. If
respondent had reviewed her bank statements, she would have realized there
was a discrepancy. Further, we find respondent violated Rule 407, SCACR, Rule
1.3 by failing to act with reasonable diligence and promptness in representing
client. Even after respondent became aware that client's family had paid her
office $20,000.00, respondent still did not file a PCR application. In addition,
respondent violated Rule 407, SCACR, Rule 1.3 by abandoning the Hampton
County appeal without first obtaining client's permission.
Retaining Out of State Attorney for Client
In February 1992, a client contacted respondent's office seeking
legal representation for a matter in the State of Georgia. Ms. Durham informed
the client that for a reasonable fee respondent would locate a Georgia attorney
for her. The amount of fee was not specified and the parties did not enter into a
written contract.
Client gave Ms. Durham a check for $5,000.00 which was to be
used as a retainer for the Georgia attorney. Neither respondent nor Ms.
Durham retained a Georgia attorney for this client. Instead, client retained a
Georgia attorney herself and was forced to pay the attorney's retainer fee
without access to the $5,000.00 she had previously given to respondent's office
p.26
IN THE MATTER OF MARSHALL
for this purpose.
After client's $5,000.00 check was deposited in respondent's trust
account, $3,000.00 was withdrawn and deposited into respondent's operating
account. At that time, no accounting was sent to client showing how respondent
had earned the $3,000.00. While it is unclear who caused this transfer of funds,
the record repeatedly demonstrates Ms. Durham controlled the operations of
respondent's office and had full and total access to these accounts.
During this time, client asked respondent's office to retain a Georgia
attorney for another matter. According to client, she told Ms. Durham she only
had $1,100.00 and Ms. Durham told her that would be sufficient. Thus, client
signed over the $l,100.00 two-party check to respondent's office. Ms. Durham
assured client this money would be used to pay the Georgia attorney. A Georgia
attorney was located for client; however, client had to pay the attorney the
retainer without access to the $1,100.00 she had previously given to Ms.
Durham.
Client attempted to communicate with respondent or respondent's
staff about these matters, but client's telephone calls were not returned.
Further, when client was able to speak to someone in respondent's office, it was
always Ms. Durham, who continued to assure client that all was well with her
Georgia cases.
Eventually, client initiated a fee dispute claim. The billing
statement submitted by respondent was not prepared until after the fee dispute
claim had been filed. The statement was prepared by respondent and Ms.
Durham from memory, notations in files, and telephone bills.
Respondent testified her office worked on several other matters for
client during this time. Thus, her fee reflected both her work on the Georgia
matter and her work on these other matters. The fee dispute was resolved in
February 1993 when respondent agreed to refund client $5,500.00.
The Panel concluded, through respondent's failure to properly
control and supervise Ms. Durham, client funds were improperly appropriated to
respondent's use for operating expenses, client funds were improperly handled,
and client was not rendered a prompt and full accounting. Rule 407, SCACR,
Rule 1.15. The Panel also concluded respondent failed to keep her client
reasonably informed about the status of client's matters and failed to comply
promptly with reasonable requests for information in violation of Rule 407,
SCACR, Rule 1.4(a). In addition, respondent failed to ensure the conduct of her
employee, Ms. Durham, was compatible with respondent's professional
obligations by failing to correctly record time expended on client matters, by
failing to oversee expenditures of funds from trust accounts, by failing to
properly distinguish between the use of monies held in trust accounts and
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operating accounts, and by failing to properly supervise her office staff, all in
violation of Rule 407, SCACR, Rule 5.3. Finally, the Panel concluded
respondent's conduct had violated Rule 413, SCACR, 5(E) (demonstrating a
current unfitness to practice law).
While we agree with the Panel's findings, we further find
respondent violated Rule 407, SCACR, Rule 1.3 by failing to act with reasonable
diligence and promptness in representing her client because client was forced to
seek her own attorney even though she had retained respondent to find an
attorney for her.
Lowry Detective Agency Matter
Mr. Davy Lowry was the owner of Lowry Detective and
Investigation Agency. Mr. Lowry testified he entered into a verbal contract with
respondent and Ms. Durham in which, for a flat fee of $600.00, he would
provide investigatory services in simple domestic situations.9 Respondent's
clients were to pay an initial retainer and if the investigation was successful,
Mr. Lowry would depend on a court order directing the other party to pay the
private investigation costs to recover his fee. Mr. Lowry testified he only had
direct contact with one of respondent's clients and he billed respondent and not
the client for his services because the contract was between respondent and Mr.
Lowery. Respondent denied any such agreement existed and claimed her clients
were directly responsible for the payment of investigatory expenses.
Mr. Lowry brought an action against respondent in Magistrate's
Court to collect the unpaid fees. In the fall of 1994, the magistrate dismissed
the matter finding the agreement violated the statute of frauds. However, the
magistrate directed respondent to provide Mr. Lowry with names and addresses
of the delinquent accounts. Respondent did not comply with this directive until
January 20, 1995. Further, according to Mr. Lowry, two of the addresses were
incorrect. Respondent testified these addresses were from her files.
At least one of the clients contacted by Mr. Lowry claimed she had
paid respondent's firm for the investigative services. However, respondent's firm
failed to pay this money to Mr. Lowry. Ms. Durham receipted the client for the
cash payment on the investigatory account and all parties concede Ms. Durham
appropriated this money. Mr. Lowry claimed respondent still owed him $1560.
The Panel concluded respondent and Mr. Lowry had entered into an
agreement with regard to payment for investigation services provided to her
clients and respondent committed acts of deceit in attempting to avoid payment
for these services thus violating Rule 407, SCACR, Rule 8.4(d) (engaging in
9 Mr. Lowry also provided process service for respondent.
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IN THE MATTER OF MARSHALL
conduct involving deceit or misrepresentation). The Panel further found
respondent violated Rule 407, SCACR, Rule 5.3 by failing to adequately
supervise Ms. Durham. In this instance, Ms. Durham only misappropriated
$150.00; however, because this was not an isolated event, the Panel found it to
be further proof of respondent's dismal performance in supervising this
employee. The Panel concluded respondent did not violate Rule 407, SCACR,
Rule 1.15 or Rule 8.4(b) because respondent did not have knowledge of Ms.
Durham's activities. The Panel found respondent violated Rule 413, SCACR,
5(D).10 by procrastinating in her obligation to provide Mr. Lowry with the
addresses of her clients and by providing Mr. Lowry with incorrect addresses.
We agree with the Panel's findings of fact and conclusions of law in this matter.
Real Estate Matter
A client retained respondent to represent her in the purchase of real
estate for a church. Client testified at the hearing that she had informed
respondent of her intention to purchase three lots prior to the November 1993
closing; however, in May 1994, client discovered she had only purchased one lot.
The deed prepared by the seller's attorney had omitted two of the parcels of
land. Respondent claimed she was unaware at the time of the closing that
client intended to purchase three lots. All closing documents refer to only one
lot, including documents prepared by the bank.
Upon discovering the problem, client contacted respondent. After
respondent agreed to attempt to rectify the problem, respondent failed to return
several of client's telephone calls and keep client informed of the status of this
matter. Eventually, respondent prepared a deed conveying the other two lots
and sent it to seller's attorney. However, client had to retain another attorney
to complete the matter because respondent failed to obtain the seller's signature
on the corrected deed. Client testified she did not pay respondent for her
attempt to correct the deed.
The Panel found the error in the deed and respondent's efforts to
remedy the error did not give rise to an ethical violation. The Panel did find
respondent violated Rule 407, SCACR, Rule 1.4(a) by failing to keep her client
reasonably informed about the status of a matter and by failing to comply
promptly with reasonable requests for information. We agree with the Panel's
findings of fact and conclusions of law. However, we further find respondent
violated Rule 407, SCACR, Rule 1.3 by failing to promptly and diligently pursue
this matter on behalf of the client. Respondent's procrastination forced the
10 Rule 413, SCACR, 5(D) defines misconduct as "[c]onduct tending to
pollute the administration of justice or to bring, the courts or the legal profession
into disrepute or conduct demonstrating unfitness to practice law."
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IN THE MATTER OF MARSHALL
client to seek another attorney to handle this matter.
Divorce Matter
Through Ms. Durham, a client retained respondent in 1991 to bring
a separate maintenance and divorce action on her behalf. Client and her
husband went to respondent's office where Ms. Durham prepared their
separation agreement, a complaint for a divorce and an answer. Client's
husband paid Ms. Durham $500.00. Ms. Durham informed the couple that it
would take one year for the divorce to be final and she would contact client with
the court date for the divorce. Further, Ms. Durham told the couple they would
owe an additional $500.00 when the divorce was finalized. The complaint
contains respondent's signature; however, respondent claimed she had no first
hand knowledge of this client. The complaint was filed in 1991. Subsequently,
the complaint was dismissed by the family court for lack of prosecution.
Although client attempted to contact Ms. Durham or respondent several times,
she was unable to reach either of them until 1995.
In 1995, client contacted respondent who was unaware of her
representation of client and had no record of this client ever visiting her office.
Prior to this communication, client had never met respondent. Respondent
informed client of Ms. Durham's improper activities including agreeing to
represent clients and receiving payment for services that were never performed.
Respondent told client she would complete the work in this matter; however, she
explained it would cost $300.00 more to complete the action. After this meeting,
client called respondent on numerous occasions, but her telephone calls were
never returned. Finally, after client's mother contacted someone at respondent's
home regarding this matter, respondent called client and claimed client had
broken several appointments with her. Client then obtained another attorney to
represent her and she eventually obtained a divorce. Respondent refunded
$500.00 to client when she was informed client had obtained another attorney.
During this time (1995-96), respondent was undergoing treatment for cancer and
was often out of the office.
The Panel concluded respondent failed to act with reasonable
diligence and promptness in representing client and failed to keep client
reasonably informed of the status of this case and to respond promptly to
reasonable requests for information. Rule 407, SCACR, Rules 1.3 & 1.4(a). In
addition, the Panel found respondent failed to supervise and control her
employee in violation of Rule 407, SCACR, Rule 5.3. We agree with the Panel's
findings of fact and conclusions of law in this matter.
Other Trust Account Matters
The Panel found, from September to December 1993, respondent's
trust account showed several insufficient funds charges and negative balances.
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Although the Panel acknowledged that these problems were probably caused by
Ms. Durham, the Panel concluded respondent has an ethical obligation pursuant
to Rule 407, SCACR, Rule 1.15 to monitor her trust account and this she clearly
failed to do. We agree with the Panel's findings of facts and conclusions of law
on this matter.
SANCTION
The authority to discipline attorneys and the manner in which the
discipline is given rests entirely with the Supreme Court. Matter of Hines, 275
S.C. 271, 269 S.E.2d 766 (1980).
Both the Panel and Committee recommended a one year suspension.
In addition, the Committee recommended respondent complete LOMAP and
make restitution before being readmitted to practice. The Panel and Committee
found respondent violated Rule 407, SCACR, Rules 1.1, 1.3, 1.4(a), 1.15, 5.3, &
8.4(d); and Rule 413, SCACR, 5(D) & (E). Most of these violations were the
result of respondent failing to properly supervise Ms. Durham and failing to
properly monitor her bank accounts. We agree respondent violated the above
rules; however, we disagree with the Panel's and Committee's recommendation
for a sanction.
This Court has sanctioned attorneys for failing to supervise their
employees and for misappropriating funds. In Matter of Craig, 317 S.C. 295, 454
S.E.2d 314 (1995), this Court suspended attorney for fifteen months for failing to
supervise employees, negligently managing the trust account, misappropriating
funds, lacking diligence in representing his clients, and failing to cooperate with
the investigation. In Matter of Gibbes, 315 S.C. 186, 432 S.E.2d 482 (1993),
this Court imposed a public reprimand on attorney for failing to supervise an
employee who engaged in misconduct. In Matter of Gibbes, attorney did not
commit multiple acts of misconduct. In Matter of Bell, 304 S.C. 529, 405 S.E.2d
825 (1991), the attorney received a public reprimand for negligently supervising
employees, for failing to correctly post expenses to clients' accounts, and for
failing to timely disburse client funds. The attorney did not misappropriate
funds in Matter of Bell.
While there is no allegation respondent failed to cooperate with this
investigation, respondent's misconduct involved multiple violations of the Rules
of Professional Responsibility, Rule 407, SCACR, including misappropriation of
funds. Further, respondent created many of these problems by delegating to Ms.
Durham such a wide breadth of responsibilities and duties without adequately
overseeing Ms. Durham's actions. Respondent delegated complete control of her
office to Ms. Durham and did little to ensure Ms. Durham was running the
office in an ethical manner. Respondent allowed Ms. Durham to work in her
office from 1991 until 1994 without any real supervision of her activities.
Instead, she gave Ms. Durham unfettered control of her office, including her
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IN THE MATTER OF MARSHALL
financial affairs. Because respondent chose not to review her bank statements
during this time period, Ms. Durham's actions remained undetected and
unchecked for three years. Thus, we find respondent's misconduct warrants a
harsher sanction than a public reprimand.
However, in choosing the appropriate sanction, the Court may
consider circumstances in mitigation. Matter of Brown, 286 S.C. 454, 334
S.E.2d 281 (1985). Several witnesses testified on behalf of respondent. Carl
Benson testified Ms. Durham was a good liar and he did not think respondent
was involved in Ms. Durham's schemes. Ms. Durham's ex-husband testified that
although Ms. Durham had been arrested for writing bad checks in the past, Ms.
Durham had a good reputation in Anderson. Mr. Durham further testified he
did not tell respondent about Ms. Durham's previous problems.
William Bannister testified respondent resolved a child support
matter for him without further compensation after he told respondent he had
previously paid Ms. Durham to resolve this issue. Curtis Mattison testified
when he discovered Ms. Durham had not properly handled his real estate
closing, respondent corrected the problem without charge. Mr. Bannister and
Mr. Mattison were "clients" Ms. Durham had undertaken to represent without
respondent's knowledge. As to the Divorce Matter, we note during the time
period respondent was attempting to straighten out the matter for client,
respondent was diagnosed with cancer and her treatment resulted in time away
from the office. Also, respondent did return the $500.00 client had previously
paid to Ms. Durham. Thus, respondent attempted to help those "clients" who
had paid Ms. Durham for services she never provided. Further, respondent
attempted to refund the money Ms. Durham had taken from these "clients" if
she was unable to help them. Respondent did this even though she never
actually received any of the money from Ms. Durham.
Elizabeth Williams testified respondent handled the financial affairs
for the church and there had never been a problem. Several attorneys who
practiced with respondent testified respondent was a good lawyer. The Public
Defender in Anderson County stated he would continue to employ respondent if
she is allowed to continue to practice law.
Finally, there was no evidence suggesting respondent personally
benefitted from Ms. Durham's scams. Instead, all evidence suggests these scams
harmed respondent at least as much as they did her clients.
In consideration of all the facts in this case, we find the appropriate
sanction for respondent's misconduct is a definite suspension from the practice of
law for six months. In addition, respondent must make restitution and complete
LOMAP prior to reinstatement.
Respondent shall file, within fifteen (15) days of this opinion, an
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affidavit with the clerk of this Court stating she has complied with Paragraph
30 of Rule 413, SCACR.
DEFINITE SUSPENSION.
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