Attorney Grievance Commission v. Drew

RODOWSKY, Judge. The Attorney Grievance Commission filed a Petition for Disciplinary Action against the respondent, Alan C. Drew. We referred the matter to Judge Marjorie L. Clagett of the Circuit Court for Calvert County for hearing. The substance of Judge Clagett’s findings and conclusions are set forth below. “The Respondent was admitted to practice law in Maryland on June 16, 1976. ...

He specialized in bankruptcy and criminal law although he also did some personal injury and domestic law. By 1981, he had narrowed his practice to bankruptcy and criminal law. At one point, bankruptcy cases accounted for 40% of his practice. In fact, he was a member of the bankruptcy trustee panel.

As part of his bankruptcy practice, Mr. Drew set up post-petition plan procedures for his bankruptcy clients wherein they would send their payments to him and he would write checks to the various lenders. He did this to help his clients and assure that the plan worked for them. This created a large volume of transactions in his client escrow account. Around 1991 (as a result of this case and perhaps a little earlier), Mr. Drew phased out his bankruptcy practice.

Presently he devotes his entire practice to criminal defense work. “The core of this disciplinary action against Mr. Drew is his use and management of his escrow account. All parties concede the Respondent clearly did not handle the account properly. Prior to 1989, the Respondent received a warning from the Attorney Grievance Commission as a result of his failing to promptly disburse monies from his escrow account and his failure to advise his clients about the procedure to pay post plan monies. In response to this warning, the Respondent hired a part-time bookkeeper.

The bookkeeper along with the Respondent’s secretary (and later the secre ¹⁴² tary alone) handled all deposits and withdrawals from the account. It was their job to ensure proper accounting and timely disbursements of the escrow funds. Unfortunately, after an initial ‘training period’ the Respondent exercised virtually no supervision of his employees. This lack of supervision ultimately resulted in this complaint. “PENA SPAIN COMPLAINT “Findings of Fact • “In December, 1989, Dena Spain, a U.S. Postal Service employee, consulted the Respondent regarding the pending foreclosure on her home.

After the initial consultation, Ms. Spain hired the Respondent to file a Chapter 13 Bankruptcy on her behalf. As a result of this filing, Ms. Spain was able to stay the foreclosure on her home. To insure proper documentation of her mortgage- payments, the post-petition plan was to have Ms. Spain pay her monthly mortgage payments to Mr. Drew’s office so that he could deposit them in his escrow account and forward them to the lender, Goldome Realty Credit Corporation (hereinafter, ‘Goldome’). Mr. Drew not only explained the post-petition plan personally to Ms. Spain but he sent her a letter detailing what she had to do.

Ms. Spain’s checks were to be made payable to Alan C. Drew. “Almost immediately, problems arose. Ms. Spain did not make timely payments (at the first of each month). In addition, she failed on several occasions to have the checks paid to the order of Alan C. Drew. Instead they were drawn from her Credit Union made payable to her.

She then did not endorse the checks therefore making them nonnegotiable by either Mr. Drew or the lender. Rather than having Ms. Spain reissue the checks, Mr. Drew’s staff forwarded at least three unendorsed checks to Goldome. Of course, when the checks were received by Goldome they were sent back for the proper endorsement. This course of action caused delay which, according to Goldome’s records, ¹⁴³ resulted in an arrearage and in the lender requesting a lift of the stay. “On July 30, 1990, Goldome filed a Motion to Modify Stay to Permit Foreclosure of the Deed of Trust so as to allow it to proceed with the foreclosure.

To avoid this new foreclosure action, Mr. Drew, after consultation with Ms. Spain, negotiated a consent order wherein in addition to her regular payments, Ms. Spain would pay the arrearage of $2,971.44 by November 9, 1990. A provision within the Consent Order provided for a lift of the stay if the debtor defaulted on these terms. While an agreement was reached to stave off the lifting, the laissez-faire supervision continued and once again the lender sought to lift the stay. “On December 10, 1990, Goldome filed an Affidavit of Default alleging an arrearage of $6,815.75 which was due in part to two checks which were returned ‘stopped payment’ and failure on Ms. Spain’s part to repay the $2,971.44 arrearage by November 9, 1990. No answer was filed within the ten day period and the Stay was lifted.

If Respondent had checked Ms. Spain’s escrow account balance at that time it would have shown a balance of $4,585.41. Both Respondent and Ms. Spain agree there was no communication between them from November of 1990 to March of 1991. “In March of 1991, Ms. Spain, who was about to go into the hospital, received notification of the sale of her home. In a panic, she called Mr. Drew who told her not to worry. He advised her to allow the sale to proceed after which he would file exceptions to the sale.

Concerned, Ms. Spain engaged the services of another attorney. In a letter dated March 22, 1991 she wrote the Respondent terminating his services and requesting an accounting of her account. The Respondent testified he did not recall seeing the termination letter of March 22, 1991. “Mr. Drew continued to represent Ms. Spain despite the letter. He filed an Objection to the Sale in the Circuit Court for Prince George’s County.

Ms. Spain’s new counsel and Mr. Drew were present for the hearing before Judge ¹⁴⁴ G.R. Hovey Johnson. Mr. Drew testified it was he who presented the argument to the Court. The Circuit Court felt the proper forum for the matter was the Bankruptcy Court. Mr. Drew on behalf of Ms. Spain filed a Motion to Reconsider Lifting Automatic Stay and a Request for Emergency Hearing in Bankruptcy Court.

Judge Mannes on the U.S. Bankruptcy Court for the District of Maryland denied the Reconsideration with a margin note that the time for the appeal had run. In both the Objection to Sale and Motion for Reconsideration the Respondent alleged Ms. Spain had in fact made her payments as ordered and that he was holding $7,177.63 in trust for her. Mr. Drew then went back to Circuit Court for a rehearing on the Objection to Sale. Unfortunately, the Circuit Court finding no fault with the sale ratified it.

Ms. Spain lost her home. “In a letter dated October 7, 1991, Ms. Spain again wrote to the Respondent demanding an accounting and return of her money which the Respondent had in escrow. Mr. Drew authorized his bookkeeper to prepare a refund of $7,177.63. The refund check, signed by Respondent and drawn on his escrow account, was returned for insufficient funds. By chance, the Respondent discovered the notice of dishonor himself.

(He testified that he normally did not open and post his mail). Upon discovering the dishonor, he immediately called Ms. Spain. He subsequently paid her $7,177.63 by cashiers check. Based on the handling of her case, Ms. Spain filed this grievance against Mr. Drew. “In response to Ms. Spain’s complaint, John Reburn, Attorney Grievance Commission investigator, was assigned to review and analyze Mr. Drew’s escrow account.

This review led to the opening of a ‘Pandora’s Box.’ The Respondent was unable to produce his ledgers and account files for the past five years. After several months, Mr. Reburn obtained the necessary bank records, escrow ledger cards and payment records from Goldome to allow him to reconcile Mr. Drew’s account. Mr. Reburn prepared a detailed spreadsheet of the running balance of the account from November 30, 1989 to May, 1991. What he discovered ¹⁴⁵ was quite disturbing.

The escrow account was in complete disarray. “The account was quite active—over 900 transactions over the two years or 2-3 per working day during the time period. The cumulative deposits and credits for 1990 and 1991 were $254,560.57 and $126,306.26, respectively. Mr. Drew failed to track funds to make sure that they were properly disbursed. Mr. Drew admitted he provided little or no supervision over his escrow account.

He would periodically review client ledger cards and when he felt he had earned a fee, he would instruct the bookkeeper to write him a check. He never checked the account balance to determine if there were sufficient funds to cover the check. On one occasion, one such fee check was returned for insufficient funds. This should have raised a ‘red flag,’ however, it did not, despite the Respondent’s testimony that he must have known that the check was not honored.

Other disturbing factors concerning the account were twenty-three bank charges for overdrafts and non-sufficient funds; ‘draw’ checks totalling $3,281.25 taken from the office account and deposited to the escrow account; and ‘fee’ checks totaling $26,161.91, drawn by the Respondent, with no corresponding deposits to support them. The most troubling of such ‘fee’ checks were three checks totaling $10,800.00 from ‘Dr. Jones’ with no supporting documentation as to deposits. Mr. Drew testified the Jones’s were long time clients. He represented Dr. Jones, his wife Agnes, and her son in a variety of legal matters including personal injury cases and criminal cases.

He produced one client ledger sheet purporting to be a criminal case for the son with a $3,000.00 retainer. Mr. Drew, however, could not produce the other ledger cards but adamantly testified he never took money from the escrow account that did not belong to him. After complete reconciliation of the account Mr. Reburn found Mr. Drew still owed Ms. Spain $1,292.44. “The Court finds, by a preponderance of the evidence, several mitigating factors. Mr. Drew is a workaholic.

The Courts have found alcoholism and drug dependency to be ¹⁴⁶ mitigating factors in the past. This Court finds Mr. Drew’s compulsive work habits to be of the same nature. As a solo practitioner, the sheer volume of his criminal practice coupled with his bankruptcy work left him little time for office supervision. In 1990, during the time of his representation of Ms. Spain, he was involved in complex criminal cases, one in Baltimore involving 12 lawyers which lasted 4 1/2 months.

He found himself in trial four out of five days. From November, 1989 to November, 1991, he never looked in the escrow book. He relied on his staff and signed the checks they presented to him. “His personal life also contributed to the stress of his already hectic professional life. He separated from his first wife in 1983.

He described the marriage as tumultuous; the separation caused alienation with his children and his parents. The custody and visitation problems are still ongoing. He remarried in 1985. He sought counseling from a clinical psychologist from 1988 for depression and stress and sought the services of a psychiatrist from 1990-1991.

He stayed in treatment with the psychologist until 1992. “By 1992 he phased out the bankruptcy work and now devotes his legal time exclusively to criminal work and thus has little use for escrow accounts. His escrow account now involves only restitution payments and transcript costs. He personally monitors every single transaction. “Conclusions of Law “It is alleged that Mr. Drew violated Rules 1.1 Competence, 1.3 Diligence, 1.4 Communication, 5.3 Responsibilities Regarding Nonlawyer Assistants. [Text of Rules omitted.] “It is the conclusion of the Court, by clear and convincing evidence, that the Respondent did violate Rules 1.3, 1.4 and 5.3 of the Rules of Professional Conduct by failing to act with reasonable diligence and promptness in his representation of Ms. Spain, by failing to communicate with her sufficiently, by failing to keep her apprised of her legal situation, and by his total abdication of his supervising responsibility to his staff. It is clear that the Respondent ¹⁴⁷ began his representation of Ms. Spain in a proper fashion.

He competently filed Ms. Spain’s Chapter 13 bankruptcy and successfully obtained a consent order to stave off a second impending foreclosure of her home. Unfortunately as a result of his inattention to the supervision of his staff, he failed to realize Ms. Spain had a credit balance in December of 1990 and thus had a valid defense to the Default action. He failed to communicate with her upon receipt of the Affidavit of Default. As a result of this lack of communication and diligence, by the time of the foreclosure in March of 1991 it was too late to save Ms. Spain’s home.

Clearly, Mr. Drew was at fault, however, Ms. Spain must share in some of the blame. Thus, the Court cannot find, by clear and convincing evidence, that Mr. Drew violated Rule 1.1. “The heart of this action is the alleged violation of Rule 1.15 Safekeeping Property, Rule 8.4 Misconduct, as well as Business Occupations and Professions Article § 10-306, Misuse of Trust Money, and Rule BU9 Prohibited Transactions. [Text of Rules omitted.] “All parties concede and the Court finds by clear and convincing evidence that the Respondent violated Rule 1.15(a), (b), and (c). In addition, the Court finds that the Respondent violated Business Occupations and Professions Article § 10-306 as well as Rule 8.4(a). Mr. Drew’s escrow account was not properly maintained nor did he keep the appropriate records and documentation for the required five year period.

It is uncontroverted that the Respondent’s escrow account was ‘inexcusably terrible.’ His accounting procedures were deficient in a number of respects. First, the transfer of funds between his office account and escrow account were not sufficiently precise to comply with the standards of an escrow account. Second, the records were not maintained with the proper care required. Third, when Ms. Spain asked for an accounting, he failed to do so.

Fourth, for a period of at least two years, Mr. Drew did not keep clients’ funds separately; he took fees when there were insufficient funds in the account to cover them; he took fees when there were no supporting deposits or credits; ¹⁴⁸ he transferred funds from his business account to his escrow account and wrote checks on behalf of clients when there was a negative balance in the account. Given the number of bank charges for insufficient funds and overdraft charges the Respondent clearly should have been on notice that there was a problem.