Florida Supreme Court disciplines lawyer who allowed non-lawyer to have signatory authority on escrow account.  [Added 6/10/10]

    Lawyer agreed to handle real estate closings for Lending Group.  She opened an escrow account for these closings.  Lawyer allowed the nonlawyer principal of Lending Group ["Principal"] to have signatory authority on the escrow account.  "However, because she recognized the inherent danger of allowing a nonlawyer access to an escrow account maintained in her name as an escrow agent and Florida lawyer, she placed caps on the amounts of money that [Principal] could access or control in the escrow account."

    For one closing that occurred in Orlando on short (same-day) notice, Lawyer express mailed 10 blank, signed account checks to a nonlawyer title processor for Lending Group.  Lawyer "did not attend the closing and did not see, review, or approve the closing documents before the closing."  Checks from the escrow account were issued.  Principal ordered a stop payment on a check issued to the sellers in the transaction and misappropriated all of the funds involved, about $128,000.  When Lawyer learned of the misappropriation, she notified law enforcement authorities and worked to ensure that the sellers were made whole.

    The Florida Bar charged Lawyer with violating various Rules of Professional Conduct, including 4-1.1 (lawyer must provide competent representation), 4-1.15 (lawyer must comply with trust accounting rules), 4-5.3(a) (paralegals must work under lawyer's direction or supervision), 4-5.3(b) (lawyer must make reasonable efforts to ensure that nonlawyers retained by or associated with lawyer act in manner compatible with lawyer's ethical obligations), 4-5.3(c) (lawyer must review and be responsible for work product of paralegals), 4-8.4(a) (lawyer shall not violate ethics rules or do so through others), and 4-8.4(d) (lawyer shall not engage in conduct prejudicial to administration of justice).  The referee who tried the disciplinary case recommended that Lawyer be found not guilty of all charges.  The Bar sought Supreme Court review of the referee's conclusions regarding Rules 4-1.1, 4-5.3(b), 4-5.3(c), 4-8.4(a), and 4-8.4(d).

    The Supreme Court concluded that "although [Lawyer's] conduct in this case reflected poor judgment in several respects," she did not violate Rules 4-1.1, 4-5.3(c), 4-8.4(a), or 4-8.4(d).  The Court, however, did find that Lawyer did violate Rule 4-5.3(b) (lawyer must make reasonable efforts to ensure that nonlawyers retained by or associated with lawyer act in manner compatible with lawyer's ethical obligations).  The Court concluded:  "[Lawyer's] professional obligations as a lawyer included holding and delivering possession of the escrowed funds in strict accordance with the principals’ agreement and supervising the closing in a reasonably prudent manner.  By allowing [Principal], a nonlawyer whom she neither employed, supervised, nor controlled, essentially unfettered access to the funds held in the escrow account, [Lawyer] failed in her responsibility to ensure that she had 'in effect measures giving reasonable assurance' that [Principal]’s conduct would be compatible with those professional obligations.  In fact, when it comes to the area of funds held in trust by a lawyer, we conclude that a reading of rule 4-5.3 in its entirety leads to only one reasonable conclusion.  A lawyer may permit a nonlawyer to have authority or control over such funds only if that nonlawyer is employed by or under the direct supervision and control of the lawyer."  (Emphasis by Court.)

    The Court distinguished Florida Ethics Opinions 64-40 and 64-40 (Reconsideration), which concerned trusted nonlawyer employees of a lawyer having signatory authority on the lawyer's trust account.  "We do not read these opinions as authorizing a lawyer to permit a nonlawyer, nonemployee to have essentially unfettered access to funds held in trust by the attorney, whether in an IOTA trust account or an escrow account in the attorney’s name.  There is a critical distinction between an attorney’s office manager and a person who is neither employed by, responsible to, nor otherwise under the supervision and control of the lawyer as here."

    The Court remanded for a hearing on the appropriate sanction, "including consideration of a rehabilitative suspension."  Florida Bar v. Hines, __ So.3d ___, 35 Fla.L.Weekly S337 (Fla., No. SC08-2297, 6/10/2010), 2010 WL 2301171.

Florida Supreme Court holds that lawyer whose trust account check to client has not cleared has duty to stop payment when served with writ of garnishment seeking those funds.  [Added 5/2/08]  --  Arnold, Matheny and Eagan, P.A. v. First American Holdings, Inc., 982 So.2d 628 (Fla. 2008).

Lawyer who intentionally misappropriated trust funds, but had "impaired judgment" due to medications and mental health difficulties, is suspended rather than disbarred.  The Florida Bar v. McFall, 863 So.2d 303 (Fla. 2003).