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In re Speck

Supreme Court of New Jersey

March 15, 2018


          Argued: November 16, 2017

          District Docket No. XIV-2013-0658E

          Andrea R. Fonseca-Romen appeared on behalf of the Office of Attorney Ethics.

          Donald M. Lomurro appeared on behalf of respondent.

          Ellen A. Brodsky Chief Counsel


          Bonnie C. Frost, Chair

         To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.

         This matter was before us on a recommendation for an admonition, which we decided to treat as a recommendation for greater discipline, in accordance with R. 1:20-15(f) (4) . The formal ethics complaint charged respondent with violations of RFC 1.15(a) and the principles of In re Wilson, 81 N.J. 451 (1979) (knowing misappropriation of client trust funds); RFC 1.15(d) (failure to comply with the recordkeeping requirements of R. 1:21-6); RPC 7.1 and RFC 7.5 (false or misleading letterhead); and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation).

         The Office of Attorney Ethics (OAE) recommends respondent's disbarment. Respondent asserts that an admonition is sufficient discipline for his misconduct. For the reasons detailed below, we determine to impose a reprimand.

         Respondent earned admission to the New Jersey bar in 1987. He is currently engaged in the practice of law in Freehold, New Jersey. During the relevant time frame, he practiced in Iselin, New Jersey.

         Respondent and Keith Burns, Esq. were best friends, who enjoyed a relationship forged in the 1990s, during their hectic, overlapping New Jersey municipal court practices. Respondent fondly described their friendship, recounting their daily telephone conversations; parallel interests, including golf, baseball, and gambling; and joint family vacations. Burns was both a certified civil and certified matrimonial attorney, and focused his practice primarily on divorce cases.

         During multiple periods between 1996 and 2008, respondent worked as an associate in three different "incarnations" of firms managed by Burns. In 2008, however, respondent joined the law firm of Garces & Grabler, as an associate, where he remained before rejoining Burns, claiming that he and Burns had formed a partnership, effective May 31, 2011. Respondent testified that, for his entire legal career prior to joining Burns as a partner, he had been an associate, and, thus, had never been in charge of recordkeeping, trust accounts, or the administration of a law firm.

         During the relevant time frame, Burns was the sole attorney and principal of Burns Law Office, LLC, (Burns Law) located in Iselin, which he had formed in 2006. Burns had only one steady employee, Suzi McMillon, who served as his office manager and paralegal. McMillon originally had worked for Burns in 1995, moved to Mississippi in 1997, and then returned to Burns' employ from 2005 until Burns' 2011 death. McMillon handled law office finances and operations, drafted legal documents, and even administered the personal finances of Burns and his wife, Angela Burns (Angela). McMillon collected fees from clients, made all deposits and disbursements, paid all of the firm's obligations, including her own salary; and had full access to the firm's attorney business and attorney trust accounts with Sovereign Bank. She drafted all business checks for Burns and, "[n]inetynine percent of the time," even issued them, using a signature stamp for Burns. She testified that he signed all attorney trust account checks.

         In 2010, Burns was diagnosed with esophageal, stomach, and liver cancer, and was told that he had one to three years to live, He began aggressive and debilitating cancer treatment, including chemotherapy. Angela testified that Burns' illness and treatment severely taxed him and immediately negatively impacted his law practice. According to McMillon, Burns did not come to the office between August 2010 and January 2011. Instead, he managed the firm from home and through daily telephone conferences.

         In October 2010, respondent began assisting with Burns Law work, with the consent and support of Garces & Grabler. In April 2011, respondent moved into the Burnses' home in Chester. He was going through a bitter divorce, needed a place to live, and was willing to help Angela care for Burns.

         During an OAE interview on October 7, 2015, respondent represented that he and Burns had held in-depth discussions about forming a law partnership, named "Burns & Speck," to become effective on June 1, 2011. Angela corroborated this assertion, testifying that Burns was "anxious to get something in writing" with respondent, and that they had drafted a partnership agreement. McMillon, too, recounted that Burns had informed her, before he died, that he and respondent were forming a partnership.

         Angela maintained, however, that the partnership had never actually been formed. Moreover, she testified that respondent had promised her that he would take care of her, representing that she would receive about $100, 000 after he wound down Burns Law. Over time, she claimed, that $100, 000 promise shrunk to $65, 000, then to $50, 000, and, ultimately, respondent claimed that she actually owed the firm money.

         Respondent testified that he and Burns had begun their discussions regarding the creation of the law partnership in February 2011. Respondent admitted that he neither inquired about the financial status of Burns' firm, nor reviewed Burns Law financial records in connection with the partnership negotiations. Respondent maintained that he and Burns had "agreed on some ideas," which Burns then memorialized, via bullet points, in a February 8, 2011 e-mail to respondent. Respondent then expanded those bullet points into a March 12, 2011 outline of a proposed partnership, which he e-mailed to Burns. He and Burns further negotiated terms, which were reflected in a draft partnership document. Respondent stipulated, however, that they never executed a final agreement. Nevertheless, respondent repeatedly asserted that the terms of the partnership were final, because they "shook hands on it" prior to May 31, 2011, and further represented that he and Burns had adopted handwritten changes to the partnership agreement.

         The draft agreement contemplated a partnership for at least two years; for Burns initially to work only twenty hours per week while .he recovered; for Burns to be the managing partner; for Burns' monthly draw to be $15, 000 and respondent's to be $10, 000; and, notably, stated that each attorney's existing accounts receivable, from his respective prior law firm, would remain an "individual partner asset" unless otherwise agreed. During OAE interviews on July 22, 2014 and October 7, 2015, respondent claimed that he had properly applied that final provision of the agreement in his administration of Burns Law. Specifically, he asserted that, if legal fees were received for services that Burns had performed for Burns Law, those funds were deposited in the Burns Law attorney business account, and "[i]f it was a new retainer agreement for me, it would have went [sic] into Burns and Speck."

         On June 4, 2011, Burns died. Respondent testified that, by this time, he "was running the law practice" known as Burns Law. Respondent conceded, however, that he was formally associated with Burns, at most, from May 31 to his death on June 4, 2011.

         According to both McMillon and respondent, Burns Law was in "a lot of debt." The practice owed multiple fee arbitration awards, and was obligated to refund client and expert retainers, given Bums' failure to perform promised work after he fell ill. At least one of the fee arbitration awards had been reduced to a judgment against Burns Law. Bills for law office equipment and other operating expenses remained unpaid, and the firm's landlord was threatening eviction over past-due rent. McMillon testified that, due to Burns' illness, the office was not receiving legal fees, and that Burns had to cover his significant personal expenses. Based on information gathered by Dennis Estis, the attorney-trustee ultimately appointed for Burns Law, as detailed below, Burns Law owed more than $56, 000 to clients and third parties.

         Conversely, Burns Law was owed significant legal fees from clients for work completed. For example, one client owed Burns more than $91, 000. Based on information that Estis gathered, clients owed Burns Law more than $172, 000 in outstanding legal fees. Additionally, Burns was holding $25, 000 in a trust account associated with one of his prior law partnerships, and more than $80, 000 in a trust account for the Estate of Delia Katenkamp, a long-standing client matter. Ultimately, $107, 226.91 was disbursed from the Burns Law attorney business account to Estis, partially paying him for services rendered as the trustee. After Burns Law was wound down, Angela received only two paintings and an office chair from the firm's assets.

         Respondent admitted that, on June 2, 2011, he paid his divorce attorney $5, 000 in legal fees from the Burns Law attorney business account, claiming that he and Burns had contemplated his doing so, and that he had deposited enough of his own earnings into that account to cover that disbursement. Moreover, respondent maintained that he actually had saved money for Burns' estate by remaining in the Burns Law office space and paying the rent and other operating expenses.

         On June 14, 2011, ten days after Burns' death, respondent formed Burns & Speck Attorneys at Law, LLC (Burns & Speck), of which he was the sole owner. The firm used the same office, in Iselin, that Burns Law had occupied. Respondent and McMillon testified that respondent had formed the new firm because he and Burns had agreed to a partnership, and because he wanted to "honor" Burns. McMillon testified that Angela, a graphic designer, had created letterhead and envelopes with the Burns & Speck logo, and had personally brought the stationery to the office, after Burns had died. Angela disputed that assertion, testifying that she had created the letterhead, at Burns' request, in March 2011, and only as a sample for use in "talking about the partnership." She conceded that she had hoped the partnership would work out, and that Burns would fully recover from his cancer, but steadfastly maintained that the partnership was never consummated.

         Angela became concerned when she visited the bank and learned that respondent had formed Burns & Speck and was "commingling [Burns Law] money." At the time, she believed that respondent represented her on a case she had against an architect, and further claimed that respondent owed a fiduciary duty to her, based on promises he had made to Burns, and because she was Burns' heir. She related that, upon confronting respondent about his use of Burns Law funds, he represented that he would pursue a bankruptcy for Burns Law, "screw all the creditors," and split the money with her. At that point, respondent was still living in her home. During a July 2014 OAE interview, respondent admitted having represented the Burnses in litigation against an architect, but asserted that any such representation had ended before Burns' death, and, thus, he no longer had an attorney-client relationship with Angela.

         After learning of the "commingling," Angela went to the offices of Burns Law, while respondent was in Utah. She testified that her visit was spurred by "[t]oo many odd things" happening, citing a judgment against Burns Law that had attached to her personal bank account, the repossession of Burns' car from their home, and the receipt of notices informing her that McMillon had not paid her health insurance premium or mortgage payment. Upon visiting the office, Angela learned of the existence of the Burns & Speck law firm. Respondent had not informed her of the formation of the law firm.

         According to respondent, many of Burns' files had been ignored during his illness, and needed "[m]ore than CPR." Shortly after Burns' death, respondent began to meet with existing clients of Burns Law, in an effort to convince them to allow him to assume their representation. Notably, and contrary to his fundamental position in this case, on June 7, June 29, and August 2, 2011, respondent executed retainer agreements, which identified his firm as "Michael R. Speck, Esq.," yet another new firm that respondent had apparently formed - not Burns Law or Burns & Speck. On at least one occasion thereafter, on July 5, 2011, however, respondent executed a retainer agreement with a client that identified his firm as Burns & Speck.

         On May 31, 2011, respondent deposited checks, totaling $6, 250, for fees owed to him in connection with his prior law practice, into Burns Law bank accounts.[1] McMillon testified that she saw no problem with the continued use of the Burns Law bank accounts. Moreover, she admitted repeatedly using Burns' signature stamp, after he had died, to issue business account checks drawn on Burns Law funds. Specifically, she testified regarding her June 10 and June 14, 2011 issuance of attorney business account check numbers 1206 and 1207 to respondent, in the amounts of $2, 000 and $500, respectively, as "draws," as well as a check to herself, for $1, 000, representing money that she claimed Burns had borrowed from her, in April 2011, to cover a gambling debt. She also issued numerous checks to pay law firm operating expenses.

         On June 14, 2011, the same day that he created Burns & Speck, respondent opened three bank accounts for the firm - an attorney business account, an attorney trust account, and a money market account. Respondent was the only authorized signatory on all three accounts. Respondent used $2, 000 from the Burns Law attorney business account to open the new accounts. The deposited check was signed using Burns' signature stamp, and included the notation "open new account."[2] The $2f000 was distributed in the new accounts as follows:

Attorney Business Account - $1, 400
Attorney Trust Account - $ 100
Money Market Account - $ 500

         During an OAE interview in October 2015, respondent claimed that the only reason he could "think of" that this $2, 000 was used was it "could have been money that got mis-deposited [sic]" from his client matters into the Burns Law attorney business account. During the ethics hearing, however, respondent testified that he had intentionally used the $2, 000 in Burns Law funds to "transfer assets into the new partnership account," as he and Burns had contemplated. Sovereign Bank sent statements for these accounts to Angela's house, because respondent still lived there and had used her mailing address. Angela admitted that she had opened the statements because "she was Burns." As detailed above, weeks after Burns' death, she discovered that respondent was using Burns Law funds. Thus, on July 14, 2011, she complained to the bank, which froze those accounts. She claimed that, in turn, respondent called her on the phone and began "screaming" at her.

         Respondent acknowledged that, "at some point" after Burns' death, he became concerned with the ethics implications of using Burns' signature stamp, stating that he "figured out [McMillon] was writing checks with a stamp." Despite his purported concern, respondent conceded that, as late as June 20, 2011, almost three weeks after Burns had died, respondent deposited a $500 draw check using Burns' stamp. Moreover, he could not recall taking any corrective action in respect of McMillon's use of Burns" signature stamp.

         On June 14, 2011, the same date that he created Burns & Speck and opened the Sovereign Bank accounts, respondent applied to be appointed the attorney-trustee for Burns Law, pursuant to r. 1:20-19, via an e-mail to the Honorable Travis L. Francis, A.J.S.C., then the Middlesex County Assignment Judge. In that e-mail, respondent stated that, due to Burns' illness and his heavily medicated state near the end of his life, respondent believed that Burns was not "competent enough to go forward with our partnership" and that "[w]e never consummated the deal." During a July 22, 2014 OAE interview, respondent also stated that, in the last month of his life, Burns was "on very large doses of pain killers. And I started to worry about his competence." He described Burns & Speck as a single-member entity, with Burns' name on the letterhead "solely to honor him," and twice referred to Angela as Burns' "sole heir." During the hearing before the special master, respondent stated "I understand the way it looks," but maintained that he meant that Burns was not competent to continue to practice law, but was mentally competent to agree to form a partnership. In requesting the appointment from Judge Francis, respondent stressed the outstanding obligations of Burns Law to existing clients, specifically referencing multiple distributions that needed to be made posthaste, including for overdue fee arbitration awards.

         The next day, Judge Francis appointed respondent as the attorney-trustee of Burns Law. Despite the overtures that respondent had made to the court in his appointment request, he neither conducted an accounting of Burns Law's assets and debts, as required of an attorney-trustee, nor paid any of Burns Law's fee arbitration or client debts. Indeed, he admitted he "didn't do anything with the Court pursuant to [his role as] the attorney-trustee." Respondent testified that, in retrospect, it was imprudent for him to have applied to be the attorney-trustee, as he "wasn't equipped to do it." Notably, during oral argument before us, respondent's counsel repeatedly took the position that the new firm, Burns & Speck, had assumed all of the debts of Burns Law.

         Angela learned of respondent's appointment as the attorney-trustee for Burns Law after respondent locked her out of the office and, as she recounted, "sent [her] a big reprimand," which stated that "he was in charge now." At the end of July or in early August 2011, given his deteriorating relationship with Angela, respondent vacated the Burnses' residence. On August 11, 2011, Angela's attorney, Mark Goldstein, filed a motion seeking respondent's immediate removal as the attorney-trustee of Burns Law. On September 30, 2011, Judge Francis removed respondent and appointed Dennis Istis as the attorney-trustee.

         Meanwhile, on July 1, 2011, invoices for outstanding Burns Law legal fees were sent to existing Burns Law clients, using Burns & Speck letterhead. Also, on July 8, 2011, McMillon had deposited a $13, 503.59 check into the Burns & Speck trust account, drawn on a trust account that Burns Law had held exclusively for the Estate of Delia Katenkamp, one of Burns' earliest clients. Burns had received these funds ...

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