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Law Digest — Md. Court of Appeals — July 29, 2021

Maryland Court of Appeals

Professional Responsibility; Disbarment: Where attorney violated several Rules of Professional Conduct by, among other things, failing to maintain an attorney’s trust account, failing to act on her client’s case, abandoning her client, and making intentional misrepresentations to Bar Counsel in its investigation of her client’s complaint, the appropriate sanction was disbarment despite the fact that the attorney had no prior disciplinary history. Attorney Grievance Commission of Maryland v. Mitzi Elaine Dailey, AG No. 6, Sept. Term, 2020.

Professional Responsibility

Disbarment

BOTTOM LINE: Where attorney violated several Rules of Professional Conduct by, among other things, failing to maintain an attorney’s trust account, failing to act on her client’s case, abandoning her client, and making intentional misrepresentations to Bar Counsel in its investigation of her client’s complaint, the appropriate sanction was disbarment despite the fact that the attorney had no prior disciplinary history.

CASE: Attorney Grievance Commission of Maryland v. Mitzi Elaine Dailey, AG No. 6, Sept. Term, 2020 (filed July 23, 2021) (Judges Barbera, McDonald, Watts, Hotten, GETTY, Booth & Biran).

FACTS: Mitzi Elaine Dailey was admitted to the Maryland Bar on December 13, 1994. Since then, Ms. Dailey has maintained an office for the practice of law in the City of Baltimore, primarily providing low-cost services to indigent clients. Ms. Dailey’s clients were often referred to her by the Maryland Volunteer Lawyers Service or the Civil Justice Network.

On March 24, 2020, the Attorney Grievance Commission of Maryland (the “Commission”) filed a Petition for Disciplinary or Remedial Action (“Petition”) with the Court of Appeals alleging that Ms. Dailey had violated the Maryland Attorneys’ Rules of Professional Conduct (“MARPC”) and the Maryland Rules. The Petition concerned Ms. Dailey’s representation of and failure to communicate with her client, Geoffrey Wolst, for nearly a year, as well as her misrepresentations to Bar Counsel and failure to comply with discovery requests and the hearing process.

A hearing judge made the following findings of fact: On July 1, 2017, Norma J. Wolst died intestate and was was survived by her children, Geoffrey Wolst and Norva Countess. Mr. Wolst was referred to Ms. Dailey by the Civil Justice Network to seek legal advice concerning the administration of his mother’s estate. On July 18, 2017, Mr. Wolst retained Ms. Dailey to represent him in his capacity as the personal representative of the estate, and he provided a retainer payment of $1,500 and agreed to be billed at an hourly rate of $150.

On August 22, 2017, Mr. Wolst paid Ms. Dailey the $1,500 retainer. On the receipt given to Mr. Wolst, Ms. Dailey noted that it was for the “[e]state filing fee and legal fees.” Ms. Dailey deposited the funds into her operating account instead of into an attorney trust account. She failed to maintain an attorney trust account for her practice, and she did not obtain Mr. Wolst’s consent to deposit this payment into an operating account that was not an attorney trust account.

Ms. Dailey prepared estate documents, including a Regular Estate Petition for Administration, Schedule A, and List of Interested Persons. Mr. Wolst signed these documents on August 22, 2017. However, Ms. Dailey never filed the documents with the Office of the Register of Wills. She informed Mr. Wolst that he was required to post a bond, the amount of which would be based on the value of the estate. On November 9, 2017, Mr. Wolst paid Ms. Dailey $1,275 in cash for the bond purchase. The receipt described the payment as the “fee for bond.” Without her client’s consent, Ms. Dailey again deposited the funds into her operating account instead of an attorney trust account. Further, Ms. Dailey never purchased a bond with the funds she received and instead misappropriated the funds for her own use.

Ms. Dailey had Mr. Wolst sign an updated Schedule A on November 9, 2017, but she never filed the updated document with the Register of Wills. From December 2017 to January 2018, Mr. Wolst reached out to Ms. Dailey requesting updates on the status of his case. Ms. Dailey did not return his calls until January 2, 2018, and she did not communicate with Mr. Wolst again for nearly twelve months. During this time, Mr. Wolst was unaware of the fact that Ms. Dailey had failed to file any of the estate documents, failed to procure a bond, and failed to properly maintain the funds he had given her. Despite her lack of communication and failure to diligently advance Mr. Wolst’s case, Ms. Dailey did not return any portion of the $1,500 retainer or the $1,275 for the bond.

Following Mr. Wolst’s complaint to the Commission, Bar Counsel requested that Ms. Dailey provide a written response to the allegations in the complaint. It was found that Ms. Dailey misrepresented to Bar Counsel that she had been attempting to “move the case along” but Mr. Wolst had failed to return her calls. According to phone records submitted by Ms. Dailey, she had placed only one call to her client on January 2, 2018. Moreover, the hearing judge found that Ms. Dailey’s claim that Mr. Wolst had failed to return her alleged calls was knowingly and intentionally false and was made to conceal the fact that she had abandoned her representation of Mr. Wolst.

Ms. Dailey failed to cooperate with Bar Counsel throughout the discovery process. On August 12, 2019, Bar Counsel requested that Ms. Dailey send phone records documenting all calls with Mr. Wolst from July 1, 2017, to that date. To prevent any contradiction with her earlier statements to Bar Counsel concerning Mr. Wolst’s lack of communication with her, Ms. Dailey only provided telephone records from December 19, 2017 to January 18, 2018. Despite repeated requests for the full phone records, Ms. Dailey failed to provide records for the requested dates.

Ms. Dailey also did not provide requested trust account information to Bar Counsel. On February 13, 2019, Bar Counsel requested records from Ms. Dailey’s trust account evidencing the receipt and maintenance of Mr. Wolst’s $1,500 and $1,275 payments. Ms. Dailey failed to provide the requested bank account records or information in her March 6, 2019, response, or in her later response to a second request by Bar Counsel. Nor did Ms. Dailey alternatively inform Bar Counsel that such records did not exist. Bar Counsel also requested a response to Mr. Wolst’s allegations that Ms. Dailey had failed to respond to his calls and text messages. In her March 6 response, Ms. Dailey falsely claimed that Mr. Wolst had failed to communicate with her and that he had changed his contact information without notifying her. Ms. Dailey further asserted that she had taken “all actions in [her] power” to advance Mr. Wolst’s case, even though she had failed to file any documents or contact him for eleven months from early January to late December 2018.

In her May 24, 2019, response to Bar Counsel, Ms. Dailey included an invoice dated April 23, 2019, which purported that Mr. Wolst had accumulated $1,650 in legal fees as of August 22, 2017. This invoice included false time entries intended to conceal the fact that Ms. Dailey had not deposited the payments into—and indeed failed to maintain—an attorney trust account. Although the invoice indicated that Mr. Wolst owed $1,650 in legal fees by August 22, 2017, that information was not shared with him when he made his $1,500 retainer payment. Ms. Dailey even indicated on that day that a portion of the payment would be used for the estate filing fee. Moreover, Ms. Dailey fabricated four two-hour meetings on July 18, August 22, September 7, and November 9, 2017, on her invoice. Ms. Dailey continued her obstructive conduct in the preliminary proceedings before the Circuit Court for Baltimore City by failing to respond to scheduling requests and Skype calendar invitations from the court.

The hearing judge concluded that Ms. Dailey violated Rules: 1.1 (Competence); 1.2 (Scope of Representation and Allocation of Authority Between Client and Attorney); 1.3 (Diligence); 1.4 (Communication); 1.5 (Fees); 1.15 (Safekeeping Property); 1.16 (Declining or Terminating Representation); 8.1 (Bar Admission and Disciplinary Matters); and 8.4 (Misconduct).

Ms. Dailey filed exceptions to several of the hearing judge’s findings of fact. However, the Court of Appeals affirmed the judge’s conclusions of law and determined that the appropriate sanction was disbarment.

LAW: Rule 1.1 requires that an attorney “provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” “[T]he failure to pursue a claim after [initiating representation] demonstrates not only incompetence, but also insufficient diligence.” Attorney Grievance Comm’n v. Sanderson, 465 Md. 1, 38 (2019) (quoting Attorney Grievance Comm’n v. Lang, 461 Md. 1, 44 (2018)); see also Attorney Grievance Comm’n v. Garrett, 427 Md. 209, 222–23 (2012) (concluding that the failure to take fundamental steps to further a client’s case is a violation of Rule 1.1). “[A]n attorney ‘demonstrates incompetence, and therefore violates Rule [1.1], when he [or she] fails to properly maintain his [or her] client trust account.’” Attorney Grievance Comm’n v. Johnson, 472 Md. 491, 527 (2021). Finally, an attorney’s failure to maintain client funds in a proper trust account demonstrates incompetence. See Attorney Grievance Comm’n v. Maignan, 390 Md. 287, 296–97 (2005)).

Here, Ms. Dailey demonstrated incompetence by failing to file the necessary estate forms even after the documents were signed by Mr. Wolst. Moreover, Ms. Dailey failed to communicate with her client for eleven months, despite her unsupported assertion that she attempted to contact Mr. Wolst but was unable to do so because he had changed his contact information. Further, Ms. Dailey violated Rule 1.1 by failing to properly maintain the funds Mr. Wolst gave to her in an attorney trust account, instead placing the $1,500 and $1,275 payments into her operating account. In fact, the hearing judge found that Ms. Dailey never had an attorney trust account at all. Based on our independent review of the record, we hold that Ms. Dailey violated Rule 1.1 by failing to act on Mr. Wolst’s case, abandoning her client, and by improperly handling client funds.

“An attorney’s failure to prosecute her client’s case, combined with a failure to communicate with the client about the status of the case, may constitute a violation of [Rule 1.2].” Attorney Grievance Comm’n v. Edwards, 462 Md. 642, 697 (2019). Ms. Dailey violated Rule 1.2 because she was retained by Mr. Wolst for the purpose of filing documents for his mother’s estate but failed to do so. Her failure to take further action on Mr. Wolst’s case constituted a violation of Rule 1.2. Moreover, Ms. Dailey’s failure to communicate with her client about the status of the case for nearly all of 2018 also lead to the conclusion that she violated Rule 1.2.

Rule 1.3 mandates that “[a]n attorney shall act with reasonable diligence and promptness in representing a client.” This Rule “can be violated by failing to advance the client’s cause or endeavor; failing to investigate a client’s matter; and repeatedly failing to return phone calls, respond to letters, or provide an accounting for earned fees[.]” Attorney Grievance Comm’n v. Bah, 468 Md. 179, 208 (2020). Here, Ms. Dailey’s conduct in relation to Rules 1.1 and 1.2, supra, and Rule 1.4, infra, also violated Rule 1.3.

Under Rule 1.4, attorneys are required “to communicate with their clients and keep them reasonably informed of the status of their legal matters.” Attorney Grievance Comm’n v. Planta, 467 Md. 319, 349 (2020). “A violation of this Rule occurs when a client repeatedly attempts to contact the attorney, but the attorney fails to respond.” Smith-Scott, 469 Md. at 341. Ms. Dailey violated this Rule by failing to adequately communicate with Mr. Wolst and therefore failing to inform him of the status of his case, even when Mr. Wolst made repeated efforts to contact Ms. Dailey.

Rule 1.5(a) provides in pertinent part: “[a]n attorney shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.” “A fee that is reasonable at the outset of representation can become unreasonable if the attorney fails to earn it.” Attorney Grievance Comm’n v. Davenport, 472 Md. 20, 33 (2021). “Although the fee may have initially been reasonable at the outset of representation, we agree that the fee became unreasonable considering the minimal, or nonexistent, work that [Ms. Dailey] performed for [her] client.” Davenport, 472 Md. at 33.

In this case, although the fee may have been reasonable at the outset of representation, the fees charged became unreasonable when Ms. Dailey failed to file the signed estate documents and abandoned Mr. Wolst without informing him of the status of his case. Thus, Ms. Dailey violated Rule 1.5(a).

“Rule 8.1(b) compels attorneys to demonstrate candor and cooperation with the disciplinary authorities of the Bar.” Smith-Scott, 469 Md. at 358. An attorney violates Rule 8.1(b) if they do not “answer timely requests from the Attorney Grievance Commission regarding a complaint in a potential disciplinary matter.” Attorney Grievance Comm’n v. Brown, 426 Md. 298, 323 (2012).

Ms. Dailey made intentional misrepresentations to avoid revealing to Bar Counsel that she failed to maintain an attorney trust account. The invoice contained an entry for a 1.6-hour telephone call on January 2, 2018, which Ms. Dailey claimed was to discuss the need to obtain a bond. Based on the record, however, this telephone call was instead a 1.1-hour call for the purpose of discussing a separate, criminal matter. Therefore, this entry was fraudulent in both subject matter and length. Thus, it was found that Ms. Dailey violated Rule 8.1(b) by failing to respond in any manner to Bar Counsel’s repeated requests for information regarding an attorney trust account on February 13, April 9, April 29, and June 25, 2019. Ms. Dailey further violated Rule 8.1(b) by failing to provide dates for her statement under oath, by evading service of the subpoena for her statement under oath, and by failing to appear for her statement under oath and deposition.

“[C]onduct prejudicial to the administration of justice,” in violation of Rule 8.4(d), occurs when an attorney acts in a way that “reflects negatively on the legal profession and sets a bad example for the public at large[.]” Attorney Grievance Comm’n v. Goff, 399 Md. 1, 22 (2007). Pertinent to this case, “misconduct that constitutes a violation of [Rule] 8.4(c) may also violate [Rule] 8.4(d).” Lang, 461 Md. at 66.

Ms. Dailey’s acts of dishonesty and incompetence, including intentional representations to Bar Counsel, the abandonment of Mr. Wolst’s legal representation, and the failure to return unearned client fees all reflected negatively on the legal profession and set a poor example for the public at large, thereby constituting a violation of Rule 8.4(d). Additionally, “an attorney violate[s] Rule 8.4(d) by failing to keep his [or her] client advised of the status of the representation…‘which tends to bring the legal profession into disrepute.’” Attorney Grievance Comm’n v. Bleecker, 414 Md. 147, 175 (2010). Thus, Ms. Dailey also violated Rule 8.4(d) by failing to keep Mr. Wolst advised on the status of his case despite his calls and requests for updates.

Bar Counsel recommended disbarment. Based on the violations and aggravating factors, the Court of Appeals determined that disbarment was the appropriate sanction.

COMMENTARY: The hearing judge found the existence of seven aggravating factors: (1) a dishonest or selfish motive; (2) multiple offenses; (3) bad faith obstruction of the disciplinary process; (4) submission of false evidence, false statements, or other deceptive practices during the disciplinary process; (5) refusal to acknowledge the wrongful nature of the conduct; (6) substantial experience in the practice of law; and (7) indifference to making restitution. The Court of Appeals agreed with each.

Ms. Dailey, on the other hand, noted that she has performed extensive pro bono work and has no prior discipline. Pro bono work can support a finding of good character as a mitigating factor. Here, however, by virtue of Ms. Dailey’s failure to participate in the hearing process, the extent and nature of her pro bono work was never presented or tested before the hearing judge. Thus, Ms. Dailey failed to show that, by a preponderance of the evidence, her pro bono work was sufficient to support a finding of good character.

Although Ms. Dailey has no prior discipline, the presence of one mitigating factor could not overcome the aggregation of her many transgressions and aggravating factors. Karambelas, 473 Md. at 177. Indeed, Ms. Dailey’s misappropriation of client funds alone was enough to warrant disbarment. See Attorney Grievance Comm’n v. Sullivan, 369 Md. 650, 655–56 (2002). Additionally, she showed no willingness to take responsibility for her actions, failed to pay restitution to her client, and failed to cooperate with Bar Counsel.

  

PRACTICE TIPS: “Even if a fee is reasonable on its face at the outset of representation, if the attorney fails thereafter to perform to any meaningful degree the legal services for which the fee was set initially, the fee becomes unreasonable with the benefit of hindsight.” Attorney Grievance Comm’n v. Hamilton, 444 Md. 163, 187 (2015).