My sense is that lawyers think of “misappropriation” as “theft” or “embezzlement.”
Yes, stealing, theft, and embezzlement are bad. Very bad. But misappropriation includes more.
You know what’s as bad?
Funds held in trust are not there for the lawyer’s personal use. Whatever the reason – payroll, rent, the student loan payment you covered just this one time with client funds that you 100% will replenish once you take your fee from the case you settled yesterday – when it comes to client funds in trust, there’s no such thing as “borrowing.”
In my view, when a lawyer uses client funds for the lawyer’s own purposes without the client’s permission, the lawyer should be disbarred. Even if the lawyer replaces the funds before anyone realized they had been removed. Even if the lawyer never intended to permanently deprive a client of money.
Long ago, the New Jersey Supreme Court defined “misappropriation” as:
- “any unauthorized use by the lawyer of clients’ funds entrusted to him, including not only stealing, but also unauthorized temporary use for the lawyer’s own purpose, whether or not he derives any personal gain or benefit therefrom.”
The opinion is here.
In 2005, I prosecuted a case that involved a lawyer’s unauthorized temporary use of client funds for the lawyer’s own purposes. For years, the lawyer used trust funds to pay personal expenses, reimbursing the trust account when the lawyer could. Indeed, while the investigation was still in its earliest stages, and long-before disciplinary charges were filed, the lawyer replenished the trust account in full. Not a single client lost even a penny.
Nevertheless, I argued for disbarment. A hearing panel of the Professional Responsibility Board agreed. The Vermont Supreme Court adopted the panel’s decision as its own and disbarred the lawyer.
In its decision, the hearing panel cited a line of cases that stretch back to the New Jersey opinion I mentioned above. The panel concluded that the unauthorized use of client funds for the lawyer’s own purposes is so serious that, absent “compelling mitigating circumstances,” disbarment will result.
To the panel, “compelling” meant something. The panel specifically noted numerous factors that, in nearly any other disciplinary case, would have mitigated in favor of a lesser sanction. Still, the panel ordered disbarment. That’s how serious the Court and hearing panels take even the temporary unauthorized use of client funds.
A law license is not license to use other people’s money as your own. Not even a nickel. Not even if you put the nickel back tomorrow. This is how I remind you.
It’s not your money. Don’t treat it like it is.