Lanphier & Associates

Lanphier & Associates Review

He is under investigation now so if you hire them you may never get your case finished and be out your hard earned money!!! | They never finished my case had to hire another lawyer how made me aware of what a crooks they are at this lawfirm. | In the Matter of | STEELE LANPHIER, | A Member of the State Bar, No. 146163. | Case No. 12-O-11055 | OPINION | Respondent Steele Lanphier erroneously designated his law firm’s operating account as a | client trust account (CTA). He used this account solely for personal and business needs. He also | maintained a second CTA, which he reserved for entrusted client funds. Lanphier kept the two | CTAs segregated and did not intermingle their funds, although he wrote several checks with | insufficient funds (NSF) against his operating account. | The hearing judge found Lanphier culpable of commingling, in violation of rule 4-100(A) | of the Rules of Professional Conduct,1 and recommended that he be suspended for 30 days. The | Office of the Chief Trial Counsel (State Bar) appeals and is seeking a 90-day suspension. It | argues that the record does not justify a departure from standard 2.2(b) of the Rules of Procedure | of the State Bar, title IV, Standards for Attorney Sanctions for Professional Misconduct,2 which | prescribes a minimum of three months’ actual suspension for violations of rule 4-100(A). | Lanphier acknowledges his culpability and does not dispute the recommended discipline. | Based on our independent review of the record (Cal. Rules of Court, rule 9.12), we adopt | the hearing judge’s culpability finding of trust account mismanagement, but we modify the 1 All further references to rules are to the Rules of Professional Conduct unless otherwise noted. 2 All further references to standards are to this source. | -2- | findings in aggravation and mitigation as discussed below. We also increase the hearing judge’s | discipline recommendation to include a 90-day period of actual suspension because we do not | find support in the record for deviating from standard 2.2(b). Of particular concern is Lanphier’s | failure to take corrective action with respect to the management of his CTA after the State Bar | advised him to do so. | I. FINDINGS OF FACT AND PROCEDURAL HISTORY | Lanphier was admitted to practice law in June 1990 and has no prior record of discipline. | He is the principal of Lanphier & Associates, where he focuses on bankruptcy law. | Lanphier stipulated to many of the facts and admission of documents establishing his | culpability. Approximately 12 years ago, he opened an operating account at Bank of the West | for his law firm and designated the account as a CTA (BOW CTA). His intention in opening this | CTA was “to make sure that the funds were separated” from another CTA at Bank of America | (BofA CTA), where he maintained all client funds. | At all times, Lanphier kept his client funds in the BofA CTA segregated from his non-client funds in the BOW CTA. There is no evidence that he intended to deceive or defraud anyone when he opened the BOW CTA; he maintains he was unaware of the trust account rules that proscribe the use of a CTA for business or personal purposes. | In early 2011, the State Bar was notified that Lanphier had issued NSF checks drawn | against the BOW CTA. After he provided a written explanation, the State Bar wrote to Lanphier | on April 27, 2011, to advise him: “Although we are closing our file in this case without an | investigation, we have a concern that you may need to give greater attention to the management | of your trust account.” | The letter also suggested that he review rule 4-100 and the State Bar’s Trust Account Record-Keeping Standards “to assist [him] in avoiding future reports of insufficient funds checks.” | -3- | Notwithstanding the State Bar’s cautionary letter, Lanphier wrote an additional 16 NSF checks against his BOW CTA during the month of December 2011, and Bank of the West again notified the State Bar about these additional NSF checks. | This prompted another investigation that resulted in the State Bar’s discovery that Lanphier had been using his BOW CTA to deposit personal funds and to pay personal and office expenses. The State Bar did not seek to discipline Lanphier for the NSF checks, but instead filed a Notice of Disciplinary Charges (NDC) in May 2012, alleging two counts of commingling funds in his CTA from September 1, 2011 through | February 29, 2012, in violation of rule 4-100(A). | Prior to the trial in this matter, Lanphier stipulated that he made numerous deposits of non-client funds, for a total of $64,300, into his BOW CTA between September 1, 2011, and February 29, 2012.3 | During the same period, he repeatedly paid personal and business expenses, for a total of about $45,500, from the BOW CTA. The hearing judge found that Lanphier commingled funds in his BOW CTA, in violation of rule 4-100(A). The judge further found this misconduct was aggravated by Lanphier’s indifference toward rectification and by uncharged misconduct for failing to deposit filing fees received from his clients into his true BofA CTA. | After considering Lanphier’s mitigation of more than 20 years of practice without discipline, lack of harm, and good character, the hearing judge recommended a 30-day actual suspension. | 3 Lanphier testified that he opened the BOW CTA in 2000, but the only records of this account admitted at trial were from September 2011 to April 2012, which is coextensive with the period of misconduct charged in the NDC. | -4- | II. CULPABILITY | Count One: Commingling (Rule 4-100(A)) Count Two: Commingling (Rule 4-100(A))4 | Rule 4-100(A) provides in relevant part: “All funds received or held for the benefit of | clients by a member or law firm . . . shall be deposited in one or more identifiable bank accounts | labelled ‘Trust Account,’ ‘Client’s Funds Account’ or words of similar import . . . . No funds | belonging to the member or the law firm shall be deposited therein or otherwise commingled | therewith . . . .” | Lanphier used his BOW CTA exclusively for business and personal purposes. He did not deposit client funds into or withdraw client funds from this account; therefore, personal and client funds were not intermingled. However, the State Bar correctly points out that rule 4-100(A), by its express language, is violated when an attorney merely deposits non-client funds into a CTA. | As the Supreme Court has instructed: “The rule absolutely bars use of the trust account for personal purposes, even if client funds are not on deposit.” (Doyle v. State Bar (1982) 32 Cal.3d 12, 22-23.) Lanphier’s misuse of his BOW CTA as an operating account violated rule 4-100(A). | III. AGGRAVATION AND MITIGATION | The State Bar must establish aggravating circumstances by clear and convincing evidence,5 while Lanphier has the same burden to prove mitigating circumstances. (Std. 1.2(b) & (e).) | 4 Counts One and Two charged violations of rule 4-100(A) based on the same misconduct but for different time periods. The hearing judge properly treated the two counts as one count alleging a continuous course of conduct for discipline purposes. 5 Clear and convincing evidence leaves no substantial doubt and is sufficiently strong to command the unhesitating assent of every reasonable mind. (Conservatorship of Wendland (2001) 26 Cal.4th 519, 552.) | -5- | A. Two Aggravating Factors | The hearing judge found two aggravating factors – indifference toward rectification and uncharged misconduct. We find indifference but do not find the State Bar provided clear and convincing evidence of uncharged misconduct. However, we find additional aggravation due to multiple acts of misconduct. | 1. Indifference toward Rectification (Std. 1.2(b)(v)) | The hearing judge found that Lanphier had stopped using his BOW CTA at the time of | trial, yet failed to close it. | Lanphier testified that he was waiting for the outcome of these proceedings before closing the account because he might utilize the account if he formed a professional corporation. His testimony does not justify his refusal to close a CTA that violated rule 4-100(A). “[S]ubsequent efforts by the attorney to correct the condition that precipitated the misconduct may demonstrate that the conduct will not likely recur.” (Baker v. State Bar (1989) 49 Cal.3d 804, 822, fn. 7.) Such is not the case here. | More importantly, Lanphier did not discontinue issuing NSF checks against the BOW CTA even after the State Bar had contacted him about the problem. We find this is additional evidence of Lanphier’s indifference and is a serious aggravating factor. | 2. Multiple Acts of Misconduct (Std. 1.2(b)(ii)) | Between September 1, 2011 and February 29, 2012, Lanphier made at least 20 deposits of personal funds into the BOW CTA. During the same period, he made more than 95 payments for personal and business expenses from the BOW CTA. Such repeated misuse of his trust account constitutes multiple acts of misconduct and is a significant factor in aggravation. | The State Bar argues that Lanphier’s trust account violation involves a pattern of misconduct that | lasted for “at least 12 years.” Although Lanphier testified that he opened the BOW CTA 12 years ago, the only evidence of its use for personal and business purposes are the bank | -6- | statements for September 2011 through February 2012. This evidence does not clearly and | convincingly support a finding of a pattern of misconduct, which is limited to the “‘most serious | instances of repeated misconduct over a prolonged period of time.’ [Citation.]” (Young v. State | Bar (1990) 50 Cal.3d 1204, 1217; Garlow v. State Bar (1988) 44 Cal.3d 689 [pattern of | misconduct found where on several occasions over nine-year period, attorney made false | statements to courts, failed to communicate and perform legal services, failed to return client | documents and property, and induced others to testify falsely].) | 3. No Uncharged Misconduct (Std. 1.2(b)(iii)) | The hearing judge found that Lanphier committed an uncharged violation of rule 4-100(A) by making eight payments for court filing fees using checks drawn on his BOW CTA from personal money Lanphier had advanced. | The judge determined that the payments for the filing fees Lanphier received from clients should have been deposited in and withdrawn from the BofA CTA, not the BOW CTA. However, Lanphier testified that he would deposit a client’s check in payment of filing fees into his BofA CTA, but if the deadline for paying the fee occurred before the check cleared, he advanced the fees using personal funds from his BOW | CTA and then reimbursed himself with the client’s funds once the check cleared his BofA CTA. | Lanphier did not violate his ethical duties by advancing filing fees for his clients. A check received from a client must be deposited into the CTA and cleared before it is paid out. (The State Bar of Cal., Handbook on Client Trust Accounting for California Attorneys (2013) § V, p. 15.) Thus, it would be improper for Lanphier to pay the bankruptcy court filing fees from his BofA CTA before his client’s check cleared. But, to protect his clients’ interests, Lanphier advanced filing fees from his personal funds held in his BOW CTA. Advancing costs is not prohibited by the rules. (See rule 4-210(A)(3) [member not prohibited from advancing costs].) |

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