The trend toward leniency in Second Department escrow fund misappropriation cases, which I identified in a previous column,1 continued in Matter of Francis.2 In the Francis case, the respondent Marc A. Francis admitted that he received $10,000 in a fiduciary capacity on behalf of a client, but then drew approximately 14 checks and made additional transfers against the funds, totaling $5493.72, to pay his own bills and expenses over a three-week period in February 2009. When he later sought to disburse the escrow funds, per his client's directive, the escrow check was dishonored due to an insufficient balance. The respondent also admitted that he commingled personal or business monies with client funds in his escrow account and in other instances drew checks on his escrow account to pay his own bills and expenses.

Following an investigation, the Grievance Committee for the Tenth Judicial District chose only to charge Francis with violations of Rule of Professional Conduct 1.15(a) (formerly, Disciplinary Rule [DR] 9-102(A) of the Code of Professional Responsibility), the rule concerning proper separation of trust funds, but not Rule 8.4(c) (formerly, DR 1-102(A)(4)), the rule proscribing dishonest conduct normally alleged in a case of deliberate theft of client funds. Based on certain (standard) mitigating factors, the respondent was publicly censured.

Law FIrm Discipline Rules

Matter of Cohen & Slamowitz3 is the first case in which the Second Department has utilized the “law firm” discipline rules, holding the law firm, as distinct from an individual lawyer, liable for professional misconduct, in addition to findings of misconduct attributable to a principal of the firm. The specific charges entailed a pattern or practice of conduct prejudicial to the administration of justice by seeking to collect debts without engaging in a reasonable and proper search to verify the identity and property of alleged debtors, and by failing to timely file and provide a client with a copy of a satisfaction of judgment. The court cited DR 1-102(A)(5) of the former Code of Professional Responsibility (now, Rule 8.4(d) of the New York Rules of Professional Conduct) which stated, in pertinent part:

(A) A lawyer or law firm shall not:

(5) Engage in conduct that is prejudicial to the administration of justice.