208 A.3d 820
Md.2019Background
- Stuart R. Blatt, long-time Maryland creditors’ rights attorney and partner at Margolis, Pritzker, Epstein & Blatt, oversaw a large collections practice that declined after losing major clients and accruing debts in 2014–2015.
- The firm used a “General Collections Account” (not maintained as an attorney trust account) to receive client collections; funds were repeatedly diverted to pay firm operating expenses and payroll.
- During the firm’s collapse, client matters were mishandled: wage garnishments continued after judgments expired, suits were not filed before statutes of limitations ran, client funds and court-cost advances were not remitted or refunded, and clients received little or no communication or files.
- Evidence showed Blatt directed transfers (including $24,500) from the General Collections Account to a PNC account in his name; Revere Bank later seized remaining firm accounts to satisfy loan obligations, and Blatt did not restore client funds.
- A hearing judge found Blatt violated numerous MLRPC provisions; this Court reviewed his exceptions and affirmed the findings and the sanction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Competence (MLRPC 1.1) & Diligence (1.3) | Blatt failed to protect client funds, failed to renew judgments, and neglected client matters. | Blatt blamed health issues and limited involvement; argued some accounts were trust accounts. | Court: Clear-and-convincing evidence of incompetence and lack of diligence; accounts were used as operating accounts. |
| Communication & Termination Duties (1.4, 1.16(d)) | Blatt failed to notify clients of firm closure, failed to respond to inquiries, and did not surrender files or provide accountings. | Blatt contended responsibility for subordinate errors and health-related absence. | Court: Blatt violated duties to keep clients informed and to take steps to protect clients on termination. |
| Safekeeping Client Property (1.15(a),(c),(d)) | Client funds were deposited in non‑trust account and diverted for firm expenses; funds and accountings not provided to clients. | Blatt claimed transfers represented earned fees or were taken to avoid bank offsets. | Court: Misuse and failure to account for client funds violated Rule 1.15. |
| Supervisory Responsibility (5.1, 5.3) | Blatt, as supervising partner, failed to ensure attorneys and staff complied with ethical rules and ratified improper employee conduct. | Blatt denied supervisory responsibility for specific matters and blamed subordinates/health. | Court: Blatt had managerial authority and failed to make reasonable efforts to ensure compliance; violations of 5.1 and 5.3 sustained. |
| Dishonesty/Misrepresentation (8.4(c)) | Blatt’s diversion and retention of client funds and misleading accountings involved dishonesty and deceit. | Blatt disputed characterization, claiming motives were to preserve practice and that some transfers were fees. | Court: Findings of deceit and misappropriation supported violation of 8.4(c). |
| Sanction | Commission sought disbarment given misappropriation, pattern of misconduct, and no restitution. | Blatt offered no alternate sanction, argued mitigation by health issues and long career. | Court: Disbarment appropriate; misappropriation and dishonesty ordinarily merit disbarment absent compelling mitigation. |
Key Cases Cited
- Attorney Grievance Comm’n v. Woolery, 456 Md. 483 (2017) (competence and diligence standards)
- Attorney Grievance Comm’n v. Maignan, 390 Md. 287 (2005) (failure to maintain client funds in trust shows incompetence)
- Attorney Grievance Comm’n v. Pattison, 292 Md. 599 (1982) (misappropriation of client funds is grave misconduct)
- Attorney Grievance Comm’n v. Zdravkovich, 381 Md. 680 (2004) (misappropriation ordinarily merits disbarment)
- Attorney Grievance Comm’n v. Awuah, 374 Md. 505 (2003) (sanction should match gravity and intent)
- Attorney Grievance Comm’n v. Zuckerman, 386 Md. 341 (2005) (sanctions must account for facts and circumstances)
- Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376 (2001) (only extreme mental/physical conditions justify alternatives to disbarment for intentional misappropriation)
- Attorney Grievance Comm’n v. Park, 427 Md. 180 (2012) (conduct prejudicial to administration of justice)
- Attorney Grievance Comm’n v. Weiss, 389 Md. 531 (2005) (review of pattern-of-misconduct findings)
- Attorney Grievance Comm’n v. Page, 430 Md. 602 (2013) (deference to hearing judge’s credibility determinations)
- Attorney Grievance Comm’n v. Shepard, 444 Md. 299 (2015) (supervisory duties of partners/managing attorneys)