Board of Professional Responsibility Of The Supreme Court of Tennessee v. Michael Gibbs Sheppard, 556 S.W.3d 139

Michael G. Sheppard, managing partner at Craft & Sheppard, handled firm finances and trust accounts; between 2009–2013 client settlement funds in multiple matters were commingled and transferred to the operating account.
Board of Professional Responsibility charged Sheppard with violating Tenn. R. Prof. Cond. 1.15 and 8.4 for mismanaging trust funds and misleading a client. Sheppard admitted mismanagement but asserted negligence, inexperience, and lack of intent.
Hearing panel found Sheppard knowingly violated Rules 1.15 and 8.4, but did not find intentional conversion for personal benefit or serious client injury; it identified multiple mitigating factors (no prior discipline, remorse, inexperience, good character) and no aggravators.
Hearing panel imposed 60-day suspension, then two years probation with a practice monitor, and 15 hours CLE on office/trust management.
Williamson County Chancery Court affirmed some findings but added aggravators (dishonesty/selfish motive; substantial experience) and increased discipline to a one-year suspension (60 days active, remainder probation) plus five years probation and restrictions on handling trusts > $5,000.
Tennessee Supreme Court reversed the chancery court, holding the hearing panel’s sanction was supported by substantial and material evidence and the trial court impermissibly reweighed evidence.

Issue	Board's Argument	Sheppard's Argument	Held
Appropriate ABA Standard/s for sanction (4.11 disbarment v. 4.12 suspension)	Only 4.11 applies because Sheppard knowingly used client funds, warranting disbarment	Hearing panel applied standards properly; facts support suspension under 4.12 given mitigating factors	Both 4.11 and 4.12 could be considered; hearing panel reasonably applied 4.12 and suspension was supported by substantial evidence
Existence of aggravating factors (dishonesty/selfish motive; substantial experience)	Aggravators proven; justify harsher sanction	Hearing panel found no aggravators; evidence supports inexperience and absence of selfish motive	Court upheld panel’s findings of no dishonest/selfish motive and that Sheppard was inexperienced; chancery court erred in reweighing evidence
Whether suspension (60 days + probation) was appropriate or whether disbarment required	Disbarment appropriate given misuse of trust funds and client harm	Suspension appropriate given mitigating factors and lesser actual harm compared to precedents	Suspension was within panel’s discretion and consistent with analogous decisions; not arbitrary or capricious
Whether chancery court permissibly modified panel’s sanction	Trial court erred by substituting its judgment and reweighing evidence	Same	Chancery court improperly modified sanction; Supreme Court reversed and reinstated hearing panel’s order

Hyman v. Bd. of Prof'l Responsibility, 437 S.W.3d 435 (Tenn. 2014) (Supreme Court’s supervisory authority over lawyer discipline)
Reguli v. Bd. of Prof'l Responsibility, 489 S.W.3d 408 (Tenn. 2016) (standard of review for disciplinary appeals)
Cowan v. Bd. of Prof'l Responsibility, 388 S.W.3d 264 (Tenn. 2012) (two-step ABA Standards analysis for sanctions)
Maddux v. Bd. of Prof'l Responsibility, 409 S.W.3d 613 (Tenn. 2013) (role of mental state and injury in selecting sanctions)
Allison v. Bd. of Prof'l Responsibility, 284 S.W.3d 316 (Tenn. 2009) (affirming 60-day suspension for commingling and trust-account mismanagement)
Skouteris v. Bd. of Prof'l Responsibility, 430 S.W.3d 359 (Tenn. 2014) (disbarment where multiple conversions and aggravators present)
Rayburn v. Bd. of Prof'l Responsibility, 300 S.W.3d 654 (Tenn. 2009) (disbarment for pattern, dishonesty, obstruction, and serious aggravators)