885 N.W.2d 185
Iowa2016Background
- Sheree L. Smith, an Iowa lawyer since 1998 and solo practitioner since 2002, was investigated after a client (Hopkins) complained about Smith’s handling of a $1,185 retainer paid in 2012 for post-decree relief.
- Smith deposited the retainer into her client trust account but later withdrew funds without providing Hopkins an itemized bill or forwarding unspent retainer to successor counsel.
- Audits (2007, 2012, 2014) revealed minimal or missing trust-account records; Smith reported a 2014 computer failure and earlier flood that she said destroyed records.
- The Disciplinary Board charged Smith with multiple violations of Iowa Rules (trust-account record retention, commingling, improper withdrawals, failure to notify clients of withdrawals, failure to promptly deliver client property, and failure to respond to Board inquiries).
- Smith stipulated to many facts and the Board’s list of rule violations and jointly proposed a 30-day suspension; the Grievance Commission found multiple violations and recommended a 60-day suspension.
- The Iowa Supreme Court reviewed de novo, agreed with the commission, and suspended Smith’s license for 60 days (no reinstatement for that period), taxing costs to Smith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Failure to retain/preserve trust account records for six years | Board: Smith failed to keep sufficiently detailed records and could not produce records for effective audit | Smith: Records lost due to 2008 flood and 2014 computer crash; prior audits without sanction suggested compliance | Held: Violation proven; catastrophic events did not excuse failure to maintain required records |
| Commingling personal and client funds | Board: Smith deposited personal items (tax refund, insurance proceeds, earned fees) into trust account and used it as operating account | Smith: Deposits were related to practice and reflected how she managed office finances | Held: Violation proven; commingling established |
| Withdrawing client funds before fees earned | Board: Alleged withdrawals from retainer before fees earned | Smith: Contended she earned the entire Hopkins retainer; records scarce but no direct proof of premature withdrawal | Held: Not proven by convincing preponderance; no violation found on this specific point |
| Failure to respond to Board and to deliver/notify client property/withdrawals | Board: Smith ignored multiple Board letters and did not provide written notices/accountings or forward unspent retainer on request | Smith: Claimed she earned retainer and cited document loss; asserted prior audits supported belief her practices were acceptable | Held: Violations proven for failure to respond, failure to provide required written notices of withdrawals, and failure to promptly deliver funds when client entitled (as to notice/notification rules); but Board failed to prove she owed a refund in this record |
Key Cases Cited
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Haskovec, 869 N.W.2d 554 (Iowa 2015) (stipulations in disciplinary matters narrow issues but do not bind the court as to violations)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Eslick, 859 N.W.2d 198 (Iowa 2015) (chapter 45 trust-account violations also violate rule 32:1.15(f); trust-account commingling and record deficiencies warrant suspension)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Lubinus, 869 N.W.2d 546 (Iowa 2015) (series of trust-account misuse incidents may justify a thirty-day suspension when not showing total long-term disregard)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morris, 847 N.W.2d 428 (Iowa 2014) (severe, persistent record-keeping deficits support suspension; consider remediation attempts and notice)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Nelissen, 871 N.W.2d 694 (Iowa 2015) (failure to retain six-year billing/trust records constitutes violation)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Santiago, 869 N.W.2d 172 (Iowa 2015) (thirty-day suspension for persistent trust-account recordkeeping violations)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Parrish, 801 N.W.2d 580 (Iowa 2011) (sixty-day suspension warranted where aggravating history and prolonged failure to return client funds existed)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ricklefs, 844 N.W.2d 689 (Iowa 2014) (long refusal to correct deficient trust-account practices justified a multi-month suspension)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Boles, 808 N.W.2d 431 (Iowa 2012) (multiyear disregard for billing/accounting requirements supports suspension)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kersenbrock, 821 N.W.2d 415 (Iowa 2012) (minimal recordkeeping over several years supports suspension)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Kingery, 871 N.W.2d 109 (Iowa 2015) (Board must prove violations by convincing preponderance of the evidence)