Matter of a Member of the Bar: Malik
260, 2017
| Del. | Jul 7, 2017Background
- John S. Malik, admitted 1984, is a solo Wilmington practitioner whose books and records were audited for the six months ending April 30, 2016 by the Lawyer's Fund for Client Protection (LFCP).
- The LFCP audit and related evidence showed recordkeeping deficiencies (monthly reconciliations out of balance, negative trust-account transaction, missing retainer agreements, aged client balances) and failure to provide written fee statements when withdrawing client funds.
- Malik also failed to timely file and pay City of Wilmington net profits taxes for 2013 and 2014 until March 2016 and filed a 2016 Certificate of Compliance with inaccurate answers about his records compliance.
- The Office of Disciplinary Counsel (ODC) charged Malik with violations of Rules 1.5(f), 1.15(a), 1.15(d), 5.3, 8.4(c), and 8.4(d); Malik admitted all counts in an amended answer.
- A Board hearing treated the matter primarily as a sanctions proceeding; the Board found negligence (not intentional misconduct), identified multiple aggravating and mitigating factors, and recommended a public reprimand with two years’ probation and specific CPA precertification and tax-notification conditions.
- The Delaware Supreme Court accepted the Board’s report and imposed the recommended public reprimand and probation with conditions.
Issues
| Issue | Plaintiff's Argument (ODC) | Defendant's Argument (Malik) | Held |
|---|---|---|---|
| Whether Malik violated the Rules by failing to provide fee agreements/earned-fee statements | Malik failed to provide required written statements and statements of earned fees when trust funds were withdrawn, violating Rule 1.5(f). | Admitted the deficiencies but emphasized they were negligent and not dishonest. | Violations of Rule 1.5(f) admitted/found. |
| Whether Malik failed to safeguard and account for client funds and maintain required books/records | Audit showed negative balances, unreconciled months, aged client balances, missing documentation — violations of Rules 1.15(a) and 1.15(d). | Malik acknowledged bookkeeping lapses, blamed inexperienced bookkeeper/software limits, and said reconciliations had been done though not always timely. | Violations of Rules 1.15(a) and 1.15(d) admitted/found. |
| Whether Malik failed to supervise nonlawyer staff and whether his Certificate of Compliance was false | Malik failed to supervise staff responsible for reconciling and taxes (Rule 5.3) and filed a Certificate of Compliance with misrepresentations (Rules 8.4(c), 8.4(d)). | Malik conceded errors, characterized them as negligent, cooperative with ODC, and remorseful. | Violations of Rules 5.3, 8.4(c), and 8.4(d) admitted/found. |
| Appropriate sanction given misconduct, state of mind, and precedent | ODC sought public reprimand and two-year probation with CPA precertification and tax-notification conditions, citing potential harm and prior admonitions. | Malik conceded presumptive public reprimand but urged private admonition with probation and precertification conditions. | Board recommended and Supreme Court imposed a public reprimand with two-year probation and conditions (CPA precertification with LFCP-trained CPA and tax notifications). |
Key Cases Cited
- In re Doughty, 832 A.2d 724 (Del. 2003) (framework for applying ABA Standards to sanctions)
- In re Benson, 774 A.2d 258 (Del. 2001) (potential injury need not be actual; reliance on Certificates of Compliance)
- In re Gray, 152 A.3d 581 (Del. 2016) (public reprimand where books/records deficiencies and failure to pay taxes present)
- In re Finestrauss, 32 A.3d 978 (Del. 2011) (public reprimand where delinquent tax payments implicated discipline)
- In re Martin, 35 A.3d 419 (Del. 2011) (discussion of private admonition with probation and conditions)
- In re Thompson, 911 A.2d 373 (Del. 2006) (remoteness of prior discipline and its weight in sanctions analysis)