In the DISCIPLINARY MATTER INVOLVING Michael A. STEPOVICH, Respondent.
Supreme Court No. S-15945, Supreme Court No. S-15961
Supreme Court of Alaska.
December 16, 2016
Rehearing Granted December 23, 2016
386 P.3d 1205
J. John Franich, Franich Law Office, LLC, Fairbanks, for Respondent.
Louise R. Driscoll, Assistant Bar Counsel, Anchorage, for the Alaska Bar Association.
Before: Stowers, Chief Justice, Fabe, Maassen, and Bolger, Justices. [Winfree, Justice, not participating.]
OPINION
MAASSEN, Justice.
I. INTRODUCTION
A few months after reinstatement to the Alaska Bar from a two-year suspension, an attorney violated
The Bar brought a disciplinary action against the attorney and stipulated that his violation of
We conclude that the attorney acted not negligently but knowingly, and after considering relevant aggravating and mitigating factors we impose a 12-month suspension. But because the violation is not the same as or similar to the misconduct for which the attorney was suspended before, we do not also impose the stayed year.
II. FACTS AND PROCEEDINGS
The underlying facts are undisputed; the only issue on appeal is the appropriate sanction for the attorney‘s violation of
A. Facts
Michael Stepovich and a client had been friends for several decades, and when the client was diagnosed with cancer he asked Stepovich to draft his will. Although probate is outside Stepovich‘s normal practice areas, he had helped other friends with “very simple” wills, and he agreed to help the client because of their friendship.1 Stepovich knew that the client “was in bad shape,” though the client kept the specifics of his illness to himself.
Stepovich drafted the will in May 2009. The client had acquired “an estate with assets of more than $800,000” through his work and his real-estate holdings. He was married but had no children. His mother was still living, and he also had a brother and sister with whom he had “problems.” In his will he left each of his siblings their choice of six shot glasses from his collection; he left his mother nothing because she was “taken care of” as the beneficiary on a six-figure bank account she would receive outside of probate; and he left the remainder of his estate to his wife. The will named the client‘s “good friend, Michael Stepovich,” as the sole contingent beneficiary.2 According to Stepovich, the client convinced him to be the contingent beneficiary even though Stepovich resisted, advising the client to choose someone else and saying that if by chance he inherited he would just give the money away.
Stepovich had helped the client with other legal matters such as landlord-tenant issues, and he had helped the client‘s wife dissolve a prior marriage. He never charged the client or his estate for any of his professional services.
The client died about six weeks after signing his will. Because his wife survived, the contingent beneficiary, Stepovich, received nothing. Probate proceedings were nonetheless contentious, as the client‘s mother contested the will. Eventually she and the client‘s wife successfully petitioned to remove Stepovich as the personal representative of the estate. The court enforced a settlement agreement in 2012, ending the probate proceedings.
B. Proceedings
The Alaska Bar Association filed a petition for formal hearing in December 2013, alleging that Stepovich had violated the conflict of interest provision,
Stepovich had been disciplined before; during his 32 years of practice leading up to the matter at issue here he received sanctions for three separate incidents of misconduct. On December 22, 2008, about six months before he drafted the client‘s will, he had been reinstated to active status following a three-year suspension of his license with one year stayed.5 In that matter, the Disciplinary Board6 concluded that Stepovich violated
Bar Counsel presented the parties’ stipulation in the present matter to the Disciplinary Board in September 2014, but the Board rejected it. The Board “determined that, given the . . . previous misconduct, and the nature of the misconduct in this case, . . . the proposed discipline [of public censure] is too lenient. Of particular concern to the [B]oard [was] the degree to which the mental state in this matter involved negligence versus knowledge.”
The matter was referred to an Area Hearing Committee (Committee) for development of the record.7 The Committee heard testimony on the sanction in January 2015 and issued written findings and conclusions. It found Stepovich grossly negligent, a mental state it acknowledged is not found in the ABA Standards; the Committee explained that “[n]aming one[self] as a contingent devisee in a client‘s will is an obvious conflict of interest that should have been recognized as a problem even absent specific knowledge of
The Disciplinary Board conducted another hearing and again found public censure too lenient; it concluded that the appropriate sanction was a six-month suspension. The Board chair, Geoffrey Wildridge, explained on the record that the Board agreed with the Committee‘s “determination that negligence was the appropriate mental state” and “that it was actually gross negligence in this case, to be more specific.” Wildridge further explained that the Board disagreed with the Committee‘s decision “that the conduct in this matter was not the same [as] or similar [to] the conduct that got [Stepovich] in trouble the last time around.” But in the Board‘s view the fact Stepovich was “on probation for a prior transgression, a prior ethical violation[,] when this took place” was “an aggravating factor,” and the Board “direct[ed] Bar counsel to alert the Supreme Court to the fact that this transgression occurred during that one-year suspension.”
The Board‘s written Decision and Recommendation, signed by the new Board president approximately a month later, differed somewhat from the decision announced orally. First, the written decision noted the Committee‘s determination that Stepovich‘s conduct had been “grossly negligent” but did not expressly agree with it, as the Board had orally. Second, the written decision noted the Committee‘s determination that the conduct at issue was not the “same [as] or similar to” that of Stepovich‘s earlier violation but did
Stepovich appeals the Board‘s decision.9 He argues that the proper sanction is “a public reprimand“—“the sanction to which the parties stipulated and the sanction that was recommended by the area hearing committee.” The brief submitted by Bar Counsel also does not support the Board‘s decision. It surveys the controlling ABA Standards before concluding that it is up to the court to determine whether Stepovich‘s conduct “warrants a public censure which will not limit [his] right to practice or a disciplinary suspension for a period of time to be determined by the [c]ourt.” Bar Counsel cautions that “[a]ny period of suspension should not be regarded as insubstantial in these circum-stances” and strongly implies that any suspension longer than 90 days is unwarranted.
III. STANDARD OF REVIEW
The
IV. DISCUSSION
A. A Suspension Longer Than Six Months Is Appropriate.
We use “a three-step analysis” when determining sanctions in attorney discipline cases.14 The first step requires us to address “(1) the duty violated; (2) the lawyer‘s mental state; and (3) the extent of the actual or potential injury.”15 In the second step we “examine recommended sanctions under the ABA standards for misconduct found in the
1. The ABA Standards for Imposing Lawyer Sanctions support a suspension longer than six months.
a. Duty
The relevant language of
b. Mental state
Stepovich and Bar Counsel originally stipulated that the violation was negligent, and the Committee agreed. But the Committee qualified its finding:
If “gross negligence” were a mental state under the [ABA] Standards, the Committee would characterize [Stepovich‘s] knowledge as gross negligence. Naming one[self] as a contingent devisee in a client‘s will is an obvious conflict of interest that should have been recognized as a problem even absent specific knowledge of
Rule 1.8(c) .
As noted above, the Board expressly agreed with the “gross negligence” aspect of this characterization in its oral decision but did not say so in the later written version; it did, however, expressly concur with the Committee‘s finding of negligence.
The severity of the sanction depends in part on whether the conduct was negligent, knowing, or intentional.19 The ABA Standards define negligence as “the failure of a lawyer to heed a substantial risk that circumstances exist or that a result will follow, which failure is a deviation from the standard of care that a reasonable lawyer would exercise in the situation.”20 The ABA Standards define knowledge as “the conscious awareness of the nature or attendant circumstances of the conduct but without the conscious objective or purpose to accomplish a particular result.”21 ABA Standards § 4.33 states that a “[re]primand is generally appropriate when a lawyer is negligent in determining whether the representation of a client may be materially affected by the lawyer‘s own interests,” whereas § 4.32 states that “[s]uspension is generally appropriate when the lawyer knows of a conflict of interest and does not fully disclose to a client the possible effect of that conflict.”
Thus, to determine whether Stepovich‘s conduct was negligent or knowing, we must consider whether he had knowledge of the nature of his conduct and whether he knew his conduct created a conflict of interest. Stepovich argued before the Committee that he “should have known, [but he] didn‘t know.” But the Committee appropriately characterized the circumstances as presenting an “obvious conflict of interest,”22 and
Ultimately, there is no question that Stepovich knew that the will he drafted, in his capacity as a lawyer, identified himself as the contingent beneficiary. And we agree with the Committee that the conflict created by this knowing conduct was “obvious.” Stepovich‘s counsel argued before the Committee that
We conclude that these facts establish at least knowledge: Stepovich knew that the will he drafted identified himself as the contingent beneficiary and created an obvious conflict of interest, the potential consequences of which he paused to contemplate. We conclude that Stepovich acted knowingly.
c. Injury
Alaska‘s comment to
Other courts have identified some of the dangers created when an attorney prepares a will in which the attorney is named as beneficiary, including “the attorney‘s incompetency to testify, . . . the attorney‘s ability to influ-ence
While a will contest may have been likely in this case regardless of Stepovich‘s involvement, his client suffered a real injury when he did not receive the “detached advice” to which he was entitled. And whether future harm to the administration of the client‘s estate was actual or only potential does not matter under ABA Standards, which in this context address “injury or potential injury to a client” as equally important concerns.29
d. A six-month suspension is the starting point.
Given the knowing violation that caused “injury or potential injury” to the client, we find the appropriate sanction under ABA Standards § 4.32: “Suspension is generally appropriate when a lawyer knows of a conflict of interest and does not fully disclose to a client the possible effect of that conflict, and causes injury or potential injury to a client.” The ABA Standards further provide that suspension, to be effective, “should be for a period of time equal to or greater than six months.”30 Though we have sometimes imposed shorter suspensions,31 we more recently observed that “if suspension is indicated, a six-month suspension is the baseline.”32
e. Aggravating and mitigating factors
Our next step is to determine whether the suspension should be shorter or longer because of aggravating and mitigating factors.33 “[T]here is no ‘magic formula’ for determining how aggravating and mitigating circumstances affect an otherwise appropriate sanction. Each case presents different circumstances which must be weighed against the nature and gravity of the lawyer‘s misconduct.”34 In this case we consider the following aggravating factors from ABA Standards § 9.2: (1) prior disciplinary offenses;35 (2) the vulnerability of the victim;36 and (3) the attorney‘s substantial experience in the practice of law.37 We also consider the following mitigating factors from ABA Standards § 9.3: (1) absence of a dishonest or selfish motive;38 (2) remorse;39 (3) full and free disclosure to the disciplinary board or a cooperative attitude toward discipline proceedings;40 and (4) inexperience in the practice of law.41
Stepovich has prior discipline arising out of three separate incidents over a span of 20 years. The Board‘s discussion of prior discipline appeared to take into account only the immediately preceding trust fund violation, which Bar Counsel argued to the Board was “[d]istant and different,” involving “different issues, different rule violations than the one that‘s here.” According to the commentary to ABA Standard § 9.22, “[i]n evaluating whether prior offenses constitute an aggravating factor, courts generally look to the timing of the current offense in relation to the prior offense, similarities in the misconduct, the number of prior offenses, and the relative recency of the prior offense.”42 The commentary notes that “[c]ourts also have found that a prior offense can be too remote in time to be considered aggravating,” leading them to apply “remoteness of prior offenses” as a mitigator under ABA Standard § 9.32(m).43 But “[i]n other instances, courts will still find a prior offense to be an aggravating factor, but lessen its weight due to remoteness in time.”44
When we consider the “prior offenses” aggravator in this case, remoteness does not lessen the weight we give it. While the earliest offenses date back decades, Stepovich wrote the will at issue six months after reinstatement following the serious trust fund violation, while a stayed year of suspension was still pending. The trust fund violation cannot be characterized as remote or distant. And while the instances of Stepovich‘s misconduct are not all similar, a lawyer with a history of professional discipline should be familiar with the Rules of Professional Responsibility and particularly apt to tread carefully in circumstances that are ethically uncertain.
ii. The “substantial legal experience” aggravator
Stepovich‘s substantial legal experience also aggravates his misconduct. Although he had limited experience in probate matters, an attorney with his 32 years of practice should nonetheless have recognized the conflict at issue here.45 And
iii. The “victim‘s vulnerability” aggravator
The Committee found that Stepovich‘s client “may have been vulnerable at the time [Stepovich] drafted the will in question.” The Committee explained that the client “was gravely ill with cancer, and while [Stepovich] may not have known how ill he was, [Stepovich] was aware he was ill.” The Disciplinary Board did not discuss this finding. We conclude that the client was vulnerable and therefore give weight to this factor.
iv. The “motive” mitigator
Though his client was vulnerable, Stepovich did not take advantage of that vulnerability. There is no dispute about his motive; the parties agree it was not dishonest or selfish. Stepovich did not expect to inherit, and he testified that he agreed to be named as contingent beneficiary only because the client, his long-time friend, insisted on it. The
v. The “remorse” mitigator
The Committee also found that Stepovich was remorseful, and the Committee was in the best position to judge the sincerity of the testimony on this issue. While the commentary to ABA Standard § 9.32 notes that “[a] lawyer‘s remorse for misconduct can be considered in mitigation,” it also says that “remorse is insufficient to outweigh very serious underlying misconduct.”48 But remorse is typically among “several compelling mitigating factors” we consider in determining an appropriate sanction.49
vi. The “cooperation” mitigator
Stepovich argues that his cooperation during the disciplinary process is a mitigating factor, and the Committee agreed. But Stepovich came forward only after the Bar had begun its investigation; in past cases we have concluded that cooperation at that stage is not a significant mitigator.50 In In re Buckalew the offending attorney reported to the Bar that he had falsified a settlement agreement and embezzled from trust accounts to pay his client.51 But the attorney made this disclosure only after his law partner had discovered the fraud.52 We held that in those circumstances the attorney‘s “‘voluntary disclosure’ carrie[d] little weight. . . . While cooperation and disclosure are to be strongly encouraged, not every act of that sort deserves full mitigative effect.”53
We acknowledge that Stepovich could not have been expected to come forward before the Bar filed its petition if he only then became aware that his conduct violated
vii. The “inexperience in the practice of law” mitigator
The ABA Standards list as a mitigating factor “inexperience in the practice of law” rather than inexperience in the relevant area of practice.54 For the same reasons that Stepovich‘s “substantial experience in the practice of law” is an aggravating factor, his lack of significant experience in probate law is not a mitigator.
Three significant aggravating factors apply: prior offenses, substantial experience in the practice of law, and a vulnerable victim. Three mitigating factors apply: lack of a dishonest or selfish motive, which is significant, and remorse and cooperation, which both carry less weight. The Disciplinary Board did not comment on how it weighed each factor, noting in its written decision only that “[t]he serious nature of the prior ethical violation is an aggravating factor which must be afforded significant weight.” The Board increased the Committee‘s recommended sanction of public censure to a six-month suspension, apparently based only on Stepovich‘s most recent prior offense. We agree that the prior offenses are entitled to the most weight as an aggravator.
2. A 12-month suspension is significant and appropriate.
In reaching an appropriate sanction we also consider relevant case law. The parties direct us to only one instance in which an Alaska lawyer was disciplined for violating
Bar Counsel cites cases from two other jurisdictions that resulted in reprimands. In Florida Bar v. Miller, an attorney drafted a will for a client friend who asked that the attorney be the contingent beneficiary.55 The attorney drafted the will as requested and eventually inherited $200,000.56 The court issued only a public reprimand because of sig-nificant mitigating circumstances, including “forty years [of legal practice] with an unblemished record” and the fact that the attorney did not expect to inherit.57 Furthermore, because the Rules Regulating the Florida Bar were not yet in effect when the will was prepared, the court was guided only by ethical considerations that were merely advisory.58
On similar facts but after promulgation of the Rules Regulating the Florida Bar, the Florida Supreme Court suspended an attorney for 90 days in Florida Bar v. Anderson, noting that Miller did not inform the sanction because it was not decided under the rules.59 The court imposed a suspension in Anderson despite the absence of aggravating circumstances or “real injury” and despite the fact that the attorney was only attempting to effectuate his client‘s intent through the “inartful” devise.60
We also distinguish the other case cited by Bar Counsel. The attorney in In re Boulger drafted a will for a friend and included himself as a beneficiary, contingent on the earlier deaths of his friend‘s two sons.61 The attorney argued that his conduct did not violate North Dakota‘s version of
As noted above, we follow the ABA Standards to hold that a six-month suspension is an appropriate starting point for a knowing violation of
The most significant factor on the other side of the balance is Stepovich‘s lack of a dishonest or selfish motive, on which “we are inclined to place a great deal of weight.”70 Weighing all aggravators and mitigators in the balance, the significance of the prior offenses aggravator in this case persuades us to increase the sanction by another six months, and we therefore suspend Stepovich from the practice of law for a total of 12 months.
B. This Violation Is Not The “Same [As] Or Similar To” The Preceding Trust-Account Violation.
Our 2006 order suspending Stepovich from the practice of law provided, in part, that “[i]f [he] is reinstated, for the next year he will be subject to the stayed suspension as follows: If he engages in the same or similar misconduct, and if the Disciplinary Board or the Court imposes discipline for the new misconduct, the present matter may be remanded directly to the Court for review and imposition of the one-year stayed suspen-sion.”71
In the 2006 case, Stepovich stipulated that he knowingly misappropriated client funds and failed to preserve client property in violation of ABA Standards § 4.12. Misappropriation of client funds is clearly antagonistic to a client‘s interests, but the Board in the 2006 case did not characterize Stepovich‘s conduct as a failure to avoid a conflict of interest.
Hearing this subsequent case, the Committee found that the conduct in the two cases was dissimilar because the wording of the 2006 suspension order “was limited to further trust fund violations.” As noted above, the Board announced orally that it disagreed with the Committee‘s finding on this issue but in its later written decision ostensibly took no position on it, finding that the prior ethical violation “must be afforded significant weight, whether or not” the violations were the “same or similar.” On appeal Bar Counsel supports Stepovich‘s position, asserting that his
This is our first occasion to consider the meaning of “same or similar” in this context.72 The most obvious cases of “the same or similar” misconduct involve repeated violations of the same ethical rules73 or similar patterns of misbehavior.74 The two violations at issue here involved different rules. Only by characterizing the 2006 misappropriation of client funds very broadly—as the failure to avoid a conflict of interest—can we view the violations in the two cases as similar. Such a broad interpretation seems unwarranted, as almost any violation of a lawyer‘s duty to his client could be broadly characterized in this way as a conflict of interest. We conclude that Stepovich‘s violation of
C. Stepovich Must Take And Pass The Multistate Professional Responsibility Exam As A Condition Of Reinstatement.
Given that Stepovich‘s defense included the argument that he was not aware of
V. CONCLUSION
Michael A. Stepovich is suspended from the practice of law in Alaska for 12 months, to take effect 30 days from the date of this opinion. As a condition of reinstatement he is required to take and pass the MPRE.
MAASSEN
JUSTICE