Iowa Supreme Court Attorney Disciplinary Board v. Michael Gerard Reilly
884 N.W.2d 761
Iowa
2016
Check Treatment

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Michael Gerard REILLY, Respondent.

No. 05-1365.

Supreme Court of Iowa.

Sept. 2, 2016.

PER CURIAM.

Tara van Brederode and Wendell J. Harms, Des Moines, for complainant. Michael G. Reilly, Council Bluffs, pro se. PER CURIAM. Ten years ago, we revoked the respon￾dent’s license to practice law. This matter comes before us on the respondent’s appli￾cation for reinstatement of his license to practice law under Iowa Court Rule 34.25(9). We provisionally grant the re￾spondent’s application for reinstatement of his law license subject to the conditions set forth in this opinion.

I. Background Facts and Proceedings.

We admitted respondent Michael G. Reilly to practice law in Iowa in June 1981, and the Nebraska Supreme Court admit￾ted him to practice law in Nebraska in September 1982. In 2006, we revoked his license to practice law in Iowa. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Reilly, 708 N.W.2d 82, 82 (Iowa 2006). Thereafter, the Nebraska Supreme Court disbarred him in a reciprocal disciplinary proceeding. State ex rel. Counsel Dis- cipline of Neb. Supreme Ct. v. Reilly, 271 Neb. 465, 712 N.W.2d 278, 278-79 (2006) (per curiam). Prior to the revocation of his law license, Reilly engaged in the private practice of law at a law firm in Council Bluffs, Iowa. He had an excellent reputation as a diligent and skilled trial attorney. We revoked Reilly’s license to practice law in Iowa because he misappropriated client funds. In November 2000, Reilly obtained a settlement of $137,500on behalf of the parents of a child who sustained a serious eye injury and caused a conserva- torship to be opened for the child. Reilly, 708 N.W.2d at 83. Upon receiving the settlement funds, Reilly deposited them in his firm’s trust account. Id. In addition to the checks issued from the trust account to cover the contingent fee and expenses as- sociated with the case, Reilly deposited additional checks totaling the remaining balance of the settlement funds in his per- sonal bank account rather than the conser- vatorship account in December 2000 and January 2001. Id. At the time, Reilly had an active gambling addiction that caused him to be constantly in need of funds. Id. at 85. In August and September 2001, after he unsuccessfully attempted to secure a loan from a friend to repay the misappropriated funds, Reilly wrote a series of kited checks between his personal accounts attempting to float a check to the conservatorship account to replace the misappropriated funds. Id. at 83. Eventually, a bank asso- ciated with one of Reilly’s personal ac- counts honored a check he wrote to the law conservatorship account after a bank asso- ciated with another one of his personal accounts honored a kited check he had written. Id. The account with the second bank ended up $96,000 overdrawn because the bank was unable to cash another check Reilly had written from yet another ac- count with insufficient funds. Id. By the time Reilly repaid the bank the following year, it had already notified federal au￾thorities. Id. After our client security and disciplinary commissions received a letter from the United States Attorney recounting these events and the Iowa Supreme Court Attor￾ney Disciplinary Board conducted an in- vestigation confirming them, the Grievance Commission of the Supreme Court of Iowa recommended we suspend Reilly from the practice of law for three years. Id. at 82, 83-84. Instead, we concluded consistency with our past decisions--addressing misap￾propriation of client funds and the protec- tion of the public warranted a harsher sanction. In January 2006, we revoked Reilly’s license to practice law in Iowa. Id. at 85.

In January 2009, Reilly filed an applica￾tion for reinstatement of his license to practice law in Iowa based on the prog￾ress he had made in addressing his gam￾bling addiction. The Board opposed rein￾statement, noting the Iowa Court Rules contained no provision addressing rein￾statement following a license revocation as opposed to a license suspension. Though the Board acknowledged we had reinstat￾ed a revoked license in the past, it insisted the standard for assessing whether rein￾statement was appropriate was set forth

in Committee on Professional Ethics & Conduct v. Brodsky, 487 N.W.2d 674 (Iowa 1992), in which we stated, License revocations are ordinarily per- manent in Iowa. Indeed our rules spell out no special procedure for applying for readmission by a lawyer whose license has been revoked. On occasion we nevertheless consider such applications under· our inherent power and, in extremely rare cases, have granted them. These rare cases have arisen where, in long retrospect, it ap- pears the need for permanent revocation was debatable, and where there has been a demonstrated reformation on the part of the lawyer so that the public interest would not be compromised· by readmission. Id. at 675. Following a hearing, we issued an order in which we rejected the applica- tion for reinstatement. In the order, we concluded Reilly had not “carried his heavy burden of showing that the need for permanent revocation was debatable and that he has .undergone such.a reformation that the public interest would not be threatened by readmitting him to the prac- tice of law.” In May 2015,following a period of public comment, we amended Iowa Court Rule 35.14 to renumber existing provisions with­ in the rule and incorporate new provisions setting forth a procedure by which an indi­ vidual whose license to practice law has been revoked may apply for its reinstate­ ment. The amendments became effective September 1, 2015. By subsequent amendment shortly thereafter, we moved the provisions addressing reinstatement to Iowa Court Rule 34.25.1 The purpose. of the amendment was to allow an attorney who has rehabilitated him or herself the

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opportunity to petition the court for rein­ statement and prove to the court he or she has good moral character, is fit to practice law, and is in all respects worthy of read­ mission to the Iowa bar. Reinstatement under the rule is not meant to be automat­ ic. In November 2015, Reilly filed his sec­ ond application for reinstatement of his license to practice law in .the State of Iowa with this court. Prior to submitting the application, Reilly submitted a request for preparation of a character and fitness re­ port by the National Conference of Bar Examiners (NCBE) and paid an-adminis­ trative fee to the Iowa Board of Law Ex­ aminers as required by Iowa Court Rule 34.25(8). In his application for reinstate­ ment, Reilly first reported that we admit­ ted him to the Iowa bar in June 1981 and revoked his license to practice law in Iowa in January 2006. See Iowa Ct. R. 34.25(9)(6). Reilly next affirmed that he had complied in all respects with all orders of this court pertaining to his license revo­ cation and the Iowa Court-Rule governing the notification of clients, opposing coun­ sel, and courts upon revocation of an attor­ ney’s license to practice law. See id. Fi­ nally, he affirmed that the Client’ Seqixrity Trust Fund expended no funds due to his conduct. See id. r. 34.25(9)(e). Reilly attached a letter from the Office of Profes­ sional Regulation confirming he had paid all fees set forth in the rules governing the Client Security Commission, his annual continuing legal education fees, and all costs associated with the disciplinary mat­ ter that culminated in the revocation of his license to practice law. See id. r. 34.25(9)(d)-(e).

With his application for reinstatement, Reilly submitted an affidavit detailing his personal history, work history, and edu­ cational history following his license revo­ cation along-with letters from six attorneys currently practicing in the Fourth Judicial District of Iowa recommending his license to practice law be reinstated. See id. r. 34.25(9)(c). In the affidavit, Reilly indi­ cated he received treatment for his com­ pulsive gambling addiction from April 2002 through November 2008. He also indicat­ ed he has abstained from casino gambling since February 2002. Reilly also de­ scribed his work immediately following his license revocation as a litigation consultant offering mediation services to law firms and individual attorneys, as well as his current work providing consulting services on insurance litigation and claims handling involving insurance policies of various types issued to clients throughout the country. Finally, Reilly indicated that al­ though he has not received any formal educational training since we revoked his license, he,has maintained his familiarity with current Iowa law by regularly review­ ing state and federal appellate court deci­ sions as well as through his employment, which requires him to deal with statutes, rules, and regulations in most states. The recommendation letters Reilly sub­ mitted from members of the bar recom­ mending his reinstatement described him as a particularly diligent and skilled trial attorney who consistently accepted respon­ sibility for the actions that led to the revo­ cation of his license and expressed re­ morse for the harm they caused. The individuals who penned the letters were

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practicing attorneys who knew Reilly when he was still in practice and remained in close contact with him after we revoked his license. Each expressed the opinion that Reilly is of good moral character and fit to practice .law. The letters also described how Reilly aggressively pursued treatment for and overcame the gambling addiction that motivated him to engage in the con­ duct for which we .revoked his law license.2 The Iowa Supreme Court Attorney Dis­ ciplinary Board filed a resistance to the application for reinstatement urging us to deny it. Relying on Brodsky, the Board argued reinstatement.is inappropriate in this case because revocation is indisput7 sably the appropriate sanction for conduct involving the conversion of client funds to which an attorney has no colorable future claim. Moreover, the Board argued the fact that Reilly misappropriated client funds confirms that he lacks the funda­ mental honesty and integrity necessary to be an attorney. Although the Board ac­ knowledged Reilly had an active gambling addiction when he misappropriated client funds, it argued his addiction is irrelevant to the question of whether reinstatement of his law license is appropriate because no illness, regardless of its severity, can ex- cuse an attorney’s dishonest conduct. See Iowa Supreme Ct. Bd. of Prof-‘l Ethics & Conduct v. Hansel, 558 N.W.2d 186, 191 (Iowa 1997). Finally, the Board claimed we should not reinstate Reilly’slaw license because the passage of time, his payment of restitution, and his completion of. a treatment program did nothing to erase the harm to the public and the legal pro­ fession that resulted from his conduct. The board of law examiners also filed a report and recommendation concerning the application for reinstatement. See Iowa Ct. R. 34.25(13). The board noted that, with the exception of two foreclosure pro­ ceedings closely connected to the events leading up to the revocation of his license, Reilly has had no significant involvement in any criminal or civil proceedings since we revoked his license and has maintained consistent employment since that time. Al­ though the board noted that Reilly ap­ pears to have made great strides in over­ coming his gambling addiction, a four- member majority of the board declined to recommend reinstatement of his law li­ cense, concluding Reilly submitted insuffi­ cient evidence concerning his rehabilita­ tion to demonstrate he presently has the requisite moral character to be worthy of read­ mission to the bar. In particular, the ma­ jority noted the status of Reilly’s gambling addiction had not been professionally eval­ uated since 2008. The majority also noted Reilly did not submit an expert opinion addressing the likelihood that his addiction would relapse or a copy of his current

credit report. Finally, the majority ex­ pressed concern that Reilly indicated he has abstained, from “casino gambling” in his application for reinstatement but did not address whether he has engaged in other forms of gambling. Two members of the board dissented, concluding Reilly had met his burden of demonstrating he is “of good moral character and in all re­ spects worthy of readmission to the bar” despite the seriousness of the conduct that led to the revocation of his license. The dissenters noted Reilly’s character and fit­ ness examination revealed no information to suggest he would present a danger to the public if we reinstated his license.3See id. r. 34.25(9)(c). Reilly makes his payments on time, has little revolving debt, and has a credit score

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II. Standards for Determining the Eligibility of an Applicant Seeking Reinstatement of His or Her License to Practice Law in Iowa.

Iowa Court Rule 34.25(15) states that a former attorney who applies for reinstatement of his or her license to prac­ tice law in Iowa “bears the burden of demonstrating that the applicant is of good moral character, is fit to practice law, and has complied in all respects with the terms of the order or judgment of revocation.” It further indicates that an applicant for reinstatement must submit “satisfactory providing proof that the applicant is of good moral character and is in all respects worthy of readmission to the bar.” Iowa Ct. R. 34.25(9)(c). Accordingly, an applicant seeking reinstatement of his or her license to practice law must demonstrate his or her moral character and fitness for the practice of law by a convincing preponder­ ance of the evidence. See In re Peterson, 439 N.W.2d 165, 166 (Iowa 1989) (conclud­ ing an applicant for admission to the Iowa bar must demonstrate his or her moral fitness to practice law by a convincing preponderance of the evidence before we will reverse a decision of the board of law examiners denying him or her an opportu­ nity to sit for the bar because by rule the applicant bears the burden of submitting “satisfactory proof” of his or her fitness to practice law). “A convincing preponder­ ance of the evidence is more than a pre­ ponderance of the evidence, but less than proof beyond a reasonable doubt.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. McCarthy, 814 N.W.2d 596, 601 (Iowa 2012). Numerous subsections of the rule set forth various prerequisites and proce­ dural requirements associated with sub­ mitting an application for reinstatement. Our review of an application for reinstatement is de novo. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Stowe, 830 N.W.2d 737, 739 (Iowa 2013). In review­ ing an application for’ reinstatement, we remain mindful that the primary goal of attorney discipline is protection of the pub­ lic, not punishment of the attorney. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Barnhill, 847 N.W.2d 466, 487 (Iowa 2014). Therefore, our primary task in con­ sidering an application for reinstatement is to assess whether the applicant seeking reinstatement of his or her law license has proved he or she has good moral charac­ ter, is fit to practice law, and is in all respects worthy of readmission to the Iowa bar. See Iowa Ct. R. 34.25(9), (15).

We now contemplate the factors we will consider in making that assessment. The American Bar Association has promulgat­ ed a model reinstatement rule listing eight criteria for consideration in assessing an application for reinstatement. See Model Rules for Lawyer. Disciplinary Enft r. 25(E), (Am. Bar Ass’n 2002).5 Similarly, some states in which disbarred attorneys may be reinstated have adopted court or disciplinary rules specifying the criteria to be considered in assessing applications for reinstatement. See, e.g., Ill. Supreme Ct. R. 767(f); N.D. R. Lawyer Discipline 4.5(F); Md. R. 19-752(h)(2). In states with less specific reinstatement rules, courts “have adopted diverse ethical inven­ tories to assess applicant for reinstate­ ment.” In re Pier, 561 N.W.2d 297, 300 & n. 3 (S.D.1997) (surveying cases). Our review of an applicant for reinstate­ ment is de novo; we consider whether the applicant has demonstrated good moral character and fitness by a convincing pre­ ponderance of the evidence. The myriad of factors relied upon in assessing appli­ cations for reinstatement vary from state to state. See M.C.-Dransfield, Annotation, Reinstatement of Attor­ ney After Disbarment, Suspension, or Resignation, 70 A.L.R.2d 268, §§ 11-18, at 288-93 (1960 & 2007 Later Case Service & Supp.2015). Furthermore, is no · there clear consensus· among state supreme courts or disciplinary agencies as to how to weigh the relevant factors. G.M. Filisko, The Rough Road to Redemption, 99 A.BA. J. 46, 49 (2013). Nonetheless, the diverse ethical inventories and rules relied upon in assessing the reinstatement applications of previously disbarred attorneys generally serve a common purpose—to aid in deter­ mining the likelihood that “the public can rely on the competence and integrity of the previously disbarred attorney.” In re Cooke, 426 Md. 662, 42 A.3d 610, 615-16 (2012) (quoting In re Murray, 316 Md. 303, 558 A.2d 710, 711 (1989)).

Mindful of the purposes attorney discipline serves, we conclude the following factors are most relevant to assessing whether an applicant seeking reinstate­ ment of his or her license to practice law in Iowa has proved his or her good moral character, fitness for the practice of law, and worthiness of readmission to the bar: 1. The nature and character of the con­ duct that led us to revoke the applicant’s license to practice law as well as the con­ text in which the applicant engaged in that conduct; 2. Whether the applicant recognizes the wrongfulness and seriousness of the conduct that led us to revoke the appli­ cant’s license to practice law; 3. Whether the applicant has demon­ strated candor and sincerity in communica­ tions with this court and other entities assessing his or her current moral charac­ ter, fitness for the practice of law, and worthiness for readmission to the Iowa bar; 4. Whether the applicant has demon­ strated with respect to any physical or mental condition such as addiction or sub­ stance abuse that was a causative factor in the conduct that led to revocation of his or her license: a. That the applicant has completed appropriate rehabilitative treatment from a qualified treatment provider; b. That the applicant is presently ab­ staining from any behavior or substance use believed by his or her qualified treat­ ment provider to be problematic for the applicant and has been abstaining from such behavior or substance use for a sig­ nificant period of time; and c. That the applicant is likely to contin­ ue to abstain from any such behavior or substance; 5. How much time has passed since the applicant’s license to practice law was re­ voked and the nature of any activities the applicant has engaged in during that time, including whether the applicant has en­ gaged in or attempted to engage in the unauthorized practice of law or any other professional misconduct since the revoca­ tion of his or her license; 6. The opinions of the attorneys recom­ mending reinstatement of the applicant’s license to practice law with respect to the question of his or her moral character, fitness for the practice of law, and worthi­ ness of readmission to the Iowa bar; and 7. Any other matters shown by the evidence to bear on the question of wheth­ er the applicant has good moral character, is fit to practice law, and is in all respects worthy of readmission to the Iowa bar.6

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It is within our discretion to place condi­ tions on the reinstatement of a license to practice law following its revocation. Iowa Ct. R. 34.25(16)(6). Preconditions on rein­ statement may include, but are not limited to, requiring the individual seeking rein­ statement to pass the Iowa bar examina­ tion. Id. Generally, if we determine an individual who otherwise qualifies for rein­ statement need not retake the bar exami­ nation, we will require the individual to attend and report up to 100 hours of con­ tinuing legal education as a condition of reinstatement. Id. Additionally, every in­ dividual seeking reinstatement of his or her license to practice law in Iowa follow­ ing its revocation must post a scaled score of at least 80 on the Multistate Profession­ al Responsibility Exam (MPRE) as a pre­ condition of reinstatement. Id. Furthermore, we may subject the con­ tinued maintenance of a reinstated law license to ongoing requirements not gener­ ally applicable to members of the Iowa bar. See id. For example, we may find it appropriate to reinstate a revoked license to practice law subject to the attorney’s continued maintenance of malpractice in­ surance. If the attorney fails to meet a condition we impose on the continued maintenance of his or her reinstated li­ cense, we may summarily revoke it without a hearing. Id.

III. Analysis.

The evidence Reilly submitted indi­ cates he complied with the terms of the order revoking his license to practice law and all other procedural requirements set forth in the rule governing reinstatement of a former attorney’s law license following its revocation. See id. 34.25(7), (8), (9), (15). Therefore, the question of whether Reilly is eligible for the reinstatement of his law license turns on whether he has submitted adequate evidence demonstrat­ ing his good moral character, fitness to practice law, and worthiness of readmis­ sion to the Iowa bar. Id. r. 34.25(15). In light of the evidence Reilly submitted in support of his application for reinstate­ ment, we conclude he has proved by a convincing preponderance of the evidence that he has good moral character, is fit to practice law, and is in all respects worthy of readmission to the Iowa bar. Though the conduct that led us to revoke Reilly’s license to practice law was egregious, it occurred during a relatively brief period following years of bar membership during which Reilly earned a reputation as a par­ ticularly diligent and skilled attorney. We find this notable given that Reilly strug­ gled with his casino gambling addiction for years. Although his addiction does not obviate the seriousness of his improper conduct, the evidence he submitted demon­ strating his efforts to overcome it supports his eligibility for reinstatement to the bar. For years before and for years after we revoked his license, Reilly voluntarily un­ dertook treatment for his addiction with a licensed mental health provider and certi­ fied compulsive gambling counselor. Fur­ thermore, he has managed to abstain from engaging in the behaviors his treatment provider has advised him to avoid for more than fourteen years. Thus, his treatment provider has concluded he requires no fur­ ther treatment for his addiction.

As his dedication to his recovery might suggest, Reilly has consistently accepted responsibility for the impropriety of his conduct and acknowledged the harm it caused his clients, the bank that reported him to the federal government, and .the bar. The members of the bar who have recommended we reinstate Reilly uniform­ ly attest to his good moral character and fitness for the practice of law and express confidence that he is presently equipped to exercise the responsibility and judgment bar membership requires. Their letters commend Reilly for his outstanding legal ability, his commitment to treating his ca­ sino gambling addiction, and his accep­ tance of responsibility and remorse for the harm he caused. Moreover, they confirm Reilly has held a position of executive re­ sponsibility with his current employer for years without incident and maintains a personal and professional support system that includes, among others, many of his former colleagues in the bar. Based on our careful examination of the evidence submitted, we believe Reilly has estab­ lished by a convincing preponderance of the evidence that reinstatement of his li­ cense to practice law poses no threat to the public because he has good moral char­ acter, is fit for the practice of law, and is in all respects worthy of readmission to the

Iowa bar. Reilly has maintained his famil­ iarity with current law by means of his subsequent employment and regular re­ views of state and federal appellate court decisions. Therefore, we decline to re­ quire him to pass the Iowa bar examina­ tion as a precondition of the reinstatement of his license to practice law. Neverthe­ less, given that Reilly has been without a law license for more than ten years, we think it appropriate to require him to re­ port at least· thirty hours of continuing legal education, including at least three hours of continuing legal education dedi­ cated to legal ethics, as a precondition of its reinstatement. This is equivalent to the minimum continuing legal education members of the Iowa bar must report every two calendar years. See id. r. 41.3. Accordingly, all continuing legal education courses Reilly has taken since January 1, 2015, shall be counted in satisfaction of this requirement. By.rule, Reilly must also post a scaled score of at least 80 on the MPRE as a precondition of the rein­ statement of his license to practice law. Id. r. 34.25(16)(b).

Upon Reilly’s demonstration that he has satisfied the preconditions of reinstate­ ment set forth in this opinion, we will order the reinstatement of his license to practice law subject to his continued main­ tenance of a malpractice insurance policy

APPLICATION FOR REINSTATEMENT PROVISIONALLY GRANTED SUBJECT TO THE CONDITIONS SET FORTH IN THIS OPINION.

Notes

1
The subsequent amendment became effective April 1, 2016, after Reilly filed his second application for reinstatement.
2
After Reilly filed his application for reinstatement, we subsequently received two additional letters from district court judges in the Fourth Judicial District of Iowa recommending his application to practice law in Iowa be reinstated. The letters were substantially similar to the letters from attorneys that Reilly submitted with his application for reinstatement.
3
The Iowa Board of Law Examiners consists of five persons admitted to practice law in the state and two persons not admitted to practice law in the state. See Iowa Ct. R. 31.1(1).
4
Once again, one board member took no part in the board decision concerning the report and recommendation.
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