In the Matter of Albert S. Lazarus
(Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 387

Overview

Attorney Albert S. Lazarus was charged with multiple counts of misconduct concerning his handling of a single $839.39 settlement check in a personal injury case. While he deposited the check properly into his client trust account, he failed to notify his client of its receipt for over a year, and later applied the funds unilaterally toward his attorney’s fees and costs after withdrawing from representation. The hearing referee recommended public reproval, but the Review Department increased the discipline to a two-month stayed suspension and one year of probation, including trust-account auditing and passage of the Professional Responsibility Examination.

Facts of the Case

Lazarus, admitted to practice in 1979 with no prior record of discipline, represented a client, Filomena Vinzon, in a personal injury matter arising from a 1982 automobile accident. Their retainer agreement included a special power of attorney authorizing Lazarus to sign the client’s name to settlement drafts and related documents. In January 1983, the client’s insurer issued a medical-payments draft for $839.39. Lazarus endorsed Vinzon’s name pursuant to the power of attorney and deposited the check into his client trust account.

He did not inform Vinzon of the receipt of the draft because he feared she might demand disbursement rather than allowing the funds to satisfy medical and fee liens. Several months later, he withdrew from representation and transferred the file to successor counsel, but did not disclose the draft at that time. Only in February 1984 did he write to the new attorney, explaining that he had retained the funds to reimburse $621.70 in costs and applied the remainder toward his 40 percent contingency fee. The client herself did not learn of these actions until 1986, when her case settled and she discovered the draft’s existence.

Proceedings and Findings

The hearing referee found Lazarus culpable only for failure to notify his client promptly of the receipt of funds (former Rule 8-101(B)(1)), recommending public reproval. On review, the State Bar argued for harsher discipline and additional findings of moral turpitude and misappropriation. The Review Department declined to find moral turpitude but added culpability for failure to render an appropriate accounting under former Rule 8-101(B)(3), finding his February 1984 accounting both delayed and incomplete.

The Review Department also found that his unilateral decision to withdraw trust funds for his fee—before the fee was fixed or approved—violated fiduciary duties, though not charged separately under Rule 8-101(A). While not treated as an independent ground for discipline (due to lack of notice), this misconduct was considered an aggravating circumstance.

Legal Analysis

The court held that an attorney’s failure to notify a client of received funds violates fiduciary duty, even if motivated by concern that the client might object. It reaffirmed that the obligation to account runs directly to the client—not merely to successor counsel—and that unilateral withdrawals from trust accounts are impermissible unless the attorney’s entitlement is fixed or judicially determined.

The Review Department rejected allegations of moral turpitude (Bus. & Prof. Code § 6106) because Lazarus acted under a good-faith belief in his lien rights and did not intend to deceive. It also held that signing a client’s name on a draft under a written power of attorney did not violate § 6104 or public policy. The court emphasized that such conduct, though improper, was not dishonest or fraudulent.

Mitigation and Outcome

Mitigating factors included Lazarus’s clean record, good faith, candor during proceedings, lack of client harm, and corrective measures to improve his trust-account practices. The client ultimately received all funds due to her, and no misappropriation occurred. Nonetheless, the court found that his year-long delay in notice and inadequate accounting warranted more than public reproval.

The Review Department imposed a two-month stayed suspension and one-year probation with conditions including quarterly compliance reports, CPA trust-account audits, and completion of the California Professional Responsibility Examination.

Sanctions Table