In the Matter of Bruce Howard Blum (1994)

Overview

In the Matter of Blum is a leading disbarment decision addressing willful misappropriation of client trust funds coupled with deceit, overreaching, and failure to complete restitution. The Review Department affirmed the hearing judge’s disbarment recommendation, emphasizing that vague “permission” to borrow client funds is not consent and provides no defense to misappropriation.

Facts

Blum was admitted to the California Bar in 1973 and practiced primarily in civil and business matters. In 1988, he represented a client, Chol Sik Park, in the purchase of real property and a grocery business in Los Angeles. To demonstrate that Park was “ready, willing, and able” to complete the purchase, Blum directed Park to deposit $55,000 into Blum’s client trust account.

Park, who had limited English proficiency, understood that the trust account meant the funds could not be accessed by the attorney. Despite this, Blum began using the entrusted funds for personal purposes within months of deposit. By five months after deposit, less than $9,000 remained in trust; three months later, the balance had fallen to $86.

During this same period, Blum repeatedly represented to Park—and to opposing counsel—that Park’s funds remained intact and that Park was financially able to complete the transaction. No written agreement authorized Blum to borrow or use the funds, and correspondence affirmatively misrepresented the status of the trust account.

When Park demanded return of the funds, Blum proposed repayment plans that included releases and agreements not to complain to the State Bar, without advising Park in writing of his right to consult independent counsel. Ultimately, the State Bar’s Client Security Fund reimbursed Park $33,500, which Blum failed to repay by the time of trial.

In a separate matter, Blum also failed to report court-ordered sanctions imposed against him in a family law case, in violation of statutory reporting duties.

Charges

• Bus. & Prof. Code § 6106 — Moral turpitude (willful misappropriation)
• Rule 4-100(B)(4) — Failure to promptly pay client trust funds
• Rule 3-400(B) — Failure to advise client to seek independent counsel
• Bus. & Prof. Code § 6068(o)(3) — Failure to report court-ordered sanctions

Defenses

Blum argued that the client had consented to his use of the funds and that his conduct lacked moral turpitude. The Review Department rejected these arguments, holding that, at most, Blum obtained an unenforceable “agreement to agree” in the future and that he had neither a reasonable nor honest belief that he was entitled to use the funds.

The court further held that disciplinary proceedings are not governed by contract principles and that vague or implied consent cannot defeat charges of misappropriation.

Aggravation and Mitigation

Discipline Imposed

Key Takeaways

• Client trust funds may never be “borrowed” absent informed, written consent meeting strict standards.
• Vague or implied consent is no defense to misappropriation.
• Deceit and overreaching dramatically increase sanction severity.
• Failure to repay the Client Security Fund weighs heavily toward disbarment.