Overview
In the Matter of McKiernan addresses serious client trust account violations arising from an attorney’s prolonged misuse and neglect of his trust account in a single matter. Although the misconduct did not involve willful misappropriation of identified client funds, the Review Department concluded that respondent’s gross mismanagement, commingling, and issuance of checks he knew would not be honored constituted moral turpitude and warranted actual suspension.
Factual Background
Respondent Stanley Wayne McKiernan was admitted to practice in California in 1969 and had no prior discipline. His practice involved financial planning and banking-related matters. During 1990 and 1991, respondent permitted a longtime friend, who was not a client, to use the law firm’s client trust account as a de facto business account for a travel business.
The non-client deposited business funds into respondent’s client trust account and directed respondent or his staff to issue checks to vendors. Respondent failed to maintain client ledgers, reconcile the account, or supervise trust activity. At the same time, respondent borrowed approximately $20,000 from these deposited funds due to law firm cash-flow problems, kept the borrowed funds in the trust account, and used the account to pay personal and business expenses.
In November 1990, respondent issued two trust account checks totaling approximately $17,000 to a Las Vegas hotel on behalf of the non-client. At the time the checks were sent, respondent knew the trust account lacked sufficient funds to cover them. He hoped an anticipated settlement would replenish the account, despite knowing the settlement was uncertain. Both checks were dishonored twice for insufficient funds.
The hotel pursued respondent personally for payment. Respondent did not make timely restitution and paid the balance only after several years. During the same period, the trust account repeatedly showed negative balances and overdrafts, sometimes in significant amounts. Respondent admitted he could not determine whether any client funds were lost because no adequate accounting controls were in place.
Rules and Statutes Violated
The Review Department found violations of the Business and Professions Code and former Rules of Professional Conduct, including:
- Business and Professions Code section 6106 (moral turpitude);
- Former rule 4-100(A) (failure to safeguard and properly maintain client trust accounts); and
- Related trust-accounting and commingling principles governing attorney fiduciary duties.
Moral Turpitude and Trust Account Misuse
The Review Department emphasized that attorneys have a nondelegable duty to supervise and safeguard trust accounts. Allowing a non-client to use a client trust account as a business account violated both the letter and spirit of the trust account rules and placed client funds at serious risk.
The court held that issuing checks with knowledge that sufficient funds are not available violates the fundamental rule of honesty and constitutes moral turpitude. Although a reasonable belief that funds will be available can be a defense, respondent’s own admissions demonstrated that any belief was unreasonable given the uncertainty of the anticipated settlement.
Aggravation and Mitigation
In aggravation, the court found multiple acts of misconduct and a prolonged pattern of trust account misuse, repeated negative balances, and indifference toward prompt restitution. Although no willful misappropriation was proven, the actual danger to client funds was substantial.
In mitigation, respondent had no prior discipline, cooperated with the State Bar, expressed remorse, and took corrective steps to improve accounting procedures. However, the Review Department discounted mitigation based on respondent’s longstanding inattention to trust account supervision and rejected any claim of good faith based on ignorance of ethical duties.
Discipline Analysis
Applying the Standards for Attorney Sanctions and comparing similar trust account cases, the Review Department concluded that actual suspension was required. While the misconduct was less egregious than cases involving intentional misappropriation, it was more prolonged than isolated commingling cases and created serious risk to client funds. The recommended discipline appropriately balanced public protection, deterrence, and proportionality.
Sanctions
| Sanction | Details |
|---|---|
| Stayed Suspension | Two years stayed |
| Probation | Two years, with standard conditions |
| Actual Suspension | Ninety days |
| Additional Conditions | Ethics examination, compliance with rule 955, probation monitoring |
| Costs | Costs imposed |
Conclusion
In the Matter of McKiernan underscores the State Bar Court’s strict approach to trust account violations. Even in the absence of proven client loss or intentional misappropriation, prolonged neglect, commingling, and dishonored checks can constitute moral turpitude and justify actual suspension to protect the public and preserve confidence in the legal profession.
Tags
trust accounting, commingling, moral turpitude, dishonored checks, probation, actual suspension
Attorneys facing trust account investigations or discipline should seek experienced counsel promptly. East Bay Law P.C. represents attorneys in State Bar Court proceedings, review matters, and reinstatement cases.