OLR Compendium > Public Reprimand of John Anthony Ward

Public Reprimand of John Anthony Ward

2012-OLR-2

Attorney John Anthony Ward, 54, is licensed to practice law in both Wisconsin and Illinois. He currently practices in Kenosha, Wisconsin. This reprimand is based on the following conduct relating to three grievance matters and an OLR Inquiry.

With respect to the first grievance, on March 31, 2004, a man hired Atty. Ward to reduce and ultimately terminate maintenance payments awarded to his ex-wife by an Illinois court. The client entered into a written fee agreement with Atty. Ward that included a “non-refundable minimum fee” of $3,000. The client subsequently gave Atty. Ward $290 for filing fees, and those funds were deposited in Ward’s trust account. Several months later, Atty. Ward filed a motion to terminate maintenance. A filing fee was not required, and after deducting service fees there was a balance of $255 in trust for the client. While Atty. Ward considered the representation to have ended following a motion hearing on January 7, 2005, he did not refund the $255 trust account balance at that time.

After performing some additional work relating to the client’s matter in the fall of 2005, Atty. Ward billed him an additional $660 in October 2005. When the client questioned the bill, Atty. Ward waived the fees but did not account for or refund the $255 at that point. Atty. Ward ultimately refunded the $255 in October 2007 after the client filed a grievance.

By failing to return the unexpended $255 in costs to the client either at the conclusion of the representation in January 2005 or when he sent the final bill in October of 2005, Atty. Ward violated SCR 20:1.15(d)(1) (effective July 1, 2004), which requires prompt delivery of any funds that a client is entitled to receive, and SCR 20:1.16(d) (effective through June 30, 2007), which requires the surrender of property to which the client is entitled upon the termination of representation.

With respect to the second grievance, a man hired Atty. Ward to represent him regarding visitation and custody issues. On July 30, 2008, the client gave Atty. Ward a $3,500 advanced fee and signed a fee agreement, allowing the advance to be deposited into Ward’s business account, subject to the requirements of SCR 20:1.15(b)(4m).

After several attempts to resolve the issues between Ward’s client and the client’s wife, the parties reached an agreement, which was approved by the court on January 29, 2009. Atty. Ward mailed an invoice to the client on March 20, 2009, along with a copy of the fee agreement, directing the client’s attention to the SCR 20:1.15(b)(4m)-related language. At the conclusion of the representation, $425 of the fee had not been earned by the provision of services at Atty. Ward’s hourly rate. The $425 and was described in the invoice as a “minimum charge adjustment for minimum charge for completed case.” It was not refunded, and the client filed a grievance regarding the matter on April 20, 2009.

By failing to refund the unearned $425, Ward violated SCR 20:1.16(d), which requires a lawyer to refund of any advance payment of fee or expense that has not been earned upon termination of representation.

With respect to the third grievance, on November 20, 2007, a man hired Atty. Ward to represent him regarding a potential criminal charge with workplace ramifications. Both the employer and a district attorney’s office were investigating the allegations at the time the client signed an hourly fee agreement and paid Atty. Ward a $5,000 fee that was identified as being “nonrefundable.”

Atty. Ward did not deposit the $5,000 fee into his trust account, and he did not provide the client with the information that lawyers must provide to clients when they will not be holding a clients’ fee advances in trust. Atty. Ward treated the fee as a traditional retainer. Several days after the client paid the $5,000 fee, his employer decided not to pursue work-related charges against him. Based upon Atty. Ward’s subsequent itemization of services in the matter, his legal work totaled approximately $700 at that point. Criminal charges were never filed against the client.

On October 7, 2009, the client filed a grievance with OLR, alleging that Atty. Ward had failed to return unearned fees despite requests for such refunds in November 2007 and July 2008. Atty. Ward performed additional services for the client in 2009 in connection with a potential civil rights claim and deducted fees for those services from the $5,000 paid in 2007.

Four days after being notified of the grievance, Atty. Ward provided his client with an itemization of his services, along with information relating to the SCR 20:1.15 (b)(4m) alternative to holding advanced fees in trust. The itemization indicated that there was a balance of $1,925 that could not be attributed to any particular services. Approximately one month later, the client agreed to and received a $2,500 refund.

By failing to deposit a $5,000 fee advance to his trust account, and depositing it to his business account without complying with the alternative fee protection provisions of SCR 20:1.15(b)(4m), Atty. Ward violated SCR 20:1.15(b)(4), which requires lawyers to hold unearned fees in trust until earned by the lawyer unless the lawyer complies with the requirements of SCR 20:1.15(b)(4m).

The fourth and final matter relates to OLR’s review of Atty. Ward’s trust account management and recordkeeping. From 1999 to date, Atty. Ward has utilized a total of three IOLTA trust accounts in his various practice settings. Throughout those years, he used computer software to keep his records and employed accrual, rather than cash basis accounting principles. Consequently, a positive balance in his trust account records reflects an overdraft in the trust account while a negative balance in his records reflects a positive balance in the trust account. Beginning in 2002, Atty. Ward became primarily responsible for managing the trust accounts. He subsequently employed a series of accountants to assist him.

At some point, the transaction registers and client ledgers for two of the trust accounts were combined into a single set of records. It is unclear whether the funds in those two accounts were actually combined at that time. Atty. Ward’s transaction register reflects that there was an $11,295.76 balance in Trust Account #1 on August 16, 2000, when $7,564.79 of that amount was transferred to Trust Account #2. Ward’s records do not identify the clients to whom the transferred funds belonged. Trust Account #1 was subsequently closed.

Atty. Ward acknowledges that his general ledger, i.e., transaction register, “is not accurate in some respects.” This is due to “entries that were made and should not have been made, data entry errors and possibly entries that were not made, but should have been made.” Some of the errors may be attributable to loss of data due to computer failures.

Atty. Ward’s client ledgers reflect delays in disbursing funds in 30 separate matters. Those delays ranged from two years to over six years.

While Atty. Ward’s trust accounts were reconciled on a sporadic basis, the reconciliations were deficient in the following respects:

• A listing of individual client balances and a totaling of those balances was not included;

• The transaction register balances identified in the monthly reconciliations did not match the balances in the actual registers. (For example, the July 2007 reconciliation showed a register balance of $50,984.07 when the balance that appeared in the register was actually $26,414.41.);

• The reconciliations included numerous stale transactions that had not cleared or been addressed. (For example, the November 2007 reconciliation included 18 checks totaling $4,668.74 that had not cleared between December 2000 and June 2006. That reconciliation also included 17 deposits totaling $29,424.24 that had not been made between October 2002 and July 2007.)

By late 2005, Atty. Ward recognized that there were serious problems with his trust account records. Based upon “his personal knowledge and recollection of the client accounts and the unreimbursed fees and expenses that were owed to the business account,” Ward concluded that he was entitled to receive $15,511.30 that had been sitting in his trust account for an extended period of time. He further determined that he had disbursed $10,432.92 more than he was holding in trust in connection with 68 other matters.

In order to address these issues, Atty. Ward disbursed a $5,078.38 check to his firm (No. 2066) and recorded that disbursement in his records as relating to 223 separate client matters. With respect to the clients who had negative ledger balances, Check No. 2066 was identified as a deposit. In the client matters where funds had been undistributed for years, Check No. 2066 was identified as a disbursement. Atty. Ward did this in lieu of disbursing $15,511.30 to his firm and then depositing $10,432.92 to the trust account.

In 2008, after OLR asked Atty. Ward to produce various records, he made another attempt to address ongoing problems in his client ledgers. In July 2008, a series of transactions totaling $3,139.71 were entered in the register and client ledgers. Those transactions included 16 deposits totaling $3,139.71 and 18 disbursements totaling the same amount.

OLR’s review of Atty. Ward’s trust account records identified numerous irregularities and violations. The amounts involved in individual matters ranged from dollars to thousands of dollars. The examples that follow are illustrative of the problems that were discovered:

Atty. Ward represented a man and his business in defense of a complaint filed with the Department of Workforce Development. Ward deposited the “retainer fee” in that matter to his business account rather than his trust account. In January 2003, Atty. Ward disbursed a $3,600 refund to the client. As there were no funds in the account belonging to that client, funds belonging to other clients or third parties were used to make that disbursement. This error was not discovered and addressed until December 2005. At that time, Atty. Ward added a $3,600 credit to the client’s ledger as one of the 223 transactions included in Trust Account Check No. 2066.

In the second matter, Atty. Ward represented another man regarding three legal matters, a criminal matter, a CHIPS matter and a divorce. In December 2005, Atty. Ward disbursed $800 from his trust account relating to one of those matters when there were no funds in trust belonging to the client. Three months later, that shortfall was covered by a $5,000 deposit of funds belonging to the client. Four months after that, Atty. Ward disbursed $2,500 from trust on behalf of the client, overdrawing that client’s balance at the time by $2,250. In October 2006, a $377 deposit relating to the client was recorded in the trust account’s transaction register and voided. Atty. Ward’s reconciliation reports identify this transaction as an “uncleared” deposit of $377. Atty. Ward simultaneously disbursed a $377 check relating to one of the client’s matters.

In late July 2007, $8,625 was deposited to the trust account for the client, restoring that ledger to a positive balance of $5,998. One month later, there was a $50,000 deposit to the trust account from an assignment of bond money for legal fees. That same day, Atty. Ward disbursed $42,303.44 in fees to his firm relating to the criminal matter, along with several additional checks, leaving a balance of $6,805.39 in trust.

In September 2007, Atty. Ward disbursed attorney fees and costs from the trust account relating to the client’s divorce, thereby reducing his balance to $4,809.39. Atty. Ward simultaneously refunded $7,672.39 to the client’s mother, when she requested a refund of monies she advanced. This led to a negative balance of $2,863 in the client’s ledger. Atty. Ward determined the amount of the refund by reviewing a software report that identified the client’s balance as $7,702.39.

Atty. Ward disbursed funds from his trust account in many other clients’ matters when he was holding either insufficient funds in trust to cover those disbursements or no funds whatsoever. The length of time that the individual client accounts remained overdrawn ranged from a week to over three years.

In a third matter, in late December 2005, a $4,500 personal injury settlement was deposited to Atty. Ward’s trust account for a married couple. Atty. Ward immediately disbursed all but $500 of the settlement. That $500 balance was still in trust and undistributed 2½ years later. In addition to this matter, OLR identified 17 other cases in which Atty. Ward inexplicably failed to distribute funds from his trust account for extended periods of time. He has included this couple in a listing of clients to whom refunds are to be made.

In the fourth matter, Atty. Ward represented a woman in a paternity case. His client ledgers for Trust Accounts #1 and #2 included two deposits for her, a $185 deposit in May 2002 and a $154 deposit in July 2002. Ward disbursed $154 to the Clerk of Circuit Court on July 10, 2002; however, the $185 balance was not returned to the client. In December of 2005, Atty. Ward disbursed the woman’s $185 to his firm as a “reimbursable” expense. However, there is currently no documentation to support that the $185 was owed to him.

Finally, Atty. Ward represented a man in a child support matter. In August 2001, $4,405.19 was deposited to the trust account for the man’s child support obligations. One month later, following a disbursement to the Wisconsin Child Support Collections Trust Fund there was a balance of $600 in trust for this client. That $600 remained in Atty. Ward’s trust account for over four years. In December 2005, it was disbursed to Atty. Ward’s law firm for fees; however, there is currently no documentation that fees were owed in this client’s matter.

By disbursing at least $14,473.89 from his trust accounts in connection with multiple client matters, when there were either insufficient or no funds whatsoever in trust relating to those matters, and thereby failing to hold funds belonging to other clients in trust, Atty. Ward violated former SCR 20:1.15(a) (Effective through June 30, 2004) and SCR 20:1.15(b)(1) (Effective July 1, 2004), which require a lawyer to hold the property of clients and third parties in trust which are in the lawyer’s possession in connection with a representation, as well as SCR 20:1.15(f)(1)b. (Effective July 1, 2004), which prohibits a lawyer from disbursing funds from a trust account if doing so would create a negative balance with respect to any individual client or matter.

By depositing fee and cost advances to his business account in multiple client matters, and thereby failing to hold those funds in trust, Atty. Ward violated former SCR 20:1.15 (a) (Effective through June 30, 2004), which requires a lawyer to hold the property of clients and third persons in trust, separate from the lawyer’s own property and in an identifiable trust account. Atty. Ward also violated former SCR 20:1.15(b) (Effective, July 1, 2004 through June 30, 2007) and SCR 20:1.15(b) (Effective July 1, 2007), which require unearned fees to be held in trust until earned by the lawyer and advanced payments of costs to be held in trust until the costs are incurred.

By disbursing cost reimbursements to his firm in numerous client matters in December 2005 and July 2008 in connection with trust account reconciliations, without providing an accounting to the clients involved, Atty. Ward violated SCR 20:1.15(d)(2) (Effective, July 1, 2004), which requires a lawyer to promptly render a full written accounting to a client or 3rd party who has an ownership interest in the property upon the final distribution of that trust property.

By holding in trust fee and cost advances, earned fees and other funds in multiple client matters for periods of time ranging from two years to over six years and thereby failing to promptly deliver funds to which his clients or his law firm were entitled, Atty. Ward violated four rules:

• SCR 20:1.15(b)(3) (Effective, July 1, 2004), which prohibits depositing or retaining funds in trust that belong to the lawyer or law firm, except funds reasonably sufficient to pay monthly account service charges;

• SCR 20:1.15(d)(1) (Effective, July 1, 2004), which requires that, upon receiving funds in which a client has an interest or in which the lawyer has received notice that a 3rd party has an interest identified by a lien, court order, judgment, or contract, the lawyer must promptly deliver to the client or 3rd party any funds that the client or 3rd party is entitled to receive;

• Former SCR 20:1.16(d) (Effective through June 30, 2007), which requires a lawyer to take steps to the extent reasonably practicable to protect a client's interests upon termination of representation, including surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned; and

• SCR 20:1.16(d) (Effective, July 1, 2007), which requires a lawyer to take steps to the extent reasonably practicable to protect a client's interests upon termination of representation, including surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred.

By failing to reconcile his trust accounts on a monthly basis from July 2004 through at least April 2008 and by failing to retain printed reconciliation reports, reflecting the subsidiary ledger balances, Atty. Ward violated SCR 20:1.15(f)(1)g. (Effective, July 1, 2004), which requires a lawyer to prepare and retain a printed reconciliation report on a regular and periodic basis not less frequently than every 30 days for each of the lawyer’s trust accounts. The rule further requires that the reconciliation reports show that the following balances are identical: (1) the balance in the transaction register as of the reporting date; (2) the total of all subsidiary ledger balances determined by listing and totaling the balances in the individual client ledgers and the ledger for account fees and charges, as of the reporting date; and (3) the adjusted balance, determined by adding outstanding deposits to the balance in the financial institution’s monthly statement and subtracting outstanding checks from that statement’s balance.

Atty. Ward has a prior private reprimand and a prior public reprimand.

In accordance with SCR 22.09(3), Attorney John Anthony Ward is hereby publicly reprimanded.

In addition, prior to the imposition of this reprimand, Atty. Ward willingly complied with the following conditions requested by the Office of Lawyer Regulation:

• He has refunded $425.00 to his client, T. J.;

• He has disbursed funds to which 29 former clients were entitled, most of which had been held in trust for extended periods of time;

• He has closed an inactive trust account after escheating any unclaimed and/or unidentifiable funds in that account to the State Treasurer’s Office; and

• He has commenced using a cash basis accounting system for his active trust account.

Furthermore, for a period of one year after the imposition of this reprimand, Atty. Ward shall have an accountant review his trust account records on a quarterly basis and shall furnish the results of those quarterly examinations to the Office of Lawyer Regulation.