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Kirk Reese is a Wisconsin-licensed attorney
admitted to practice on November 23, 1983.
Reese represented a client in the separation
of a corporation from its subsidiary. Reese
negotiated the separation on behalf of the
client, who served as Director and President
of the corporation. The client’s equal
partner served as Director and Secretary of
the corporation. The client signed an
Agreement to Separate the corporation
from the subsidiary on March 14, 2011.
Pursuant to the Agreement to Separate,
the client would acquire full ownership of
the subsidiary and the partner would acquire
full ownership of the corporation.
The Agreement to Separate did not become
binding on the client and the partner until
the partner signed it on August 9, 2011.
Prior to August 9, 2011, it was unknown to
Reese and the client whether the partner
would agree and sign the Agreement to
Separate. On April 4, 2011, despite
ongoing discussions regarding separation,
the client and the partner signed a $200,000
commercial promissory note on behalf of the
corporation. Prior to August 9, 2011, both
the client and the partner remained
directors and officers of the corporation
with the ability to act on behalf of the
corporation.
On May 5, 2011, the client requested that
Reese assist him in collecting a debt which
was secured by mortgage in favor of the
corporation. Reese did not enter into a
written fee contract with the corporation
regarding the collection of the debt secured
by the mortgage. Reese negotiated the
satisfaction of the mortgage on behalf of
the corporation between May and July, 2011
while the client remained President of the
corporation. All of Reese’s communications
regarding the mortgage negotiation were with
the client. The partner was never
consulted.
Reese negotiated the satisfaction of the
mortgage and on July 15, 2011, the client
gave Reese permission to settle on behalf of
the corporation for the $24,794.80 offered
by the title company in exchange for release
of the mortgage. The client instructed
Reese to deposit the check into Reese’s
trust account and make the settlement check
payable to the subsidiary. The client gave
Reese permission to deduct his fees before
cutting the check for the balance.
On July 2, 2011, Reese drafted a
Satisfaction of Mortgage which was
signed by the client for the corporation.
On July 28, 2011, Reese deposited the check
from the title company in the amount of
$24,794.80 into his firm’s trust account.
On July 28, 2011, Reese retained $2,036 from
the satisfaction of the mortgage and
deposited it into his firm’s business
account for the client’s attorney’s fees.
On July 28, 2011, despite the client’s
instructions to have the settlement proceeds
issued to the subsidiary, Reese issued a
check from his trust account to the client
individually in the amount of $22,758.80.
The partner was not informed of the mortgage
satisfaction or the manner in which the
proceeds were handled. As of the time of
the receipt of funds the subsidiary remained
wholly owned by the corporation, and the
client had authority to act on behalf of
each entity.
On August 2, 2011, Reese provided the client
with an accounting by letter. Reese failed
to include the total settlement amount in
the accounting but indicated he had taken
out his attorney’s fees. On August 3, 2011,
the client deposited the $22,753.80 into the
business account of the subsidiary.
On August 9, 2011, the partner signed the
Agreement to Separate at which time he
acquired a 100% interest in the corporation
and the client acquired a 100% interest in
the subsidiary. The corporation never
received the proceeds of the satisfaction of
the mortgage despite being the mortgage
holder.
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Reese simultaneously represented both the
corporation in the satisfaction of the
mortgage and the client individually in the
client’s attempt to separate himself and the
subsidiary from the corporation. At the
time the mortgage was satisfied, the client
had already indicated his intent to separate
by signing the Agreement to Separate.
There was a significant risk that Reese’s
representation of the corporation would be
materially limited by his simultaneous
representation of the client. By
representing both, Reese violated SCR
20:1.7(a)(2), which states, “Except as
provided in par. (b), a lawyer shall not
represent a client if the representation
involves a concurrent conflict of interest.
A concurrent conflict of interest exists if
(2) there is a significant risk that the
representation of one or more clients will
be materially limited by the lawyer’s
responsibilities to another client, a former
client or a third person or by a personal
interest of the lawyer.”
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After the satisfaction of the mortgage,
Reese distributed the funds directly to his
client, giving one client, the client in his
individual capacity, the opportunity to do
what he wanted with the funds that belonged
to his other client, the corporation. Reese
retained attorney’s fees earned through the
representation of one client, the client in
his individual capacity, from the funds that
belonged to another client, the corporation.
Having received the funds in satisfaction of
a mortgage owned by the corporation, by
disbursing none of the funds to the
corporation, and instead disbursing a
portion to himself for fees earned through
the representation of the client in an
individual capacity, and disbursing the
remainder to the client individually, Reese
violated SCR 20:1.15(d)(1) and 20:8.4(c).
SCR 20:1.5(d)(1) provides, “Upon receiving
funds or other property 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 shall
promptly notify the client or 3rd party in
writing. Except as stated in this rule or
otherwise permitted by law or by agreement
with the client, the lawyer shall promptly
deliver to the client or 3rd party any funds
or other property that the client or 3rd
party is entitled to receive.” SCR
20:8.4(c) states, “It is professional
misconduct for a lawyer to engage in conduct
involving dishonesty, fraud, deceit
misrepresentation.”
Reese retained, in aggregate, $2,036 from
the satisfaction of the mortgage for
attorney’s fees. Based on billing
statements generated by Reese and billed to
the client, Reese earned $1,017.50 through
the representation of the client in his
individual capacity between April 15, 2011
and March 9, 2011. According to the same
billing statements, Reese earned $1,018.50
while representing the interests of the
corporation between May 5, 2011 and July 26,
2011.
Reese has no prior discipline.
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As a condition of the imposition of this
public reprimand, Reese refunded $1,018.50 to
the corporation.
In accordance with SCR 22.09(3), Attorney Kirk
Reese is hereby publicly reprimanded.
Dated this 29th day of April, 2016.
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