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ATTORNEY disciplinary proceeding.
Attorney's license suspended.
¶1 PER CURIAM. We review a report and
recommendation of Referee Richard C.
Ninneman approving a stipulation filed by
the Office of Lawyer Regulation (OLR) and
Attorney John E. Hotvedt. In the
stipulation, Attorney Hotvedt stipulated to
the facts underlying the five counts of
misconduct alleged in the OLR's amended
complaint and joined the OLR in jointly
recommending an 18-month suspension of
Attorney Hotvedt's Wisconsin law license.
The referee agreed that an 18-month
suspension was appropriate.
¶2 Upon careful review of this matter,
we uphold the referee's findings of fact and
conclusions of law and agree that an 18-
month suspension is an appropriate sanction
for Attorney Hotvedt's misconduct. We also
find it appropriate to impose the full costs
of this proceeding, which are $6,309.67 as
of September 19, 2016, on Attorney Hotvedt.
Since Attorney Hotvedt has already made
restitution to his law firm, the OLR does
not seek a restitution order.
¶3 Attorney Hotvedt was admitted to
practice law in Wisconsin in 2001 and
practices in Kenosha. He has no prior
disciplinary history.
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¶4 On January 7, 2016, the OLR filed a
complaint against Attorney Hotvedt alleging
five counts of misconduct. Attorney Hotvedt
filed an answer on February 12, 2016. The
referee was appointed on April 5, 2016. The
OLR filed an amended complaint on July 11,
2016. The parties' stipulation and Attorney
Hotvedt's no contest plea was filed on
August 8, 2016.
¶5 As part of the stipulation, Attorney
Hotvedt agreed that the referee could use
the factual allegations of the amended
complaint as an adequate basis in the record
for a determination of misconduct as to the
five counts alleged in the amended
complaint.
¶6 According to the amended complaint,
Attorney Hotvedt was formerly employed at
the Burlington, Wisconsin law firm of Lloyd,
Phenicie, Lynch, Kelly, Hotvedt & Terry,
S.C. He was a stockholder, director, and
officer of the firm and had practiced with
the firm since he graduated from law school.
By common and accepted practice, and
pursuant to written employment agreements,
all attorneys at the firm understood and
agreed that revenues generated by the
practice of law belonged to the firm.
¶7 In January 2014, Attorney Hotvedt
and Attorney Todd Terry told firm
shareholders that they would be withdrawing
from the firm and establishing their own law
practice in Kenosha. The shareholders of
the firm agreed to dissolve the corporation
effective May 31, 2014. All firm members
signed a dissolution agreement winding up
the corporation.
¶8 Subsequent to the dissolution of the
firm, and in connection with the winding up
of the firm, Attorney Dennis Lynch, the
former President of the firm, noticed
billing discrepancies attributable to
Attorney Hotvedt, including writing off
substantial amounts of firm billings in the
years 2011 through 2013. In many instances,
Attorney Hotvedt had written off client
billings, but clients reported to the firm
that they had paid legal fees directly to
Attorney Hotvedt.
¶9 Review of firm accounts showed that
Attorney Hotvedt had deposited client fee
payments directly into his own personal bank
account rather than depositing the fees into
the law firm account. Attorney Hotvedt did
not disclose to the firm's shareholders that
he was depositing firm funds paid by clients
into his personal bank account. Attorney
Hotvedt continued his conduct of depositing
client funds belonging to the firm into his
personal bank account during 2014, after he
had announced his departure from the firm
and after he had executed a dissolution
agreement.
¶10 As part of its investigation into
the grievance filed against Attorney
Hotvedt, the OLR discovered that in 2014
Attorney Hotvedt established his own
consulting company, JBG Consulting Services,
during the time period in which he was
preparing to leave the firm. Through this
consulting company, Attorney Hotvedt
converted additional attorney's fees
belonging to the firm. The OLR's
investigation revealed that the total amount
of identifiable client funds converted by
Attorney Hotvedt from his former law firm
was over $173,000.
¶11 The OLR's amended complaint alleged
the following counts of misconduct:
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• Count One: By converting client funds
belonging to the firm in an amount in excess
of $173,000 over the years 2011 through 2014,
Attorney Hotvedt violated SCR 20:8.4(c).
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• Count Two: By writing off client fees
owed to the firm, Attorney Hotvedt violated
SCR 20:8.4(c).
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• Count Three: By establishing JBG
Consulting Services to convert client fees
while employed by the firm for the purpose of
advancing his own financial interests,
Attorney Hotvedt violated SCR 20:8.4(c).
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• Count Four: By misrepresenting to
the
firm that he would not bill or otherwise
recover client fees from firm clients; by
converting client funds owed to his law
firm,
by writing off client billings; by
establishing JBG Consulting Services for the
purpose of converting client fees owed to
the
firm, Attorney Hotvedt breached his
fiduciary
duties owed to his firm and his duty of
honesty in his professional dealings with
the
firm, thereby violating a standard of
conduct
set forth by the Supreme Court in In re
Disciplinary Proceedings Against Shea, 190
Wis. 2d 560, 527 N.W.2d 314 (1995),
actionable
via SCR 20:8.4(f).
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• Count Five: By failing to disclose to
the OLR the full extent of funds converted
from the firm; by failing to initially
disclose the full amount of fees received from
JBG Consulting Services, an entity that served
to convert client funds belonging to the firm;
by failing to disclose to the OLR that he had
converted additional firm funds through
another bank after specifically denying to the
OLR that there was any other bank into which
such deposits were made, Attorney Hotvedt
violated SCR 22.03(2) and SCR 22.03(6),
enforced through 20:8.4(h).
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¶12 In the stipulation, Attorney Hotvedt
represented that he fully understands the
misconduct allegations; fully understands his
right to contest the matter; fully understands
the ramifications of his entry into the
stipulation; acknowledges that he has had the
representation and advice of counsel; and
states that the entry into the stipulation is
made knowingly and voluntarily.
¶13 As noted above, the parties agreed
that an appropriate level of discipline for
Attorney Hotvedt's misconduct was an 18-month
suspension of his license to practice law in
Wisconsin. The referee agreed.
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¶14 The referee's August 30, 2016 report
and recommendation found that the OLR met
its burden of proof with respect to the five
counts of misconduct set forth above. The
referee said the amount of firm money
misappropriated by Attorney Hotvedt, coupled
with the attorney's admitted allegations of
failing to cooperate with the OLR, supported
a very serious level of discipline. The
referee commented that deciding on an
appropriate level of discipline was made
more difficult since the parties reached a
stipulation and no contest agreement without
a hearing, which meant the referee had no
opportunity to meet and observe Attorney
Hotvedt's demeanor as to his misconduct.
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¶15 The referee went on to say that an
18-month suspension for a relatively new
attorney who recently started a new firm is
a significant discipline, particularly
considering the additional time it may take
for him to be reinstated under the
reinstatement procedures dictated by SCR
22.28(3). The referee noted that Attorney
Hotvedt has no prior disciplinary history;
he reached an agreement with his former firm
regarding restitution; and he ultimately was
willing to enter into a stipulation and no
contest agreement. Upon consideration of
all those factors, the referee said he had
no difficulty agreeing to recommend the 18-
month suspension recommended by both the OLR
and Attorney Hotvedt as part of the
stipulation.
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¶16 This court will adopt a referee's
findings of fact unless they are clearly
erroneous. Conclusions of law are reviewed
de novo. See In re Disciplinary
Proceedings Against Eisenberg, 2004 WI 14,
¶5, 269 Wis. 2d 43, 675 N.W.2d 747. The
court may impose whatever sanctions it sees
fit, regardless of the referee's
recommendation. See In re
Disciplinary Proceedings Against Widule,
2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d
686.
¶17 We adopt the referee's findings of
fact and conclusions of law that Attorney
Hotvedt violated the supreme court rules as
alleged in the five counts set forth above.
We further agree with the referee that an
18-month suspension of Attorney Hotvedt's
license to practice law in Wisconsin is an
appropriate level of discipline. Since no
two cases are precisely the same, there is
no standard sanction for any particular
misconduct. We note that in In re
Disciplinary Proceedings Against Brown,
2005 WI 49, 280 Wis. 2d 44, 695 N.W.2d 295,
this court accepted a stipulation in which
an attorney agreed to an 18-month suspension
for accepting fees from clients while
informing his law firm he was acting pro
bono, converting fees belonging to the law
firm, and making misrepresentations to the
OLR as part of its investigation. We find
the misconduct at issue in this case to be
somewhat analogous to the misconduct in
Brown, and we find a similar suspension
to be appropriate. We also deem it
appropriate, as is our usual custom, to
impose the full costs of this disciplinary
proceeding on Attorney Hotvedt.
¶18 IT IS ORDERED that the license of
John E. Hotvedt to practice law in Wisconsin
is suspended for a period of 18 months,
effective December 30, 2016.
¶19 IT IS FURTHER ORDERED that within 60
days of the date of this order, John E.
Hotvedt shall pay to the Office of Lawyer
Regulation the costs of this proceeding,
which are $6,309.67.
¶20 IT IS FURTHER ORDERED that John E.
Hotvedt shall comply with the provisions of
SCR 22.26 concerning the duties of a person
whose license to practice law in Wisconsin
has been suspended.
¶21 IT IS FURTHER ORDERED that
compliance with all conditions with this
order is required for reinstatement.
See SCR 22.28(3).
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