NMSC Disbars Lawyer for Mismanagement of Client Funds

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The latest opinion out of the New Mexico Supreme Court, In re Behles, is a reminder of both an attorney’s duty to safeguard client money and the diverse jurisdiction of the state’s highest court. One of the Court’s other areas of responsibility is to review recommendations by the disciplinary board regarding the discipline of attorneys who have violated the rules of professional conduct. The Court hears one or two such cases per year.

This case involved one of the classic ways to get disbarred: mismanagement of client funds. Attorneys frequently handle client money. They are required to keep it separate from their own funds and to rigorously account for it. Even where the money is for work that the client will do (for example a retainer), the attorney may not move the money from the trust account to the operating account until it has been earned.

We write to emphasize the longstanding principle that “stealing client funds is perhaps the most egregious violation of a lawyer’s ethical responsibilities[.]” This Court will not condone misconduct that irreparably erodes the sacred bond of trust shared between attorney and client.

Behles represented a building owner in what was essentially a construction dispute. According to the opinion, Behles took a $7,500 retainer from the client, but deposited it directly into her operating account (not, as she should have, her trust account). From the record, it does not appear that she did any work to earn this fee until months later.

Unfortunately, this was only the beginning. Without getting to far into the details, Behles charged another retainer which she deposited directly into her operating account. After the district court disbursed money to her client, she kept all of it for herself (claiming it as a contingent fee!), while apparently telling her client she hand mailed them a check for that amount. She charged an unreasonable fee, and did not account for any trust funds until after the disciplinary board began an investigation.

Given that she had already been suspended from the practice of law once previously for mismanaging trust funds, the outcome of this case was never in doubt: the Court adopted the disciplinary board’s recommendation that Behles be disbarred.

As a decision on a disciplinary board recommendation, this opinion is not particularly interesting from an appellate point of view. This is especially so given that the facts basically demanded this outcome. But, perhaps due to the sheer variety of misconduct, the opinion is able to lay out many of the rules regarding how client money should be accounted for. If you are an attorney, it is well worth the fifteen minutes to read even for attorneys with excellent accounting practices. And if you are a client, know that this sort of behavior is uncommon and not tolerated. You can report mismanagement of client funds (or any violations of the rules of professional conduct) to the disciplinary board.

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