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Tom Steven Hyde (WSBA No. 20509, admitted 1991), of Everett, received a reprimand following approval of a stipulation by order of the hearing officer on July 9, 2010. This discipline is based on conduct involving trust account irregularities. Tom Steven Hyde is to be distinguished from Thomas C. Hyde of Wichita, Kansas.
On September 4, 2007, Mr. Hyde wrote two checks from his trust account. Mr. Hyde’s bank sent the Bar Association a Trust Account Overdraft Notice notifying the Association that the two checks had been returned for insufficient funds. One of the checks was returned by the bank a second time and the bank sent the Association another overdraft notice. Mr. Hyde wrote the two checks to pay court filing fees for clients who had paid Mr. Hyde filing fee advances. At the time he wrote the checks, the two clients’ fee advances had already been disbursed by Mr. Hyde and used to pay fees or expenses of other clients or to pay Mr. Hyde.
After receiving the overdraft notices, the Association opened a grievance, requested information from Mr. Hyde, and audited Mr. Hyde’s trust account for the period between July 1, 2007, through March 31, 2008. During the audit period, Mr. Hyde kept trust account records in the form of a handwritten check register and a Quicken deposit register. The audit revealed Mr. Hyde had failed to record in his registers all bank fee payments and transfer withdrawals; failed to pay bank fees and other costs assessed by the bank against the trust account; failed to enter some deposits in his Quicken deposit register and incorrectly entered the amounts of other deposits; failed to keep a running account balance after each transaction in the trust account; failed to maintain individual client ledgers; failed to reconcile his check register balance to his bank statement balance and to the combined total of all client ledger records; and failed to maintain all client funds in trust, resulting in a shortage of client funds in trust continuous throughout the audit period. The shortage resulted from Mr. Hyde’s payment of attorney fees to himself in excess of funds available for that purpose, his payment of funds from trust on behalf of clients in excess of funds on deposit for those clients, and his failure to pay bank fees with his own funds. Mr. Hyde did not intentionally misappropriate client funds for the use of himself or others. The shortage was the result of inadequate record-keeping and the accumulation of small errors over a period of time.
On May 4, 2009, after the audit period described above, the bank sent the Association another trust account overdraft notice notifying the Association that a check drawn on Mr. Hyde’s trust account had been returned for insufficient funds. Mr. Hyde had written a check on April 27, 2009, to pay a $20 ex parte fee on behalf of a client. The balance in Mr. Hyde’s trust account was $18.30. At the time he wrote the check, Mr. Hyde had deposited the client’s advance payment in his trust account and it had been collected by the bank. Mr. Hyde had already disbursed a small portion of the client’s filing fee advance from trust and there were insufficient funds of other clients in the account. The same check was presented again on May 6, 2009, and the check cleared. The shortage was the result of a small error.
Subsequent review of Mr. Hyde’s trust-account records by the Association auditor indicated that, after the audit period, Mr. Hyde was still not maintaining adequate client ledgers or properly reconciling his check register balance to his bank statement balance and to the combined total of all client ledger records. From the beginning of the audit period, July 1, 2007, through December 31, 2009, Mr. Hyde had identified $4,162.00 that he had deposited in his trust account as client advances for filing fees. Mr. Hyde’s trust-account records did not properly account for the use to which those funds were put.
Mr. Hyde’s conduct violated RPC 1.15A(b), prohibiting a lawyer from using, converting, borrowing, or pledging client or third-person property for the lawyer’s own use; RPC 1.15A(c)(1), requiring a lawyer to hold property of clients and third persons separate from the lawyer’s own property and to deposit and hold in a trust account funds subject to the rule pursuant the rule; RPC 1.15A(h)(2), requiring a lawyer to keep complete trust-account records as required by Rule 1.15B; RPC 1.15A(h)(6), requiring trust-account records to be reconciled as often as bank statements are generated or at least quarterly, and requiring the lawyer to reconcile the check register balance to the bank statement balance and the check register balance to the combined total of all client ledger records as required by Rule 1.15B(a)(2); RPC 1.15A(h)(8), prohibiting disbursements on behalf of a client or third person from exceeding the funds of that person on deposit, and prohibiting funds of a client or third person from being used on behalf of anyone else; RPC1.15A(i)(1), requiring that when client or third-person funds will not produce a positive net return to the client or third person, the funds must be placed in an IOLTA; and RPC 1.15B(a), requiring a lawyer to maintain current trust-account records, in electronic or manual form, requiring the records to be retained for at least seven years after the events they record, and setting out the minimum requirements for maintenance of the records.
M. Craig Bray represented the Bar Association. Kurt M. Bulmer represented Mr. Hyde. Sidney Stillerman Royer was the hearing officer. |