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Michael R. Karber (WSBA No. 24044, admitted 1994), of Tempe, Arizona, was ordered to receive two reprimands on May 22, 2006, following a stipulation approved by a hearing officer. This discipline was based on his conduct involving failure to put a contingent-fee agreement in writing and trust-account irregularities.
Mr. Karber represented a client in a lawsuit to recover for damage to the client’s pond. The client had been previously represented by another lawyer in the matter. Mr. Karber and the client agreed to a 25 percent contingent fee with a cash advance of $4,000. Although Mr. Karber was aware of the requirement that agreements for contingent fees be in writing, he neglected to put the contingent-fee agreement in writing. In April 2004, the matter settled at mediation when two insurance carriers agreed to pay $25,000 each. As part of the mediation, the client agreed to give her previous lawyer a lien of $1,500 on the settlement proceeds. An environmental expert involved in the matter agreed to limit her charges to $13,000, provided that the remaining balance of $9,000 would be paid out of the proceeds of the settlement. Mr. Karber agreed to reduce his fees if necessary to ensure there would be sufficient funds to repair the client’s pond. At the time, Mr. Karber believed the repairs could be accomplished for a sum that would allow him to collect the full 25 percent contingency fee of $12,500.
Mr. Karber deposited the first $25,000 check into his trust account. Mr. Karber paid the environmental expert $9,000, and, with the client’s consent, he withdrew an additional $1,000 as a fee advance. The second $25,000 check was sent directly to the client. Out of the $15,000 remaining in the trust account, Mr. Karber was entitled to the remainder of his fee, which could have been up to $7,500. However, the exact amount of Mr. Karber’s fee was indeterminate until the cost of repairing the client’s pond was determined. Mr. Karber intended to assist his client in getting the work contracted. Owing to a medical condition, Mr. Karber’s ability to assist his client was impaired at the time. This, coupled with the unavailability of the environmental expert during this period, led to a failure to obtain a contractor to do the work.
Although he was not able to determine the amount of additional fee to which he was entitled, Mr. Karber made a series of disbursements to himself between April and June 2004, totaling $8,100. Mr. Karber did not maintain individual client ledgers or a check register for his trust account, other than carbon copies of the check stubs. Consequently, Mr. Karber had no running balance of his client’s funds apart from periodic bank statements. Due to his medical condition and the inadequacy of his records, Mr. Karber was not aware that he had taken $600 more than the maximum of fees to which he could have become entitled.
In late June 2004, Mr. Karber left the area to seek medical treatment. In November 2004, he relocated to Arizona. Feeling remorse for his inability to assist his client in arranging for the pond repairs, Mr. Karber decided he would refund the client all of her fees absent the $5,000 advances. To accomplish this, Mr. Karber deposited $8,100 of his own funds into his trust account, representing the $7,500 of his fee that he was forgoing and the $600 excess fee disbursement he had taken. Mr. Karber subsequently issued a $13,500 check to the client, retaining $1,500 in his trust account pending resolution of an apparent dispute between his client and her previous lawyer over a $1,500 lien.
Mr. Karber’s conduct violated RPC 1.5(c)(1), requiring that a contingent-fee agreement be in writing; RPC 1.14(a), requiring that all funds of clients paid to a lawyer or law firm, including advances for costs and expenses, be deposited in one or more identifiable interest-bearing trust accounts and that no funds belonging to the lawyer or law firm be deposited therein; and RPC 1.14(b)(3), requiring a lawyer to maintain complete records of all funds, securities, and other property of a client coming into the possession of a lawyer and render appropriate accounts to his or her client regarding them.
Randy V. Beitel represented the Bar Association. Mr. Karber represented himself. David B. Condon was the hearing officer. |