ORIGINAL PROCEEDING IN DISCIPLINE
Original proceeding in discipline.
This is an original proceeding in discipline filed by the office of the Disciplinary Administrator against the respondent, John C. Davis, of Overland Park, an attorney admitted to the practice of law in Kansas in 1983, and in Missouri in 1968. Respondent's Missouri license has been suspended since May 1, 2012.
On March 20, 2012, the office of the Disciplinary Administrator filed a formal complaint against the respondent alleging violations of the Kansas Rules of Professional Conduct (KRPC). The respondent filed an answer on March 26, 2012. A hearing was held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on May 24, 2012, when the respondent was personally present and was represented by counsel. The hearing panel determined that respondent violated KRPC 1.5 (2011 Kan. Ct. R. Annot. 470) (fees); 1.15 (2011 Kan. Ct. R. Annot. 519) (safekeeping property); 8.4(b) (2011 Kan. Ct. R. Annot. 618) (commission of a criminal act reflecting adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer); 8.4(c) (engaging in conduct involving misrepresentation); and 8.4(d) (engaging in conduct prejudicial to the administration of justice).
Upon conclusion of the hearing, the panel made the following findings of fact and conclusions of law, together with its recommendation to this court:
"7. In 1991, the Respondent began representing [D.N.] in estate planning matters. The Respondent prepared a revocable trust naming [D.N.] as the trustee and naming himself as the successor trustee. Finally, in the event the Respondent was unable to serve or continue to serve, [D.N.] named Commerce Bank as an additional successor trustee.
"8. Beginning in 1993, [D.N.] had a series of strokes. As a result, [D.N.] asked the Respondent to succeed her as trustee of the trust. The Respondent continued to serve as [D.N.'s] attorney and the attorney for the trust. The Respondent had the responsibility to manage the trust's multi-million dollar investments and make disbursements for the benefit of [D.N.]. Additionally, [D.N.] gave the Respondent a power of attorney for healthcare decisions.
"9. Following her husband's death, [D.N.] moved into an apartment at a nursing facility. From that point forward she lived in skilled nursing facilities, assisted living communities, and rehabilitation centers for the rest of her life.
"10. In 1996, the Respondent, in his capacity as trustee of the trust, hired the Respondent's wife to serve as an advocate for [D.N.]. The Respondent testified that this engagement was initiated at his wife's suggestion. Initially, the Respondent paid Mrs. Davis $25.00 per hour for her services. Over time, Mrs. Davis' hourly rate increased in the Respondent's sole discretion. At the time of [D.N.'s] death in May, 2009, the Respondent paid Mrs. Davis $100.00 per hour for her services. Mrs. Davis was paid in all instances from the trust assets.
"11. Mrs. Davis' duties included supervising other care givers, accompanying [D.N.] to doctor's appointments, visiting [D.N.], and ensuring that the nursing facilities provided [D.N.] with good care.
"12. Mrs. Davis' annual income from serving as [D.N.'s] advocate was as follows:
1996 $25.00 per hour $5,706.25 1997 $25.00 per hour $10,268.75 1998 $35.00 per hour $15,233.75 1999 $35.00 - $45.00 per hour $21,985.00 2000 $45.00 per hour $30,172.50 2001 $45.00 per hour $32,996.25 2002 $50.00 - $60.00 per hour $45,207.50 2003 $60.00 per hour $50,350.00 2004 $60.00 per hour $47,070.00 2005 $60.00 per hour $49,050.00 2006 $60.00 per hour $51,390.00 2007 $60.00 per hour $54,585.00 2008 $60.00 per hour $55,095.00 2009 $60.00 - $100.00 per hour $28,510.00
(Footnote: In 2009, the Respondent's wife received $28,510.00 for the time period of January through May.) Thus, from 1996 through 2009, the Respondent paid his wife from trust assets a total of $497,620.00 for serving as [D.N.'s] advocate.
"13. During that same period of time, the Respondent's hourly attorney rate went from $185.00 to $380.00 per hour. The Respondent paid his law firm (for services he rendered) the same rate whether the Respondent was performing work as attorney for the trust or whether he was performing work as trustee of the trust. From 1996 through 2009, the Respondent paid his law firm a total of $801,906.00 in attorney and trustee fees.
"14. On April 13, 2009, the Respondent opened an account, titled 'John C. Davis, Trustee, [D.N.] Trust' at US Bank. Prior to the Respondent opening this account, all of [D.N.'s] bank accounts had been held at Commerce Bank. As noted previously, Commerce Bank was named as an additional successor trustee under the trust instrument. The initial funds deposited into the US Bank account came from the sale of an investment account held by the trust with A.G. Edwards. The initial deposit at US Bank was for $119,595.08. Two days after opening the account, on April 15, 2009, the Respondent wrote three checks drawn on the trust's account at US Bank as follows:
1001 Internal Revenue Service $70,000.00 1002 Kansas Income Tax $7,000.00 1003 Mo. Dept. of Revenue $6,000.00
The Respondent used the three checks to pay the Respondent's joint marital 2008 income tax liability. On two of the checks, the Respondent struck through '[D.N.] Trust.' And, on all three of the checks, the Respondent hand-wrote his personal social security number. The Respondent did not have authority from [D.N.] to use trust funds in this fashion. Further, the Respondent did not inform [D.N.] nor her beneficiaries that he used the trust's assets to pay his personal marital income tax liabilities.
"15. The Respondent testified that at the time the Respondent converted the trust assets to his own use, he had sufficient personal assets to pay his own tax obligations.
"16. On May 23, 2009, [D.N.] died.
"17. In January 2010, [R.E.], as part of his administrative duties as chair of the tax, trusts, and estate division of the Respondent's law firm, Stinson Morrison Hecker, reviewed matters on which the Respondent, a member of that division, was working. [R.E.] discovered that a significant portion of the Respondent's time billed during the previous year had been devoted to [D.N.'s] trust and estate. During his review, [R.E.] became concerned that the Respondent was billing excessive amounts of time for the tasks detailed in the billing records. Additionally, [R.E.] noted that many of the Respondent's time entries were in even hour increments rather than in tenth of an hour increments that are standard for Stinson Morrison Hecker billing. Finally, [R.E.] also discovered that the Respondent had been paying the Respondent's wife from [D.N.'s] estate and trust assets.
"18. [R.E.] reported his concerns to the law firm's general counsel, [L.J.]. The law firm conducted additional investigation. During the investigation, [R.E.] and [L.J.] met with the Respondent on two occasions. During those meetings, the Respondent acknowledged that he 'rounded up' some of his time entries. The Respondent failed to disclose that he used [D.N.'s] trust funds to pay his personal marital income tax liabilities for 2008.
"19. After being questioned by [R.E.] and [L.J.], on January 21, 2010, the Respondent deposited $83,000.00 into [D.N.'s] trust account at US Bank. Additionally, the Respondent deposited into [D.N.'s] trust account at US Bank $1,490.00 for interest on the $83,000.00 that he had converted to his personal use on April 15, 2009. On the trust account ledger, the Respondent noted that the $83,000.00 deposit was for 'tax refunds.' Additionally, on the trust account ledger, the Respondent noted that the $1,490.00 was for 'interest on refunds.'
"20. On February 8, 2010, the Respondent withdrew as a partner with Stinson Morrison Hecker. At that time, the Respondent agreed to leave his partner capital account with the law firm to cover any expenses associated with his misconduct. The Respondent testified that at the time the Respondent departed Stinson Morrison Hecker, the Respondent's partner capital account was approximately $50,000.
"21. On March 2, 2010, the Respondent resigned as trustee of [D.N.'s] trust. At that time, Commerce Bank took over as ...