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In re Arnold

Supreme Court of New York, First Department

December 26, 2019

In the Matter of Robert E. Arnold III, (admitted as Robert Edward Arnold III) an attorney and counselor-at-law: Attorney Grievance Committee M-3730 for the First Judicial Department, Petitioner, Robert E. Arnold III, Respondent.

         Disciplinary proceedings instituted by the Attorney Grievance Committee for the First Judicial Department. Respondent, Robert E. Arnold III, was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the First Judicial Department on April 15, 1996.

          Jorge Dopico, Chief Attorney, Attorney Grievance Committee, New York (Raymond Vallejo, of counsel), for petitioner.

         Respondent pro se.

          Hon. Rosalyn H. Richter, Justice Presiding, Judith J. Gische, Barbara R. Kapnick, Cynthia S. Kern, Peter H. Moulton, Justices.

          PER CURIAM

         Respondent Robert Edward Arnold III was admitted to the practice of law in the State of New York by the First Judicial Department on April 15, 1996. At all times relevant to this proceeding, respondent maintained an office for the practice of law in Kansas.

         By order entered June 12, 2018, the Supreme Court of Missouri disbarred respondent from the practice of law for, inter alia, misappropriating settlement proceeds, inadequate trust fund records, violating client confidentiality and failing to respond to a lawful demand of disciplinary authorities.

         The Attorney Grievance Committee (the Committee) now seeks an order, pursuant to Judiciary Law § 90(2), the Rules for Attorney Disciplinary Matters (22 NYCRR) § 1240.13 and the doctrine of reciprocal discipline, disciplining respondent predicated upon the discipline imposed by the Supreme Court of Missouri and directing respondent to demonstrate why discipline should not be imposed for the underlying misconduct, or, in the alternative, sanctioning respondent as this Court deems appropriate. Respondent has also been disbarred in Connecticut and Kansas based upon his misconduct in Missouri. Respondent was served with the Committee's motion but he has not submitted a response.

         In August 2016, the Missouri Supreme Court Disciplinary Committee charged respondent with misconduct arising out of his representation of a client, who he represented in a child custody and support case (family law case) as well as a personal injury case related to a motor vehicle accident. Respondent entered into a retainer agreement for the family law case and had a written contingency fee agreement for the personal injury case, pursuant to which he would receive 33% of a settlement plus expenses.

         Respondent submitted an answer denying many of the allegations made against him and requesting a disciplinary hearing. He also filed a second amended answer in which he admitted he failed to maintain sufficient funds in his trust account to satisfy certain medical liens until such time as the liens were resolved in an interpleader action filed with the court.

         A hearing was held in April and August 2017 by the Advisory Committee to a Disciplinary Hearing Panel where respondent, represented by counsel, testified on his own behalf, presented testimony from several character witnesses and offered exhibits. In a decision dated November 21, 2017, the Disciplinary Hearing Panel found, inter alia, that respondent settled the personal injury case for the $25, 000 limit of the at-fault driver's insurance policy and deposited the funds into his trust account. He thereafter transferred all of the settlement funds into his operating account despite the fact that his client never gave her consent for respondent to keep the entire settlement amount. After his client threatened to sue him for misconduct, respondent filed an attorney lien against his client's family law case, alleging his client owed him more than $15, 000, and then filed a civil interpleader action against her regarding the distribution of the settlement proceeds. Without her informed consent and without her implied authorization, respondent attached an affidavit in support of the interpleader action that included personal information about his client related to his representation of her in the family law case. Following a July 2014 trial in the interpleader action, the court awarded $8, 276 to the client, $6, 350 to her health care providers and $10, 373 to respondent. Respondent eventually satisfied these awards. The disciplinary proceeding followed the verdict.

         In its decision, the Hearing Panel found respondent's conduct to have violated numerous Rules of Professional Conduct by failing to keep the settlement funds in his trust account; withdrawing more than his contractual fee from his trust account; failing to correct his original representation to a Kansas disciplinary investigator that the funds belonging to his client and the medical lien holders remained in his trust account; failing to maintain complete records of his client's trust funds; failing to respond to a lawful demand for information from a disciplinary authority by not producing various requested documents; failing to provide his client an itemized statement; misappropriating the settlement proceeds; denying his client the opportunity to have the fees reviewed if she so desired pursuant to the retainer agreement; and by revealing certain personal information about his client relating to matters not directly related to the distribution of the proceeds from the settlement of the personal injury case without his client's consent.

         After considering evidence in aggravation and mitigation, the Hearing Panel recommended that respondent's license to practice law be suspended indefinitely with no leave to apply for reinstatement for one year, suspension to be stayed and respondent to be placed on probation for one year.

         Following submission of the complete record before the Disciplinary Hearing Panel to the Supreme Court of Missouri, the court issued a one-page order finding respondent violated Missouri's Rules of Professional Conduct 4-1.5(a) (a lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses); 4-1.5(c) (failure to promptly provide a contingency fee remittance statement); 4-1.6 (a lawyer shall not reveal confidential client information); 4-1.15(d) (failure to maintain complete trust account records); 4-1.15(i) (misappropriation of trust funds); 4-8.1(c) ...

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