Two recent decisions by the Ohio Supreme Court in disciplinary cases discuss lawyers’ ethical duties to supervise nonlawyers employed by the lawyer. Ohio Rule of Professional Conduct 5.3: Responsibilities Regarding Nonlawyer Assistants provides guidance for these ethical duties.
Rule 5.3 (a) provides that a lawyer with managerial authority in a law firm or government agency shall make reasonable efforts to ensure that the law firm or government agency has measures in effect giving reasonable assurance that the conduct of nonlawyers working at the law firm or government agency is compatible with the professional obligations of the lawyers. This also applies to sole practitioners employing nonlawyer assistants.
The rule also imposes a duty on lawyers who directly supervise nonlawyers, whether or not the lawyer also has managerial authority. Under 5.3 (b), a lawyer with direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure the nonlawyer’s conduct is compatible with the professional obligations of the lawyer.
Finally, 5.3 (c) indicates that the lawyer shall be responsible for the conduct of the nonlawyer that would be a violation of the Ohio Rules of Professional Conduct if engaged by the lawyer if 1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct; or 2) the lawyer with managerial authority in the law firm or government agency or direct supervisory authority over the person, knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
In a Per Curiam opinion Cincinnati Bar Association v. Kathman, Slip Opinion No. 2021-Ohio-2189, decided June 30,2021, the Ohio Supreme Court found a lawyer failed to supervise a paralegal while representing personal-injury plaintiffs. The duties of the paralegal included preparing contingent-fee agreements using the lawyer’s form, corresponding with insurance companies on the lawyer’s behalf, and collecting information on client damages and medical expenses. The lawyer also authorized the paralegal to prepare closing statements after the client settled the personal injury claim and write checks on the IOLTA for distribution of settlement proceeds. The paralegal was not given authority to enter contingent-fee agreements on the lawyer’s behalf or sign checks on the operating or IOLTA accounts.
The lawyer provided a laptop for the paralegal to work outside the lawyer’s small office. The laptop was not linked or networked with the lawyer’s office computer. The lawyer gave the paralegal minimal or no oversight. When the paralegal was on vacation, the lawyer opened the bank statement for the IOLTA and discovered checks had cleared out of numerical sequence. Investigating with the bank, the lawyer learned the checks were payable to the paralegal. The paralegal was terminated and pleaded guilty to one count of theft and one count of forgery, sentenced to five years community control, and ordered to make restitution of $200,000.
The lawyer’s conduct violated Rule 5.3(a) and 5.3(b). There were additional violations of Rule 1.15 regarding client funds and the lawyer’s IOLTA and Rule 1.8(e) prohibiting a lawyer from providing financial assistance to a client in connection with pending litigation. The lawyer was suspended for one year, with six months stayed on conditions he engage in no further misconduct and pay the cost of the disciplinary proceedings.
A second opinion, Cleveland Metropolitan Bar Association v Heller, Slip Opinion No. 2021-Ohio-2211, involving lawyer failure to supervise was decided by the Ohio Supreme Court on July 1, 2021. The lawyer, who practices bankruptcy law, hired an assistant who performed general office duties, met with clients, prepared bankruptcy petitions and related documents under the lawyer’s supervision and accepted client payments on behalf of the lawyer. The lawyer charged a standard fee and typically paid the assistant $100 or $150 for each bankruptcy petition the assistant prepared. The lawyer also rented a room in the lawyer’s home to the assistant.
The lawyer discovered the assistant was collecting cash payments from clients and not keeping accurate records or remitting all the funds to the lawyer. However, the lawyer continued to allow the assistant to work at the firm, believing the assistant would repay the firm. Eventually, the lawyer concluded the assistant was stealing and reported the alleged theft. The assistant admitted to the theft but was never charged. The lawyer admitted he exercised extremely poor supervision over the assistant, even after discovering the issues with handling client funds.
The lawyer violated Rule 5.3(b) and 5.3(c)(2). There were other violations involving, among others, Rule 5.4 for sharing a legal fee with a nonlawyer and Rule 1.15 for client funds. The lawyer was suspended for one year, with six months suspended on the conditions that he complete within six months, six hours of CLE in law-office and client trust-account management, submit to a drug-and-alcohol assessment conducted by OLAP, pay the outstanding filing fee for client’s 2017 bankruptcy filing, and commit no further misconduct.
The bottom line is, if you are a lawyer who manages or supervises a nonlawyer assistant, YOU must make reasonable efforts to ensure that the conduct of the nonlawyer assistant does not violate your professional obligations. YOU will be held responsible if you ratify conduct that violates your professional obligations or you fail to mitigate the conduct after you discover it.
- Implement/update your Office Procedures Manual.
- Use Checklists to perform tasks uniformly.
- Maintain good financial accounting policies.
- Always perform monthly IOLTA reconciliation.
- Have bank statements emailed to you at a secure, non-office electronic or mail address.
Good policies and procedures regarding nonlawyer assistants can help lawyers practice more ethically and efficiently. As always, if you have questions about this or any other loss prevention topic, please do not hesitate to contact us. OBLIC is here to help!
Gretchen K. Mote, Esq.
Director of Loss Prevention
Monica Waller, Esq.
Senior Loss Prevention Counsel