BEFORE THE VIRGINIA STATE BAR DISCIPLINARY BOARD
IN THE MATTER OF:
ROBERT SIDNEY RICKS
VSB DOCKET NOS. 02-010-0908, 02-010-1014,
02-010-3329, 02-010-3628, and
ORDER OF REVOCATION
These matters were certified to the Virginia State Bar Disciplinary Board (“Board”) by the First District Committee, and were heard on May 16, 2003, by a duly convened panel consisting of Roscoe B. Stephenson, III, 1st Vice Chair, Thaddeus T. Crump, lay member, Robert L. Freed, Joseph R. Lassiter, Jr., and Janipher W. Robinson. The Respondent, Robert Sidney Ricks (hereinafter “Mr. Ricks” or “Respondent”), was present and proceeded pro se. The Virginia State Bar (hereinafter “the Bar”) was represented by Edward L. Davis, assistant bar counsel.
The Chair polled the panel members to determine whether any member had a personal or financial interest in this matter that might affect or reasonably be perceived to affect his or her ability to be impartial in this proceeding. Each member, including the chair, verified that they had no conflicts.
The Bar presented to the panel a total of sixty-six (66) exhibits pertaining to the individual complaints listed below, all of which were received into evidence without objection. In addition, the parties presented to the Board a 46 paragraph Stipulations of Fact, which further stipulated that the parties agreed that the stipulated facts gave rise to violations of the Disciplinary Rules and Rule of Professional Conduct, as set forth below. In addition, the parties orally stipulated that Respondent discovered the embezzlement of client funds by his longtime employee, Ms. Mehalko, in December, 1999 or January, 2000.
STIPULATIONS OF FACT
The Stipulations of Fact entered into by the Bar and Mr. Ricks are as follows:
1. During all times relevant hereto, the Respondent, Robert Sidney Ricks (hereinafter Respondent or Mr. Ricks) was an attorney licensed to practice law in the Commonwealth of Virginia.
Complainant: Latashia M. Baker
2. In 1998, complainant Latashia M. Baker hired Mr. Ricks to represent her in a personal injury claim resulting from a traffic accident that occurred on January 20, 1998. Mr. Ricks told her that he would contact the other driver’s insurance carrier and try to arrange a suitable settlement. This was the only time that she saw Mr. Ricks. Thereafter, she saw only Mr. Ricks long-term secretary, Cynthia Mehalko. Ms. Baker would contact Ms. Mehalko about the status of her claim. When she informed Ms. Mehalko that she was in need of cash, Ms Mehalko had her execute three loans with Bynum Finance, Inc., as well as assignments of her personal injury claim to Bynum.
3. By letter dated January 27, 1998, Mr. Ricks notified the other driver’s liability carrier, Allstate, of Ms. Baker’s personal injury and property damage claims. Ms. Mehalko signed the letter for Mr. Ricks. By letter dated February 10, 1998, Allstate acknowledged the claim, and by letter, dated January 14, 2000, asked Mr. Ricks to provide information about Ms. Baker’s treatment status and medical bills.
4. No one ever provided the information requested by Allstate, and no one ever perfected Ms. Baker’s claim against Allstate or the other driver. Allstate did pay a subrogation claim to Ms. Baker’s insurance carrier, State Farm, for the damage to Ms. Baker’s motor vehicle. With respect to the personal injury claim, however, Allstate closed its file after the applicable statute of limitations ran, and notified Mr. Ricks about this by letter, dated March 21, 2000.
5. As a result of her claim not being asserted, Ms. Baker was left with more than $7,000 (seven thousand dollars) in unpaid loans and interest to Bynum Finance, and $1,440 (one thousand four-hundred forty dollars) in unpaid medical bills owed to Portsmouth Orthopedic. She left several messages with Ms. Mehalko for Mr. Ricks to call her, however, he never did.
6. On January 22, 2002, Mr. Ricks advised the Virginia State Bar investigator that Ms. Baker was his client, but that his secretary had absconded to Florida with the files. He said that he had no knowledge of the loans from Bynum finance.
Complainant: Mary Evelyn Sellars
7. On May 4, 1998, complainant Mary Evelyn Sellars was injured a traffic accident when her vehicle was struck by another driver. She provided the pertinent information to Ms. Mehalko, her sister-in-law, and later met with Mr. Ricks. Mr. Ricks told her something to the effect that it was a matter that insurance would handle. Thereafter, she never saw or spoke with Mr. Ricks again.
8. On July 15, 1998, Ms. Mehalko arranged for Ms. Sellars to execute a $1,580 loan with Bynum Finance, Inc., as well as an assignment of her personal injury claim to Bynum. She used the money to repair the damage to the vehicle, and to pay Ms. Mehalko $500, purportedly a fee to Mr. Ricks. Ms. Mehalko told her that the loan would be repaid from her settlement. Bynum, however, demanded payment, saying that Mr. Ricks had never settled her claim. Ms. Baker left several messages for Mr. Ricks, but never heard from him. No one ever asserted Ms. Sellars’ claim against anyone, and the statute of limitations ran. Ms. Sellars filed a warrant in debt against Mr. Ricks.
9. On January 22, 2002, Mr. Ricks advised the Virginia State Bar investigator that he recalled telling Ms, Sellars to settle with the insurer directly, because it was a property damage claim only. He said that Ms. Sellars never hired him, and that he could find no file on the case, suspecting that Ms. Mehalko absconded with it. He denied any knowledge of the loan or assignment.
Complainant: Allen Bynum
10. Complainant Allen Bynum operates a finance company that makes loans to clients in personal injury cases. The borrowers agree to repay the loans from funds that they recover in their personal injury cases. Mr. Bynum furnished the bar with a list of 22 debtors, all purported clients of Mr. Ricks, who never repaid their loans, and purportedly never received any funds from Mr. Ricks either. Several of the borrowers are the other complainants mentioned in this certification.
11. One of the delinquent loans, made on December 17, 1999, was to Mr. Ricks’ secretary, Cynthia Mehalko, The amount of the loan was $5,700. The amount owing on the loan, as of November 30, 2001, was $9,769.80. In this case, Mr. Ricks witnessed the execution of the loan, and endorsed the assignment to Bynum. According to Mr. Bynum, he agreed to the loan because Mr. Ricks assured him that the underlying case was good, and that Mehalko would pay the loan. Mr. Ricks explained that the loan would be repaid from Ms. Mehalko’s proceeds from a real estate transaction, and by payroll deduction beginning in January 2000. Mr. Bynum, however, never received any payments on the Mehalko loan. Mr. Ricks did not forward any payroll deductions from Mehalko’s pay as promised.
Complainant: Vivian A. Scott
12. On August 5, 1999, complainant Vivian A. Scott was injured when she fell at a grocery store. Based upon a referral from a neighbor, Trina Artis, she saw Mr. Ricks, and gave him her medical bills. (Mr. Ricks has no recollection of this meeting, and did no work for Ms. Scott.) Thereafter, Ms. Scott never saw Mr. Ricks again, and saw only his secretary, Cynthia Mehalko. No one ever asserted a claim against the grocery store, or made demand for Ms. Scott, and the statute of limitations ran.
13. By letter, dated September 30, 1999, Risk Management Services, Inc., on behalf of the grocery store, asked Ms. Scott to endorse an authorization of release of medical information. The company never received a response from Ms. Scott, and closed its file.
14. On the advice of Ms. Mehalko, Ms. Scott executed three loans with Bynum Finance, Inc., as well as assignments. The aggregate total of the loans was $3,250. She did not pay the loans, Ms. Mehalko having explained that they would be paid out of her settlement. The last of the three loans, executed on May 12, 2001, took place after Mr. Ricks knew that Ms. Mehalko had been embezzling from him. At the time, however, he had kept her in his employment, thinking that she would pay back the money that she had embezzled from him.
02-010-1431 - Complainant: Denita L. Baker
02-010-1432 - Complainant: Lizzie B. Goodman
02-010-1790 - Complainant: Trina D. Artis
15. On February 12, 1998, complainants Denita Baker, Lizzie B. Goodman, and Trina D. Artis were injured when their vehicle was struck in the rear by a drunken driver. The other driver was uninsured. The three women and a fourth occupant, Joyce A. Harris, hired Mr. Ricks to represent them in their personal injury claims. Ms. Goodman also hired Mr. Ricks to pursue her vehicular damage claim. They met with Mr. Ricks only once. Thereafter, they saw only his secretary, Ms. Mehalko.
16. By letter dated July 13, 1998, Mr. Ricks asserted a claim against Ms. Goodman’s uninsured motorist protection policy on behalf of all four of his clients. The insurer, State Farm, issued medical payment checks to Ms. Harris on August 17, 1998, to Ms. Artis and Ms. Goodman on August 20, 1998, and to Ms. Baker on September 17, 1998. On an unknown date, Ms. Mehalko called the four women to a meeting at Ms. Goodman’s house where she instructed them to endorse all four checks and give them to Ms. Mehalko. Ms. Mehalko told them that the checks were for medical bills, and that they would remain in the law firm’s safe until the case settled. The four clients, however, never received any of the money from the checks, and none was applied toward their unpaid medical bills.
17. The following year, on February 9, 1999, the insurance carrier issued four more checks, ranging in value from $1,000 to $1,300, payable to each of the four women jointly with Mr. Ricks. On February 11, 1999, an unknown person endorsed the checks for the four women and Mr. Ricks, and deposited all four checks into Mr. Ricks’ attorney trust account. Mr. Ricks’ trust account records show that the funds were then drawn from the trust account promptly, but for an unrelated matter. Someone also endorsed releases for all four women and for Mr. Ricks, and sent the releases to the insurance carrier. Both Mr. Ricks and the four women claim that they never saw the checks or the releases, and that someone forged their signatures on the checks. Mr. Ricks never detected the improper disbursement reflected in his trust account records.
18. On Ms. Mehalko’s advice, each of the four women also executed loans with Bynum Finance, Inc., and executed assignments to Bynum, with the understanding that their loans would be repaid from their settlements. The loans were never repaid. Mr. Ricks denied any knowledge of the loans or assignments, and cannot locate the files for these cases. Ms. Mehalko told the four women that she was moving to Florida and taking their files with her so that she could work on them some more. When Bynum demanded payment, the four women contacted Mr. Ricks, who explained that he had no knowledge of the loans or the status of their cases, and could not locate their files.
Complainant: Jane E. Matthews
19. On an unknown date, James F. Peterson hired Mr. Ricks to foreclose on a residence he had previously sold to Millard and Ramona Hall on July 6, 1999. On November 24, 2000, Mr. Peterson died. The complainant, Jane E. Matthews, qualified as executrix of his estate on January 19, 2001, and asked Mr. Ricks to proceed with the foreclosure. Mr. Ricks requested $1,500 to proceed, which Ms. Matthews paid with estate funds on January 26, 2001. Mr. Ricks did not place any of the funds in his trust account.
20. Ricks did not conduct the foreclosure until November 16, 2001. Ms. Matthews was the only bidder, effectively returning the home to Mr. Peterson’s estate. Mr. Ricks, however, failed to file his trustee’s report of foreclosure, and failed to deliver the foreclosure deed to Ms. Matthews. Having left several messages for Mr. Ricks, but receiving no response, she complained to the bar in April 2002. Ricks still did not prepare the deed, causing Ms. Matthews to hire another attorney to help her. Ricks finally prepared the deed sometime in August or September 2002. As of September 23, 2002, he still had not filed his trustee’s report of foreclosure sale.
21. Meanwhile, the defaulting buyers remained on the property without paying the mortgage or property taxes. Ms. Matthews asked Mr. Ricks to initiate eviction procedures against the defaulting buyers. He failed to do so, however, and did not return any of Ms. Matthews telephone calls. She left messages for Mr. Ricks to return the file; however, he failed to do so.
Complainant: Ms. Margaret R. Coleman
22. On December 30, 1996, complainant Margaret R. Coleman was awarded $500 per month in spouse support pursuant to a final decree of divorce. Mr. Ricks was her attorney. In 2001, her husband moved and stopped making payments. On November 29, 2001, Ms. Coleman hired Mr. Ricks to pursue the delinquency for her. She paid him $750, and delivered him a copy of her divorce decree. Mr. Ricks did not place the funds in his attorney trust account. Thereafter, Mr. Ricks took no further action in the matter.
23. Mr. Ricks having done nothing, Ms. Coleman discharged him on more than one occasion. She would change her mind, however, when he mentioned hearing dates to her. She contacted the court, however, and determined that her case was not on the docket. She discharged him and demanded a refund of her advanced fee.
24. During his interview with the Virginia State Bar investigator, Mr. Ricks denied telling Ms. Coleman that he had scheduled hearings. Mr. Ricks, however, never pursued the matter, never returned the divorce decree, and never issued a refund.
Complainant: Mr. Lance D. Nyman
25. On January 29, 1999, the complainant, Lance D. Nyman, hired Mr. Ricks to assist him with a homeowner’s insurance claim relating to hail damage that occurred on May 1, 1997. He paid Mr. Ricks $78 for filing fees. His check stated that it was for “filing fees” and Mr. Ricks issued a receipt indicating that the money was “Payment to file suit.” Mr. Ricks, however, paid the filing fees with a check drawn on his office account. He did not file suit until April 28, 2000, and the case was dismissed because the insurance policy had a contractual provision for a two-year statute of limitations.
Complainant: William H. Jones
26. On October 10, 1996, William H. Jones was injured in a traffic accident when a truck struck the vehicle he was driving. His vehicle was also damaged in the accident. He engaged Mr. Ricks, who asserted a claim against the liability carrier, State Farm Insurance. Unable to settle, Mr. Ricks filed a law suit for personal injury in the Portsmouth Circuit Court, and for property damage in the Portsmouth General District Court. On August 11, 1997, Mr. Ricks won a judgement for the property damage claim. The defendant, however, appealed to the circuit court, and the cases were consolidated.
27. On November 7, 2000, Mr. Ricks took a voluntary non-suit when his client failed to answer interrogatories. He delegated the duty of refiling the case to his secretary, Cynthia Mehalko. Ms. Mehalko failed to ensure that the case was refiled as directed, and the time for doing so expired, causing the cases being dismissed with prejudice. Mr. Ricks accepted responsibility for the neglect, and advised his client about his error. He did not suggest a malpractice claim.
Complainant: Ms. Maria Shelia Herboso
28. On October 18, 1999, Shelia Herboso was injured in a traffic accident her vehicle was struck by an uninsured motorist. In October 1999, she contacted Mr. Ricks about representing her. On November 18, 1999, Mr. Ricks notified the insurer of the vehicle, Nationwide, that he was representing Ms. Herboso, and commenced negotiations.
29. On August 14, 2001, Nationwide issued a check in the amount of $8,626.40 payable to Mr. Ricks and Ms. Herboso. The check was for medical expenses incurred by Ms. Herboso under the policy’s medical payments coverage. This coverage was provided to Ms. Herboso by contract, and payment did not require any negotiation. Although he received the check, Mr. Ricks did not deposit it at that time. Subsequently, Mr. Ricks accepted $21,000 for Ms. Herboso as full and final settlement of her personal injury claim. On October 2, 2001, Nationwide issued a check in that amount, payable to Mr. Ricks and Ms. Herboso.
30. On October 12, 2001, Mr. Ricks deposited both checks into his attorney trust account. The gross amount of the deposit was $29,626.40, including the med-pay. Although the med-pay check was issued on August 14, 2001, Mr. Ricks did not deposit it until October 12, 2001 after he received the other check. Mr. Ricks explained to the bar that he “probably slipped it into the file” thinking that the other check would be “right behind.”
31. On October 12, 2001, Mr. Ricks prepared a disbursement sheet that Ms. Herboso endorsed. According to the disbursement sheet, his attorney’s fees were $9,875.46, reduced to $8,500. The figure of $9,875.46 equals one-third of the gross amount received, including the contractually provided med-pay. There was no written fee agreement to indicate how much his fee would be, although the settlement sheet says “1/3.” The net fee of $8,500, however, is approximately 40.47% of the $21,000 personal injury settlement figure. The sheet also reflects a balance of $12,296.33 owed to the medical care providers. The remainder, payable to Ms. Herboso, was $8,830.37.
32. On October 18, 2001, Mr. Ricks paid himself his attorney’s fees of $8,500 with a check drawn on his trust account, but did not pay Ms. Herboso her share of the settlement. He did not pay any of the medical care providers either, but did ask Ms. Herboso to allow him two or three weeks to negotiate with the medical care providers so that she could receive more money. Thereafter, Ms. Herboso’s medical care providers began to dun her for payment, having received nothing from Mr. Ricks. Unable to reach Mr. Ricks, she paid one of the bills herself. In March 2002, Mr. Ricks having continued to fail to pay the medical care providers, she complained to the Virginia State Bar.
33. Mr. Ricks still did not pay Ms. Herboso or her providers. During a meeting on July 10, 2002, he advised the Virginia State Bar investigator that he felt that he should not disburse because of the bar complaint. No one at the bar advised Mr. Ricks to do so, however, and after meeting with the investigator, he paid the rest of the medical expenses. He also indemnified Ms. Herboso for the bill she paid on her own. A review of his trust account showed that the account balance was never less than the amount of funds held in trust for Ms. Herboso.
Complainant: Mr. Bruce E. Knight
34. On January 5, 2000, Bruce E. Knight was injured when another vehicle entered his lane of travel and struck him head-on. In addition to his injuries, Mr. Knight the total loss of his vehicle. The other driver was uninsured. On an unknown date, Mr. Knight hired Mr. Ricks, and Mr. Ricks asserted a claim against Mr. Knight’s insurance carrier, Progressive. Thereafter, when Mr. Knight tried to contact Mr. Ricks, he spoke only with Mr. Ricks’ former secretary, Cynthia Mehalko.
35. In July 2001, Ms. Mehalko called Mr. Knight and informed him that Progressive offered a settlement of $8,200, and that Mr. Knight would receive$3,000 from the settlement after the payment of medical expenses and fees. Mr. Knight refused the offer, and assumed that Mr. Ricks would continue to negotiate for him. In April 2002, one of the medical care providers began to dun Mr. Knight for payment, saying that they could not reach Mr. Ricks. Mr. Knight contacted Progressive, and learned that someone had accepted Progressive’s $8,200 settlement offer, despite his prior refusal. He also learned that Progressive issued a check in that amount, payable to Mr. Ricks and Mr. Knight, on July 22, 2001. The investigation revealed that someone forged both Mr. Ricks and Mr. Knight’s signatures on the check, deposited it into his attorney trust account, and then withdrew the funds from the trust account. According to Mr. Ricks, he never saw the check or the money.
36. The investigation revealed further that it was Ms. Mehalko who accepted Progressive’s settlement offer of $8,200. The investigation also revealed that she previously rejected an offer of $7,800 on June 28, 2001 without notifying Mr. Ricks or Mr. Knight. On August 6, 2001, Ms. Mehalko moved to Florida, taking that and other case files with her. She has not returned. Mr. Knight never heard from Mr. Ricks again.
37. Mr. Ricks kept Ms. Mehalko in his employment despite knowing that she had embezzled from him in the past. He did this in order to enable her to repay the money that she had previously embezzled.
Complainant: Chantale L. Joseph
38. On February 21, 1997, Chantale L. Joseph was injured when her vehicle was struck from behind. On an unknown date, she hired Mr. Ricks to represent her. Thereafter, whenever she tried to contact Mr. Ricks, she could speak only with his former secretary, Cynthia Mehalko. In 2000, Ms. Mehalko called Ms. Joseph and told her that the liability carrier, Farmers Insurance Group, had issued them a settlement check, but that they lost it when they moved the office. In July 2001, Ms. Mehalko contacted Ms. Joseph again, and advised her that Farmers Insurance refused to issue a replacement check, and that a court hearing was scheduled for September 27, 2001. Thereafter, Ms. Joseph heard nothing from Mr. Ricks or Ms. Mehalko. On September 19, 2001, with the purported hearing approaching, she called Mr. Ricks’ office and spoke to his new assistant, who arranged a meeting. At the meeting, Mr. Ricks told Ms. Joseph that he had no recollection of ever meeting her, and had no case file or record of her case.
39. The investigation revealed that Farmers Insurance and someone in Mr. Ricks’ office agreed to a settlement of $8,100 on May 20, 1999. (Farmers Insurance’s file indicates that they were communicating with someone named “Cyndi” in Mr. Ricks’ office.) Farmers Insurance then issued the check, payable to Mr. Ricks and Ms. Joseph. Someone then forged their signatures, deposited the check into Mr. Ricks’ trust account on May 27, 1999, and subsequently withdrew the funds. Farmers Insurance sent several written requests for Mr. Ricks to return an endorsed release, but this was never done. Mr. Ricks said that he never saw the check, and never participated in its processing. He surmised that Ms. Mehalko forged the signatures, and forged about ten of the thirteen checks that drew the funds from his trust account in this case. One of the checks was payment to a medical provider in another case. Ms. Joseph, however, never received any of the proceeds, and none of her medical providers were ever paid.
40. Mr. Ricks kept Ms. Mehalko in his employment despite knowing that she had embezzled from him in the past. He did this in order to enable her to repay the money that she had previously embezzled from him. On August 6, 2001, Ms. Mehalko moved to an unknown location in Florida, taking several case files with her.
Complainant: Sylvia H. Simpson
41. In 1997-1998, Mr. Ricks represented Sylvia H. Simpson in a personal injury case. On February 11, 1998, Ms. Simpson’s insurer, Southern Heritage, issued a medical payments check in the amount of $1,322, payable to Ms. Simpson and Mr. Ricks. Mr. Ricks’ former secretary, Cynthia Mehalko, told Ms. Simpson that they would hold the check in escrow to pay her medical care providers. Cover letters in Mr. Ricks’ file indicate that he paid several of Ms. Simpson’s medical care providers between December 1998 and February 1999.
42. Mr. Ricks continued to negotiate the personal injury claim with State Farm, the liability insurance carrier. In October 1998, State Farm offered $3,000 to settle the claim, and Ms. Mehalko accepted it on behalf of Mr. Ricks and Ms. Simpson. On October 19, 1998, State Farm issued a check in the amount of $3,000, payable to Mr. Ricks and to Ms. Simpson. Ms. Simpson endorsed the check, but someone forged Mr. Ricks’ signature and deposited the check into his attorney trust account on October 23, 1998. The same day, someone forged Mr. Ricks’ signature on a trust account check in the amount of $1,000 for “legal fee Sylvia H. Simpson,” and deposited it into his general account. On November 19, 1998, someone forged Mr. Ricks’ signature on two more trust account checks, one in the amount of $2,620 and the other in the amount of $350, both payable to Sylvia Simpson for “settlement for accident.” Both checks were paid on November 23, 1998. The disbursements represented a total of $3,970 drawn on a $3,000 deposit. Mr. Ricks said that the signatures were not his. He suspected former secretary Cynthia Mehalko.
43. Ms. Simpson said that she received one check, in the approximate amount of $2,300, and that she did not receive two checks. Ms. Simpson continued to be dunned by one medical care provider, Obici Hospital. By May 2000, Obici stopped dunning Ms. Simpson, so she assumed that someone paid the claim, although to this day, she does not know. In June 2002, she received a dunning letter from another provider, the Orthopaedic Surgery Center, indicating that she still owed money, and that they had not been able to contact her attorney, Mr. Ricks. When she contacted Mr. Ricks, he explained that his secretary had taken all of his money, and that he could not help her.
44. Neither Mr. Ricks nor his former assistant prepared a personal injury closing statement reflecting the disbursements. According to Mr. Ricks, he has no recollection of either insurance check coming to his office.
45. A review of Mr. Ricks’ trust account bank statement indicated that check number 3273 was drawn on the trust account and made payable to Bell Atlantic, his telephone company.
46. Mr. Ricks kept Ms. Mehalko in his employment despite knowing that she had embezzled from him in the past. He did this in order to enable her to repay the money that she had previously embezzled from him. On August 6, 2001, Ms. Mehalko moved to an unknown location in Florida, taking several case files with her.
After admitting the exhibits into evidence and receiving the stipulations of the parties, the Board retired to deliberate the issues of misconduct. Following the consideration of all the evidence so received, the Board found by clear and convincing evidence the following findings of misconduct, which are in accordance with the stipulations of the parties, to wit:
FINDINGS OF MISCONDUCT
The Board finds by clear and convincing evidence that the Respondent has violated the following Disciplinary Rules and Rules of Professional Conduct:
DR 1‑102. Misconduct.
(A) A lawyer shall not:
(3) Commit a crime or other deliberately wrongful act that reflects adversely on the lawyer’s fitness to practice law.
DR 2‑105. Fees.
(C) A fee may be contingent on the outcome of the matter for which the service is rendered, except in criminal cases or other matters in which a contingent fee is prohibited by law. A contingent fee agreement shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial, or appeal, expenses to be deducted from the recovery, and whether expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a closing statement showing the fee and the method of its determination.
DR 3‑104. Nonlawyer Personnel.
(A) A lawyer or law firm may employ nonlawyer personnel to perform delegated functions under the direct supervision of a licensed attorney, but shall not permit such nonlawyer personnel to:
(1) Counsel clients about legal matters;
(2) Appear as counsel in court or in proceedings which are part of the judicial process; or
(3) Engage in the unauthorized practice of law.
(C) A lawyer or law firm that employs nonlawyer personnel shall exercise a high standard of care to assure compliance by the nonlawyer personnel with the applicable provisions of the Code of Professional Responsibility. The initial and the continuing relationship with the client must be the responsibility of the employing attorney.
(D) The delegated work of nonlawyer personnel shall be such that it will assist only the employing attorney and will be merged into the lawyer’s completed product. The lawyer shall examine and be responsible for all work delegated to nonlawyer personnel.
DR 6‑101. Competence and Promptness.
(A) A lawyer shall undertake representation only in matters in which:
(1) The lawyer can act with competence and demonstrate the specific legal knowledge, skill, efficiency, and thoroughness in preparation employed in acceptable practice by lawyers undertaking similar matters, or
(2) The lawyer has associated with another lawyer who is competent in those matters.
(B) A lawyer shall attend promptly to matters undertaken for a client until completed or until the lawyer has properly and completely withdrawn from representing the client.
(C) A lawyer shall keep a client reasonably informed about matters in which the lawyer’s services are being rendered.
(D) A lawyer shall inform his client of facts pertinent to the matter and of communications from another party that may significantly affect settlement or resolution of the matter.
DR 9‑102. Preserving Identity of Funds and Property of a Client.
(B) A lawyer shall:
(1) Promptly notify a client of the receipt of his funds, securities, or other properties.
(2) Identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable.
(3) Maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to his client regarding them.
(4) Promptly pay or deliver to the client or another as requested by such person the funds, securities, or other properties in the possession of the lawyer which such person is entitled to receive.
DR 9‑103. Record Keeping Requirements.
(B) Required Trust Accounting Procedures: The following minimum trust accounting procedures are applicable to all trust accounts maintained by lawyers or law firms holding funds on behalf of clients who reside in this State, or from a transaction arising in this State, whether or not the lawyer or law firm maintains an office in this State.
(4) Periodic Trial Balance: A regular periodic trial balance of the subsidiary ledger shall be made at least quarter annually, within 30 days after the close of the period and shall show the trust account balance of the client or other person at the end of each period.
(a) The total of the trial balance must agree with the control figure computed by taking the beginning balance, adding the total of monies received in trust for the period and deducting the total of trust monies disbursed for the period.
(b) The trial balance shall identify the preparer and be approved by the attorney or one of the attorneys in the firm.
(a) A monthly reconciliation shall be made at month end of the cash balance derived from the cash receipts journal and cash disbursements journal total, the trust account checkbook balance, and the trust account bank statement balance.
(b) A periodic reconciliation shall be made at least quarter annually, within 30 days after the close of the period, reconciling cash balances to the subsidiary ledger trial balance.
(c) Reconciliations shall identify the preparer and be approved by the attorney or one of the attorneys in the firm.
From the conduct that occurring after January 1, 2000, the Board finds by clear and convincing evidence that the Respondent has violated the following Rules of Professional Conduct:
RULE 1.1 Competence
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
RULE 1.3 Diligence
(a) A lawyer shall act with reasonable diligence and promptness in representing a client.
(b) A lawyer shall not intentionally fail to carry out a contract of employment entered into with a client for professional services, but may withdraw as permitted under Rule 1.16.
RULE 1.4 Communication
(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.
(c) A lawyer shall inform the client of facts pertinent to the matter and of communications from another party that may significantly affect settlement or resolution of the matter.
RULE 1.5 Fees
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall state in writing the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
RULE 1.15 Safekeeping Property
(a) All funds received or held by a lawyer or law firm on behalf of a client, other than reimbursement of advances for costs and expenses, shall be deposited in one or more identifiable escrow accounts maintained at a financial institution in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein except as follows:
(1) funds reasonably sufficient to pay service or other charges or fees imposed by the financial institution may be deposited therein; or
(2) funds belonging in part to a client and in part presently or potentially to the lawyer or law firm must be deposited therein, and the portion belonging to the lawyer or law firm must be withdrawn promptly after it is due unless the right of the lawyer or law firm to receive it is disputed by the client, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved.
(c) A lawyer shall:
(1) promptly notify a client of the receipt of the client’s funds, securities, or other properties;
(2) identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable;
(3) maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to the client regarding them; and
(4) promptly pay or deliver to the client or another as requested by such person the funds, securities, or other properties in the possession of the lawyer which such person is entitled to receive.
(f) Required Escrow Accounting Procedures. The following minimum escrow accounting procedures are applicable to all escrow accounts subject to Rule 1.15(a) and (c) by lawyers practicing in Virginia.
(4) Periodic trial balance. A regular periodic trial balance of the subsidiary ledger shall be made at least quarter annually, within 30 days after the close of the period and shall show the escrow account balance of the client or other person at the end of each period.
(i) The total of the trial balance must agree with the control figure computed by taking the beginning balance, adding the total of monies received in escrow for the period and deducting the total of escrow monies disbursed for the period; and
(ii) The trial balance shall identify the preparer and be approved by the lawyer or one of the lawyers in the law firm.
(i) A monthly reconciliation shall be made at month end of the cash balance derived from the cash receipts journal and cash disbursements journal total, the escrow account checkbook balance, and the escrow account bank statement balance;
(ii) A periodic reconciliation shall be made at least quarter annually, within 30 days after the close of the period, reconciling cash balances to the subsidiary ledger trial balance;
(iii) Reconciliations shall identify the preparer and be approved by the lawyer or one of the lawyers in the law firm.
RULE 1.16 Declining Or Terminating Representation
(e) All original, client-furnished documents and any originals of legal instruments or official documents which are in the lawyer’s possession (wills, corporate minutes, etc.) are the property of the client and shall be returned to the client upon request, whether or not the client has paid the fees and costs owed the lawyer. If the lawyer wants to keep a copy of such original documents, the lawyer must incur the cost of duplication. Upon request, the client must also be provided copies of the following documents from the lawyer’s file, whether or not the client has paid the fees and costs owed the lawyer: lawyer/client and lawyer/third-party communications; the lawyer’s copies of client-furnished documents (unless the originals have been returned to the client pursuant to this paragraph); pleadings and discovery responses; working and final drafts of legal instruments, official documents, investigative reports, legal memoranda, and other attorney work product documents prepared for the client in the course of the representation; research materials; and bills previously submitted to the client. Although the lawyer may bill and seek to collect from the client the costs associated with making a copy of these materials, the lawyer may not use the client’s refusal to pay for such materials as a basis to refuse the client’s request. The lawyer, however, is not required under this Rule to provide the client copies of billing records and documents intended only for internal use, such as memoranda prepared by the lawyer discussing conflicts of interest, staffing considerations, or difficulties arising from the lawyer/client relationship.
RULE 5.3 Responsibilities Regarding Nonlawyer Assistants
With respect to a nonlawyer employed or retained by or associated with a lawyer:
(a) a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person’s conduct is compatible with the professional obligations of the lawyer;
(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer; and
(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or
(2) the lawyer is a partner in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows or should have known of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
RULE 8.4 Misconduct
It is professional misconduct for a lawyer to:
(b) commit a criminal or deliberately wrongful act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer;
Upon returning its findings on the issues of misconduct, the Board proceeded to hear evidence on the issues of sanctions. Mr. Ricks’ prior disciplinary record was submitted to the Board for consideration.
SUMMARY OF DECISION
Fifteen ethical complaints were filed against Mr. Ricks and consolidated for purposes of this hearing. Eleven of the complaints involve Mr. Ricks’ long-term secretary, Cynthia Mehalko. The stipulations, including Ms. Mehalko’s admissions to Mr. Ricks no later than January, 2000, establish that Ms. Mehalko routinely signed retainer agreements for Mr. Ricks, negotiated settlements with insurance adjusters, met with clients to obtain endorsements on settlement checks, forged client endorsements, and forged Mr. Ricks’ signature on settlement checks, trust account checks, and operating account checks. Upon learning in the fall of 1999 that Ms. Mehalko had embezzled at least $12,000 in client funds from Mr. Ricks’ trust account, Mr. Ricks kept Ms. Mehalko on his payroll as his sole employee. Mr. Ricks stated that he did so, thinking she would pay back the money that she had embezzled. Mr. Ricks admitted during oral argument that, after learning that Ms. Mehalko had embezzled $12,000 from one client, he questioned her and she admitted taking client funds from “six or eight other clients”. Mr. Ricks did not conduct any investigation of his trust account records and files in order to establish the true extent of Ms. Mehalko’s defalcations.
At least four of the eleven complaints arising from personal injury cases involve malfeasance by Ms. Mehalko after she admitted her criminal activity to Mr. Ricks in January, 2000. In Scott, Mehalko obtained a loan for the client in May, 2001. In Jones, Ricks nonsuited the client’s case in November, 2000, and relied upon Ms. Mehalko to refile the suit, which never occurred and the statute of limitations ran. In Knight, Mehalko negotiated a settlement without Mr. Ricks’ involvement, and then settled the case in July, 2001, contrary to the client’s instructions and without the client’s knowledge. Mehalko forged both the client’s signature and Mr. Ricks’ signature on the settlement checks. In Joseph, Mehalko continued to make misrepresentations to the client during 2000 and as late as July, 2001, about the whereabouts of the settlement check. The case had apparently been settled by Mehalko in May, 1999.
In at least three other complaints, Mr. Ricks’ could not point to Ms. Mehalko to explain his inattention to his clients’ files. In Herboso, Mr. Ricks handled a personal injury claim himself and received payment for the medical payments claims in August, 2001. Mr. Ricks failed to deposit the medical payments checks into his trust account until October, 2001, two months later, at which time he drew down his fee but did not disburse to the client. In March, 2002, Ms. Herboso filed her bar complaint because she still had not received her settlement proceeds. Mr. Ricks did not disburse her settlement proceeds to her until July, 2002, after the bar investigator suggested to him that he should disburse the funds. To compound the matter, Mr. Ricks clearly charged her a contingency fee on the medical payments recovery, a non-contingent matter. In Matthews, Mr. Ricks accepted a $1,500 fee in January, 2001, to institute foreclosure proceeds, which he deposited directly to his operating account. He did not conduct the foreclosure until November, 2001, and he failed to file a foreclosure report or to prepare a trustee’s deed. Ultimately he prepared the deed in August or September, 2002, but had still not filed his report as of September 23, 2002. In Coleman, Mr. Ricks accepted a $750.00 fee to collect spousal support arrears owed to a former divorce client, but took no action to collect the arrears and never refunded the fee.
There is no suggestion in the record that Mr. Ricks was in any way a participant in Ms. Mehalko’s criminal activity. Bar counsel and the bar investigator both advised the panel that Mr. Ricks had been very cooperative throughout the investigation, ultimately stipulating to the charges. However, the magnitude of the harm to Mr. Ricks’ clients is overwhelming. The personal injury clients have in most cases lost their ability to recover from the tortfeasors, and are left with substantial, often overwhelming medical bills. Mr. Knight testified before the panel that he had borrowed heavily to pay his medical bills. Ms. Artis testified that her husband’s wages were still being garnisheed to pay her medicals. Mr. Ricks asked the panel to take into consideration the impact that Ms. Mehalko’s criminal activities have had on him. More pertinently, the panel must take into consideration the impact that Ms. Mehalko’s defalcations have had on his clients. Mr. Ricks used incredibly naive and questionable judgment in failing to terminate Ms. Mehalko’s employment when he first learned in January, 2000, that she had stolen at least $12,000 from one of his clients and further admitted to taking funds from a half dozen other clients. Mr. Ricks further compounded the problem by failing to ascertain the extent of the criminal activity, and failing to put satisfactory controls in place to make sure the defalcations would not continue. The bar investigator testified that the total of funds known to be embezzled by Ms. Mehalko exceed $31,000.
The panel takes note of Mr. Ricks’ prior record consisting of two private reprimands issued on December 4, 2001, both of which involve other clients bilked by Ms. Mehalko.
The Respondent has failed to produce any evidence that would support a determination that the problems that Mr. Ricks has experienced would not continue to occur were Mr. Ricks to continue the practice law. Having given due consideration to bar counsel’s recommendation that Mr. Ricks’ license be suspended for three years, the panel finds the Respondent guilty by clear and convincing evidence of the numerous ethics violations as set forth above, and that the Respondent’s license to practice law should be revoked effective immediately.
IMPOSITION OF SANCTION
The Board, having considered all evidence before it and having considered the nature of the Respondent’s actions, and having considered the Respondent’s prior disciplinary record, ORDERS pursuant to Part 6, Sec. IV, Para. I.f(2) of the Rules of the Virginia Supreme Court that the license of the Respondent, Robert Sidney Ricks, to practice law in the Commonwealth of Virginia be, and the same is hereby revoked effective May 16, 2003.
It is further ORDERED that Respondent must comply with the requirements of Part 6, Section IV, Paragraph 13(M) of the Rules of the Supreme Court of Virginia. All issues concerning the adequacy of the notice and arrangements required by the Order shall be determined by the Board. Pursuant to Part 6, Sec. IV, Para. 13.B.8.C of the Rules, the Clerk of the Disciplinary System shall assess costs.
It is further ORDERED that a copy teste of this Order shall be mailed by certified mail, return receipt requested, to the Respondent at his last address of record with the Virginia State Bar, 1 Crawford Parkway, Suite 102, Post Office Box 1295, Portsmouth, Virginia 23705-1295, and hand delivered to Edward L. Davis, Assistant Bar Counsel, Virginia State Bar, 707 East Main Street, Suite 1500, Richmond, Virginia 23219-2803.
Donna T. Chandler, Chandler and Halasz, Inc., P.O. Box 9349, Richmond, Virginia 23227, 804/730-1222, was the reporter for the hearing and transcribed the proceedings.
ENTERED this ____ day of June, 2003.
VIRGINIA STATE BAR DISCIPLINARY BOARD
By: _____________________________________Roscoe B. Stephenson, III, First Vice Chair