Virginia Lawyer Register — January 2013
In this issue:
- Amendments to Rules 7.1-7.5 Vacated
- Legal Ethics Opinion 1865
- Legal Ethics Opinion 1867
- Legal Ethics Opinions 1313 and 1339 Withdrawn
- New Cover Sheet for Filing Civil Actions
- New Credit Card Transaction Reporting Requirement
- Nominations Sought for Special Board and Committee Vacancies
- Volunteers Sought for VSB Committees
- Nominations Sought for District Committee Vacancies
View January 2013 Virginia Lawyer Register (PDF of mailed version with hyperlinks to additional materials)
|Respondent’s Name||Address of Record||Action||Effective Date|
|Gwen Anne Carpenter||Alexandria, VA||Suspension w/Terms – 2 years||November 1, 2012|
|Mark John Sullivan||Fairfax, VA||Public Admonition||May 23, 2012|
|James Anthony Bullard Jr.||Richmond, VA||Suspension w/Terms – 60 Days||November 16, 2012|
|Dale Eugene Duncan||Alexandria, VA||Suspension – 2 years||September 28, 2012|
|John Lydon McGann||Fairfax, VA||Public Reprimand||September 25, 3012|
|Robert Henry Smallenberg||Ashland, VA||Revocation||November 13, 2012|
|Michael Raymond Thames||Arlington, VA||Suspension – 1 year and 1 day||August 24, 2012|
|Gregory R. Wright Sr.||Virginia Beach, VA||Public Reprimand w/Terms||September 20, 2012|
|Richard Johan Conrod Sr.||Virginia Beach, VA||Public Admonition||October 23, 2012|
|Stephanie Allette Pease||Abingdon, VA||Public Reprimand w/Terms||September 4, 2012|
|Suspension – Failure to Pay Disciplinary Costs||Effective Date||Lifted|
|Stephen Joseph Caputo||Stony Brook, NY||October 22, 2012|
|Shannon McLaughlin Guignon||Fairfax, VA||November 6, 2012|
|Rebecca Louise Marquez||Arlington, VA||November 29, 2012|
|Eric Marie Weber||Falls Church, VA||October 18, 2012|
|Suspension – Failure to Comply with Subpoena||Effective Date||Lifted|
|Pauline Marjorie Ewald||Ashland, VA||November 16, 2012||December 4, 2012|
|Timothy Paul Harris||Arlington, VA||November 26, 2012|
|Jeanne Lynn Dove-Taylor||King George, VA||October 15, 2012|
The following are summaries of disciplinary actions for violations of the Virginia Rules of Professional Conduct (RPC) (Rules of the Virginia Supreme Court Part 6, ¶ II, eff. Jan. 1, 2000) or another of the Supreme Court Rules.
Copies of disciplinary orders are available at the Web link provided with each summary or by contacting the Virginia State Bar Clerk’s Office at (804) 775-0539 or firstname.lastname@example.org. VSB docket numbers are provided.
Gwen Anne Carpenter
Effective November 1, 2012, a three-judge panel of the Circuit Court of the City of Alexandria suspended Gwen Anne Carpenter’s license to practice law for two years with terms for violating professional rules that govern diligence, safekeeping property, unauthorized practice of law; multijurisdictional practice of law, bar admission and disciplinary matters, and misconduct. RPC 1.3(a); 1.15(a)(1)(2), (c)(1-4), (d)(1)(i-iv)(2))i-iii), (e)(1)(i-v)(2)(i-iii), (f)(2)(3)(4)(i,ii)(5)(i-iii)(6); 5.5(c); 8.1(a-c); 8.4(c)
Mark John Sullivan
On May 23, 2012, a three-judge circuit court issued a public admonition to Mark John Sullivan for violating a professional rule that governs candor to the tribunal. RPC 3.3(a)(4)
James Anthony Bullard Jr.
12-032-089215, 12-032-089851, 12-032-090039
Effective November 16, 2012, the Virginia State Bar Disciplinary Board suspended James Anthony Bullard Jr.’s license to practice law for sixty days with terms for violating a professional rule that governs diligence. This was an agreed disposition of misconduct charges. RPC 1.3(a)
Dale Eugene Duncan
On September 28, 2012, the Virginia State Bar Disciplinary Board suspended Dale Eugene Duncan’s license to practice law for two years for violating professional rules that govern bar admission and disciplinary matter. RPC 8.1(c)(d)
John Lydon McGann
On September 25, 2012, the Supreme Court of Virginia affirmed the Virginia State Bar Fifth District Committee Section I public reprimand upon John Lydon McGann for violating professional rules that govern client communication. RPC 1.4(a)(b)(c)
Robert Henry Smallenberg
11-060-087166, 12-060-089755, 11-060-087953, 11-060-085684, 11-060-088181, 11-060-087698, 11-060-088022, 11-060-088180, 12-060-089121
On November 13, 2012, the Virginia State Bar Disciplinary Board revoked Robert Henry Smallenberg’s license to practice law for violating professional rules that govern competence, scope of representation, diligence, communication, fees, safekeeping property, declining or terminating representation, candor toward the tribunal, truthfulness in statements to others, responsibilities of partners and supervisory lawyers, responsibilities regarding nonlawyer assistants, bar admission and disciplinary matters, and misconduct. In consenting to the revocation, Mr. Smallenberg admitted that the disciplinary charges brought against him are true and that he could not successfully defend against them. RPC 1.1; 1.2(a); 1.3(a); 1.4(a-c); 1.5(a)(1-8)(b); 1.15(b)(3),(c)(1)(2)(i,ii)(3),(d)(1)(2)(3)(i-iv),(d)(4),(e)(1)(i-iv)(2)(i-iii),(f)(1)(i)(ii)(iii)(a-c)(iv)(v)(vi)(2)(3)(4)(I,ii)(5)(i-iii)(6); 1.16(a)(1),(d),(e); 3.3(a); 4.1; 5.1(a)(b)(c)(1)(2); 5.3(a)(b)(c)(1,2); 8.1(c)(d); 8.4(a-c)
Michael Raymond Thames
On August 24, 2012, the Virginia State Bar Disciplinary Board suspended Michael Raymond Thames’s license to practice law for one year and one day for failing to comply with the board’s December, 2010, order imposing a public reprimand with terms, as amended January 27, 2011. Rules Part 6, § IV ¶ 13-18.
Gregory R. Wright Sr.
Virginia Beach, Virginia
On September 20, 2012, the Virginia State Bar Disciplinary Board issued a public reprimand with terms to Gregory Robert Wright Sr. for violating professional rules that govern diligence and communication. This was an agreed disposition of misconduct charges. RPC 1.3(a), 1.4(a)(b)(c)
Richard Johan Conrod Sr.
Virginia Beach, Virginia
On October 23, 2012, the Virginia State Bar Second District Committee issued a public admonition to Richard Johan Conrod Sr. for violating a professional rule that governs declining or terminating representation. RPC 1.16(c)
Stephanie Allette Pease
On September 4, 2012, the Virginia State Bar Tenth District – Section II Subcommittee issued a public reprimand with terms to Stephanie Allette Pease for violating professional rules that govern declining or terminating representation, and bar admission and disciplinary matters. This was an agreed disposition of misconduct charges. RPC 1.16(d)(e); 8.1(c)
On November 29, 2012, the Supreme Court of Virginia ordered that the order entered September 18, 2012, approving modifications to Rules 7.1-7.5 of the Rules of Professional Conduct be vacated.
The VSB’s Standing Committee on Legal Ethics issued the following LEO as final on November 16, 2012:
Legal Ethics Opinion 1865
Obligations of a Lawyer in Handling Settlement Funds When a Third Party Lien or Claim is Asserted
The VSB’s Standing Committee on Legal Ethics issued the following LEO as final on November 15, 2012:
Use of Release-Dismissal Agreement by Prosecutors
The VSB’s Standing Committee on Legal Ethics withdrew the following LEOs on November 15, 2012:
LEO 1313 Attorney-Client Relationship – Conflict of Interests
LEO 1339 Attorney-Client Relationship – Power of Attorney
The Supreme Court of Virginia is requesting that attorneys who file civil actions in circuit courts complete a new Cover Sheet for Filing Civil Actions.
Clerks use the cover sheet to identify the filing type for the action, which is then entered into the statewide Circuit Court Case Management System. The form was modified at the behest of the 2012 Virginia General Assembly.
The new cover sheet reorganizes the filing types into subject matter categories, making it easier for attorneys to select the correct filing type. Karl Hade, executive secretary of the Supreme Court of Virginia, said that use of the new cover sheet will help actions be counted properly for the weighted caseload study being undertaken for the General Assembly to measure judicial workloads.
The cover sheet form is a fillable PDF that can be completed online and printed for submission to the court when the action is filed. A copy of the form is available on the Virginia Judicial System website at http://www.courts.state.va.us/forms/circuit/cc1416.pdf.
What It Means For Attorneys
Most attorneys accept credit cards as a form of payment from clients. As such, they are “merchants” and “businesses” when it comes to reporting these transactions to the IRS. All merchants and businesses are now subject to the newest IRS requirement – Section 6050W.
What is 6050W?
Section 3091(a) of the Housing Assistance Tax Act of 2008 (the “Act”) added section 6050W to the Code requiring merchant acquiring entities and third party settlement organizations to file an informational return to the IRS for each calendar year reporting all payment card transactions and third party network transactions with participating payees (merchants and businesses) occurring in that calendar year. It was created in an effort to further reduce the estimated $345 billion tax gap from the business sector by providing additional information to the IRS on aggregate credit card transactions. Effective January 2012, all credit card processors (i.e. LawPay, First Data, TSYS, etc.) and 3rd party payment aggregators (PayPal & Square) will be required to report gross card transactions to the IRS. This means the gross dollar amount of all transactions will be reported on a special 1099-K, regardless of returns or any processing fee deductions.
What About My Trust Accounts?
In the case of attorneys, Sections 6050W does not make a distinction between credit card transaction deposits made to a trust account (whether IOLTA or some other form of trust account, e.g., interest bearing trust account set up for a particular client or non-interest bearing trust account) and an attorney’s operating bank account. This has some attorneys concerned the IRS will view these transactions incorrectly as income. However, there are two important items to note: (1) the new 1099-K filed by the credit card processors is only intended to be “informational,” (2) the attorney’s credit card processor should include a merchant industry code on your 1099-K identifying you as a law firm or provider of legal services. The reporting requirements under section 6050W require credit card processors to report to the IRS on Form 1099-K the total gross amount of payment card transactions for each “merchant” client over the calendar year, without reduction to account for amounts deposited into trust accounts. Although there are few instructions from the IRS informing taxpayers on how to account for discrepancies between 1099-Ks issued to them and amounts reported on the taxpayer’s return, it is clear that the IRS does not intend the Form 1099-K to match net, taxable, or even gross income. Thus, the amount shown on the Form 1099-K will not in all instances be required to be reported as income.
In addition to the gross volume reporting, Section 6050W also requires processors to verify and match your federal tax ID and legal name to IRS records. 6050W requires an exact match on both items for your credit card processors to file the 1099-K correctly. Due to technology limitations with most Visa and MasterCard processors, merchant statements are usually limited to only 25-35 characters. As such, many law firms have either abbreviated their name or used an acronym for their merchant account. If this is the case, you will need to contact your processor to assure that your legal name on your merchant account and your law firm tax ID number exactly match the legal name and tax ID number you use to file your tax returns.
Does The Name And Tax ID On My Trust Account Need To Match Those On My Tax Filing?
No. If you maintain an interest bearing trust account on behalf of an individual client with the interest being paid to the client, then that trust account needs to have your law firm name, the client’s name on whose behalf you maintain the account and that client’s tax ID number. If you maintain a non-interest bearing trust account, then it is ok to have your law firm’s tax ID on that trust account because there is no “income” associated with it. If you maintain an IOLTA account, it needs to have and should already have your firm name as well as the name of the IOLTA program (Legal Services Corporation of Virginia) and the IOLTA program’s tax ID.
What needs to match for purposes of Section 6050W is the name and tax ID on the merchant account with your credit card processor with the name and tax ID on your own tax return. If they don’t match, the IRS could impose a 28 percent withholding penalty on all credit card transactions.
Due to the steep withholding penalty, it is imperative that you confirm the information on your 1099-K this year. If you have not received a 1099-K from your credit card processor, call and request a copy. All 1099-Ks should have been sent out in late January of 2012 for a trial run. Penalties will start to apply for tax year 2012 for which you will receive a 1099-K from your credit card processor in early 2013. The safest approach is to call your credit card processor now to resolve any mis-match between your firm name and tax ID as reported by the credit card processor and the firm name and tax ID you use to file with the IRS.
If I Deposit Credit Card Transaction Funds Directly Into My Trust Account, Won’t The 1099-K Filed By My Credit Card Processor Show More Gross Income For Me Than I Actually Received?
The IRS understands that the 1099-K is a statement of gross credit card transactions and that for a law firm that deposits funds into trust accounts, some or all of the funds might not be includable in the income of the law firm. Therefore, if the IRS were to inquire as to the discrepancy between gross credit card receipts and claimed income by the law firm, the law firm will only need to explain that a particular dollar amount of the gross credit card receipts was deposited into client trust accounts from which the law firm receives no income.
If you have any questions, please don’t hesitate to call state bar ethics counsels.