I’ve often said that title insurance underwriting is an art and not a science. A lawyer facing a title defect issue might obtain different opinions from different title companies and even from different lawyers employed by a single title company.
During my 28-year career as a lawyer for a title company, I have often joked that I try very hard to agree with myself!
If a lawyer calls to describe a title defect and says, “Claire, this is bad, isn’t it?”, it’s easy for me to agree. The closing attorney is, after all, often the best judge of marketable title in the community. But what if a different lawyer calls weeks later with basically the same facts, and explains why the defect is technically a problem but won’t cause a claim from a practical standpoint? That lawyer may be more familiar with the opposing parties or the history of the property. The underwriting answer may be different. Or what if the second lawyer says, “this is my best client” and asks for a one-time favor? You see where I’m going here. Answers may vary on the same facts, and an underwriting attorney can easily get into trouble with her agents!
But I thought attorney discipline issues in South Carolina might be addressed with more consistency. If you have that opinion, please check out this October 7 opinion from our Supreme Court*.
I don’t know this lawyer, but he apparently had a successful litigation practice across many decades. In 2013, he was placed on interim suspension when a former associate filed a complaint alleging operational and case management issues, including concerns relating to the mismanagement of his trust account. The lawyer filed a petition for reconsideration, and the suspension was lifted with conditions. Notably the lawyer was prohibited from accessing or controlling the law firm’s trust and operating accounts. An associate was made responsible. (Huh? A senior partner who manages an associate couldn’t touch the trust account, but the associate could?)
Six years later, in 2019, formal charges were filed by the Office of Disciplinary Counsel. There was much discussion in the case about the ODC’s delay and whether that delay was a mitigating factor.
The underlying facts indicate that prior to 2012, the lawyer allowed his staff to routinely disburse funds from the trust account for operating expenses. Disbursements were made before deposits, funds were comingled, and funds were missing. A law firm formed by former associates demanded trust account funds for a particular client, and the funds were not available until this lawyer infused personal funds into the account
There was never a client complaint and, apparently, no client actually lost funds.
But the differing opinions about the appropriate sanction makes this case remarkable. The panel of the Commission on Lawyer Misconduct recommended a suspension of six weeks. In a dissent, Justice Hearn said she would impose a one-year suspension in light of the lawyer’s lengthy, unblemished disciplinary history and the prejudice sustained by the delay of the ODC.
In an opinion authored by Chief Justice Beatty, the majority disbarred the lawyer and chastised the ODC for its delay. The majority said that the delay was not prejudicial because the lawyer was allowed to practice law in the interim. An interesting added fact is that $21.5 million passed through the trust account since 2013.
In a concurring opinion, Justice Few said the case had nothing to do with Rule 417, the financial recordkeeping rule. Rather, he stated this lawyer stole client money from his trust account. Justice Few also said the delay of the ODC was the failure of the Court to supervise the professionals the Court employs.
So try to wrap your legal, logical brains around this. The panel recommended a six-week suspension and Justice Hearn recommended a one-year suspension on facts where Justice Few said the lawyer stole money from clients.
Apparently attorney discipline, like title insurance underwriting, is an art and not a science!
* In the Matter of Wern, South Carolina Supreme Court Opinion 27998 (October 7, 2020)